March 28, 2007

Medical Device Regulatory, Reimbursementand Compliance Congress

Steve UblPresident and CEOAdvaMed

• About AdvaMed

• The Public Policy Environment

• AdvaMed’s Priorities for 2007

Overview of Remarks

About AdvaMed

• World’s largest medical technology association

• 1,300+ member companies and subsidiaries

• Members produce 90% of sales in domestic market,50% of sales in global market

• 70%+ of member companies have less than$30 million in annual revenue

• 70 staff with global expertise, bi-partisan backgrounds

• 45 member Board of Directors (BD, Siemens, Philips,Medtronic, Johnson & Johnson, GE, Boston Scientific,Roche, etc.)

AdvaMed’s Daily Focus

Appropriate Regulation

+

Adequate Reimbursement

+

Access to Global Markets

=

Patient Access to Benefits of Medical Technology

Defining AdvaMed’s Role

Design Clinical Review

Idea through FDA: 2-6 yrs

Coverage Payment

Coding

Cov & Paymt: 0-6

JapanCanada

UKKoreaGermany

MexicoChina

IndiaFrance

Think Tanks

Policy Environment

Policy Environment

Policy Environment, cont’d

The Legislative Front

• More industry oversight

• Critically important legislation pending― Federal budget proposal with deep Medicare cuts― SCHIP― Physician Fee Fix

― Consideration of MDUFMA, PDUFA, drugsafety, others will mean major FDA bill

Priorities for 2007

Regulatory Policy

MDUFMA Reauthorization

Issues with MDUFMA I• Unpredictable and unexpectedly high fee increases from year-

to-year

• “Clock-stopping” behavior due to cycle goals

• FDA focused on goals rather than interacting with applicants

Outlook for MDUFMA II• Agreement in principle reached with FDA

• Reduced fees across the board for applications

• Sets forth a user fee structure that instills more predictability in to the year-to-year increases in fees

• Provides important performance goals to significantly reduce application review times while ensuring safety and efficacy

Regulatory Policy, continued

• Post Market Regulation– Inappropriate comparison between drugs and devices

– AdvaMed working to• Assist FDA in streamlining and “connecting the dots” with

adverse event reports

• Establish clearer criteria for communicating risk– Limit use of “recall” to appropriate situations

• Develop flexible approach to Unique Device Identifiers (UDI)

Key Payment Rules

• Inpatient Round II― Severity weighted diagnosis related groups (DRGs)

― Hospital-specific relative values (HSRVs)

― Charge compression adjustment possible

• Competitive Bidding― Potential for cheapest is best approach to technology

― Inappropriately group different technologies together forbidding purposes

― Could deny patients access to best care

Value-based Purchasing

• Legislative initiatives likely – demonstrations ongoing― advocated by key health policy makers / analysts

• If done correctly― Improves quality

― Enhances diffusion of innovative technologies

― Rewards quality and efficiency

• If done incorrectly― “Efficiency” can become code for “cheapest is best”

― Freezes technology in place

Value = Price + Quality

Key Legislation

• Remote Monitoring― Prime example of payment policy not keeping pace

with technology

― Offers physicians real-time, remotely accessedpatient information

― Provides homebound and rural patients 24/7 link to health care

― Legislation would eliminate disincentives in current Medicare rules that only provide payment for face-to-facemeetings between patients and their doctors.

Patient using an ECG/Rhythm strip recorder, a blood pressure cuff and a TeleStation that sends data via modem from the telestation to a server, then on to the care manager. Courtesy: Philips

Key Legislation, cont’d

• Diagnostics― Lab tests account for >70% of treatment decisions, but are less

than 2% of Medicare costs

― Horse and buggy payment policy in the age of molecular medicine

― Legislation establishes new payment mechanism for moleculardiagnostic tests based on resource use and value

Health Reform Principles

• Expand health coverage to all, so that every American can have access to the best medicine has to offer

• Improve the efficiency and quality of health care– Quality of care highest priority– Control cost the right way: lift the burden of

disease and improve efficiency• Prevention• Quality• Efficiency• Medical innovation

Shaping the future instead of being shaped by it.Shaping the future instead of being shaped by it.

International Top Line

• Nascent health care economies: China, India

• Japan: Foreign reference pricing

• EU: DRGs and procurement policies

– Europeans have followed US model for hospital payment based DRGs (France, Germany, UK, Italy)

Partnership Development

•Enhance partnerships with patient, physician, and hospital groups to enhance advocacy efforts

Industry Reputation

Compliance and Code of Ethics

• Increase outreach and education

• Firmly establish logo license as compliance icon

• Develop other tools / programs to help ensure appropriate HCP relationships

Value of Technology

•Increase volume and frequency to solidly embed core messages

•Broaden channels through partnerships

•Post market reg.

•Value of FDA risk-based approach

Integrity of FDA

Build Industry Reputation

Telling our story

March 28, 2007

Medical Device Regulatory, Reimbursementand Compliance Congress

Steve UblPresident and CEOAdvaMed