Medical device industry worries
about cost-focused approach to judging medical care
With politicians on the campaign trail
pledging to lower health care spending, medical device companies are pushing to
ensure their technology isn't targeted by federal cost-cutting efforts.
From a demographic viewpoint, times have never looked better for the medical
device industry, which earned $180 billion in sales last year, according to
Ernst and Young. The largest generation in U.S. history is entering their elder
years, increasing demand for hip replacements, heart devices and hundreds of
Despite such promising trends, most analysts temper their expectations for the
sector by pointing to challenges from an increasingly cost-conscious federal
Both presidential candidates, Sens. John McCain, R-Ariz, and Barack Obama,
D-Ill., had said they want the government to play a bigger role in determining
which treatments are most effective in an effort to help curb spending on
The U.S. spends over $2 trillion each year on health care, more than any other
Many countries in Europe already have systems to compare the cost effectiveness
of drugs, devices and medical procedures. Perhaps no program is more
intimidating to U.S. companies than the United Kingdom's National Health System,
which has often been accused of rationing care of pricey drugs and devices.
As Washington begins groping for solutions, the medical device lobby maintains
that any government evaluations of cost effectiveness should serve as
suggestions to physicians, not enforceable standards.
"When you dictate a course of action that suggests there is such a thing as an
average patient, and that everyone should be treated the same, and we know
that's not the case," said Mike Mussallem, Chief Executive of Edwards
Lifesciences Corp. and chairman of the industry trade group AdvaMed.
The group spent nearly $1.6 million lobbying the U.S. government in the first
half of the year, including bills to create a domestic system for comparing
Washington's cost-cutting efforts already have been felt in some corners of the
medical device world. Sales of scanners made by companies like General Electric
Co., Siemens AG and Toshiba Corp. tumbled 20 percent in the first half of 2007
after the government's Medicare program cut payments to doctors for running MRIs,
X-Rays and other scans.
Aware of the increasingly fiscal concerns in the health care system, device
companies have been developing technologies to catch medical problems before
they become catastrophic -- and costly.