The financing and regulation of medical devices in the United States.
This paper focuses on two major areas of US federal policy that relate to medical devices, regulations regarding premarketing approval and arrangements for financing the use of devices. Other relevant areas, such as patents, liability, and taxation, are discussed more briefly. In 1976 legislation authorized the federal Food and Drug Administration (FDA) to require manufacturers of medical devices to show that their products meet acceptable levels of safety and effectiveness. FDA has classified each device into one of three classes according to the extent of regulation needed to ensure safety and effectiveness. Although all devices must conform to general manufacturing controls and some to premarketing approval, no performance standards have yet been developed. About two-thirds of all expenditures for medical care in the United States are paid by private or public insurers. Although procedures vary for institutional and individual providers, payment is usually made after the medical care has been provided and covers the provider's costs or charges. Prevailing insurance coverage and payment methods contain incentives for the innovation and use of medical devices that are part of mainstream medical care. At the same time, these financial arrangements discourage preventive and rehabilitative devices, which are generally excluded from insurance coverage.