Implants in Key Categories Show Price Drops, Study Claims

Contrary to what some who evaluate the cost of healthcare would have you believe, a recent study released by the Advanced Medical Technology Association (AdvaMed) shows that average prices for implantable medical devices have declined. Findings such as these seem to support the Washington, D.C.-based advocacy group’s assertions that the medical device industry is part of the solution to healthcare’s rising cost and not one of the causes.

During the group’s recent annual industry gathering—AdvaMed 2013—held this year in Washington (next year’s event will take place in Chicago, Ill.), AdvaMed’s top brass—CEO Steven Ubl and Chairman David Dvorak (president and CEO of Zimmer)—sat down with journalists to discuss the report’s findings, as well as other industry issues.

From 2007 to 2011, according to the report, the seven largest categories of implantable medical devices experiences “Substantial declines” in average prices paid by hospitals on both a nominal and inflation-adjusted basis. Declines in average inflation-adjusted prices ranged from 17 to 34 percent depending upon the device type:

• Implantable defibrillators (24 percent)
• Cardiac resynchronization therapy defibrillators (26 percent)
• Pacemakers (26 percent)
• Artificial hips (23 percent)
• Artificial knees (17 percent)
• Drug-eluting stents (34 percent)
• Bare metal stents (27 percent)

Not adjusted for inflation, price drops ranged from 5 to 25 percent.

“These average pricing declines reflect the intensely competitive marketplace medical technology and underscore the tremendous value devices and diagnostics provide to patients and the overall healthcare system,” Ubl said.

Ubl added that the reports—which was conducted by the Analysis Group Inc.—reaffirms previous findings that medical technology prices overall have “remained consistently low for 20 years,” growing at less than half the rate of prices in the overall economy. According to figures cited by AdvaMed, medical technology prices have grown at an average annual rate of 1 percent compared to 2.7 percent for the overall consumer price index (CPI) and 4.7 percent for the medical care CPI.

“It’s important to note that spending on advanced medical technology makes up a consistently small and stable 6 percent of national health expenditures,” Ubl said.

The data, however, do not mean that hospitals’ overall costs have gone down for each of the implant procedures. The reported average selling prices reflect trends in the average prices for the given device types paid by hospitals rather than trends in the overall costs to the hospital for a given procedure.

The prices evaluated also represent the net acquisition costs paid by hospitals after accounting for all discounts and rebates. The underlying cause of the prices declines was not examined as part of research conducted for this study. The findings also don’t mean that manufacturers have been reducing their prices across the board.

According to study authors: “The medical technology industry is intensely competitive, and hospital budget pressures in recent years have contributed to increased competition among suppliers.”

But if overall prices for medical technology are going down, why should reimbursements for certain procedures increase? According to AdvaMed, reimbursements for procedures are not based solely on the price of a device bit also include a number of items such as operating room expenses, hospital medical and administrative staff salaries, the cost of energy prices and other supplies used in procedures, as well as other care- and follow-up-related items.

“Even as innovation and job creation in the industry remain under threat from the medical device tax and repeated reimbursement cuts impacting diagnostic lab tests, imaging services and durable medical equipment in particular, old-fashioned competition continues to ensure the strong value proposition of advanced medical technologies that save lives and improve patients’ quality of life,” Ubl said. “We look forward to sharing the results of this new study with members of Congress and other policy makers as they consider changes to the healthcare delivery and payment system.”