Like another medical device report we mentioned last week, the Milken report focuses on the importance of the medical and pharma sectors to employment in the U.S. Authors of both reports are concerned that legislation being debated, such as the medical device tax that is part of the new healthcare law, could eventually force companies to lower their headcounts. The new 2.3% excise tax on the medical device industry is scheduled to take effect in 2013.
According to the Milken Institute report, entitled "The global biomedical industry: Preserving U.S. leadership", the biomedical sector directly and indirectly accounts for some 5 million U.S. jobs, of which about 1.2 million are in the private sector in pharmaceuticals, biotech, medical devices, and research and testing. The report was funded in part by a grant from the Council for American Medical Innovation.
What's to worry about? According to the Milken report's authors, multiple factors leave the U.S. vulnerable to growing international competition. These factors include the increasing complexity and uncertainty in the FDA's approval processes, especially as these relate to medical devices; government funding cuts; and federal tax policies that are not globally competitive. According to one slide the Institute shows in a presentation at its website, in the medical device approval process in the U.S. the average time for 510(k) products and PMAs has risen by 45 and 75%, respectively, since 2007.
Across Europe and Asia, nations are investing in research as well as improving access to capital for biotech start-ups. They are also standardizing regulatory regimes and offering incentives for innovation. These steps also are done in the U.S., of course, but the authors argue that legislation is hindering U.S. companies just as companies overseas are the beneficiaries of this increased support.