Mar 9, 2009

Misconceptions on medical device costs

The Happy Hospitalist has a post on a vacuum assisted wound closure device, Wound VAC, his post and the Wound Vac site have videos and everything. Anyway, Happy complains about the cost:

"I checked with Happy's Hospital wound care nurse. Guess how much these cost retail, should you wish to purchase them outright?


Nope. She tells me to buy them outright is thirty thousand dollars. Thirty grand for a LCD screen and some surgical steel, surrounded by a power supply.

I suspect parts and manufacturing would run you about $300. Legal costs about $29,700."

No one pays retail anyway! I think those numbers are a bit off, since you can't buy a lab vacuum pump for less than $1000, let alone an easily portable one with a color touch screen, battery, alarm system, controller and medical grade power supply, I would guess the cost of goods is more likely around $4000. It is tough to say since I don't know what exactly is included in a system. Medical device assembly is not as cheap as you think it is, traceability requirements tend to drive up costs, plus it is difficult to outsource. This isn't consumer electronics where you can just throw it together and hope it works.

There are some legal costs, but I bet they're not more than $100 per device. Although I'm obviously not an expert. What you're mostly paying for is meeting regulations and the design and validation of the next wound care device. Those alarms don't write and validate themselves.


JRS Medical said...

Another important reason they're expensive is "economies of scale" (They are factors that cause a producer’s average cost per unit to fall as output rises). I'm sure the R&D is higher when you make so many improvements at once also on this type of device. It looks pretty good but I think under 10K is more reasonable.


mangesh said...

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Nicole said...

My company manufactures medical products in China for companies looking to outsource. How do I find companies looking for the type of service that we provide?

Rankin said...

These are definitely some misconceptions on medical device costs.

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