Industry—Serving the Needs of the Patient or Stockholder?

by Medicare and are therefore reimbursed at rates determined by the Health Care Finance Administration Diagnostic Related Group. In such a system, hospitals are reimbursed a set amount for a procedure inclusive of the cost of the device. The estimated price of an endovascular device is approximately $10,000 to $15,000 in comparison to 5653 for a standard surgically placed graft. In order for a savings to be realized in the endovascular group, there would have to be a significant reduction in other hospital costs to offset the cost of the device. Despite significant savings related to recovery time and shOlter ICU stays, the overall hospital costs are significantly higher in the endovascular group than in the open repair group ($21,000 vs $12,000) (11). With current reimbursement practices, it has been estimated that costs for endovascular repair alone rival that of standard therapy only when device cost is reduced to $5,000. Such an estimation includes a higher diagnostic hospital costs for the endovascular group, but does not take into account the added costs of follow up imaging and estimated costs for treating complications such as endoleaks. In a recent study that compared relative value units (RVU) for radiologic studies between matched groups of patients undergoing standard repair versus endovascular repair, researchers found 5.4 times higher RVUs in the endovascular group (12). Without significant changes in reimbursement policies or in the number of adjunctive studies, endovascular repair may not be an economically advantageous alternative for patients who are candidates for open repair. For high risk patients unfit for open repair, the long-term benefit of the procedure over medical therapy remains to be shown. Conclusion Endovascular aneurysm repair represents an emerging technology that has the potential to treat approximately 50% of patients with infrarenal aneurysms, and may be performed successfully in patients deemed to be too high of a risk for an open procedure. Morbidity and mortality rates of endovascular therapy compare favorably with those of standard therapy, but diligent follow up is reqUired in the endovascular group. Questions concerning the durability of endografts, the significance of endoleaks, the long term effects of aneurysm shrinkage, and the benefits of endovascular repair need to be studied in prospective randomized trials to determine appropriate therapy in high and low risk patients. Although some aspects of endovascular repair are cheaper than conventional therapy, the economic impact of this less invasive therapy needs to be studied and reconciled with current payment policies before this therapy can be considered routine.

References 1. Katzen B. The GuidantlEVT Ancure Device. ]VTR 2000; 11(suppl):62-69. 2. Uflacker R, Robison J, Selby JB. Treatment of AAA with the Talent stent-graft device: Phase I high risk

US trial: one year interim report. ]VTR 2000; l1(suppl): 195. 3. Yusuf SW, Hopkinson BR. The .l'\otingham experience with endovascular repair of abdominal aortic aneurysms, In: Parodi JC, Veith F, Marin lVi, Eels. Endovascular Grafting Techniques. Philadelphia: William & Wilkins, 1999:73-76. 4. Zarins CK, White RA, Fogarty TJ. Aneurysm rupture after endovascular repair using the AneuRx stent graft. J Vasc Surg 2000; 31(5):960-970. 5. Schurink GWH, Aarts NJM, van Bockel JH. Endoleak after stent-graft treatment of abdominal aortic aneurysm: a meta-analysis of clinical studies. Br J Surg 1999; 86:581-587. 6. Harris P, Brennan ), Martin ), et al. Longitudinal aneUlysm shrinkage follOWing endovascular aortic aneurysm repair: a source of intermediate and late complications. J Endovasc Surg 1999; 6:11-16. 7. Umscheid T, Stetler W. Time related alterations in shape, position, and structure of self-expanding, modular aOltic stent grafts: a 4-year single center follow-up. J Endovasc Surg 1999; 6:17-32.

8. White GH, May J, Petrasek P, Waugh R, Stephen M, Harris). Endotension: An explanation for continued AAA growth after successful endoluminal repair. J Endovasc Surg 1999; 6:308-315. 9. Baum RA, Carpenter JP, Cope C, et al. Aneurysm sac pressure measurements after endovascular repair of abdominal aortic aneurysms. J Vasc Surg (in press) 10. Aboll-Zamzam At"'!, Jr., POlter )M. Does endovascular grafting represent a giant step forward? Seminars in Vascular Surgery 1999; 12(3):235-241. 11. Stembergh C, Money S. Hospital cost of endovascular versus open repair of abdominal aortic aneulysms: a multicenter study. J Vasc Surg 2000; 31:237244.

12. Baum RA, Fairman R, Carpenter JP. The economic impact of AAA stent grafts. Dec Imaging Econ 2000; 13:22-26.

5:25 p.m. Industry-Serving the Needs of the Patient or Stockholder? Brian Stainken, MD Albany Medical College Albany, New York

It is the thirteenth leading cause of death in the United States and diagnosed in nearly 200,000 Americans every year, but fewer than a quarter of those diagnosed are treated. The remaining ones are observed because the risk of surgery exceeds the protective benefit from lUpture or other major comorbid complications. As many as 10% rue from the treatment and the

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survivors can expect at least a week-long hospital stay and a 6-month recovery. Compare this with a procedure, which can be performed on outpatients under local anesthetics at a fraction of the risk. You can resume your normal life in a few days. Which would you want? Is there really any question? On the surface, the decision is simple. Endoluminal prostheses represent a huge potential step forward in the treatment of aortic aneLllysms. The early results are impressive. But acute survival is notlhe primary objective. It is life long prevention of rupture. We currently do not know, in any conclusive sense, what the predictive factors, the incidence, or the best treaUnenlS are for device failure. We are beginning to realize that it takes at least three years before many problems emerge. We do not have a clue what may pop up beyond 5 years. Have we gone too far lOO fast? What happens to these devices in the long run? Have we fallen victim to lechnohype and implanted tiny Iiule time bombs in our patients? Is the solution bener lhan the problem? Does the availability of new technology justify its use? Has the dissemination of this new technology, been driven primarily by profit motive and professional politics rather than skill, and pragmatism? Are our patients informed? There is no question that this evolution from developmem to education to dissemination has been primarily driven by industry, nor is there any real question that the primary investment has come from the same source. Similarly, there is no reason to question the careful eval· uation of these devices under the protections of a clinical trial. But should they have been released? Should we continue to place them? Has our assessment been sufficiently thorough? Why are we going so fast? Why not continue to enroll patiems imo expanded clinical trials, accrue long term data and train the next generation of "endovascular specialists" needed to perform virtual surgery? It's about money: worldwide, the AAA market is expected to produce 41,400 endograft implants by 2002. This assumes that one third of patients are endograft candidates. At current US market prices, this represents a potential device market of over 500 million dollars. (source: medica/data. com). As technology matures and devices conform to a wider variety of aneurysms this market could more than double. Therefore, the AAA market has the ability to challenge the device giant'S cardiac defibrillawrs and coronary stents (each approximately 1 billion). Market analysts consider the coronary stent market penetrated. The opportunities for growth are limited and the competition intense. Without incremental advances in technology, price competition will begin to erode profit margins as it has in Europe. Industry needs to find new fields to sow. Medical device companies survive on growth driven

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IntervenHonal Radiology and Other Corporations and Their 1999 Profit Margins and Gross Income

Corporation Guidant Medtronic Bost. Sci.

J+J Lucent IBM

NW' Airlns Abbott

1999 Profit Margin %

1999 Gross (millions)

17.8 16.3 14 15.7 6.8 8.5 3 188

2,457 5,161 2,782 28,808 39,449 N/A 10,895 13,358

Note.-source: moneycenler.msn.com

by new technology. Over 70% of Medtronic's revenue comes from products introduced in the last two years (4). They are therefore oriented toward significant R&D expenditures. The leader in R&D spending is Guidant, which allocates nearly 14% of their budget on product development (2). But, as with any investment, there must be a plan and a projected return proportionate w the risk. Endografts have proven to be a particularly tricky endeavor. The issues, particularly the late complications related to migration, disartlculation, stent fracture, and material failure were unexpected. Our understanding of the pathophysiology of the disease after inteIVention is still primitive. In retrospect, many of the "endodlsasters" could have been predicted and perhaps prevented with better pre-clinical snldies. Millions of dollars have been gambled on platforms destined for the museum of endoluminaJ technology.

A Tale of Two Endografts Endovascu/ar Technology (EV!) In 1997, the GuidaOl corporation spent 170 million dollars in stock to buy ~ndovascular Technologies (Evr) (3). At that time, the EVT graft was completing clinical trials and the field was full of competing technology (Minrech, Corvita, Vanguard, Talent, AneuRx). Gore, Cordis, and Cook were not yet on the radar screen. Prior to US approval, the company generated revenues of only 10M annually from European sales. Since approval the marker share is expected to reach $150 million by 2002 (source; Morgan Sta.oJey). Five years to reach break-even pOint (investments subsequent to purchase notwithstanding). Kind of reminds me of my student loans. But don't feel too bad for GuidanL Their stock is a darling of the Wall Street crowd, posting a 22% increase in income this quarter, 10% of the gain from "emerging therapies" treating AAA, CHF, and PVD. For 1999, they produced a very healthy profit margin of 17.8%. In general, medical device companies are doing well. The profit margins, annual revenue and income of some other players as well as comparisons to some other "big guys" in other industries are listed below. But it must

also be noted that there are far fewer players than just a few years ago to the victor goes the spoils (Table).

C01vita Not everyone can be a star. In 1992, a venture capitalist invested 11 million in a company which was able to apply a liquid polycarbonate urethane coating to bare stents curiously similar in appearance to the Wallstent. The company, Corvita, developed a modular bifurcated endograft intwduced through a 21-f sheath and initiated clinical trials contemporaneously with the EVT graft. The fledgling company was acquired by Schneider in 1996 for $85 million (1) and IDE ITials continued but ultimately the endograft technology was shelved when Schneider was acquired by BSC, who already owned the Meadox Vanguard System. The Corvita device was not nearly as wetl developed as the Vanguard and only one system could go to market. Corvita became a victim of the R&D bottom line. Milking the Market? Endografts are risley, expensive technology. Unlike stents which are estimated to have as much as a ten fold profit margin, endografts are labor intensive from construction, to packaging, to education and support services. To apply the teclmology, industry took on the responSibility and risk of training and creating liaisons between the vascular surgeons who "owned" the clients and "catheter doctors" who "owned" the skills. Arguably, with 20:20 hindSight, I doubt that many companies would have jumped on the endo band wagon so eagerly if they knew how inhospitable the aorta would turn out to be to their devices. So, how much should the two commercially available devices cost? Clearly, the current price points were set based upon the cost savings associated with the device over traditional therapy-a break-even approach for hospitals, and the most the manufacturer could charge and still sell based on patient demand. UnfoInmately, reimbursement for hospitalization and palticularly vascular reimbursement has continued to plummet, leaving the direct reimbursement for the endoprosthesis procedure as a wash or net Joss for most institutions particularly those dependent on per-diem reimbursement contracts (9,10). Interestingly, emerging data suggest that long tenn cost effectiveness favors endografting over surgical repair (8). But that will not dissuade your hospital administrator. Fortunately, this issue will solve itself with the introduction of the next generation of endoprosthesis probably by the time of this meeting (Talent, Gore). As long as you are willing to use the old stuff, your costs should drop. Is it too much too fast? Of course. But it is not fair to fault industry for providing the devices. They exist to serve their shareholders. They profit when we succeed. We do have the right to say no. It is, arguably, the fault of the profession for failing to develop adequate controls, standards, and registries. It is incumbent upon each

treating physician to inform their patients about the risk of both known and unknown complications, arrange for appropriate lifelong follow-up, or maintain vigilant observation for as yet unknown complications. In the case of aortic endografts, FDA approval does not imply that the procedure is no longer experimental. Until we have long term foHow-up on each device and consensus on the detection and management of complications we should limit our use to weH informed, good anatomic candidates. It is too early to "push the envelope." It is never too late to put our patients' best interests first.

References 2. Guidant press release 7/18/2000. 3. Indianapolis Business Journal 10-13-97. 4. CNBC 05-15-00, 6. Nightly Business Report 04-11-96. 7. Business Wire 12-21-98.

8. Patel ST, Haser PB, Bush HL, et al. The cost-effectiveness of endovascular repair versus open surgical repair of abdominal aortic anelllysms: A decision analysis model. J Vasc Surg 1999; 29(6):958-972. 9. Seiwert AJ, Wolfe J, Whalen RC, et al. Cost comparison of aortic aneurysm exclusion versus open surgical repair. Am J Surg 1999; 178(2):117-120. 10. Clair DG, Gray B, Ohara PJ, Ouriel K. An evaluation of the costs to health care institutions of endovascular aortic repair. J Vasc Surg 2000; 32(1):148-152. 5:50 p.m. Management of AAA in the Year 2006: How and by Whom Gary j. Becker, MD, FACe, FACR Miami Can:liac & Vascular Institute Miami, Florida Learning Objectives: Upon completion of this pl-esentation, the attendee should be able to: 1) Correctly identify all of the key forces that will impact AAA management and the form that it takes in the year 2006,. 2) Recite the important data describing the mOl1ality risks of conventional AAA ,-epai'r and the relative risks according to preoperative stratification; 3) Apply approp1"'iate imaging procedw-es to tbe pr'eopemtive evaluation of patients with AAA, and know that ultrasound will assume an increasingly important screening role in the futw"e and that work-ups will become increasingly less invasive,. 4) Predict that transluminat endografting will be the procedure offirst choice for' AAA management within 5 years; 5) List all of the important current limitations oftransluminal endografting; 6) Appreciate that further imjJ1"ovements in endogl'aft technology will decrease device prClfile and result in bmader application of the method to mom patients, including women and patients with occlusive iliac artery disease; 7) Describe how miniature sensors will help to eliminate tbe needf01'

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