Devicemakers to offer stronger guarantees on products if they fail to perform

In response to slower sales and increased competition, medical device makers are starting to offer hospitals and patients in the U.S. better guarantees on their products if they don't perform as promised.

Among the devicemakers that are extending the improved guarantees are Medtronic ($MDT), St. Jude Medical ($STJ) and Johnson & Johnson ($JNJ), which have said they will help absorb the costs of follow-up surgeries connected to their heart devices and other products, Reuters reported. Makers of hip and implant replacement devices also are exploring similar offers, the news agency said.

Susan DeVore

"It's a big shift," Susan DeVore, CEO of Premier, which represents about 3,400 hospitals in negotiating supplier contracts, told Reuters. "Device manufacturers that are responding to that discussion are the most progressive ones, who see the world changing."

Still, some hospitals are looking for even stronger guarantees that would cover the entire cost of a surgery when a device needs to be replaced. Typically, costs of additional surgeries were absorbed by health insurers and patients, who usually had to sue to recoup expenses. In recent years, device makers have shelled out billions in court settlements over faulty devices such as hip replacements and lead wires used with defibrillators.

"We are really doing this to promote a technology and a benefit that we know exists, to remove any doubt and to speed up market acceptance," Omar Ishrak, Medtronic's CEO, told Reuters. "Risk-sharing in our commercial transactions is going to be an increasing component going forward."

J&J has offered risk-sharing for its Thermocool catheter ablation treatment for atrial fibrillation if a patient treated with the product returns within a year. The company also plans a risk-sharing program for its Biopatch antimicrobial dressing used to reduce catheter-related infections.

St. Jude has offered a 45% rebate for its Quadra heart rhythm device if within the first year after surgery there are problems with its Quartet lead wire.

Medtronic says it will cover the cost of a patient's treatment for infection related to procedures using its Tyrx product, which is a mesh sleeve that surrounds a cardiac implant with antibiotics, if the level of infection isn't lower than that seen at the hospital for similar procedures that don't use their device.

- check out the Reuters story

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