Don Webber’s CEO Perspective #7

To the Organ Transplantation Community,

As we all know, it's been a wild first few weeks of the new Administration. Politics aside, it has been challenging for us all to fully understand and appreciate the ramifications of these initials acts and executive orders.

However, one action is particularly unsettling for the medical technology industry: tariffs levied on countries with which the industry conducts necessary business, including importing products that have a profound impact on patients' (including transplant recipients and donors) lives.

You may have read that recently AdvaMed, the MedTech Association, has taken the position of requesting that the Administration carve out an exemption from all tariffs for medical technology devices and products. The AdvaMed press release - which you can read here - includes a statement from AdvaMed President and CEO Scott Whitaker:

"We have shared with the Administration our concerns about the potential impact tariffs could have on the medical technology supply chain that American patients depend on for their care. In light of that risk, an exemption was provided for most medical devices during President Trump's first term with respect to the tariffs on China, and we are advocating for a similar approach this time. We will closely monitor for any effects the tariffs may have on this critical supply chain and share that information with the Administration."

Bridge to Life, as a member of AdvaMed, and provider of solutions and innovative technologies for the organ transplantation community - including transplant centers, OPOs and patients - strongly supports this position.

Moreover, the American Hospital Association (AHA) in a letter sent to the President from Richard J. Pollack, AHA President and Chief Executive Officer, similarly advocated for an exemption from tariffs for medications and medical supplies. See his letter to the Administration here.

Ironically, the Administration provided an exemption for medical technology companies during its first term. Now, the Administration is offering the same exemption, but ONLY if all manufacturing is relocated to the United States. Allow me to explain why this belies an understanding of how the medical technology production system operates: Relocating manufacturing requires Food and Drug Administration approval, making it difficult to move production to the U.S. in the short term, notwithstanding the impact of the costs involved in making that move.

There are myriad other reasons why the tariffs would be untenable in the medtech sector:

• Tariffs impact American companies similarly to an excise tax, which would lead to less R&D/innovation, layoffs, higher prices for Medicare, Medicaid and the Veterans Administration (VA), and patients.
• The increased costs posed by tariffs could resurrect the climate of concern the medical device excise tax created for nearly a decade.
• Tariffs would potentially create a supply chain disruption and its downstream impact on patients remains a risk, especially if companies had to relocate entire manufacturing operations stateside. Shortages of critical medical technologies are a real concern. In some instances, raw materials required to produce certain devices, and pharmaceutical formulations would not be readily reproducible in the US.
• We must also consider why companies originally moved their manufacturing offshore-to gain a cost advantage in producing devices or drugs. Bringing production back to the U.S. could drive up prices in an already expensive healthcare market. Tariffs could hold back the innovation potential of the U.S. medtech industry. R&D spending would likely be the first and most direct casualty, threatening America's medtech innovation leadership. And increased tariffs may even have the unintended consequence of boosting the competitiveness of medtech industries of other nations.

Despite ongoing efforts to build the domestic supply chain, the U.S. health care system relies significantly on international sources for many drugs and devices needed to both care for patients and protect our health care workers.

Many medical devices or their materials are sourced outside the United States. Some of these devices are single­ use devices designed to protect the patient from infection, such as single-use blood pressure cuffs, stethoscope covers and sterile drapes. Others are small devices used ubiquitously in hospitals, such as anesthesia instruments, cautery pencils, needles and syringes and pulse oximeters. Disruption in the availability of these instruments would curtail hospitals' ability to perform life-saving surgeries, keep patients safe from contagion and greatly reduce our ability to effectively diagnose and monitor patient conditions.

And, perhaps most significantly, the protection of our health care workers from infectious diseases (gowns, face masks, gloves, and more) is vital to their health and the ability of the health care system to continue caring for patients. The lack of this essential equipment will not only put patients at risk but also threaten our health care delivery personnel.

As part of our longstanding commitment to the organ transplantation community for providing a reliable, consistent and uninterrupted supply chain, continued innovation, and dedication to safety, Bridge to Life will continue to monitor and support the progress of AdvaMed and the AHA through the resolution of this pressing issue.

As always, I welcome hearing from you.