Report: Medtech spending, pricing barely budged in more than 20 years

Medical devices are often at the center of healthcare spending debates, but a new report released by medical device industry lobbying group AdvaMed concluded that "medical devices are a relatively small and  very  slowly growing share of national health expenditures."

In a study commissioned by AdvaMed, researchers found that medical device spending as a share of national health expenditures barely budged between 1989 and 2010, growing from 5.3% of overall costs to 6.0%. Most of that growth occurred prior to 1992 and since then medtech spending has represented about 6% of U.S. health spending, researchers noted.

The new study builds on a previous report, which considered the period between 1989 and 2009 and which AdvaMed released last year.

"The findings underscore the tremendous value medical technology provides to patients and the overall health care system," AdvaMed payment & healthcare delivery policy executive vice president Anne-Marie Lynch said in prepared remarks. "Unlike other areas of health care, the prices of medical devices have been growing much more slowly not only as compared to the Medical Consumer Price Index but also as compared to the CPI as a whole."

Medical device prices have also grown more slowly than average prices nationwide according to the report, which was conducted by Roland "Guy" King, the former chief actuary for what is now known as the Centers for Medicare & Medicaid Services. The agency was known as the Health Care Financing Administration during King’s time.

During the most recent 10-year period, ending in 2010, medical device prices increased at an average rate of 1%, the report concluded. That compared with 4.1% for the overall Medicare Care Consumer Price Index and 2.4% for the general Consumer Price Index. Medtech prices gained 0.1% from 2009 to 2010, the period between AdvaMed’s last and latest report.

"In view of the conventional wisdom about the role of medical technology in driving up costs, it is surprising that the cost of medical devices has risen little as a share of total national health expenditures," the researchers wrote. "It is also striking that, unlike most other areas of medicine, the prices of medical devices have actually been growing more slowly not only than the MC-CPI but also the CPI as a whole."

The study included medical device and diagnostics pricing and spending over a 22 year period, excluding laboratory apparatus and furniture, dental equipment and supplies, dental laboratories and diagnostics substances, according to the report.

The news comes as AdvaMed and medical device advocates continue working to repeal the 2.3% medical device tax that’s set to take effect at the beginning of next year. The measure, contained in President Barack Obama’s landmark Affordable Care Act, is expected to raise $30 billion over the next 10 years through a levy on domestic sales of medical devices.

Recent MassDevice.com analyses suggest that the industry’s effort to push repeal through a lame-duck Congress aren’t likely to succeed, but a motion to spike the levy could ride along on bigger bill if key Senate Democrats go along.

The new study may help make some inroads by helping to dispel perceptions that the medical device industry is a prime driver of increased healthcare spending in the U.S. Earlier this year the Bipartisan Policy Center released a report concluding that overuse of expensive and unnecessary medtech innovations is among the primary sources of the skyrocketing cost of healthcare in the U.S.

"We are proud of the value we deliver as an industry to patients worldwide and look forward to sharing the results of this new study with Members of Congress and other policymakers as they consider changes to the health care delivery and payment system in the United States," AdvaMed’s Lynch said.

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