AdvaMed, the Advanced Medical Technology Association, has released an important new study that demonstrates the slow rate in growth in overall prices in the highly competitive medical technology sector.
The study's author, Roland Guy King, former chief actuary for Medicare and Medicaid, and Gerald F. Donahoe, found that medical technology is a relatively small and constant share of total national health expenditures (NHE).
"The report's findings are significant in light of recent comments by some suggesting policies to limit the diffusion of and access to advanced medical technology in response to cost pressures. Simply put, medical technology is part of the solution to managing health care expenses and limiting patient access to life-saving, life-enhancing technologies compromises patient health and may actually increase costs," said Edward J. Ludwig, Chairman, President and Chief Executive Officer, BD and Board Chairman, AdvaMed.
"The innovative and competitive nature of the medical technology sector benefits patients by providing continual improvements in care," said Michael A. Mussallem, Chairman and CEO, Edwards Lifesciences, Chairman, AdvaMed Board Committee on Payment and Healthcare Delivery, and AdvaMed's Board Chairman-Elect. "This study shows that there is also an economic benefit of competition due to the relatively slow rate of growth in overall industry prices."
"The report's findings are clear: the highly competitive medical device marketplace is working and delivering tremendous value both in patient care and in economic terms. Policies that stifle innovation, interfere in the marketplace or limit access to care threaten that success," said Stephen J. Ubl, president and CEO of AdvaMed.
In 2004, the latest year studied, spending on medical devices and in vitro diagnostics totaled $112 billion or 6 percent of total NHE, and has stayed relatively constant at that modest proportion for the last 15 years. During that same period, overall medical device prices grew far more slowly than either the Consumer Price Index (CPI) for medical services or the CPI overall.
The report also found that during the 15-year period studied, medical device prices have increased at an average annual rate of only 1.2 percent compared to 5 percent for the Medical Consumer Price Index (MCPI) and 2.8 percent for the CPI.
"Medical device prices, on average, have grown at less than half the rate of the overall CPI and less than one-quarter the rate of other medical goods and services. Medical technology is clearly delivering tremendous value to American patients," said Ubl.
As the report notes, "This relatively slow rate of price increase suggests that the industry is highly competitive."
Please visit AdvaMed's Web site at www.advamed.org to see a copy of the study.
AdvaMed member companies produce the medical devices, diagnostic products and health information systems that are transforming health care through earlier disease detection, less invasive procedures and more effective treatments. Our members produce nearly 90 percent of the health care technology purchased annually in the United States and more than 50 percent purchased annually around the world. AdvaMed members range from the largest to the smallest medical technology innovators and companies. For more information, visit www.advamed.org.