Medical Device Daily Contributing Writer

NEW YORK — BMO Capital Markets hosted its 2008 Focus on Healthcare Conference at the Millennium Broadway hotel last week, featuring presentations by a cross-section of companies making medical devices, drugs and diagnostics.

Dr. Peter Orszag, director of the Congressional Budget Office, was the keynote speaker, giving a revealing presentation on healthcare spending. He dismissed the view promulgated by the media that attributes rising healthcare costs to demographics and the "tsunami of coming of age" of baby boomers. In fact, he said the aging population contributes only about 2% to the overall cost.

A much greater factor in the growth of healthcare spending is due to technology changes in medical practice (see Table 1), Orszag said. The fiscal problem was attributed to the rising cost per beneficiary, and not the number or type of beneficiaries.

Also, the increased costs of Medicare and Medicaid were projected to result in a long-term budget problem (see Table 2). He reviewed Medicare spending per beneficiary in the U.S. by hospital referral region. Interestingly, the regions with higher cost per beneficiary did not correlate with better healthcare.

Healthcare was said to contain the largest inefficiencies in the U.S. economy, with 5% of gross domestic product being spent on costs that don't improve healthcare overall. Thus, the challenge, Orszag said, is how to improve efficiency of our healthcare system without compromising care.

Noting that "we have a payment system that promotes more care rather than better care," he also observed that most workers don't realize how much healthcare costs them, since their take-home pay is adjusted for payments of healthcare coverage made by their employers.

The costs of pharmaceuticals often are cited as main contributors to the rising healthcare costs, but Orszag said that drugs represent only 10% of total healthcare spending and "get way too much attention, just like aging."

Saying that the healthcare economy is "stymied" by short-term and piecemeal efforts and the inability to deal with the long-term problems, he said the notion that universal health insurance will reduce costs is incorrect, because uninsured people spend less on healthcare than do the insured.

An analysis of total Medicare spending at leading medical centers revealed widely different figures, with costs at UCLA Medical Center (Los Angeles) being twice that of the Mayo Clinic (Rochester, Minnesota). This observation had prompted the query by Professor Uwe Reinhardt, a noted healthcare economist at Princeton University (Princeton, New Jersey): "How can it be that 'the best medical care in the world' costs twice as much as the best medical care in the world?"

A look at selected presenting companies at the conference:

Cardiva Medical (Mountain View, California) is developing vascular access site management and closure devices for patients undergoing catheterization procedures. About 12 million percutaneous catheterization procedures are performed worldwide with approximately 70% being diagnostic angiography.

The traditional methods used to close the femoral artery puncture site are direct manual compression over the puncture site or use of implantable vascular closure devices, such as the Angio-Seal from St. Jude Medical (St. Paul, Minnesota) and Perclose and StarClose from Abbott Vascular (Santa Clara, California), a subsidiary of Abbott Laboratories (Abbott Park, Illinois).

Cardiva Medical's Boomerang Catalyst II Wire system is used for both diagnostic and interventional procedures and has market clearances in the U.S., Europe, Canada and China. It has been used to close the femoral artery puncture sites in more than 150,000 percutaneous catheterization procedures since 2005.

In July 2007, the company launched its Catalyst II system, which incorporates a proprietary hemostatic material along the shaft of the original Boomerang Wire. It accelerates coagulation adjacent to the puncture site and has been used in more than 15,000 patients. It is the first vascular closure device to achieve final hemostasis in the catheterization lab for diagnostic patients without leaving any foreign materials behind in the patient, thereby eliminating a major cause of device failure.

Additional devices under development are the Catalyst III for peripheral intervention, to be introduced in mid-2009, and the Catalyst IV for coronary intervention, for release in mid-2010.

MIV Therapeutics (Atlanta) reported at the conference 12-month clinical trial results of its 15-patient VESTAsync polymer-free sirolimus-eluting stent. All of the patients have been Plavix-free for at least eight months, which suggests that the company's stent has the potential to reduce the treatment regimen for these patients to only short-term anti-platelet therapy from the current standard of a minimum of one-year therapy.

The cobalt-alloy coronary stent has an ultra-thin NanoPorous hydroxyapatite coating on struts for improved healing by protecting the surrounding tissue from potentially harmful interactions with bare metallic stents. Dr. Mark Landy, president/CEO, envisions that his company's extremely thin stent with its flexible design can jump-start the market and increase usage of drug-eluting stents.

VNUS Medical Technologies (San Jose, California) markets catheters for treating pain and swelling caused by varicose veins. This condition is a result of venous reflux disease which develops when the valves that keep blood flowing out of the legs and back to the heart become damaged or diseased.

The closure procedure employs a catheter that is guided by ultrasound into the diseased vein and delivers radio frequency energy to the vein wall. The vein wall is heated which causes the collagen in the wall to shrink and the vein to close. Venous blood is then naturally re-routed by the body to other healthy veins.

The company's ClosureFAST catheter was evaluated vs. endovenous laser treatment of varicose veins in an 87-limb randomized study in six centers, known as the RECOVERY trial. The ClosureFAST catheter showed superiority in causing less pain, bruising and fewer complications.

In June, VNUS Medical settled its litigation with AngioDynamics (Queensbury, New York) and Vascular Solutions (Minneapolis), marketers of vascular access products, and received an up-front payment of $9.9 million and ongoing royalty payments for endovenous laser products sold in the U.S. through Sept. 11, 2017.

In exchange, VNUS has granted AngioDynamics a non-exclusive and non-sublicenseable license to the applicable patents for use in endovenous laser therapy.

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