Will Medtronic, Boston Scientific Snuggle With Democrats?

For weeks, there's been speculation that medical device companies will strike some sort of deal with the White House to get on President Obama's good side during the health reform debate.

Pledging to cut billions of dollars from the health care system would give companies like Medtronic Inc. and Boston Scientific Corp. leverage in Washington as important aspects affecting their business are debated. At stake: billions of dollars in government money that flows to these companies. The hospital and drug industries already cut deals with Obama and the Democrats in Congress.

But given there's no deal yet, some in the industry are beginning to doubt there will be one.

Ben Andrew, an analyst at William Blair & Co. in Chicago who covers Medtronic and some of its rivals, points to the difficulty in making an effective cost-cutting pledge. While the drug makers and hospitals agreed to take out billions of dollars in costs from the Medicare system, the device companies can't make that claim. For one, these companies aren't paid directly by Medicare, the government's insurance plan for the elderly. The government money goes to hospitals and they pay the manufacturers.

The medical device field is very diverse and includes companies that make pacemakers, artificial hips, heart valves and hundred of other products. It's represented by a pair of trade groups but the more powerful of the two is Advanced Medical Technology Association, which declines to comment on any negotiations in Washington.

"We are maintaining an open line of communication and working constructively with the White House and leaders on Capitol Hill. We have been engaged in continuing discussions with all interested parties on methods for improving the quality and efficiency of the health care system," the group says in a statement.