Perspective. The need for greater price transparency in the medical device industry: An economic analysis

Health Affairs

Volumn 27, Issue 6, 2008, Pages 1554-1559

  Hahn, Robert W ^a   Klovers, Keith B ^b   Singer, Hal J ^b  

^a Reg Markets Center

^b Empiris   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COST BENEFIT ANALYSIS; DEVICE; ECONOMIC EVALUATION; HEALTH CARE COST; HEALTH CARE INDUSTRY; IMPLANT; INTERPERSONAL COMMUNICATION; LAW; PROSPECTIVE PRICING; REVIEW; APPARATUS, EQUIPMENT AND SUPPLIES; ARTICLE; ECONOMICS; LEGAL ASPECT; MASS COMMUNICATION; MEDICARE; REIMBURSEMENT; UNITED STATES;

COST-BENEFIT ANALYSIS; DIFFUSION OF INNOVATION; DISCLOSURE; EQUIPMENT AND SUPPLIES; MEDICARE; REIMBURSEMENT MECHANISMS; UNITED STATES;

EID: 56649085007     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.27.6.1554     Document Type: Review

References (37)

1. Office of Sen. Arlen Specter, "Arlen Specter Speaks on the Senate Floor regarding the Transparency in Medical Devices Act," 23 October 2007 (discussing support from hospitals and the National Partnership for Women and Families), http://specter.senate.gov/public/index.cfm?FuseAction=NewsRoom. ArlenSpecterSpeaks (accessed 17 September 2008).
2. Office of Sen. Chuck Grassley, "Grassley, Specter Introduce Transparency in Medical Device Pricing Act," Press Release, 23 October 2007, http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=12996 (accessed 12 September 2008).
3. M.V. Pauly and L.R. Burns, "Price Transparency for Medical Devices," Health Affairs 27, no. 6 (2008): 1544-1553.
4. See R.W. Hahn and H.J. Singer, "Is Greater Price Transparency Needed in the Medical Device Industry?" 2007, http://www.criterioneconomics.com/ docs/Hahn_Singer_Disclosure_final_12-7.pdf (accessed 19 August 2008).
5. For a full list of state-specific mandatory disclosure statutes, see National Conference of State Legislatures, "State Legislation Relating to Transparency and Disclosure of Health and Hospital Charges," June 2008, http://www.ncsl.org/programs/health/Transparency.htm (accessed 18 August 2008).
6. See, for example, P.B. Ginsburg, "Shopping for Price in Medical Care," Health Affairs 26, no. 2 (2007): w208-w216 (published online 6 February 2007; 10.1377/hlthaff.26.2.w208).
7. U.S. Federal Trade Commission, Letter to Assembly man Greg Aghazarian, 7 September 2004. The FTC reviewed California Assembly Bill 1960.
8. Gov. Arnold Schwarzenegger, Veto Message to the Members of the California State Assembly, 29 September 2004.
9. P.W. MacAvoy, The Failure of Antitrust and Regulation to Establish Competition in Long-Distance Telephone Services (Cambridge, Mass., and Washington: MIT Press and AEI Press, 1996), 69-77.
10. See U.S. Federal Communications Commission, "In the Matter of Policy and Rules Concerning the Interstate, Interexchange Marketplace, Second Report and Order," CC Dkt. no. 96-61 (29 October 1996), paragraph 3.
11. S. Albæk, P. Møllgaard, and P.B. Overgaard, "Government-Assisted Oligopoly Coordination? A Concrete Case," Journal of Industrial Economics 45, no. 4 (1997): 429-443.
12. S.W. Fuller, F.J. Ruppel, and D.A. Bessler, "Effect of Contract Disclosure on Price: Railroad Grain Contracting in the Plains," Western Journal of Agricultural Economics 15, no. 2 (1990): 265-271.
13. J.T. Hong and C.R. Plott, "Rate Filing Policies for Inland Water Transportation: An Experimental Approach," Bell Journal of Economics 13, no. 1 (1992): 1-19.
14. D.G. Devine and B.W. Marion, "The Influence of Consumer Price Information on Retail Pricing and Consumer Behavior," American Journal of Agricultural Economics 61, no. 2 (1979): 228-237.
15. D.W. Carlton and J.M. Perloff, Modern Industrial Organization, 3d ed. (New York: Addison-Wesley, 1999), 444.
16. Devine and Marion, "The Influence of Consumer Price Information," 236.
17. Regarding product standardization, see U.S. Department of Justice, Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to Look For (Washington: U.S. DOJ, 2005), 5.
18. B. Meier, "As Their Use Soars, Heart Implants Raise Questions," New York Times, 2 August 2005.
19. See also Frost and Sullivan, U.S. Coronary Stents Market, Report no. N148-54 (New York: Frost and Sullivan, 2007), 2-6;
20. and Frost and Sullivan, U.S. Orthopedic Joint Replacement Markets, Report no. N149-54 (New York: Frost and Sullivan, 2007), 2-9, 2-10.
21. See L.R. Burns, The Health Care Value Chain: Producers, Purchasers, and Providers (San Francisco: Jossey-Bass, 2002), 63-64;
22. and E. Schneller, The Value of Group Purchasing in the Health Care Supply Chain (Tempe: Arizona State University, no date).
23. See FTC and DOJ, Improving Health Care: A Dose of Competition (Washington: FTC and DOJ, 2004), 11-12
24. (citing C.S. Lesser and P.B. Ginsburg, "Back to the Future? New Cost and Access Challenges Emerge," Issue Brief no. 35 [Washington: Center for Studying Health System Change, 2001]).
25. See U.S. Government Accountability Office, Group Purchasing Organizations: Pilot Study Suggests Large Buying Groups Do Not Always Offer Hospitals Lower Prices, Pub. no. GAO-02-690T (Washington: GAO, 2002), 11-15.
26. B.J. Feder, "Advisory Panel Backs New Drug-Coated Stent," New York Times, 11 October 2007;
27. J. Moore, "The Fast Track to Being No. 2," Minneapolis Star Tribune, 26 August 2007;
28. and Frost and Sullivan, U.S. Orthopedic Joint Replacement Markets, 3-23, 4-18, and 5-14.
29. Frost and Sullivan, U.S. Coronary Stents Market, 2-1.
30. D. Landis, "Medtronic: Still a Keeper," Kiplinger's, 24 October 2007.
31. By the end of 2008, bare metal stents will be made by the same four firms that make drug-eluting stents. See Frost and Sullivan, U.S. Coronary Stents Market, 4-5;
32. and Feder, "Advisory Panel Backs New Drug-Coated Stent."
33. GAO, Group Purchasing Organizations, 14.
34. Ibid.
35. We note that rivals cannot learn prices through GPO contracts. In a fashion similar to hospital contracts with manufacturers, GPO contracts with member hospitals typically require members to keep all price information strictly confidential. For example, the University Health-System Consortium requires its members to keep GPO price schedules strictly confidential. See University HealthSystem Consortium, "Medical Research Participant Agreement," http://www.uhc.edu/Web/downloads/MedicalResearchApplication.DOC (accessed 15 August 2008).
36. See GAO, Group Purchasing Organizations, 5-6.
37. See Cardiac Pacemakers, Inc. v. Aspen II Holding Co., Inc., 413 F.Supp.2d. 1016 (D. Minn. 2006); and Meier, "Heart Implants Raise Questions."