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Do You Hear What I Hear?

Eighty percent of people over 80 have a hearing problem and overall 30 million Americans struggle to hear well. While hearing aids can usually help, less than 30% of people with hearing loss actually get them.
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How well will you or a family member hear the conversations at holiday dinners this year? Will you need to say "huh" more than once? Or "Could you repeat that"? If that has happened recently, read on, because the ability to hear at an affordable price may be on the way. The President's Council of Advisors on Science and Technology (PCAST) has released a report with recommendations that could make hearing aids as accessible and cheap as the reading glasses you buy at CVS.

Eighty percent of people over 80 have a hearing problem and overall 30 million Americans struggle to hear well. While hearing aids can usually help, less than 30% of people with hearing loss actually get them. There are a variety of reasons for this including a fear of "looking old", the discomfort of having something in your ear, or thinking you can tough it out by just turning up the volume on the TV or asking people to speak louder. Whatever the reasons, the average length of time it takes someone to get fitted with hearing aids is over 10 years from the first diagnosis.

The biggest barrier to getting hearing aids is the cost. Insurance, including Medicare, does not cover them. A recent study revealed that the average cost of ONE hearing aid was between $2363 and $2898.

Even at Costco, a low cost provider that currently has 10% of the market for hearing aids, a pair of Kirkland branded hearing aids starts at $1800 ($900 each) and a pair of Bluetooth-enabled aids is $3400. Most people don't even think of Costco as an alternative and go to a private audiologist for their tests and devices. But if you get your aids at a private audiology center, we're talking a range of $4000 to $7000 for a pair.

Despite these high retail costs, the actual cost of the technology is less than $100 to produce!

How did we get into a situation where we are paying thousands of times more than we should for a device that can improve our daily lives and affects so many? Why has innovation and market competition not affected this industry? It may not be something you've thought much about, but the main reason for the high costs is the alliance between the manufacturers of hearing aids and the audiologists who have locked up the market for testing and prescribing. As the PCAST report notes:

The hearing-aid industry is highly concentrated and lacks a steady influx of new innovative companies. Following a wave of acquisitions, just six hearing-aid manufacturing companies (mostly based outside of the United States) have been dominant for the past 15 years. In 2012, these six companies accounted for 98 percent of the global market.

To add to this market concentration, the audiology industry has managed to control the state regulation of dispensing, so that many states require certified hearing aid dispensers to sell the devices and many states prohibit any sale of hearing aids by mail or over the internet. This has produced a situation where someone who needs a hearing aid assumes the only place they can buy one is in the office of a private audiologist, and that monopoly has kept innovation and cost competition to a minimum.

Additional barriers to innovation lie in the way the FDA regulates the sale of hearing aids. By differentiating between a "hearing aid" vs. a "personal sound amplification product" (PSAP), the FDA has kept the sale and distribution of hearing aids within the medical industry. Unlike the reading glasses you can buy in any pharmacy, people with modest hearing loss are supposed to have a physicia evaluate them, although most waive that requirement. With the technology we have available today, hearing tests could be conducted on the internet and devices could be ordered via the web.

The PCAST has identified a few recommendations for changes the Federal Government can make that would decrease the cost of hearing aids, spur technology innovation and increase consumer choice. These recommendations include:

1. "The Federal Trade Commission (FTC) should enable a hearing-aid prescription process similar to what is available for eyeglasses and contact lenses, giving consumers a greater diversity of choices and the opportunity to shop around without being locked into the cost of a particular device or service.

2. The Food and Drug Administration (FDA) should create a new category for "basic" hearing aids and associated hearing tests that are meant for sale over-the-counter. This would allow entrepreneurs and innovators to enter the market and open a space for creative solutions to improve mild-to-moderate, age-related hearing loss with devices that can be sold widely, allowing consumers to buy a basic hearing aid at the local pharmacy, online, or at a retail store for significantly less.

3. The FDA should rescind its previous draft guidance about Personal Sound Amplification Products and allow these devices to make truthful claims about capabilities like improving hearing or understanding in situations where environmental noise or crowded rooms might interfere with speech intelligibility."

Do you hear what I hear this holiday season? The issue is pretty clear. Consumers need to demand that they have more choice at a lower cost, and ask the government to facilitate that process.