Medical device prices hold steady for three decades

How much more is being spent on medical devices as a share of national health expenditures (NHE) compared with 30 years ago? Medical device spending is about the same, according to research conducted by Guy King, a former chief actuary of the Health Care Financing Administration, now called the Centers for Medicare & Medicaid Services.

Medical device spending accounted for 5.3 percent of NHE in 1989 and grew to 6 percent in 1992, then remained mostly steady through 2010, according to an October report authored by King and Gerald F. Donahoe for AdvaMed.

“The share of medical device spending as a percent of NHE, while varying from year to year, has been essentially flat at about 6 percent since 1992,” King and Donahoe wrote. “Over the full period, medical device spending increased at an average annual rate of 7.4 percent compared to 6.8 for overall NHE. Since 1992, however, medical device spending has increased at a rate of 6.4 percent annually compared to 6.3 percent for NHE.” Spending on medical devices has increased from $34.6 in 1989 to $156.3 billion in 2010, but its rate of growth has been similar to the average of all spending categories.

Additionally, medical device prices have increased an average of 1 percent annually compared to increases of 2.7 percent in the consumer price index, 4.7 percent in the medical care consumer price index and 5 percent in the medical care services consumer price index.

"During much of the 22-year period, a significant driver of changed medical practice has been the development of new medical devices, from stents to implantable defibrillators,” King and Donahoe concluded. “In view of the conventional wisdom about the role of medical technology in driving up costs, it is surprising that the cost of medical devices has risen little as a share of total NHE.”