Washington Update PACT Medical Device Group March 7, 2013 Mark Leahey President & CEO

1. Washington Update PACT Medical Device Group March 7, 2013 Mark Leahey President & CEO Medical Device Manufacturers Association (MDMA)

2. Founded in 1992 by handful of smaller medical device executives seeking a voice in Washington Today MDMA represents nearly 300 member companies Leverage collective resources to provide top-tier advocacy and educational assistance to companies Track record of success About MDMA

3. The Year Ahead • 2013 presents significant opportunities and challenges (ex. device tax repeal, FDASIA implementation, cost of care, value of technology) • Your engagement is vital to the success of our efforts • Collectively, we will succeed

4. Agenda FDA ACA Implementation (device tax, Sunshine Law, ACOs) Cost of Care/Value of Technology Other Issues

5. FDA The past 3 years lead to the MDUFA 3 agreement and FDASIA Total time goals Earlier FDA interaction IDE reform 510(k) Modifications Guidance Other FDA “reforms” Benefit-Risk Guidance Network of Experts Key in 2013 will be FDA execution Monitoring FDA performance 3rd Party assessment

6. FDA (Cont.) • UDI Implementation • Likely phased in over the next 2-5 years • Enhanced Focus on Post-Market Surveillance • Potential expansion of De Novo Process • Congressional oversight likely to continue

7. ACA Device Tax Continue to push for full repeal in 2013 Bipartisan, bicameral bills introduced last month Explore variety of vehicles for repeal Leverage increasing bipartisan support Will require your input to succeed Physician Payment Sunshine CMS recently issued final regulations Companies must start tracking payments on August 1, 2013 First reports due to CMS by March 31, 2014 ACOs & Bundling Additional ACOs being announced around the country CMS Innovation Center continuing research and testing of bundled payments for episodes of care

8. The BIG ISSUE - Entitlements • 1962 = 14 cents of every federal dollar not going to interest payments spent on entitlement programs • Today = 47 cents of every dollar • 2030 = 61 cents of every noninterest dollar will be spent on entitlements. • MEDICARE is the biggest portion of these expenditures The Reality – MASSIVE change is coming

10. Cost of Care will be Major Battle in 2013 Great macro data demonstrating devices less than 6% of total healthcare spending Device costs increases (<1%) below rate of medical CPI (approx 4%) Medical services increase much more significant driver of increased costs Other groups that are heavily engaging (AHIP, AHA, AMA, etc) 

12. We Need More Examples of Micro Data Specific examples of how medical technologies save overall costs Less expensive products Shorter hospitalization  Less invasive

13. We Need More Patient Advocates to Engage • You are close to your patients • Identify those with compelling message willing to discuss the value of technology • Expand geographic footprint beyond your corporate profile

14. We Need Industry Engagement MDMA members have ALWAYS stepped up on behalf of innovators and patients Some of the biggest threats lie ahead We will succeed if we all actively engage to shape the narrative

16. Ultimate Objective: Change narrative to: Medical Technology is the solution to healthcare costs, not the problem

17. Coverage with Evidence Development (CED) • CED is a policy where CMS covers a new medical device used in a clinical trial so more evidence can be developed for CMS to make an informed decision on coverage • New guidance in 2013 • CMS may use CED more frequently • Local Medicare contractors may initiate data-collection conditions • No specific guidance on time-lap of when CED ends and Medicare coverage begins, if at all

18. CPT Coding Reform Ongoing concerns over growing trend of Category III codes, lack of transparency on CPT Editorial Panel Recent AMA Enhancements: New guidelines for specialty societies (March 2012) Allowed earlier and more meaningful engagement during specific CPT code change proposals Additional reforms expected in 2013

19. Value of Engagement • Success on key issues relies upon the collective effort of the industry • Association engagement provides an effective and efficient way for you voice to be heard

20. Questions? Mleahey@medicaldevices.org (202) 354-7171