MedTech Prices Remain Low Over Two Decades

Prices for medical technology have remained consistently low over a 21-year period, growing at less than half the rate of overall prices in the economy and only one-fifth the rate of prices for other medical goods and services, according to an updated study by the Advanced Medical Technology Association (AdvaMed).

From 1989 to 2010, spending on medical technology remained a small and relative constant part of national health expenditures (NHE) – rising just slightly from 5.3% in 1989 to 6% in 2010 – a 0.7% increase over more than two decades. Virtually all of that growth occurred between 1989 and 1992. Since 1992, although medical device spending as a share of NHE has varied somewhat, it has remained essentially constant at about 6% of NHE. In 2010, the last year studied, spending on medical devices and in-vitro diagnostics totaled $156.3 billion.

The research was conducted by Roland "Guy" King, former chief actuary at the Health Care Financing Administration (HCFA, now known as the Centers for Medicare & Medicaid Services) and Gerald Donahoe, a former U.S. Commerce Department economist and an expert on economic accounting, on behalf of AdvaMed.

“The findings underscore the tremendous value medical technology provides to patients and the overall health care system,” says Ann-Marie Lynch, AdvaMed’s executive vice president for payment and health care delivery policy. “Unlike other areas of health care, the prices of medical devices have been growing much more slowly not only as compared to the Medical Consumer Price Index (CPI) but also as compared to the CPI as a whole.”

Over the past 21 years, device and diagnostic prices have increased at an average annual rate of 1 percent, compared to the CPI increase of 2.7%, the Medical Care CPI increase of 4.7% and the Medical Care Services CPI increase of 5%.

“We are proud of the value we deliver as an industry to patients worldwide and look forward to sharing the results of this new study with Members of Congress and other policymakers as they consider changes to the health care delivery and payment system in the United States,” says Lynch.