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.
The author, Michael G., is a corporate attorney and former New York Times reporter who has sleep apnea. He is also the founder of a blog and social network dedicated to the Sleep Apnea patient: http://www.sleepguide.com
If you wish to contact him, you may do so by e-mailing him at firstname.lastname@example.org