WASHINGTON — IN the last few days of negotiations in Congress, repeal of the Affordable Care Act’s tax on medical devices emerged as a key Republican demand. The medical-device industry waged an intense lobbying campaign — even garnering the support of many Democrats who favored the law — arguing that the tax would stifle innovation and increase health care costs.

This argument is doubly disingenuous. Not only can the medical-device industry easily afford the tax without compromising innovation, but the industry’s enormous profits are a result of anticompetitive practices that themselves drive up medical-device costs unnecessarily. The tax is a distraction from reforms to the industry that are urgently needed to lower health care costs.

The medical-device industry faces virtually no price competition. Because of confidentiality agreements that manufacturers require hospitals to sign, the prices of the devices are cloaked in secrecy. This lack of transparency impedes hospitals from sharing price information and thus knowing whether they are getting a good deal.

Even worse, manufacturers often maintain personal relationships (sometimes involving financial payments like consulting fees) with physicians who choose the medical devices that their hospitals purchase, creating a conflict of interest. Physicians often don’t even know the costs of the devices, and individual physicians often choose devices on their own, which weakens a hospital’s ability to bargain for volume discounts.

Such anticompetitive practices help generate a wide variation in the prices of medical devices — and contribute to higher prices in general. For example, the Government Accountability Office found that prices for cardiac implantable medical devices in the United States vary by several thousand dollars. And even the lowest-priced devices in the United States are expensive compared with those in other developed countries. According to the consulting firm McKinsey & Company, the United States spends about 50 percent more than expected on the top five medical devices, compared with Europe and Japan. McKinsey calculates that this amounts to $26 billion in excessive spending each year. Medicare, private health insurers and patients end up paying these inflated prices.

Excessive prices fuel enormous profits — profits that dwarf both the medical-device tax and the industry’s investments in research and development. Consider the device division of Johnson & Johnson, which in 2012 had an operating profit of $7.2 billion. By the company’s own estimate, the device tax would amount to at most $300 million, and its investment in research and development amounts to only $1.7 billion.

There are several ways policy makers could lower device costs. The first step would be to end the anticompetitive practices that prevent hospitals from getting the best deals. Senator Charles E. Grassley, Republican of Iowa, has sponsored legislation that would foster transparency by posting online price information for implantable medical devices.

In addition, instead of simply paying hospitals based in part on what they have spent on devices, Medicare should force manufacturers to compete for business based on a product’s price and quality.

Medicare should also pay hospitals a single lump sum for all of the associated costs of a given procedure (like a hip replacement). This approach, known as “bundling” the costs, would create incentives for hospitals to lower device costs. Savings should be shared with the physicians, so that their incentives are aligned with the hospital’s.

Bundling has been used successfully in pilot programs. Under Medicare’s Acute Care Episode Program — which bundled payments for cardiac and orthopedic procedures — physicians worked together to choose high-quality, cost-effective devices. Baptist Health System in Texas, which participated in the program, used clinical evidence to choose devices and negotiated lower prices for both Medicare and non-Medicare patients.

States could adopt similar payment reforms for private insurance and their Medicaid programs. In Arkansas, the Medicaid program and private payers — including Walmart — have collaborated to adopt bundled payments for several procedures, including hip and knee replacements.

To complement these efforts, the new Patient-Centered Outcomes Research Institute, a nongovernmental body created by the Affordable Care Act, should pay for research that compares the effectiveness of devices so physicians can make informed choices. (Three years into its existence, the institute has initiated few, if any, studies of medical devices.) Medicare or the Food and Drug Administration should also require the use of registries that track when devices fail.

Currently, medical-device manufacturers allocate only a sliver of profits to research and development and often focus on “tweaks” to existing devices, without providing any evidence that they are of better quality. Competitive pressures from public and private payers would provide incentives for the industry to become more innovative, producing technologies that actually lowered costs and offered truly advanced breakthroughs.

Instead of using its clout to lobby against the device tax — which helped foment opposition to the Affordable Care Act — the medical-device industry needs to share the responsibility of lowering costs for patients, businesses and taxpayers.

<img src=”<a href=”http://meter-svc.nytimes.com/meter.gif”>http://meter-svc.nytimes.com/meter.gif</a>”/>Topher Spiro is the vice president for health policy at the Center for American Progress.

A faulty Articular Surface Replacement, or A.S.R., removed from a patient in 2010.

Johnson & Johnson has tentatively agreed to a settlement that could reach up to $4 billion to resolve thousands of lawsuits filed by patients injured by a flawed all-metal replacement hip, said two lawyers briefed on the plan.

A spokeswoman for the company’s DePuy Orthopaedics unit declined to comment on the possibility of a settlement. An announcement about the plan is expected in the coming days, the lawyers said.

The agreement will include those patients who have already been forced to have the device, known as the Articular Surface Replacement, or A.S.R., removed and replaced with another artificial hip, said the lawyers who spoke about the agreement only on the condition of anonymity.

Under the deal, each patient would receive about $350,000 on average in compensation, though that figure will vary depending on factors like a patient’s age and medical condition.

The precise value of the settlement is unclear because lawyers for patients are still trying to estimate how many of the 12,000 related lawsuits involve patients who had a replacement. Lawyers believe that number may be 7,000 to 8,000 cases.

The final cost of the deal to Johnson & Johnson could rise, depending on how many claimants who received the device undergo replacement operations in the future, the lawyers said. Under the plan, patients who have not had a replacement would not receive compensation, the lawyers said.

Read the full article here – New York Times

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FDA cracks down on all-metal hip replacements

Manufacturers who want to keep selling all-metal hips will have to prove that they’re safe and effective, according to proposed new rules from the Food and Drug Administration. Incredibly, for the past decade manufacturers have been aggressively marketing the devices as being better than conventional varieties without that evidence, to the great harm of patients.

Last year in our report on dangerous medical devices, we highlighted evidence that patients with all-metal artificial hip implants were suffering serious side effects, including pain, infections, muscle lesions, and neurological problems such as depression and deterioration of hearing and eyesight, as a result of reactions to metal debris wearing off their implants. At the end of this blog is a video highlighting one such victim, an Alaska orthopedic surgeon, Dr. Stephen S. Tower, whose research was cited in the the FDA’s announcement.

At the peak of the craze for all-metal hips in 2008, they accounted for about 40 percent of all hip replacements done in the U.S., according to new estimates by Steven M. Kurtz of Drexel University. He estimates about 755,000 Americans have been implanted with the hips. Their use has dropped dramatically in recent years as awareness of their dangers has spread.

The FDA regulations announced yesterday specify that once the new rules become final, likely to happen sometime later this year, manufacturers will have 90 days in which to file applications that include the results of clinical trials and other “valid scientific evidence” showing the hips are safe and effective. If they don’t, they’ll no longer be able to sell them in this country.

“I think it’s a good thing,” Tower told us, “but in a lot of ways it’s a formality, because the use of the devices has practically gone to zero anyway.”

Manufacturers we contacted yesterday said they were still studying the FDA’s proposal. Zimmer, once a major purveyor of the all-metal hips, has stopped selling them in the U.S. because “the demand is reduced so much they’re not commercially viable,” said media spokesman Garry R. Clark.

If you have an all-metal hip, here are symptoms to watch out for, according to the FDA:

• Swelling, numbness, noise (popping, grinding, clicking or squeaking of your hip), and/or a change in ability to walk.
• General hypersensitivity reaction (skin rash)
• Deterioration in your hearing or eyesight.
• Psychological status change (including depression or cognitive impairment)
• Kidney problems
• Thyroid dysfunction (including neck discomfort, fatigue, weight gain or feeling cold)

Anyone who experiences these symptoms should seek medical attention and, in particular, consider tests that detect elevated levels of the toxic metals cobalt and/or chromium in the bloodstream.

Sources
FDA safety communication: metal-on-metal hip implants

Information for patients who have metal-on-metal implants (FDA)

September 27, 2012 — Smith & Nephew, the medical device company that manufactures the Birmingham metal-on-metal hip implant, has published an “Urgent Field Safety Notice” after finding the Birmingham hip implant is associated with a higher rate of failure and revision surgery than is acceptable in the United Kingdom. The average rate of revision exceeds the 1% benchmark created by the U.K.’s National Institute for Health and Clinical Excellence (NICE).

Researchers have found that the metal-on-metal hip implant is associated with a 1.29% failure rate, according to the National Joint Registry of England and Wales. A separate analysis of data from the Australian Orthopaedic Association’s National Joint Replacement Registry linked the Birmingham to a 1.12% failure rate.

It is difficult for researchers in the United States to determine the failure rate of the Birmingham, because the U.S. Food and Drug Administration (FDA) lacks a tracking system for medical devices. The FDA only keeps a database of voluntarily-submitted adverse event reports.

Smith & Nephew is also reminding healthcare professionals about several factors that increase the risk of hip implant failure and revision surgery. The risk of failure increase for patients who receive smaller component sizes (less than 46-mm), patients who require implantation at a high abduction angle, patients with osteonecrosis (bone death) in the hip, or other problems in their hip. Women of childbearing age and people who are severely obese have a higher risk of hip implant failure.

The company warns that patients who absolutely should not get a Birmingham hip implant include those with osteoporosis (bone loss), metabolic disorders such as kidney failure, muscle atrophy/weakness, lack of bone or soft tissue in the hip area, infection anywhere in the body, or a pre-existing metal sensitivity.

The safety communication warns about the risk of serious health complications. Metal-on-metal hip implants are facing heightened scrutiny by regulators around the world. The products can shed particles of metal into the body, which increases the risk of pain, inflammation, metal poisoning, and severe irritation of surrounding tissues and bone. This can cause the formation of soft-tissue lesions, pseudo-tumors, and fluid collections. Patients may require revisions surgery to remove, replace, or repair the implant.

Do I have a Birmingham Hip Implant Lawsuit?

The Schmidt Firm, LLP is currently accepting Smith & Nephew Birmingham hip implant induced injury cases in all 50 states. If you or somebody you know has been injured by a Birmingham hip implant, you should contact our lawyers immediately for a free case consultation. Please use the form below to contact our Defective Medical Device Litigation Group or call toll free 24 hours a day at (866) 920-0753.

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THE note sent by a doctor to several executives at Johnson & Johnson was blunt: an artificial hip sold by the company was so poorly designed that the company should slow its marketing until it understood why patients were getting hurt.

The doctor, who also worked as a consultant to Johnson & Johnson, wrote the note nearly two years before the company recalled the device in 2010. And it was far from the only early warning those executives got from doctors who were paid consultants. Still, the company’s DePuy orthopedic unit plowed ahead, and those consultants never sounded a public alarm to other doctors, who kept implanting the device.

The memos have recently emerged during the trial of the first of more than 10,000 patient lawsuits brought against Johnson & Johnson over the hip implant device, the Articular Surface Replacement, or A.S.R. The company has insisted that it acted responsibly in determining when to halt its sale. But plaintiffs’ lawyers have offered a portrait of executives who put profits ahead of patients, even scuttling a plan to fix the implant because it cost too much.

It might not be surprising to find that executives acted to protect a company’s bottom line. Still, the Johnson & Johnson episode is also illuminating a broader medical issue: while experts say that doctors have an ethical obligation to warn their peers about bad drugs or medical devices, they often do not do so.

“Questioning the status quo in medicine is not easy,” said Dr. Harlan Krumholz, a professor at Yale School of Medicine.

Physicians may remain silent for a variety of reasons, he and other experts said. They may fear that speaking out could get them sued or believe that a product problem was an anomaly or their fault.

Doctors also have an aversion to reporting. For instance, while the Food and Drug Administration relies on physicians to help monitor product safety by alerting the agency to adverse patient reactions, doctors usually do not make such filings, saying they are too busy for the paperwork.

“The standard in the medical community is not to report,” said Dr. Robert Hauser, a cardiologist who, along with a colleague, warned other doctors in 2005 about a defective heart implant.

There is another reason doctors may choose to remain silent, experts say: their financial ties to a drug or device maker.

For years, such consulting payments have raised concerns about the impact of money on a doctor’s decision about which drugs to prescribe or how to interpret research findings. Money can also shift a physician’s sense of loyalty, said George Loewenstein, a professor at Carnegie Mellon University who has studied medical conflict-of-interest policies. “If someone has been paying you or employing you, it is very difficult to blow the whistle,” said Professor Loewenstein, who teaches economics and psychology. “It offends our sense of loyalty.”

Dr. Krumholz said he also believed that such loyalties were between a doctor and a company’s executives, rather than with a company or its brand. Over time, a physician may come to see his relationships with those officials in terms of friendship, while companies see an influential doctor as an asset who helps develop products and boost sales.

For a consultant, breaking those ties can carry a cost. For example, when Dr. Lawrence D. Dorr, an orthopedic specialist, warned fellow surgeons in an open letter in 2008 that a hip implant made by Zimmer Holdings was flawed, he became the subject of a whisper campaign that questioned his skills as a surgeon.

“The first thing that a company does is to put out a campaign that a surgeon does not know how to operate,” said Dr. Dorr, who was a consultant to Zimmer when he wrote the letter. “It hurt my practice for a year.”

TRADITIONALLY, doctors have brought problems to the attention of colleagues by conducting research and publishing their findings in a medical journal. The advantage of that system helps ensure the credibility of study data and protects a researcher from random attack, said Dr. David Blumenthal, the president of the Commonwealth Fund, a group that studies health policy issues.

But getting a study published can take a year or two; some Johnson & Johnson consultants did publish studies about the hip’s flaws, but they largely appeared after it had been recalled.

Dr. Blumenthal said there was probably a need for more immediate ways for doctors to share their concerns, like forums supported by professional medical organizations. Another approach would be to have companies hire doctors as consultants whose sole concern was product safety, Professor Loewenstein said.

The results of not speaking out are playing out in a Los Angeles courtroom, where the first Johnson & Johnson hip case is unfolding. In the years before the implant’s recall, a British physician, Dr. Antoni Nargol, and a colleague were among those who tried to alert surgeons to the problem.

But the silence of other doctors apparently gave company executives the upper hand; in meetings with Dr. Nargol, they said that he seemed to be the only doctor having trouble.

He said recently, “They told me there were no other problems.”

Patients victims of untested medical devices

Victoria Colliver

Updated 9:21 pm, Tuesday, February 12, 2013