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June 03, 2014

King Calls on Medical Device Industry to Increase Transparency for Price Information

WASHINGTON, D.C. – During remarks on the Senate floor today, U.S. Senator Angus King (I-Maine) called on the medical device industry to be more transparent and provide consumers and policymakers with more information regarding medical device prices. Last month King filed an amendment to a tax relief bill that would allow the Department of Health and Human Services (HHS) to shed light on medical device prices in an effort to help hospitals negotiate better prices for critical medical equipment.

“To the extent that prices of implantable medical devices, which are very expensive generally, are not disclosed, the ability of hospitals to bring price information to bear in negotiations and decisions is clearly limited. So I believe that if we’re going to talk about repealing the Medical Device Tax, we should also talk about calling upon the industry to provide consumers and policymakers greater transparency in order to better control cost,” Senator King said.

“In a world of limited resources we have to spend the money we have most wisely. It is very difficult to spend money wisely if prices and comparative prices and prices of your various components of the healthcare system are kept secret. This is a simple amendment. It is simply based upon the fundamental idea that markets work, but they only work when consumers – in this case, hospitals – have the information necessary to make good purchasing decisions,” he continued.

Under current practices, companies often force hospitals to sign confidentiality agreements that protect medical device price information, thereby limiting competition and discouraging negotiation for lower prices. In 2012, the nonpartisan Government Accountability Office released a study demonstrating that the prices paid by hospitals for implanted medical devices varied widely and identifying confidentiality clauses as a reason behind those variances. King’s amendment would allow HHS to collect and make public medical device price information and prohibit companies from forcing hospitals to sign such confidentiality agreements.

King’s amendment also follows legislation authored in 2007 by Senator Chuck Grassley (R-Iowa) and former Senator Arlen Specter (R-Pennsylvania) that would require medical device manufacturers, as a condition of receiving direct or indirect payments under Medicare, Medicaid and CHIP, to submit data to the Secretary of Health and Human Services on average and median sales prices for all implantable medical devices used in inpatient and outpatient procedures.

King offered his amendment last month following the introduction of another amendment that would repeal the Medical Device Tax which, according to the Joint Committee on Taxation, would cost an estimated $29 billion from 2013-2022. If the repeal amendment is brought to the floor for a vote, then King’s amendment will also be considered as an alternative.


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