Medical device companies on defense

WASHINGTON (Reuters) - Medical device companies are on defense to prove their pricey new technologies are worth the price, in the face of increasing U.S. health care costs and rising numbers of individuals without health insurance.

Executives accused the U.S. Medicare program of not keeping pace with medical device innovations by skimping on industry reimbursements at a meeting of Advamed, the medical device industry's trade group on Tuesday.

The use -- and sometimes overuse -- of medical technologies ranging from tiny wire-mesh stents to prop open heart arteries to advanced body imaging -- are often blamed for driving up health care costs in recent years.

At the same time, 47 million people lack health insurance in the U.S., up from about 40 million in 2000. Cost and access-to-care issues have emerged as one of voters' top domestic concerns in polls leading into the 2008 election year.

"You might hear medical technology cast as a villain in the debate over health care costs," Sleep Solutions Inc. chief executive Michael Thomas told reporters at the meeting. His company's products treat sleep apnea, a breathing illness Thomas said is costly for the U.S. economy because of lost worker productivity.

The government's Center for Medicare and Medicaid Services finances insurance for 45 million elderly and disabled and is a major customer of the industry.

Edwards Lifesciences Corp (EW.N) chief executive Michael Mussallem said proving benefits outweigh costs for expensive technologies "gets a little tricky" because quality can be difficult to measure.

In some cases, companies are going to the U.S. Congress for help.

Qiagen NV (QGEN.DE) is pushing a bill to get coverage for its human papillomavirus virus test for cervical cancer, according to Peer Schatz, an executive with the company, which recently acquired the test through its buy of Digene Corp.

OVERUSE

But some experts say the Medicare reimbursement system, where doctors are generally paid on volume and not patient outcomes, skews decision-making toward the most expensive, but not necessarily the best, tests and treatments.

Imaging services such as expensive MRI and CAT scans are a frequent target of critics who say the tests are overprescribed and add millions in costs to the health care system.

The industry recently staved off $400 million in cuts in the Medicare program to imaging services in a bill to extend children's health insurance program. President George W. Bush has said he will veto the bill and it will likely go back to the Congress for further cuts.

"There have been many discussions about the volume of imaging," said Doug LaVigne, a senior vice president at Siemens Medical Solutions, a unit of Siemens (SIEGn.DE). The use of these tests "will increase, and it should."

The magazine Consumer Reports on Monday issued a list of the most overused medical tests and treatments, and included heart stents, defibrillators and several types of imaging tests.

"Society is really looking to your industry to help solve this cost problem," Princeton University health economist Uwe Reinhardt, who is also on the board of the medical devicemaker Boston Scientific, told a panel.

He said the industry needs to do a better job of explaining the benefits of certain technologies.

"Cataract surgery may have driven expenditures up, but a lot more people can see," Reinhardt cited as an example.

U.S. health insurance premiums have risen faster than wages and overall inflation for several years, straining employer and government coffers, which finance the American health care system.