Sean Fenske, Editor09.08.16
Perhaps “strange” isn’t the right word; “inconvenient” bedfellows might be better. Either way, it expresses the intended idea. That is, the goal of capitalism is not always congruent with the idealized goals of healthcare organizations (or better yet, the public’s perceived notion of what those goals should be). No better example exists of this disparity than the headlines-grabbing pharma company Mylan and its exorbitant increase of its EpiPen product. (Well, except for maybe one other example, but I’ll get to that one.)
Recently, Mylan increased the price of its product six fold, causing those who suffer from allergies serious enough to need to have one on hand at all times to experience sticker shock. A two-pack now goes for approximately $600 in the U.S. (although the price apparently varies fairly significantly in other countries). This has understandably led to a tremendous backlash against the company, which acquired the product in 2007. Additionally, since certain institutions such as schools are required to have this product on hand, the company has a virtual monopoly on a much-needed product, a fact that has not gotten past a very interested Congress.
Perhaps some of the outrage from the public, Congress, and others is a result of the fact that it seems this had just happened at another pharmaceutical company, Turing Pharmaceuticals (that aforementioned other example). At that time, former CEO Martin Shkreli increased the price of a drug the company had acquired by an even greater margin—5,000 percent. Daraprim, the drug in question, had gone from costing around $13.50 per pill to $750 for each tablet. Once again, very understandable outrage followed.
In an era of distrust toward “Big Pharma” with a surprising number of people expressing a concern with vaccinations for children, questioning their value, these “greedy” actions only reinforce the views of many who say the industry is only about money, not about healthcare. Similarly, questions from conspiracy theorists cast further doubts on the industry when the last disease to be “eliminated” was polio in the 50s. Since then, the pharma industry has put out products that treat symptoms—but vaccinations or cures for HIV, cancer, and other prominent diseases seem to be elusive. Whether these theories are sound or created by those with fantastic imaginations seems to be a matter of less significance when the industry plainly illustrates just how greedy it can seemingly be, regardless of the toll such price increases take on the people who need the drugs most.
Meanwhile, the medical device industry continues to face cost pressures from hospitals and healthcare providers who are reducing their device supply chain, buying from fewer sources to better leverage bulk rates. According to an AdvaMed report, in 2010, medical device spending accounted for only $156.3 billion or 6 percent of total national health expenditures ($2.6 trillion). It makes one wonder how much of that total figure likely went toward pharmaceuticals? (Estimates have it at about double the $156 billion figure.)
The medical device industry isn’t without its flaws, however, when it comes to pricing. The industry lobbied against a 2007 bill that would have required medical device companies to share their prices with regulators and the public. Since device pricing isn’t known from hospital to hospital, one location could be paying a much different price for products compared to a hospital just down the street. Certainly not an offense that’s going to get the public into a tizzy like it would for the pharmaceutical company price increases, but comparison shopping for orthopedic implants or pacemakers is not likely something hospitals want to see their patients doing.
Hospitals are also growing tired of “incremental innovation” to warrant price increases on medical devices. This also goes hand-in-hand with a changing reimbursement system of payments based on results rather than procedures. If a newly released pacemaker doesn’t offer significant benefits over the previous, less expensive model, what’s the incentive for the hospital to move to the newer device offering?
Healthy competition between device makers for similar technologies is also stronger than perhaps ever before. Even advanced, minimally invasive products are being provided by more than one company in many cases, creating another reason for price competition.
Ultimately, I fall back on the fantastic innovation that’s happening within the industry. Significant technology advancements will change the way healthcare is delivered, the benefits realized by patients, and the monitoring that will be possible to get ahead of problems. This is where medical device companies will realize their greatest opportunities for increasing revenue and growth. In the meantime, let Congress tax the pharma price gouging companies (retroactively) to make the device tax suspension permanent!
Sean Fenske
Editor
Recently, Mylan increased the price of its product six fold, causing those who suffer from allergies serious enough to need to have one on hand at all times to experience sticker shock. A two-pack now goes for approximately $600 in the U.S. (although the price apparently varies fairly significantly in other countries). This has understandably led to a tremendous backlash against the company, which acquired the product in 2007. Additionally, since certain institutions such as schools are required to have this product on hand, the company has a virtual monopoly on a much-needed product, a fact that has not gotten past a very interested Congress.
Perhaps some of the outrage from the public, Congress, and others is a result of the fact that it seems this had just happened at another pharmaceutical company, Turing Pharmaceuticals (that aforementioned other example). At that time, former CEO Martin Shkreli increased the price of a drug the company had acquired by an even greater margin—5,000 percent. Daraprim, the drug in question, had gone from costing around $13.50 per pill to $750 for each tablet. Once again, very understandable outrage followed.
In an era of distrust toward “Big Pharma” with a surprising number of people expressing a concern with vaccinations for children, questioning their value, these “greedy” actions only reinforce the views of many who say the industry is only about money, not about healthcare. Similarly, questions from conspiracy theorists cast further doubts on the industry when the last disease to be “eliminated” was polio in the 50s. Since then, the pharma industry has put out products that treat symptoms—but vaccinations or cures for HIV, cancer, and other prominent diseases seem to be elusive. Whether these theories are sound or created by those with fantastic imaginations seems to be a matter of less significance when the industry plainly illustrates just how greedy it can seemingly be, regardless of the toll such price increases take on the people who need the drugs most.
Meanwhile, the medical device industry continues to face cost pressures from hospitals and healthcare providers who are reducing their device supply chain, buying from fewer sources to better leverage bulk rates. According to an AdvaMed report, in 2010, medical device spending accounted for only $156.3 billion or 6 percent of total national health expenditures ($2.6 trillion). It makes one wonder how much of that total figure likely went toward pharmaceuticals? (Estimates have it at about double the $156 billion figure.)
The medical device industry isn’t without its flaws, however, when it comes to pricing. The industry lobbied against a 2007 bill that would have required medical device companies to share their prices with regulators and the public. Since device pricing isn’t known from hospital to hospital, one location could be paying a much different price for products compared to a hospital just down the street. Certainly not an offense that’s going to get the public into a tizzy like it would for the pharmaceutical company price increases, but comparison shopping for orthopedic implants or pacemakers is not likely something hospitals want to see their patients doing.
Hospitals are also growing tired of “incremental innovation” to warrant price increases on medical devices. This also goes hand-in-hand with a changing reimbursement system of payments based on results rather than procedures. If a newly released pacemaker doesn’t offer significant benefits over the previous, less expensive model, what’s the incentive for the hospital to move to the newer device offering?
Healthy competition between device makers for similar technologies is also stronger than perhaps ever before. Even advanced, minimally invasive products are being provided by more than one company in many cases, creating another reason for price competition.
Ultimately, I fall back on the fantastic innovation that’s happening within the industry. Significant technology advancements will change the way healthcare is delivered, the benefits realized by patients, and the monitoring that will be possible to get ahead of problems. This is where medical device companies will realize their greatest opportunities for increasing revenue and growth. In the meantime, let Congress tax the pharma price gouging companies (retroactively) to make the device tax suspension permanent!
Sean Fenske
Editor