02
03
Inside HSCA: Medical Device Gag Clauses May Drive Up Costs for Hospitals, According to New Investigation
04
05
15
16
19
20
21
22
23
24
25
26
27
28
31
32
33
34
According to a recent investigation by the Miami Herald, American hospitals are often unable to confirm that they are getting competitive prices for expensive medical devices. Public hospitals like the Jackson Health System in Florida are often prohibited from disclosing medical device costs due to contractual confidentiality agreements or “gag clauses” that prevent the hospital from sharing the true cost of products with third parties, including their own physicians.
“Miami-Dade taxpayers know how much they pay for street lights, school buses and sidewalks, but they don’t know how much they pay for pacemakers and defibrillators purchased by their public hospitals in Jackson Health System – a form of pricing secrecy that drives up healthcare costs for everyone, experts say,” concluded the Herald investigation.
Key findings of the Herald investigation included:
• Contractual gag clauses are standard in the medical device world and are exempt from public records laws;
• Without the ability to compare prices, hospitals can’t be sure they are getting a competitive price for medical devices and taxpayers cannot be sure their dollars are being spent efficiently;
• Device sales representatives have very close working relationships with the doctors who frequently choose which medical supply their hospitals purchase – including a presence in the operating room during medical procedures;
• Inappropriate relationships between medical device sales reps and doctors have led to questionable business conduct. For example, cardiac device sales for one leading medical device manufacturer increased by over 400% after the company hired as a sales rep the girlfriend of a University of Miami doctor who implanted most of the devices at Jackson Health System;
• Congress has “kept a close eye” on the medical device industry “because of repeated government accusations of fraud and illegal kickbacks, as well as pricing secrecy.”