Bending the Healthcare Cost Curve

The prestigious Institute of Medicine (IOM) will shortly release a report that recommends changing the way the FDA approves new medical devices. This comes on the wave of numerous recalls of artificial hips and knees, pumps, and defibrillators that can cause serious injury.

In a preemptive strike, the medical device industry is waging an unprecedented campaign to discredit this country’s most pre-eminent scientists. In my opinion this only makes the device manufacturers look guilty.

Up until now, medical device companies have reaped tremendous monetary rewards by producing newer generations of products that generally either offer no benefit over earlier models or, in some instances, cause great harm.

Here’s a good example where such an approval ratchets up costs without providing better care. There are currently three radiation treatments for prostate cancer. The first generation treatment, called three-dimensional radiation, costs $10,000; a newer treatment (called IMRT) costs $42,000; and the newest treatment called proton radiation costs $50,000. Which one do you think your doctor will recommend? If he has a proton radiation device, that will be it. Now, listen to this. There is no solid scientific evidence that the newer treatment provides better and safer care than the original three-dimensional radiation! NONE WHAT-SO-EVER. Yet, the FDA approves them all and Medicare pays for them, no questions asked. What we do know for sure is that newer means more expensive.

It’s relatively easy to get approval for these items by going through the 510(k) route. A 510(k) is a premarket submission made to the FDA to demonstrate that the device to be marketed is at least as safe and effective and substantially equivalent, to a legally marketed device. No proof is required to establish that the newer machine actually improves healthcare. But, for sure, the new device is expensive and will increase healthcare costs.

Now, it appears that this easy route is going to change, and, hence, the manufacturers’ anxiety. For sure, the IOM will recommend a more thorough approval process.

If we are going to “bend the cost curve” we have to stop wasting money on medical devices that only add costs, not value, to our healthcare. If it reduces stock holders’ profits, so be it. 

Stay tuned for the recommendations! 


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