The possibility for a technology company to create a generic version of a complex, patented medical device may seem unrealistic.
The business intelligence consulting firm Fuld & Company, however, suggested in a recently released white paper that lower-cost generic medical devices are one sector of the healthcare industry that is likely to grow due to economic pressures.
The Food & Drug Administration has said there is "no such thing as a generic medical device that is equivalent to the meaning of ‘generic drugs,’" but there is a lack of institutional acknowledgment because there is not a regulatory pathway for devices in the same way that there is for generic drugs.
In the report, titled “Generic Medical Devices Are Closer Than They Appear,” Fuld gave the examples of generic versions of an asthma albuterol inhaler and a female stress urinary incontinence sling as examples of successful generic medical devices. The firm said that more complicated devices may be out of reach, but the market for small devices is large.
Less complex, Class II, or medium-risk, devices, which a manufacturer would use the FDA’s 510(k) application process for the device’s regulatory clearance, “are probably the most vulnerable,” according to Fuld, with expiring patents playing a role.
“Generic producers will target class II devices that that are not currently sold as commodities, but in reality the market would find it is hard to differentiate one branded product from another,” Fuld wrote.
The report also took a hard look at hospital group purchasing organizations, or GPOs. According to the white paper, the funding relationship between GPO device distribution and device companies "has historically been a market force that can prevent lower-cost alternative treatments from entering the market." Manufacturers who sell to GPOs often pay the organization’s operating expenses through fee systems, creating a conflict of interest.
A recent study funded by the Washington, D.C.-based Medical Device Manufacturers Assn. found that GPOs cost their member hospitals $37.5 billion more than they should be paying for medical supplies. The organizations create a barrier between the open market. GPOs sell medical products to hospitals via “sole source” contracts, and because insurance companies cover the costs, the higher prices go unnoticed by the customers, according to the MDMA study.
The Fuld report suggests that GPOs may eventually be forced to purchase generic medical devices because of pricing pressures.