If you like bailouts, not for you

Guys,

I know this topic is not a new one to this board, but i feel that with the current economic crisis and the bailouts underway, that it's very timely now and that we can look at it through that lens. Your favorite. MAP policies. Here's my take.

It's a dirty little secret of Respironics, ResMed and other CPAP manufacturers, but one that touches the lives of each and every one of us, especially in these difficult economic times: vendors of CPAP equipment aren't allowed to advertise CPAPs below a certain price that the CPAP manufacturers dictate. The result is that you will more often than not pay more than you should for CPAP equipment. Price fixing? Socialism? Un-American? You would think so, but it's perfectly legal. Here's why: The Sherman Act, a fixture of U.S. Antitrust law, prohibits price fixing as an illegal restraint on competition. The manufacturers go right up to this line, but get away with their policies because vendors are free to sell CPAPs at whatever price they choose; they just can't advertise the CPAPs below whatever price the manufacturers determine. In practice, this leads to the same result for certain vendors --- those who sell over the internet, which is where the plot really gets juicy...

Think about it: an internet vendor isn't in the same room with you when you make a purchase and can't, with a wink and a nod, sort of suggest that better pricing is available if you know the secret handshake. These online vendors have to advertise a price and people expect them to stick to it. However, brick and mortar vendors, like your local DME, see you in person, make eye contact, and don't need to "advertise." You doctor sends you to them, and you go to their office and they just tell you the price. Bottom line: the manufacturers favor internet vendors and penalize brick and mortar vendors. Why? Great question. After all, the manufacturer is getting the same amount of money, regardless. Why should they care? Sort of takes the "free" out of "free market", huh? Oh, but wait, that sounds kind of familiar.... I heard about something like this happening with GM and Chrysler. Capitalism is left to work on its own for the Joe Six Packs out there, but for those powerful enough to hire lobbyists in Washington, socialism is just fine thank you very much. And so it is with the established, brick and mortar DMEs versus the online vendors who are mom and pop operations trying to make a go of it and sell their goods direct to consumer online.

If you think this is the way things had to be, you're wrong. In 2007, the legality of minimum advertised pricing was challenged before the Supreme Court of the United States. The challenge failed, but only barely -- in a sharply divided 5-4 decision, the U.S. Supreme Court upheld the legality of the tactic. (Leegin Creative Products, Inc. v. PSKS, Inc. d/b/a Kay’s Kloset…Kay’s Shoes) That was 2007. This is 2008/2009. The world has changed, and competition is going to have to be let loose to bring the best prices to consumers so that we can actually afford this stuff.

http://www.sleepguide.com/profiles/blog ... s-for-cpap

sleepguide wrote:Guys,

... After all, the manufacturer is getting the same amount of money, regardless. Why should they care? Sort of takes the "free" out of "free market", huh? Oh, but wait, that sounds kind of familiar....

Hmmm....yeah, that does sound a bit familiar.

This is something that I tend to disagree with. In many cases, the prices are negotiated with the insurance providers and the patient (paying client) can't find out HOW much is going to be paid.....UP FRONT. They'll probably see the statements later, but from what I've read here, this has been a problem for the users trying to "do the math".

sleepguide wrote:You doctor sends you to them, and you go to their office and they just tell you the price.

The Anti-Trust laws have been pretty flagrantly violated for the last 20 - 30 years without many ramifications.

Den

just to be clear, they're not violating the antitrust laws --- more like they found a "loophole" in the law that allows them to continue with these practices.