Artificial Disk Meets Reimbursement Resistance

When FDA approved the Charité artificial disk last October, some industry analysts speculated that the device could experience a rapid rate of adoption similar to those experienced by new joint-replacement technologies or drug-eluting coronary stents. To clinch their case, the experts cited pent-up demand for the device, which has been available to patients around the world for more than 17 years; the incidence of 200,000 spinal fusion surgeries performed each year in the United States; and the estimated $50 billion spent annually to treat back pain.

Charité: Promising indicators

Despite such promising indicators, however, early reports suggest that the Charité artificial disk is running into reimbursement roadblocks—from both government and private insurers. The Centers for Medicare and Medicaid Services (CMS; Baltimore) limits reimbursement to approximately half the estimated $11,600 cost of the device. While Medicare’s population of patients age 65 and over is not the target demographic for Charité, CMS’s reimbursement rulings are typically seen as guidelines for the private insurance sector. The average age in clinical trials of artificial disks was 40, and the typical spinal-fusion patient is under 50.

Charité is manufactured by DePuy Spine Inc. (Raynham, MA), a Johnson & Johnson company. The artificial disk was developed in the 1980s by Waldemar Link GmbH. DePuy Spine acquired the Link Spine Group in 2003 for $235 million. DePuy Spine reports that more than 5000 of the disks have been successfully implanted worldwide. More than 350 have been implanted in the United States since FDA approval.

The total cost for implanting the artificial disk—including the device, surgeon fees, and associated hospital costs—can easily exceed $50,000. Use of the disk is an alternative to lumbar spine fusion, which uses bone grafts to weld the spine’s vertebrae together. Recovery from artificial disk surgery is described as faster and less painful than spinal fusion. [ More ]

Angel Group Aims to Give Medtech Start-Ups an Inside Track

Citing a dearth of investment organizations focused exclusively on supporting young life sciences companies, a coalition of 15 financial and scientific firms have launched an angel group to help seed and early-stage biotech and medical device companies position themselves for venture-backed funding.

The newly formed group calls itself Life Science Angels Inc. (LSA; Menlo Park, CA), and is sponsored by both technology and service providers to the life sciences industry. The group will target investments of approximately $250,000 to $1 million, and expects to distribute between $4 million and $6 million in 2005. [ More ]

Crawford Nominated as FDA Chief

FDA’s Crawford: Confirmation expected.

President Bush has nominated Lester M. Crawford, DVM, PhD, to take over as FDA commissioner. Crawford has held the title of acting FDA commissioner since March 2004, when the former head of the agency, Mark B. McClellan, MD, PhD, left to head up the Centers for Medicare and Medicaid Services (CMS; Baltimore). Crawford was named deputy commissioner in February 2002 and also served as acting commissioner prior to McClellan’s appointment in November 2002.

Michael Leavitt, who was confirmed in January as the new secretary of the Department of Health and Human Services (HHS; Washington, DC), described Crawford as an outstanding choice who has “dedicated his career to advancing the nation’s public health and will lead the way as we enter a new era of individualized medicine and rapidly developing science.”
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Suit and Countersuit: Angiotech Trades Barbs with Conor Medsystems

Another skirmish is brewing in the coronary stent patent-infringement wars. The combatants this time are Angiotech Pharmaceuticals Inc. (Vancouver, BC, Canada), a specialty pharmaceutical company with an interest in drug-eluting medical devices, and Conor Medsystems Inc. (Menlo Park, CA), a development-stage company focusing on drug-eluting stents to treat coronary artery disease.

Angiotech initiated joint legal proceedings in The Netherlands in February with its partner, Boston Scientific Corp. (Natick, MA), which licenses Angiotech’s paclitaxel drug and polymer carrier as core components of its market-leading Taxus drug-eluting coronary stent. The action followed a ruling of the European Patent Office (Munich, Germany) that upheld the validity of Angiotech’s patent. [ More ]

Cardiac Science and Quinton Cardiology to Merge

Cardiac Science Inc. (Irvine, CA), a manufacturer of automatic public-access defibrillators, and Quinton Cardiology Systems Inc. (Bothell, WA), which makes cardiovascular monitoring equipment, have announced their intention to merge and form a new holding company to be called Cardiac Science Corp.

In a joint statement, the companies cited their “similar missions, business models, technology expertise, and operational processes.” The companies said the merger will “combine their respective strengths in development, manufacturing, and marketing of cardiology devices, services, and supplies and create a diversified, well-capitalized medical technology growth company with a broad portfolio of cardiology-related products.”

The merger is expected to reduce annual operating expenses by $10 million, eliminate $9 million in annual interest expense, and generate tax savings of at least $4 million. [ More ]

Medical Systems Interoperability Demonstrated at HIMSS

With an increasing national focus on the need to bring medical information into the digital age as backdrop, the Healthcare Information and Management Systems Society (HIMSS; Chicago) once again devoted a major portion of its recently held conference and exhibition to the organization’s connectivity and interoperability initiative known as Integrating the Healthcare Enterprise (IHE).

IHE was launched in 1998 by HIMSS and the Radiological Society of North America (RSNA; Oak Brook, IL). The effort has since been joined by the American College of Cardiology (ACC; Bethesda, MD), which is now a sponsor. Since its formation, IHE has sought to facilitate the introduction and improvement of computer systems that enable the collection, transfer, and storage of vital clinical information. The initiative emphasizes the adoption of industry wide standards that can be systematically implemented across the many local- and wide-area networks that make up the healthcare enterprise. [ More ]

CDRH Ombudsman Issues Annual Report for 2004

Weinstein: Complaints down for 2004.

Les Weinstein, ombudsman for FDA’s Center for Devices and Radiological Health (CDRH; Rockville, MD), recently released his annual report for calendar year 2004. The office of the ombudsman was established in April 2000 “to investigate complaints from outside the agency and to facilitate the resolution of disputes between CDRH and the medical device industry it regulates.” As he conducts his investigations, the ombudsman is pledged to remain neutral and impartial. The annual report focuses on the number of complaints and disputes, their source, subject matter, reasons, the particular CDRH agency involved, and disposition.

For calendar year 2004, the ombudsman reported a total of 125 complaints and disputes, a 4% decrease as compared with 2003. The overwhelming majority of complaints —90%—came from industry, with 7% from consumers, and 3% from healthcare providers.

The CRDH agency most often cited in complaints or disputes was the Office of Device Evaluation at 66%, followed by the Office of Compliance at 22%. The majority of the complainants sought the intervention of the ombudsman early in the process (62%), while more than a third (38%) sought intervention “as a last resort.” [ More ]

The editors welcome your suggestions for future content in MX: Issues Update. Please feel free to contact us with your comments and ideas. —Steve Halasey, Editor in Chief, MX

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