Tag Archives: Medical-devices

One Implant, Two Prices. It Depends On Who’s Paying. | Kaiser Health News

Here is another example of our broken health care system and the way in which health care has become a cash cow for hospitals, physicians, medical device manufacturers, which includes implant manufacturers, and pharmaceutical companies.

The following article from Kaiser Health News is eerily familiar to a piece I wrote a while back about a man who needed a hip replacement, and went to Belgium to get it, and discovered that the hip they gave him was made near his home in the US, but was considerably cheaper in Belgium than in the US, even though it was the same hip he would have gotten if he had the surgery locally.

That the same implant should come with two different costs, either because it is implanted in the US, or in a foreign country, or in the case below, because of the type of surgeries performed, is illogical and a symptom of a dysfunctional, profit-driven health care system that is out of control.

Here is the article link:

Breast implants — used for both cancer and cosmetic surgeries — give a glimpse into how hospitals mark up prices of medical devices to increase their bottom lines.

Source: One Implant, Two Prices. It Depends On Who’s Paying. | Kaiser Health News

Tariffs Threaten U.S. Health Care

The petulant man-child occupying the White House is proposing to impose a 25 percent tariff on Chinese products and ingredients, according to a report in the New York Times on Friday.

Some of the products and ingredients are essential to health care in the U.S. such as pacemakers, artificial joints, defibrillators, dental fillings, birth-control pills and vaccines.

In addition, dozens of drugs and medical devices are also among products targeted for the tariff. Some of them are in short supply, and dangerously so. They are epinephrine, which treats allergic reactions, and others like insulin, whose price rising has led to public outrage.

This proposed tariff has unsettled the medical device and supply industries, since a growing number of products and their components are manufactured in China.

The manufacturing of medical equipment has shifted from throwaway surgical gloves to more complicated products like MRI scanners.

An International Trade Commission in January, the Times reported, said the fastest growth in China’s medical device industry has been in sales of orthopedic devices, plates, and screws, made mostly of titanium and used for surgery and sports medicine.

One analyst, the Times continued, estimated that 12 percent of medical devices imported to the US come from China, which amounts to $3 billion a year.

A report this week by RBC Capital Markets, the article mentioned, estimated that if the tariffs took effect, this could cost the medical device industry up to $1.5 billion each year. Some of these higher costs would result in higher prices for those devices, and would affect baby boomers, who are the biggest recipients of hip and knee replacements.

This no doubt would be a boon to the medical travel industry, from the US to countries not imposing tariffs on Chinese products, or not.

Greg Crist, spokesperson for AdvaMed, the device members trade group, said its members were “disappointed because this action threatens to affect the health and well-being of American patients and those around the world, the Times article added.

While it is unclear if the tariffs would be enacted, companies have until May to lobby the administration for changes. But the man-child ratcheted up the pressure by threatening to levy tariffs on an additional $100 billion in imports.

However, analysts said that it was unclear if the tariffs would have an effect on the drug industry, even though China is a leading exporter of raw pharmaceutical ingredients, according to the article.

“We don’t see much impact,” said Umer Raffat, a pharmaceutical industry analyst for Evercore ISI on Tuesday to investors.

This is so because many generic drugs that contain Chinese ingredients are manufactured in places like India and would not be subject to the tariffs.

Yet, one trade group has sounded the alarm, the article indicated. They said that the tariffs could exacerbate the issue of health care costs as the administration is pledging to lower drug prices.

Lastly, there are two drugs on the list of 1,300 Chines exports: epinephrine and lidocaine, which are in short supply in their injectable form.

“Things are so bad right now with the injectables, we don’t need anything else to pile on, to possibly make things worse,” said Erin R. Fox, a drug-shortage expert at the University of Utah.

She also said that the tariffs could exacerbate the shortfalls of generic injectable drugs, the decades-old products that are the mainstay of hospitals and have long been in short supply due to manufacturing problems and disruptions in supply.

For some widely used products, it is unclear, according to the article, how American consumers would be affected. Insulin is one example; however, all three companies that sell insulin in the US, Lilly, Sanofi, and Novo Nordisk said they did not import insulin from China.

Whatever happens with the tariffs, the effect they would have on health care here and around the world is uncertain. However, it would be prudent for those in the health care industry, the medical travel industry, and the workers’ comp industry to be aware and act accordingly to provide their patients with the drugs and devices they need.

“Have I Got A Deal For You?” — The Medical-Device Tax Shuffle and Medical Tourism


An Opinion piece in today’s New York Times by Topher Spiro, VP for health policy at the Center for American Progress, brought to mind two earlier posts I wrote about medical devices, more specifically hip replacements.

The first post, How much is that Hip Replacement in the Window?, described one woman’s attempt to get prices for hip replacement for her fictitious grandmother. The second post, If it is Tuesday, It Must Be Belgium, or an Inexpensive Hip Surgery, described how an American man went to Belgium to get a hip replacement and discovered that the cost of his hip differed drastically in Belgium from the price it cost in the US. The hip he received was manufactured by the same company that had quoted him a higher price here.

Spiro’s article, The Myth of the Medical-Device Tax, explodes the myth about the Medical-Device tax and its repeal, which was one of the ransom demands made by the Tea Party Republicans, as part of their attempt to defund, delay or repeal outright, the ACA, also known as “Obamacare”, during the recent hostage taking affair that ended today.

According to Spiro, the medical-device industry waged an intense lobbying campaign to repeal the tax on medical-devices, claiming that it would stifle innovation and increase health care costs. Spiro rightly labels this argument as “doubly disingenuous”, because he states that not only can the industry afford the tax without compromising innovation, but their enormous profits are the result of anticompetitive practices that drive up medical costs. He calls the tax a distraction from urgently needed reform to lower costs.

Here’s where the shuffle comes in, according to Spiro:

  • The medical-device industry faces virtually no price competition.
  • Confidentiality agreements that manufacturers require hospitals to sign mean the prices of the devices are cloaked in secrecy.
  • Lack of transparency (where have we heard this before, I wonder?) impedes hospitals from sharing price information and thus knowing whether they are getting a good deal.
  • Manufacturers often maintain personal relationships (sometimes involving financial payments like consulting fees) – more like bribes [emphasis added] with physicians who choose the medical devices that their hospitals purchase, creating a conflict of interest.
  • Often the physicians don’t know the costs of the devices and the individual physicians choose devices on their own, weakening the hospitals ability to get volume discounts.

These anticompetitive practices, Spiro writes, help generate a wide variation in the prices of medical devices, which contribute to higher prices in general. Spiro points out that the GAO (General Accountability Office of the US Congress), found that prices for implantable cardiac devices in the US vary by several thousand dollars, and the lowest-price devices are expensive when compared to those in other developed countries, as my second post on the subject describes in Belgium.

Spiro cites the consulting firm, McKinsey & Company, who reported that the US spends about 50% more on the top five medical devices, compared with Europe and Japan. This amounts to $26 billion in excessive spending each year, according to McKinsey.

What does Spiro recommend to lower costs? Here are the three key points he makes:

  • End the anticompetitive practices that prevent hospitals from getting the best deals.
  • Medicare should force manufacturers to compete for business based on a product’s price and quality, instead of simply paying hospitals based in part on what they have spent on them.
  • Medicare should also pay hospitals a single lump sum for all associated costs of a procedure, like hip replacements. This is called “bundling”.

With the recent “temper tantrum” of the GOP now abated for the next two or three months, it seems that the ACA is safe from the likes of Ted Cruz and his band of 18th century Classical Libertarians (i.e., conservative, laissez-faire capitalism). But as anyone who understands the mindset of such individuals knows, they will never give up in their attempt to recrudesce the Calvinist, Puritan spirit of original capitalism that Max Weber so eloquently described in his now-famous essay, “The Protestant Ethic and the Spirit of Capitalism”.

Yet, when one examines the high cost of the US health care system, due in part to  the free-market, and in the case of hip replacements, that traditional, capitalist practices as fair competition and transparency of prices, can be distorted by the manufacturers of such devices, then perhaps it is time to change direction and allow greater competition and greater transparency by opening up the US health care system to medical tourism, and for our purposes on this blog, the workers’ compensation system as well.

We have seen in the earlier posts that I have written on the subject, and others, that medical tourism can offer better health care at lower cost and at equal or better quality than what is available in the US today. I have said this before, and it bears repeating again and again…both the medical tourism industry and the workers’ compensation industry, must get to know each other, so that price transparency can  prove once and for all that medical tourism destinations are really cheaper than anything the workers’ compensation industry claims they can get here, and the workers’ compensation industry can see proof from the medical tourism industry that their quality is better.

It’s a win-win for both. To not do so is, well, you know, crazy.


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