Firms Fear Senate Plan’s Effect on Jobs : Medicine: Lobbyist for Irvine’s Allergan, other companies, warns that bid to cut Medicare repayments for lenses used in cataract surgery could lead to many layoffs.
The U.S. Senate has proposed a 25% cut in Medicare reimbursement payments for artificial lenses used in cataract surgery, a move that could cost hundreds of jobs in California, a Washington industry group warned on Friday.
The Health Industry Manufacturers Assn. said that almost all the medical device firms that make so-called intraocular lenses are in Southern California. Allergan Inc., based in Irvine, is the largest manufacturer of such lenses.
Intraocular lenses are inserted into the eye the during cataract surgery to restore vision. About 1.35 million cataract operations are done in the United States each year, the association said, creating a market worth $270 million annually.
“If this cut goes through, there will be grave job implications for California,” said association spokesman Steven Speil.
Speil said that the Senate Finance Committee, which is looking to cut Medicare spending by $58.3 billion over the next five years, has proposed slashing reimbursements for intraocular lenses from $200 a set to $150. The House version of the proposed budget leaves the $200 reimbursement intact.
The issue will be examined again in a joint House-Senate conference committee before the final budget vote. If the cut is accepted, some companies could feel the effects as early as September.
Speil said it is not surprising that lawmakers have taken aim at the lenses in their struggle to cut spending and lower the deficit, but if passed into law the change would be devastating for California. Of the seven intraocular lens manufacturers in the nation, six are in the Southland. The other is in Texas.
Allergan spokesman Shel Holtz said that his company, which had 1992 revenue of $897 million, brings in more than $100 million from intraocular lens sales. Because the firm has several lines of lenses with prices ranging from less than $150 to about $200 apiece, Holtz said, he doesn’t expect to see an immediate effect. But as the company phases out the older, less-expensive models, demand for the newer, more expensive ones will force the company to look for its own cutbacks.
“It’s going to involve laying off people,” Holtz said. He could not immediately estimate how many people could lose jobs at Allergan, which employs about 5,000 people.
But John R. Wolf, chief executive of Staar Surgical Inc. in Monrovia, said that, if the measure passes, he would likely issue pink slips to 38 of his 150 employees.
Other California companies potentially affected are IOLAB Corp., a Claremont-based subsidiary of Johnson & Johnson; Kabi Pharmacia of Monrovia, a subsidiary of Swedish drug firm Kabi Pharmacia; Ioptex Inc. of Irwindale; and Chiron Intraoptics Inc. of Irvine.
