Kickbacks and Cost-Effectiveness

Last week, the New York Times described how Guidant Corp. paid doctors thinly disguised kickbacks to fill out surveys about one of its more expensive implanted cardiac devices, which paid off handsomely in increased sales. A few days later, reporter Barry Meier reported that Food and Drug Administration investigators are conducting a criminal investigation into how Guidant handled the recall of flawed pacemakers.

Tough times for this medical device manufacturer? Don’t worry, the New England Journal of Medicine, which carried many of the industry-funded trials touting the devices, is riding to the rescue. The latest edition includes a special article by a group of physicians at Duke University praising the cost-effectiveness of implantable cardioverter-defibrillators (ICDs), which when working correctly shock patients having a heart attack.

According to this study, which was funded by Blue Cross Blue Shield, the ICDs cost an estimated $34,000 to $70,200 for every added year of life. When compared to the $100,000 it costs to add a year of life to the average dialysis patient (this has become the de facto cost-effectiveness standard since Medicare pays for dialysis), the authors considered ICDs a real bargain.

Medicare has already agreed to pay for expanded usage of these devices. There's never been any question that they helped some people with severely damaged hearts. However, the most recent study, published last January, expanded their usage to much healthier people. At the time, there were strong objections from within the government agency and even among some members of its payments advisory committee (see Jan. 5, 2005 GoozNews).

Apparently even the boosterish NEJM heard the criticism. They couldn’t publish this latest cost-effectiveness study without inviting a comment about how Medicare's decision to pay for expanded usage of implanted devices is contributing to out-of-control Medicare spending. Lee Goldman of the University of California at San Francisco, admitting he couldn’t poke holes in the study’s methodology, lamented the fact that Medicare “does not consider costs in any of its reimbursement decisions and is not permitted to negotiate for lower drug prices.” His rambling commentary suggested perhaps the U.S. should start outsourcing medical work to India to get costs under control.