Medical technology costs increasing slowly

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Medical technology is a relatively small and constant share of total U.S. health expenditures with an overall slow rate of growth, according to a new study released by AdvaMed, the Advanced Medical Technology Association.

Roland Guy King, former chief actuary for Medicare and Medicaid, and Gerald F. Donahoe authored the study.

“The report’s findings are significant in light of recent comments by some suggesting policies to limit the diffusion of and access to advanced medical technology in response to cost pressures,” said Edward J. Ludwig, chairman, president and CEO, of Becton, Dickinson and Company, a medical technology firm. “Simply put, medical technology is part of the solution to managing healthcare expenses and limiting patient access to life-saving, life-enhancing technologies compromises patient health and may actually increase costs,”

“The innovative and competitive nature of the medical technology sector benefits patients by providing continual improvements in care,” said Michael A. Mussallem, chairman and CEO, Edwards Lifesciences, chairman, AdvaMed Board Committee on Payment and Healthcare Delivery, and AdvaMed’s board chairman-elect. “This study shows that there is also an economic benefit of competition due to the relatively slow rate of growth in overall industry prices.”

“The report’s findings are clear: the highly competitive medical device marketplace is working and delivering tremendous value both in patient care and in economic terms. Policies that stifle innovation, interfere in the marketplace or limit access to care threaten that success,” said Stephen J. Ubl, president and CEO of AdvaMed.

In 2004, the latest year studied, spending on medical devices and in vitro diagnostics totaled $112 billion or 6 percent of total national health expenditures, and has stayed relatively constant at that modest proportion for the last 15 years. During that same period, overall medical device prices grew far more slowly than either the Consumer Price Index (CPI) for medical services or the CPI overall.

The report also found that during the 15-year period studied, medical device prices have increased at an average annual rate of only 1.2 percent compared to 5 percent for the Medical Consumer Price Index and 2.8 percent for the CPI.

During a teleconference this morning, Ludwig said that the organization in 2008 plans to “promulgate its view of what healthcare reform might look like” and focus on personalized medicine. The group also announced a renegotiation of its user fee agreement. Because the medical technology industry is populated with many small companies, the new version of the user-fee agreement has more stability. That will help small companies for whom radical changes would be devastating, said Ludwig.

As incoming chair of AdvaMed, Mussallem said that during his two-year role he plans to increase awareness of medical technology innovation and help AdvaMed become the leading advocacy group for medical technology by building and strengthening the organization’s relationships in Washington, D.C.