Are medical devices overpriced?


Medical devices overpriced:

It turns out that medical devices like pharmaceuticals can be very expensive, and their price and actual costs are also puzzling. The market for medical devices is very similar to the pharmaceutical market. To improve health system efficiency, it is important for stakeholders to better understand the factors that could impact these large price differences for medical devices. In a 2004 study of electric wheelchairs, the OIG compared the 2003 Medicare fee with the median prices offered to patients on suppliers’ websites (Figure 5-1 (Department of Health and Human Services, 2004a).

These policymakers may find that the United States spends far more per capita on medical devices than the world’s second-largest buyer of medical devices, Japan, or the third-largest buyer, Germany (Table 5-). Many proposed changes focus on creating a system to improve post-market monitoring of medical devices. Medicare classifies durable medical devices with prostheses, orthotics and accessories into an overall category with the unsightly acronym DMEPOS and typically pays for 80 percent of these items, with the remaining 20 percent of the co-payment being the responsibility of the beneficiary or their “Medigap insurer.” Let us take a step back to explore some of the characteristics of the medical device market, aspects of it that work differently and therefore impact the means to reduce costs and the changing dynamics that threaten the savings that can now be achieved.

The theory is that by collecting and distributing pricing information available for multiple vendors or versions of the same medical device, hospitals can engage their doctors in discussions about the cost and quality profiles of each manufacturer’s product. The FDA classifies medical devices according to the risk they pose to patients, with Class I being the least risky and Class III the riskiest. In both Europe and the USA, policymakers increasingly rely on regulatory guidelines for medical devices, such as market approval mechanisms, post-market monitoring systems, reference prices and health technology assessments. At the same time, most new brand-name drugs were intended for conditions with relatively low prevalence and therefore contributed little to spending growth.

The category of durable medical devices includes medical devices for use in the beneficiary’s home with a useful life of 3 or more years. For one, a number of device companies require hospitals to approve “gag clauses” that prevent them from comparing medical devices overpriced to other healthcare facilities, further contributing to a lack of overpriced transparency. Wenzl and Mossialos provide strong evidence that medical device prices and spending should be considered as part of proposals to promote high-quality care.

This blog does not provide medical advice. It is intended for informational purposes only. Do not use it as a
substitute for professional medical advice, diagnosis, treatment, or disease prevention. Always seek the
advice of your physician or qualified healthcare providers for any questions you have regarding a medical
The views and opinions expressed on this blog are solely those of the original authors and other
contributors. These views and opinions do not necessarily represent those of Gabriel Nieves, LAC
Healthcare Solutions, Staff, and/or any/all contributors to this blog/site.


Gabriel Nieves

After experiencing a variety of shortages, crises, and inefficiencies in the status quo of the procurement and distribution industry, I undertook the responsibility of building an interface for large organizations to abstract away uncertainty throughout their supply chain under most conditions.

We are focused on building a framework from which our teams of professionals on the ground can provide a new generation of procurement support and professional services for supply chain critical organizations around the nation.

We understand that the marketing process of critical supplies is a matter of national security and public safety. In this, we found our passion and mission: developing technologies, supplier networks, and platforms for the organizations that need it most.