“As I looked into this issue and thought about the medical device industry, I was surprised to find it is very difficult to find out the price of an implantable medical device. One of the reasons is that the hospitals, which are the purchasers of these devices, are often prevented by agreements with the medical device company from revealing the price they pay. In other words, there is no transparency about the prices of these devices which find their way into the cost of everybody’s health care”, said Senator King. Pictured here: Senator King presides over a Senate hearing committee – he is pictured in the middle to the left of Senator Pat Roberts (R) of Kansas.
On June 3, 2014 Senator Angus King of Maine addressed the United States Senate, during an Executive session on the budget regarding the need for “transparency” in pricing for certain medical devices, going so far as to introduce legislation designed specifically to achieve that end.
Here is what he had to say regarding this important issue:
“There have been discussions recently about repealing the medical device tax which was passed as part of the Affordable Care Act. The theory, by the way, was that the Affordable Care Act would produce, as it has, millions of new customers for the private insurance industry as well as for all of those who participate in the health care system, including those who manufacture medical devices. The Affordable Care Act has produced new customers. And the theory, as I understand it, because I wasn’t here when the bill was originally passed, was the industry–the businesses that will profit by the production of new customers through new people gaining insurance who never had it before–was that part of that would be paid back to support the overall system. That was the idea of the tax on medical devices. I realize the medical device tax is a controversial tax and that strong arguments can be made that it should be modified or reduced. But the repeal of the medical device tax would cost the government $29 billion over the next 10 years. That is money, as we all know, that has to be replaced somewhere else. So I think that is a consideration that has to be taken into account as we discuss this matter which is under consideration as part of the tax extenders package.
As I looked into this issue and thought about the medical device industry, I was surprised to find it is very difficult to find out the price of an implantable medical device. One of the reasons is that the hospitals, which are the purchasers of these devices, are often prevented by agreements with the medical device company from revealing the price they pay. In other words, there is no transparency about the prices of these devices which find their way into the cost of everybody’s health care.
Imagine for a moment going to buy a new car and there is no advertising about the prices of the cars. We couldn’t go on the Internet and determine the prices of the cars. We couldn’t compare the prices of the cars from one dealer to the other. But we go in and somebody behind a closed door says, OK, the price is $20,200, and we are not allowed to tell anybody the price we are paying for this car, and we have to sign an agreement that we are keeping that price secret. Imagine that system, and imagine for a moment what would happen to the price of cars. I don’t think it is gross speculation to assume that the price would go up, because there is no transparency.
I have filed amendment No. 3802 to H.R. 3474, which is the tax extenders bill that is pending. It simply says that when a medical device is being sold, the manufacturer cannot impose a secrecy provision on the hospitals that purchase these devices, and they also have to report median prices to the Secretary of Health and Human Services on a regular basis.
In 2012, the GAO did a report on Medicare and one of the pieces of the report was titled “Lack of Price Transparency May Hamper Hospitals’ Ability to Be Prudent Purchasers of Implantable Medical Devices”–a long title, but the conclusion is contained in the title: “may hamper hospitals’ ability to be prudent purchasers.” Well, if hospitals can’t be prudent purchasers, we who are paying the bills, quite often through Medicare and Medicaid, are not able to get the best prices. Who pays? All of us pay.
This amendment would prohibit medical device manufacturers from requiring hospitals and buyers to sign purchasing agreements that contain confidentiality clauses that would restrict them from revealing the prices paid for medical devices to third parties. In addition, as I mentioned, the amendment would require these manufacturers to submit the average and median sales prices of covered devices to the Secretary of Health and Human Services on a quarterly basis”, said Senator King (source: Congressional Record http://thomas.loc.gov/).
As a United States Senator for the great state of Maine, Angus sits on a total of four oversight committees – Rules, Intelligence, Armed Services, and Budget. Making him arguably one of the most powerful and influential members of the United States Senate.
He is generally highly regarded by his colleagues of both political parties and is known for his unusual leadership style which some describe as somewhat confrontational at time.