The Healthcare Supply Chain Association, based in Washington, D.C., has praised a U.S. Government Accountability Office report that found that “pricing secrecy in the medical-device marketplace may drive up healthcare costs for hospitals and Medicare.”
The GAO report encompassed 31 hospitals surveyed by investigators. It found substantial variations in the prices hospitals paid for medical devices such as implantable cardioverter-defibrillators, which regulate the heart’s rhythm.
One hospital paid $8,723 more than another for an identical implantable cardioverter-defibrillator model. Such devices typically cost hospitals between $16,445 and $19,007.
A Wall Street Journal article noted that such differences could influence Medicare spending because payments are tied to certain hospitals’ costs.
The article “confirms” what group purchasing organizations, hospitals, long-term care providers and others “see every day,” Curtis Rooney, the group purchasing associations’ president, said in a subsequent press release.
Device makers told the Journal that their products represent a small amount of the $2.8 trillion in annual U.S. healthcare spending, and that greater savings to the system could be found elsewhere.
“We’re not seeing the problem,” said David Nexon, an executive vice president of the Advanced Medical Technology Association, a Washington, D.C., trade group for medical device makers, told the Journal.
Confidential price agreements are routine in other industries, and price transparency could increase costs by discouraging sellers from offering discounts, Nexon said.
AdvaMed issued a report last year showing that spending on medical devices and non-drug supplies hovered between 5% and 6% of total healthcare spending from 1989 to 2009.
Allergan in Line
Irvine-based drug maker Allergan Inc. recently came under the scrutiny of ProPublica, an investigative news website, over how it pays doctors for promotional speaking, consulting and the value of meals that the company provides them.
ProPublica posted a story earlier this month noting that Allergan had been posting information about the payments on its corporate website since last April but recently removed all but the most recent payments.
Allergan’s website now includes only payments it made to doctors from July 1 to Sept. 30, and offers a range rather than specific amounts.
Allergan is one of about a dozen drug makers that post doctor payments on their websites, either voluntarily or through legal settlements with the government over allegations of improper marketing and illegal kickbacks to doctors. Allergan has done so since pleading guilty to a misdemeanor charge of promoting its flagship drug, Botox, for uses not approved by the U.S. Food and Drug Administration in 2010. The company also paid $600 million to resolve related lawsuits.
The recent changes on its website are in compliance with its corporate integrity agreement with the U.S. Department of Health and Human Services’ inspector general, Allergan spokesperson Heather Katt told ProPublica.
Allergan had to expand its disclosures in a second phase that started in November and now must list payments for research, royalties, travel and educational materials, in addition to speaking fees, consulting fees and meals, Katt said.
Allergan took down the earlier postings, which include less information, in order to avoid possible confusion, the spokesperson said.
“The earlier reports were accurate but represented limited data and as such would not provide meaningful or accurate comparisons,” Katt told ProPublica.
Donald White, a spokesman with the GAO’s inspector general’s office, agreed that Allergan is in compliance with its corporate integrity agreement.
Starting in 2013, all drug makers will have to publicly report all payments to doctors. The Physician Payment Sunshine Act was passed as part of the healthcare overhaul bill in 2010.
Bits and Pieces
Lake Forest-based Insight Imaging said that Cape Radiology in Rio Grande, N.J., signed a multi-year contract with Insight for staffed mobile positron emission tomography and computed tomography imaging services to complement their diagnostic services. Cape Radiology is affiliated with Cape Regional Medical Center, a 242-bed hospital located in Cape May Courthouse, N.J. … Placentia-Linda Hospital was named a bariatric center of excellence by the American Society for Metabolic and Bariatric Surgery … Children’s Hospital of Orange County received a gold-level California Awards for Performance Excellence award from the California Council of Excellence.
CHOC said that it’s the only pediatric hospital in the state to ever have earned the award, which is based on organizational performance excellence.
