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Home Publications Blogs Beat the Press People Respond to Incentives: Another Case of Patents Leading to Bad Medicine

People Respond to Incentives: Another Case of Patents Leading to Bad Medicine

Tuesday, 18 June 2013 04:59

The NYT reported on the findings of two independent studies that a spinal treatment procedure provided by the medical device maker Medtronic was no more effective than prior treatments and was possibly harmful. The studies implied that earlier studies by Medtronic were biased in exaggerating the potential benefits from the procedure, which has netted the company billions of dollars in revenue over the last decade.

This is exactly the sort of corruption that economic theory predicts would result from government granted patent monopolies. This leads to both large amounts of excess costs and often bad health outcomes.

Comments (8)Add Comment
Practicing to the Payment
written by Robert Salzberg, June 18, 2013 8:10
About a decade ago, a neurosurgeon told me that Medicare paid more for a lumbar microdiscectomy that takes about 10 or 15 minutes than a lumbar laminectomy that takes around an hour.

Because the microdiscectomy is generally done with small incisions and using scopes as opposed to the laminectomy which is usually done with a larger open incision, both patients and surgeons had a big incentive to opt for the less invasive surgery.

I looked up the CPT codes and now Medicare does pay less for a discectomy than a laminectomy so that incentive is reduced but since it's minimally invasive and the more invasive surgery can still be done if the discectomy doesn't work, strong incentives still exist to do what makes more money rather than what's good for the patient.

Frequently the surgeon knows that it's the bone compressing the nerve that is causing the problem and that a discectomy won't work because it won't address the problem but because patients have heard about this other minimally invasive surgery that leaves tiny incisions, financial incentives may lead the surgeon to choose what the patient wants rather than what the patient really needs.

written by Last Mover, June 18, 2013 8:19

Why is this a problem? When it comes to giving Americans the spine necessary to stand up and face the music of life, money is not an object.
US - worst spine care in the civilized world
written by Spine Guy, June 18, 2013 11:10
I'm amazed to still read about spinal fusion when competent countries have moved onto artificial discs over a decade ago.

I know, there's little financial incentive (and more liability) for US surgeons to learn current procedures. And could you imagine the horror of encouraging worldwide surgery experts to practice in the US?

Sadly, with increased knowledge sharing, we US patients know how poor our healthcare can be.
written by watermelonpunch, June 18, 2013 11:23
Wondering about the connection between artificial discs, spinal fusion, & resulting disabilities differences.
You meant to write government granted monopolies - period.
written by Capt. J Parker, June 18, 2013 11:24
If you take away the patents you still get virtual monopolies for drugs and medical devices because of the barriers to entry imposed by FDA regulations. So, the corrupting incentives will remain even without patents.
CEPR Cconfuses Patent Protectiom with Malpractice Lawsuits
written by John, June 19, 2013 1:58
Medical device patents has nothing to do with this story. Believe it or not medical device manufacturers continue to innovate unlike the pharma sector. I will let you in on a secret. Medical device companies such as Medtronics produce products that are actually life saving, however on occasion the devices do malfunction causing serious problems for the patient. This is where litigation comes in. Some devices such as pace makers are built to last -- a device that resides in the patient for a very long time. Who's going to challenge the patent and if the patent lasts 10-years, so what? Is the patient going to swap out for a new one once the patent runs out?
written by 4runner, June 20, 2013 11:49
And numerous medical studies have proven that soda is less healthy than water, and yet the Coke and Pepsi go around promoting their products even without patent protection.

Blaming patents because is shill is willing to put personal profit above the health of customers is a bit of a stretch, don't you think?
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.