Medical Device Daily Washington Editor
The Centers for Medicare & Medicaid Services reported it will offer coverage for transcatheter aortic valve replacement (TAVR) only under a coverage with evidence development framework, but despite the misgivings many in the device industry have about coverage with evidence development (CED), the only device maker with an approved device finds the decision flexible and promising with regard to future indications.
However, the news did not seem to buoy shares of Edwards Lifesciences (Irvine, California) at the New York Stock Exchange, where the company's stock price dipped as much as 11% in morning trading on Feb. 3 on news of a smaller volume of sales despite a better-than-expected figure for earnings.
CMS offered two scenarios for coverage. One is for use in a patient with "severe symptomatic aortic valve stenosis" with five conditions to be met, including that the patient be enrolled in a registry and followed for five years. Studies of the use of valve replacement devices for "unlabeled" indications must be designed to establish superiority to the comparator treatment, and CMS indicated it is considering a non-coverage position for mixed aortic valve disease and isolated aortic regurgitation. The agency indicated it is taking comment on the proposal for 30 days.
Among the conditions CMS intends to impose for the registry study patients – a group Edwards is likely already enrolling per FDA's mandates for a post-market study for the firm's Sapien valve – is that the patient be evaluated by two cardiac surgeons and that institutions with no PMA clinical trial experience in such a device have a program that will perform at least 50 such procedures each year and at least 150 percutaneous coronary interventions annually. All participating institutions, the memo says, must demonstrate a "commitment to the team heart concept," which aligns with the conditions FDA stipulated in the device's approval.
Regarding trials for unapproved indications, CMS says the procedure must be performed by a multi-disciplinary team and the protocol must "explicitly discuss sub-populations . . . particularly traditionally under-represented groups in clinical studies." Sponsors will also have to describe how the data would or would not "be generalizable to the Medicare population."
In a Feb. 3 statement e-mailed to Medical Device Daily, Edwards says that it believes "a well-written" national coverage decision "that ensures adequate patient access to this rapidly evolving therapy will be positive for patients and physicians." The company added that it is "encouraged by the flexibility of the coverage" based on an initial review of the proposal, and Edwards remarked that CMS left the door open "not only to existing indications, but also to future indications when they receive FDA approval."
The American College of Cardiology (Washington) did not respond to contacts for comment.
'Substantial variation' seen in device prices
Federal government scrutiny of prices paid by Medicare for med-tech resurfaced in a report by the Government Accountability Office (GAO), which indicated that a survey of hospital spending between 2004 and 2009 showed a "substantial variation in reported prices for cardiovascular devices." Despite that the increase in such spending is said to be matched by "Medicare spending for other hospital procedures," a member of the Senate released a statement putting the GAO study in the spotlight and proposing that hospitals report their purchasing data to the Centers for Medicare & Medicaid Services.
According to the summary of the report, which GAO posted at its website Feb. 3, prices paid for procedures associated with implantable devices "increased from $16.1 billion to $19.8 billion," a jump of 4.3% per year. GAO says that data from 31 hospitals indicate that the price difference between the lowest and highest amounts paid for "a particular automated implantable cardioverter defibrillator" came to more than $6,800, while the difference between the lowest and highest prices for another model ran to more than $8,700. However, GAO also noted that utilization of orthopedic devices "increased at a faster rate . . . and accounted for the majority of changes in expenditures" between 2004 and 2009.
GAO said that physician preference may make it difficult for hospitals to "obtain volume discounts" from manufacturers," and that the data "raise questions about whether hospitals are achieving the best prices possible."
Sen. Max Baucus (D-Montana), chairman of the Senate Finance committee, said in a Feb. 3 statement the report "makes clear that too little information is available about the costs of implantable devices" and "raises serious concerns" over prices. Baucus continued, "we simply have to find smart ways to curb rising costs," adding that one solution "could be for hospitals . . . to report and share device pricing information" with CMS.
The report sparked conflicting statements from device makers and group purchasing organizations. Mark Leahey, president/CEO of the Medical Device Manufacturers Association (MDMA; Washington), said in a Feb. 3 statement, "while MDMA supports efforts to enhance transparency in the healthcare system, it is important to recognize that medical devices represent a very small portion of total healthcare spending." Leahey said available data "show that medical devices make up less than 5% of healthcare costs," adding that MDMA "reiterates our support for Congress to examine group purchasing organizations (GPOs) and their role in increasing costs by collecting billions in fees from suppliers."
Taking the opposite tack was a Feb. 3 statement from the Healthcare Supply Chain Association (HSCA; Washington). HSCA President Curtis Rooney said "device pricing secrecy decreases competition, limits the ability of hospitals and their GPO partners to effectively negotiate for medical products and services, and artificially drives up healthcare costs." Rooney said "the $200 billion medical device industry is able to leverage its army of salespeople to drive unnecessary utilization and further enforce contractual gag clauses," and concluded that the GAO report "shows that medical device pricing secrecy is impeding the ability of hospitals and GPOs to achieve the best possible prices."
David Nexon, senior executive VP at the Advanced Medical Technology Association (AdvaMed; Washington) avoided any mention of GPOs in a Feb. 3 statement. Nexon said the pricing issue "ought to take into account the remarkably competitive nature of the industry" and cited a study he said "shows that over the past 20 years, medical device prices have risen far more slowly than price increases for other medical goods and services and substantially less than even general price increases in the economy as a whole."
Nexon closed with the observation, "as the report itself acknowledges, the GAO data are not generalizable" and for that reason, "it would be inappropriate to draw any public policy conclusions from this report."