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A Shift in the Regulatory Winds for Medical Devices

A raft of issues could set the tone for the medical device industry going forward.

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Although the complexities and large cast of characters involved with health-care reform have captured the spotlight for the last few months, there has been a raft of regulatory issues that could substantially set the tone for the medical device industry going forward. Unlike the pharmaceutical companies that have become targets, medical device firms have often been able to fly underneath the radar of both legislators and populist sentiment thanks to the smaller size of the industry, complete lack of price transparency, and the triangulated relationship between the payers, customers, and device manufacturers. However, we expect that medical device companies will garner more attention as regulators address several issues that have bubbled up recently.

Independent of Obama's push for health-care reform, the medical device industry has been buffeted by a few large-scale product recalls, a series of Department of Justice investigations into improper marketing practices by device manufacturers, and embarrassing incidents that highlight the potential conflicts of interest with physician thought leaders. All of these factors have been spurring discussion for the need to tighten regulations around how device firms do business. Here we outline which changes we expect will come about.

Debbie Wang does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.