Free software is used in medical devices where it makes sense. Sometimes it saves money.
The cost often really isn't from the writing of software, but from the regulatory, QA and hardware development typically. Which is all dwarfed by validation if you need to do a PMA, but typically devices like this will be a 510k. Software development directly is a bit more expensive that some areas, mostly because you really need to follow engineering practices (e.g. traceable V&V, full documentation, test & review practices, etc.). Usually that isn't the dominant cost of bringing a device to market.
The cost often really isn't from the writing of software, but from the regulatory, QA and hardware development typically. Which is all dwarfed by validation if you need to do a PMA, but typically devices like this will be a 510k. Software development directly is a bit more expensive that some areas, mostly because you really need to follow engineering practices (e.g. traceable V&V, full documentation, test & review practices, etc.). Usually that isn't the dominant cost of bringing a device to market.