A Senate staff report criticizing the heart pacemaker industry for alleged overpricing and corrupt sales practices is "replete with errors, misrepresentations and innuendoes," the president of a pacemaker company charged yesterday in hearings before the Senate Special Committee on Aging.
Russell Chambers, president of Intermedics, the second largest manufacturer of pacemakers in the country, testified that his company carries on two practices criticized in the Senate report but that they are neither illegal nor improper.
He said in response to a question that Intermedics maintains boats "mostly" to entertain doctors, and also has a hunting lodge used by some physicians who come to his company for training.
Doctors also are provided pacemaker monitoring devices worth several thousand dollars per unit without charge.
He acknowledged that the sale price of pacemakers is 400 percent higher than the manufacturing costs. For example, a pacemaker that costs $1,000 to manufacture might be sold for $4,000.
Many other factors besides manufacturing costs account for the difference, he said, including sales costs and research.
"But given the fact that today's pacemakers will last upwards of eight years or more versus a two-year life just five or six years ago, the cost of pacing has actually declined with advances in technology," he said.
About 150,000 pacemakers will be implanted in America this year, and more than 80 percent are paid for by Medicare.
The Senate staff report, which was the centerpiece of yesterday's hearings, concluded that $1 billion of the $2 billion expenditure may be unnecessary or inappropriate. Sen. John Heinz (R-Pa.), chairman of the committee, called the billion dollars "absolutely wasted."
The report said, "Since there are no significant differences in the products, and cost is irrelevant since Medicare foots the bill , the decision on which pacemaker to buy comes down to the relation between the doctor and the sales representative, the service and the sales inducements offered.
"Not surprisingly, a primordial sales environment has evolved. Salesmen, physicians and regulators interviewed by the committee describe the pacemaker industry as 'intensely competitive,' 'dog-eat-dog' and 'filthy,' " the report said.
Chambers testified that he had heard rumors of corruption in the industry, and had tried to check out the stories, but could never find anything of substance.
"I know there is something wrong, but I don't know exactly where it is," he said.
The Senate staff report also suggested that many pacemakers may be implanted needlessly. One witness at yesterday's hearing, Dr. Brendan Phibbs, chief of medicine at Kino Hospital in Tucson, said studies of pacemaker implants in his state showed that, depending on the hospital, 10 to 80 percent of the implants were unnecessary.
But another witness, Dr. Seymour Furman of Montefiore Hospital in New York, cast some doubt on the high figures. One of the most-often cited studies showing unnecessary insertion of pacemakers was conducted by the Public Citizen Health Research Group. It found that nearly one-quarter of all implants in Maryland during a two-year period were probably unneeded.