Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
2012 International Medical Device Industry Compliance Conference
Thursday, May 10, 2012
As prepared for delivery.
Thank you, Jeff, for that kind introduction. Good morning and thank you to AdvaMed and EucoMed for hosting this event and for the invitation to be here with you today. As many of you know, this is the fifth consecutive year for this important compliance conference. What you may not know is that AdvaMed has been advancing issues of importance to the medical device industry since 1975 – that’s nearly 4 decades of advocacy. Until 2000, it was known as the Health Industry Manufacturers Association, but its core mission—to advance global health care by promoting a legal, regulatory and economic environment that promotes worldwide access to the benefits of medical technology—has remained unchanged. Your efforts are as important today as they have ever been. Let me also just add that the Department of Commerce has enjoyed a very strong working relationship over the years with AdvaMed and its leadership team, and I’d like to recognize and thank your President and CEO, Steve Ubl, your General Counsel, Chris White, and your Senior Vice President, Ralph Ives, for their leadership and partnership. I’d also like to acknowledge the important contributions made by EucoMed and its leadership team, including its Acting CEO Luciano Cattani.
The Medical Device Sector: A Driver of Growth and Innovation
When Steve and others first invited me to deliver the keynote address for this conference several months ago, I immediately expressed my interest in being here with you, and here’s why: the medical technology industry is one of the most important drivers of growth and innovation in the world. In my capacity as Assistant Secretary of Commerce in the International Trade Administration, I have a global portfolio and responsibilities that require me to deal with virtually every industrial and services sector in the economy. Yet no sector has impressed me more than this one. Doing good for humanity while driving economic growth and prosperity is an uncommon combination – yet that’s the hallmark of your industry. It’s for that reason—this remarkable combination of human and commercial benefit—that the Department of Commerce is proud to partner with you. It’s also why we have prioritized your sector under President Obama’s National Export Initiative.
Your work begins with a commitment to unsurpassed quality in the delivery of patient care. And the impact of this commitment is remarkable: in the U.S., for example, between 1980 and 2000, advancements in medical technology contributed to, among other things, a three-year increase in life expectancy; a 50% reduction in deaths from heart disease; anda decrease in death from strokes of more than 30% and from breast cancer by 20%.
Beyond the life-saving benefits provided to countless patients, your industry also serves as an engine of employment and economic growth. According to industry figures, the medical device industry employs over 420,000 workers in the U.S., and that number is growing. Further, each of those 420-plus thousand workers generates an additional 4 jobs that are indirectly linked to this industry. Put differently, almost 2 million workers—including suppliers, manufacturers of component parts, service providers, and others—are now tied to the medical device sector in the U.S. alone. And the U.S. is not alone: the industry is experiencing significant growth in some of the world’s most important emerging markets.
Yet what impresses me most about this sector is your commitment to innovation. Your business model is premised on it. Your competitiveness and survival depend on it. And again and again, your industry lives by what so many other sectors in our economy aspire to: creativity, innovation and progress.
Let me share a quick example of what I’m talking about. Last year, I had the privilege of visiting the campus of GE’s John Welch Technology Center in Bangalore, India. The center is one of GE’s R&D hubs, and it’s one of only five such campuses in the world and the first to be located outside of the U.S. The center represents a $200 million investment by GE and employs over 4,000 Indian scientists and engineers. In addition to driving world-wide R&D for each of GE’s business units, the center is at the cutting edge of innovation directed at meeting the unique needs of the Indian market and society, including in the health care space.
Over the next few years, 40% of people suffering from cardiac disease will reside on the Indian subcontinent. As many of you know, the key to treating cardiac disease is early diagnosis from regular screening. Yet, only about a third of India’s people receive such screenings. And that percentage is even lower in rural communities. Why? One basic reason concerns the lack of access to the necessary medical equipment—echocardiograms—and the required electric power. GE’s health care division went to work to assess how it could create a device that fits the unique circumstances present in India, especially in poor rural communities. Within a short time this team of engineers, Indians and Americans working together, invented a new device, known as the “Mac-i” – which is basically, a battery operated, two pound, portable, electrocardiogram. The technology is so advanced that you don’t even need a trained cardiologist to administer the EKG or interpret the results. All of that means that tests can be administered at a stunning cost of just nine rupees (or about twenty cents) per scan. The device costs a community just $500. The Mac-i is designed and manufactured in India, and is now being exported to developing countries around the world.
Whether it’s GE’s echocardiograms, or insulin pumps for diabetics, pacemakers for cardiac patients, drug eluting stents and defibrillators, or minimally invasive surgical devices AdvaMed and EucoMed member companies are developing, the innovation happening in your industry is breathtaking and, literally, life transforming. More importantly, the technological advances driven by your commitment to R&D often lead to further developments and breakthroughs not just in medical technology but in other sectors. As countries all over the globe join the race to build the proverbial “knowledge economy,” it is no wonder why they all seek to attract your companies to their shores.
Leveling the Playing Field to Foster Growth and Competition
Despite the fact that so many economies profess their interest in attracting and supporting innovative industries like the medical technology sector, the reality is your companies continue to face substantial challenges that limit their competitiveness and impede their capacity to innovate. And in this twenty-first century, highly globalized, highly interconnected economy, these challenges most often take the form of technical barriers to trade—the so-called “behind the border” barriers that can hamstring an industry’s growth and severely limit the benefits of free and open commerce. It’s these challenges that the Department of Commerce’s International Trade Administration (ITA) is most keenly focused on.
As you all know well, a primary concern for your industry relates to a lack of regulatory convergence or harmonization, which imposes substantial transaction costs on companies as they seek to introduce high quality products in diverse markets governed by divergent regulatory standards. Regulatory cooperation is a major goal of U.S. trade policy, and we are working on issues specific to this industry through a variety of fora. Regulatory convergence is important not just in developed markets, like the United States and the European Union, but also in emerging economies, which in many cases are in the nascent stages of establishing technical standards and regulations. Because we recognize that government cooperation in the area of technical regulations is perhaps one of the most fruitful and productive areas of attention, we have prioritized our engagement through a range of multilateral efforts, including, for example, the Global Harmonization Task Force and the APEC Life Science Innovation Forum Regulatory Harmonization Steering Committee. We routinely receive very helpful input from AdvaMed and its member companies, and we welcome your continued feedback and partnership.
Additional challenges facing your industry include counter-productive pricing and reimbursement policies, inconsistent approaches to standards development, and, at times, a lack of appropriate intellectual property enforcement. Whatever the issue, know that the Department of Commerce is committed to being a fierce advocate to ensure an open and transparent marketplace, wherever that market exists. In fact, since January 1, 2010, we have initiated 30 compliance cases worldwide involving medical devices, and we’ve successfully resolved 14 of them so far—and we’re not giving up on the others.
Many of our efforts on behalf of industry are raised through a wide range of bilateral engagements across the globe. In China, for example, our staff just returned from a meeting of the U.S.-China Joint Commission on Commerce and Trade’s (JCCT) Pharmaceutical and Medical Devices subgroup, which my department chairs. The meeting focused on issues of mutual interest to the two countries, including medical device safety standards and a pending Chinese regulation on the supervision of medical devices. In India, we regularly work with AdvaMed and others to resolve market access barriers through the U.S.-India High Technology Cooperation Group (HTCG). And in Brazil, we have leveraged the U.S.-Brazil Commercial Dialogue and other efforts to make progress on barriers relating to medical devices. For example, recently we helped launch the Information Exchange Forum, which saw Brazil’s FDA equivalent, ANVISA, engage with the private sector in a public meeting for the first time. The discussions led to continued engagement between ANVISA and industry and to an MOU on data sharing between ANVISA and the U.S. FDA. Just last year, I was pleased to join AdvaMed on a policy trip to Brazil that continued these efforts and resulted in significant progress on a number of important fronts, including an agreement between industry and the Brazilian government on a mutually beneficial action plan and the development of an industry-led alliance that includes three Brazil-based associations from the “Alliance of Brazilian Innovative Healthcare Industry.”
These are, of course, just a few examples. As one of the most innovative industries in the world, you will no doubt continue to face market access barriers as you endeavor to introduce new products in new ways and push the innovation curve. Just know that the Department of Commerce is committed to working with and for you in an effort to help further the growth of your industry.
Transparency as a Market Access Priority
Among the many market access challenges your industry faces, few are as difficult or intractable as the risks posed by corruption that is, regrettably, so endemic in the international marketplace. It is difficult to overstate the significance of corruption globally. The World Bank has estimated that up to $1 trillion in bribes is paid annually, which is a staggering figure when you consider it. Of course, corruption is not a challenge unique to this industry, but it is one that poses particular risks, especially since this sector is so heavily weighted with small and medium sized companies that are particularly vulnerable to illicit demands. Their size and relative lack of bargaining power generally make it more difficult for SMEs to pushback against solicitation requests. In fact, it is estimated that up to 25% of SME operating capital is diverted to bribery—another stunning statistic.
I believe corruption is one of the most significant and difficult trade barriers companies face. It is also one of the greatest impediments to economic growth, development and, ultimately, democracy. As President Obama himself has observed: “[i]n too many places, the culture of the bribe is a brake on development and prosperity. It discourages entrepreneurship, destroys public trust, and undermines the rule of law while stifling economic growth.” This is why the President has made transparency, a commitment to open government, and the fight against corruption a major priority for his administration.
In fact, the Obama Administration has made the fight against corruption a signature issue, and I am proud that the Department of Commerce has led the way in this fight. I can tell you, without exaggeration, that transparency and anticorruption has been, and will continue to be, my highest policy priority as Assistant Secretary.
Recognizing that the United States holds its companies to a high standard through rigorous enforcement of the U.S. Foreign Corrupt Practices Act, we at the Department of Commerce have made it our focus to ensure that our companies are not placed at a competitive disadvantage by adhering to these appropriately high ethical standards. Our aim is to push our trading partners worldwide to follow our lead in adopting—and enforcing—robust antibribery norms and regimes that hold foreign companies to an equally high standard of conduct. And we are also taking aim at the “demand side” of bribery by encouraging our trading partners to criminalize the solicitation of bribes by foreign officials—thus going after the root cause of the problem.
To this end, we have elevated the issue and put it squarely on the agenda in every forum we can find. Of course we are active participants in the OECD Anti-Bribery Convention peer review process, and we have endeavored to model open, transparent engagement by involving stakeholders in and publishing comments concerning our own Phase III review. We have similarly supported widespread accession to the UN Convention Against Corruption, encouraging accession and ratification in all of our bilateral engagements. We were instrumental in establishing the G20 Anti-Bribery Working Group in Seoul, and we have actively supported its agenda these last two years. In fact, I was just in Puerto Vallarta, Mexico, for the recent meeting of the G20 and B20 to attend the High Level Dialogue on Anti-Corruption, where we shared best practices for engaging stakeholders and the private sector in efforts to promote transparency. And finally, we’ve actively woven transparency into our overall trade policy agenda—from incorporating robust commitments in our ongoing trade agreement negotiations to working hard to promote greater transparency through government procurement through the mechanisms like the WTO Agreement on Government Procurement.
And I am also pleased to say that we are endeavoring to make transparency a meaningful priority in other realms, as well. For example, I serve as a member of the U.S. Helsinki Commission, which overseas U.S. engagement in the Organization for Security and Cooperation in Europe. This year, we are actively pushing a robust transparency agenda in the economic dimension of the OSCE, which reaches some 56 countries throughout Europe and EurAsia, the Middle East and beyond. In fact I was just in Dublin, Brussels and London two weeks ago in support of those efforts. Our commitment to transparency covers a wide range of industries and sectors, but nowhere is it more important, I would argue, than for the innovative industries like this one.
Importantly, we recognize that the responsibility to promote good governance and the fight against corruption cannot rest with government alone. And this is why our partnership with the private sector—with industry associations like AdvaMed and EucoMed—have been so critical. I think you are all probably very well aware of the outstanding work that is being accomplished, as we speak, in the 21 member economies of the Asia Pacific Economic Cooperation forum. During our 2011 host year of APEC, the United States committed to making transparency and good governance a major priority, especially in the SME work stream. And we found a willing, motivated and highly capable partner in AdvaMed. Under AdvaMed’s leadership, we were able to bring a sectoral focus to our efforts, developing the now well known and highly regarded Kuala Lumpur principles, which embody the “gold standard” principles for ethical business conduct in the medical device sector. These KL Principles will provide the foundation for the drafting of a harmonized set of country specific industry codes of conduct, which are currently under development, with AdvaMed’s capable assistance and guidance. By next summer, the medical device industries in all APEC economies will have drafted codes that are aligned with the ‘KL Principles.’ In fact, the success of this effort is already creating demand in regions outside of Asia, as the G20 is now looking carefully at sectoral approaches like this one, and we are also working with AdvaMed to take this program to countries throughout Latin America. Eventually, the goal is to have all regions of the world in full code alignment so that companies can operate seamlessly around the globe without violating their ethical obligations.
While I’m proud of my team at the Commerce Department for their role in this effort, I really want to acknowledge and thank AdvaMed and its members for leading the way on this project. This effort has reflected the best of a true public-private partnership, and one which will yield important and lasting benefits for companies and countries alike. So to AdvaMed, on behalf of my colleagues in the Department of Commerce, I say a big thank you for your outstanding leadership and partnership.
Now we all know that the fight against corruption and for greater transparency will not be complete anytime soon. But there’s not doubt in my mind that it’s a fight worth fighting and, more importantly, it’s one that can be and will be won with partners like all of you. And that, friends, brings me to my last point, which is a word of encouragement for the important work that you all do each and every day.
Compliance Officers Fighting the Good Fight!
As everyone in this room knows well, compliance and ethics professionals tend to the “heart and soul” of corporate culture. Although some still cling to the tired view of compliance work as a “cost center” or something akin to auditing or bean counting—the sticklers for rules and details that must exist in every organization—the reality is something very different. The truth is that the work you do is at the heart of protecting the very brand and integrity of the organizations you work so hard for. We know that it has taken many of your companies literally years of hard work, investment and innovation to achieve the premium reputations that inspire patient trust. And it takes years of effort to build a brand that doctors and practitioners come to rely on. But it only takes one small, thoughtless mistake, one careless act, to destroy it all. One unethical act can cast a shadow and sully the reputation of companies and the hardworking men and women who are employed by them. So that’s a big responsibility, and a big burden, that you carry.
And let me add just a little more to your burden: your work matters not just for the companies you serve, but it matters well beyond that. Your efforts are part of an important chain of activities and commitments that are at the heart of the fight internationally to uphold critical values like the rule of law, transparency and good governance. By ensuring that your companies—through their employees, agents, suppliers and representatives—act in an ethical and responsible manner, and that they refuse to perpetuate the corrupt practices that have been so pervasive in so many parts of the world for so long, each of you is contributing in a mission critical way to a much larger effort that truly matters.
So let me conclude my remarks today by thanking you, loudly and publicly, for your efforts, for your service, for your tireless commitment not just to your company, or to your industry, but to your countries and the world at large. Your work matters, and it’s important that you know how much people with jobs like mine value and appreciate all that you do.
At the end of the day your commitment and your work is about advancing the rule of law, and it’s the rule of law that underlies the greatness of nations, ensures freedom, and creates real opportunity that leads to the kind of prosperity everyone—everywhere—aspires to.
It is truly a pleasure and an honor for me to be here and to support you in your important work. If I am to leave you today with one message, it’s this: government can’t win this fight without your help, and we at the Department of Commerce look forward to continuing a long and successful partnership with AdvaMed and EucoMed and with each of your companies. Thank you.
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