Cardinal Health, 21st on the Fortune 500 list, is based in Dublin, Ohio, and has offices in the Philadelphia area. In announcing its so-called Orthopedic Solutions option for hospitals and surgery centers, Cardinal said it could supply some products at 30 percent to 50 percent savings.
"Based upon our market and customer research, we believe that U.S. health-care providers are ready to support a simpler, more transparent, fair-priced orthopedic business model," Cardinal Health executive Lisa Ashby said in a statement.
Cardinal Health entered a partnership with Emerge Medical, a Denver-based company that makes surgical screws, drill bits, and guide wires. Emerge CEO John Marotta is a former Synthes sale representative. Synthes was sufficiently annoyed with his efforts that it sued him in 2011. He has countersued, and a trial is pending.
"Together, we will provide a low-cost trauma solution that will drive simplicity and transparency to this pressured health-care environment," Marotta said of the Cardinal Health partnership.
The U.S. Food and Drug Administration does not use the term generic devices, as it does with drugs, but there is an approval process. Like drugs, medical devices have patents, and the disputes employ numerous lawyers.
J&J CEO Alex Gorsky said last week that medical devices were a $40 billion market worldwide. But J&J, like other device-makers is being pressed to lower prices or at least slow the rate of growth.
The trade publication Orthopedic Network News reported that list prices for hip and knee implants increased 4.2 percent between 2011 and 2012 - the lowest increase in the 19 years it has surveyed device manufacturers, and the fourth straight decline in the growth rate.
Laura Ruth, director of the health-care practice for research and consulting firm Fuld & Co., said the generic-device market was still "fragmented," but she pointed to a January report by the Government Accountability Office as an example of greater scrutiny of the cost and acquisition process of hospitals, whose bills are often transferred to taxpayers. Hospitals often buy through group-purchasing organizations, which have been criticized for being too cozy with manufacturers and too secretive with hospitals.
The title of the GAO report was: "Lack of Price Transparency May Hamper Hospitals' Ability to Be Prudent Purchasers of Implantable Medical Devices."
Because of those forces, Ruth said, "there should be a greater opportunity for lower-cost devices."
Contact David Sell at 215-854-4506 or firstname.lastname@example.org. Read his blog at www.philly.com/phillypharma or follow on Twitter @phillypharma.