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The Supreme Court, the Lexmark case and implications for the health care industry

August 23, 2017
From the August 2017 issue of HealthCare Business News magazine

The Court’s ruling is a huge win for the reprocessing industry and affirms that reprocessors and remanufacturers have the right to repair and refurbish medical devices without fear of patent litigation from manufacturers.

And it isn’t just a win for secondary market players such as reprocessors. This is a huge victory for consumers. In the context of the health care industry, it’s a win for the hospitals and surgical centers that are saving money by extending the lifespan of the medical equipment they already own through reprocessing. The benefits of the court’s decision extend not just to remanufacturers and the like, but also to health care consumers and to Americans looking to lower their own health care costs.

This is because there are competitive benefits that stay in place as a result of the ruling. Yes, original manufacturers are entitled to make a profit from the sale of their equipment. Device manufacturers make good products, but that doesn’t mean that the only ones allowed to repair and reprocess those products are the original manufacturers. Competition is a good thing. Commercial reprocessors provides competitive market pressure to help lower the cost of those products.

Resistance from some manufacturers to secondary markets is not a new phenomenon. So the question becomes: What’s next? What will manufacturers do next to try to maintain their profitability, without the prospect of patent litigation available to them? And how do we protect savings and the secondary markets from the pushback from these manufacturers?

In the context of the health care industry, it’s likely that some original equipment manufacturers (OEMs) are going to try new contracting or licensing arrangements which may purport to benefit the customer, but ultimately drive up costs for hospitals and surgical centers. We’ve seen time and again instances of how manufacturers have tried to thwart reprocessing of their original devices by employing crafty contracting tactics that may ultimately force hospitals into minimum purchasing agreements, exclusive arrangements with the OEM or otherwise restrict the hospital from repairing or reprocessing its own devices.

In response to this pushback from manufacturers, we’re asking our hospital and surgical center partners to be mindful of new contract provisions so as not to fall prey to any language that would restrict their right to repair their medical equipment and to purchase reprocessed medical devices and products. Are your vendors committed to helping your facility reduce costs and waste? If not, maybe you should evaluate who you're working with.

The U.S. Supreme Court ruling effectively removed the latest challenge to the right to repair and refurbish, and the threat of patent litigation from manufacturers. The playing field between consumer and manufacturer is once again level. Let’s keep the momentum headed in that direction.

About the Author: Dan Vukelich, Esq., is president of the Association of Medical Device Reprocessors.
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