GLG News by Wayel Kaakaji

Implications: The data presented by multiple professional societies does not lend clinical support of many Medtronic products in the Medicare population.  The data does not support the use of disc arthroplasty in the Medicare population, and does not find any clinical advantage of kyphoplasty over vertebroplasty.  This may mean reduced sales of the Kyphon line of products as well as reduced sales of the Prestige implant, should CMS adopt some of these recommendations.

Analysis:  The data presented support the continued use of Bone Morphogenic Protein and fusion-related implants.The data, however, does not support the use of cervical disc arthroplasty in Medicare patients.  The data presented does not show any advantage of kyphoplasty over vertebroplasty.  The total effect on Medtronic sales may be quite damaging to Medtronic sales if CMS adopts these recommendations.  With CMS focusing its spending control targets on spinal surgery and implants, this data may prove quite influential.

Implications: New electrode will increase the capabilities of the Advance device from Neurometrix, potentially leading to more sales of the disposable electrodes The increased capabilities may also increase the number of practicioners interested in the Advance system, generating more sales for the company

Analysis:  The new electrode will allow for testing of a larger number of peripheral nerves, allowing for more extensive testing of the nervous system.  This will allow for increasing the number of conditions that the Advance device can be used to diagnose, and will result in the use of a larger number of electrodes, therefor increasing sales revenue for Neurometrix.

Implications: The cost of proton beam installations is massive, and is not justified in light of available litterature regarding the superiority of this therapy. There are only a handful of tumors, such as chordoma, where the proton beam therapy is recommended over other types of radiation.  The higher compensation for this radiation is probably playing a part in the decision making for these new projects.

Analysis: I do not believe that companies such as Varian, Elekta, Phillips, and Accuray have to worry about competition from proton beam facilities. 

The number of proposed centers is still quite small in the big scheme of things. 

In addition, the technology of external beam therapy and radiosurgery is rapidly advancing, which will further diminish any theoretical advantage of proton beam therapy.

Implications: Aricept, Namenda, Risperdal are grossly overused in the treatment of patients with suspected dementia Many patients with dementia have not received proper diagnosis, and do not receive proper treatment Better public and medical education will hopefully reverse this glaring deficit in our medical systems

Analysis: Americans are living longer, and the incidence and prevalence of dementia is expected to increase markedly in the next several decades.

So far, no treatment for dementia has been found, but many of dementia patients have secondary dementia, which may respond to the treatment of the primary condition.  It is the failure to recognize this subset of patients that represents our true failure in caring for these patients

Normal Pressure Hydrocephalus, a treatable condition that causes secondary dementia, is underdiagnosed.  Codman, a division of Johnson & Johnson has been at the forefront of the treatment and public education regarding this disease.  I see many patients with this condition who have not received a proper workup before the diagnosis of untreatable dementia is given.  The patient is typically never given a later workup, and therefore, there is never a chance to uncover the real diagnosis.

Many other conditions such as hypothyroidism, polypharmacy, medication side effects, brain tumors, and brain hemorrhages are also treatable if properly diagnosed. 

Implications: Alphatec product line will expand and increase their market share The cervical plate from Progressive is much more promising than the Trestle plate developed by Alphatec, and should increase sales and improve the cervical implant portfolio

Analysis:  Alphatec (NasdaqGM:ATEC) has been adding to its product line with a series of acquisitions and license agreements.  I believe the new products such as the Osseo screw and the v-stent technology will help them secure a larger market share.  This is likely to directly affect the big players such as Medtroic (MDT:NYSE) and Johnson & Johnson (JNJ:NYSE).

Implications: the use of Vertex polyaxial screws is only a minor part of the spinal implant protfolio at Medtronic (MDT:NYSE).  This should not affect the bottom line to any significant extent.

Analysis: Vertex screws are used in posterior cervical spinal surgery.  This type of surgery is relatively limited in numbers compared to some other approaches to the spine, and therefore, the use of this instrumentation probably represents much less than 5% of spinal implant sales at Medtronic.

Implications: -The new regulations will probably result in quality improvement in the selected targeted areas -It is unclear whether the cost of implementation and monitoring will offset the savings to the medicare system -Medicare will likely introduce further quality measures to fall under similar payment cuts. 

Analysis: Nonpayment for poor performance will likely turn attention to the select list of clinical complications chosen by Medicare, but will likely introduce a whole new set of regulatory and monitoring hurdles which in the end will probably cost more than the intended savings. 

Implications: If back pain persists, the patient should be referred to a specialist so further diagnosis and workup can be undertaken.  Patients with back pain are treated with a variety of interventions and medications in the hope that they will return to their normal activities.  Too often, the initial diagnosis is non-specific, and the treatments ineffective.  The appropriate timing of the referral to a specialist may avoid unnecessary delays and treatments. The key issue is to avoid unnecessary treatments and diagnostic studies by focusing on the correct diagnosis as early as possible in the process

Analysis: Back pain is extremely common.  It is one of the main causes of missed work and insurance claims.  Unfortunately, the treatment of back pain is frequently a haphazard process due to the lack of helpful standardized algorithms. 

The primary care physicians order imaging studies, physical therapy and spinal injections prior to making a definitive diagnosis.  While this approach works some of the time, it is expensive, and sometimes leads to delays in diagnosis, as well as wasted time and wasted resources.

Implications: House calls are not likely to expand to subspecialties, except in circumstances where a followup visit is required, and the primary doctor recommends specialized care.  One exception might be expanding the scope of house calls to cover all non-emergent care for the elderly who can afford an in-house evaluation for routine complaints.  While certain house call practices might thrive in metropolitan areas, the scope of such practices will be limited in the big picture.

Analysis: I agree with the report that the current health care system does not work adequately, and certainly comes up short in the areas of convenience and catering to the individual needs of patients.  Those who can afford in house calls will find it quite pleasant to have the doctor come to their door to provide private health care.  There will always be a niche segment that will benefit from this service.

Implications: -There is no reason to think that medical tourism will decline in popularity.  Certainly for cosmetic procedures, there is no insurance-related issues that might curb the rise of offshore surgery.  -As for overseas experimental treatments, they will continue to be attractive to the U.S. consumer as long as our FDA continues to lag behind international regulatory agencies in their approval process.

Analysis: -Many US hospitals and practitioners have responded to the burgeoning popularity of medical tourism.  Hospitals such as Cleveland Clinic, Massachusetts General and others have established outposts in places such as Dubai, Abu Dhabi and other niche markets.  These American style hospitals aim to serve as destination medical facilities serving Asia and the Middle East, as well as medical tourism from Europe and the US.  The attractionsof these facilities include merican operating standards, American trained staff, and US board-certified physicians.

Implications: -If this trial shows significant clinical benefit, it will bring this drug one step forward towards approval in the US.  This drug has already shown benefit for pancreatic and colorectal tumors, with minimal side effects.  There is strong scientific and preclinical testing testifying to the in vitro efficacy of this antineoplastic agent. -Further future studies should be aimed at Glioblastoma Multiforme patients, as these tumors are the most common primary malignant tumors, and larger studies can be designed with high statistical significance.

Analysis: -If Nimotuzumab is eventually approved, it would represent major competition for Temodar, the current standard in chemotherapy from Schering Plough (SGP:NYSE).  Much research will have to be done still to compare the efficacy of these two agents for glioma.

Implications: -State, or federally-funded universal insurance willl continue to exist in a vacuum until it is coupled with fixes for other illls of the health care system.  These fixes might include tort reform, or subsidized malpractice coverage for physician practices. -Universal health insurance is not enough to fix the problem of physician access.  -Primary care will continue to be a problem as long as physician reimbursement continues to dwindle. -The Massachusetts experience is a lesson in health care economics, one that should be carefully studied before investing in a national universal health care system

Analysis: It is no surprise that newly insured Massachusetts residents are facing limited access to health care.  The average primary care office is suffering from dwindling revenues due to physician payment cuts, rising practice expenses, and rising medicolegal costs.  The bottom line is that for most mature practices, accepting new patients is not an attractive proposition, especially if their insurance pays at or less than Medicare rates. 

Insured patients will continue to face access barriers until the financial conditions for primary care improve.

How about nationally-subsidized malpractice coverage for physicians in shortage, to be tied to federally-funded programs such as Medicare or Medcaid, or to a national universal health care insurance program?  This will rescue physician practices from the added expense of malpractice premiums, and guarantee access to patients carrying these forms of insurance. 

Implications: Low back pain is a major public health problem.  While there is no single therapy that can be prescribed to every patient with this problem, the ubiquitous prescribing of physical therapy is frequently misguided.  The causes of low back pain are myriad, and the treatment algorithm needs to be tailored to the specific patient.  All patients with back pain persistent for more than one month should be referred to a spine specialist in order to make further decisions regarding diagnosis and treatment.

Analysis: -While physical exercise is frequently prescribed for low back pain treatment, it is frequently a decision made in the absence of appropriate diagnosis and workup.

-In my opinion, the cost and time committment of physical therapy regimens needs to be taken into account when making this decision

-I believe that all patients with back pain should be evaluated by a spine specialist if the pain persists over one month, and certainly if the patient has had any imaging studies for evaluation of the back pain by the primary care physician.  The spine specialist can then presicribe a treatment regimen, possibly including physical therapy.

-In other words, a spine specialist should be the gate keeper for physical therapy referrals, after appropriate workup and diagnosis has been performed.  This approach would curb the unnecessary use of physical therapy in patients with back pain better managed with other therapies.

Implications: Multidetector CT technology will likely replace conventional angiography and Digital Subtraction Angiography in the diagnosis and treatment of aneurysms. MDCT technology is safer and nearly as sensitive as DSA, and can be used reliably in making treatment decisions for intracranial aneurysms.

Analysis: This article will impact companies such as GE, Phillips, Siemens and others in the field of diagnostic radiology.  While current technology for CT angiography is limited, MDCT will likely produce images of such high quality and resolution, that Digital Subtraction Angiography will be replaced within 5 years by these new technologies.  This shift in paradigm may spill into the cardiovascular disease arena, where the market is significantly larger, and the demand for safer diagnostic vascular studies is higher.

Implications: Medtronic will see increased sales of their navigation platform, and probably a secondary increase in thier spinal implants as a result of the acquisition of Breakway Imaging. Sales of the O-Arm have been increasing rapidly, adding to Medtronic's sucess in the field of spinal surgery

Analysis: The O-Arm, the lead product from Breakaway Imaging, facilitates spinal surgery.  It is an intraoperative device that can be used to obtain fluoroscopic images as well as CT scan-like images in the operating room.  This machine provides surgeons with higher accuracy, increased safety, and possibly less radiation exposure.  In addition, this machine will soon be available for cranial applications, allowing its use for brain tumor surgery and other neurosurgical procedures.

Implications: As insurers continue to cover the Charite and other disc replacement products, the hope for coverage for other disc replacement technology will encourage further refinement and investment in motion preservation technology

Analysis: spine technologies such as cervical disc replacement, motion sparing devices, facet replacement technology, and other arthroplasty devices will face reimbursement challenges.  CMS is placing the burden of proof on the manufacturers to show superiority against currently existing treatments.  The expanded coverage for Charite will encourage companies such as DePuy, Medtronic, Nuvasive, and others to continue to pursue new technology.

Implications: If the SANTE trial is successful, Medtronic will be able to dramatically expand its market share in the ever-growing neurostimulation market.

Analysis:  Since the introduction of Cyberonic's vagal nerve stimulation, there has been no new devices on the market to treat epilepsy.  Cyberonic's product did not meet with long-lasting enthuthiasm from the neurological community.  If SANTE is able to prove the clinical effectiveness of deep brain stimulation for the treatment of epilepsy, a large number of patients with medically-refractory epilepsy will qualify for this new treatment.  For Medtronic, the expansion of indications for its existing deep brain stimulation products may mean significant profits.

Implications: This study confirms the clinical impressions of the majority of spine surgeons.  Patients with degenerative spondylolisthesis fare better with surgery compared to non-operative management. If this study results in an increase in the utilization of fusion surgery to treat spondylolisthesis, the device manufacturing companies, such as Medtronic, DePuy, Nuvasive, and others, may see increases in their sales. CMS may see a significant increase in the number of fusion surgeries performed as a result of this study. CMS may see less variability in the rates of fusion surgery around the country as a result of this study. 

Analysis: Lumbar spinal fusion surgery for degenerative spondylolisthesis has been adopted by a large proprotion of spinal surgeons around the country to treat the symptoms of this painful condition. 

Many studies in the recent past compared non-operative management versus decompression surgery alone, versus fusion surgery.  Many of these studies have shown that fusion compared favorably to other methods of treatment.  The study by Herkowitz et al is considered by most to be a landmark study considerig this issue.

Generally speaking, the older generation of spinal surgeons, especially among the neurosurgical population, is more reluctant to recommend fusion to the patient with lumbar spondylolisthesis.  This reluctance is usually the result of training preferrences.  The results of the SPORT may remove some of the variability among the surgeons in their treatment choices for this condition.

Implications: Medtronic is likely to be able to get major commercial insurance carriers to cover reimbursement for cervical artificial discs The current failure of lumbar disc replacement should not be extrapolated to draw parallels and make conclusions regarding cervical disc replacement.  It is naive to think that cervical disc replacement will replace cervical diskectomy and fusion operations altogether, but there are clinical scenarios where cervical disc replacement might be a better option for the patient.

Analysis:  

Medtronic will likely avoid pressing the issue of Medicare coverage for its cervical disc replacement devices, at the outset. Instead, they will probably concentrate on the major commercial insurance payors, attempting to create pressure from the insured customers to pay for the artificial discs. Once major insurers start paying for the procedure, Medtronic will probably cosider attempting to get CMS to reimburse for the procedure. The commercial insurers cannot use the excuse of CMS non-coverage determinations as basis for denial, in a case when CMS was never asked to cover the procedure.

The fact of the matter is that CMS coverage is, arguably, of significant political importance in this matter, but of little budgetary significance, since artificial disc replacement will be offered to the young and middle-aged population primarily.

Implications: The new acquisition will expand the market share of Medtronic Kyphon products will fit very well in the lineup from Medtronic and will fill the gaps that allowed Kyphon to grow so rapidly and consistently

Analysis: Kyphon built their business on the management of osteoporotic compression fractures.  More recently, they acquired St. Francis Medical to offer a promising product for the treatment of spinal stenosis.  In addition, kyphon has completed recent acquisitions which reinforced their intellectual property in these markets. 

Medtronic has had little success in penetrating these markets, largely due to Kyphon's strong positioning.  This merger will allow Medtronic to become the major player in these markets, at a time when kyphoplasty started to expand globally into the Asian markets.