Most medical devices and prescription drugs become more expensive over time. This is largely because these markets have costly barriers to entry (R&D, patents, etc.). Products also require stringent regulatory approval. Less competition almost always means higher prices.
In a debate about rapidly rising healthcare costs, attention inevitably turns to the prices of medical services and products. The Bleeding Edge documents the complications and high costs of various medical devices, such as metal hip replacements, the Essure contraceptive coil and transvaginal mesh. Wynn suggests that well-defined products, such as durable medical equipment, are the best candidates for bidding. The Medicare rate was 37% higher than the prices on suppliers' websites and more than double the prices of wholesalers and negotiated suppliers.
At the same time, most of the new branded drugs have been for medical conditions with relatively low prevalence and therefore add little to spending growth. The Food and Drug Administration has approved a number of highly innovative medical devices that have revolutionised cardiovascular care. The increased possibilities of receiving treatment with the help of modern medical devices come with a correspondingly higher price to pay. This compares to Europe, where drug prices are regulated by the government, often according to the clinical benefit of the drug.
Financial waste in the medical device market is probably due to both pricing practices and over-utilisation. For example, the ECRI Institute classifies half a million supply items purchased by hospitals into 2,278 categories in the Institute's Universal Medical Device Nomenclature System (UMDNS). The GAO also found that physician preferences for medical devices, such as brand or model, can also impact costs. As global overseers of their countries' systems, these governments have the ability to negotiate lower costs for drugs, medical equipment and hospitals.
Suppliers initially, and then technology advocates, must provide better clinical data during the launch and early adoption phases of a medical device.