A Medical Device Daily

Larry Biegelsen, senior analyst in the Medical Supplies & Devices sector for Wachovia Capital Markets (New York) said in a report issued last week that he believes the upcoming medical device price cuts in Japan will be somewhat less severe than the cuts imposed in 2006.

The 2008 cuts are to be finalized toward the end of this month and implemented on April 1. "It is our understanding that the FAP cuts (foreign average pricing) will be lower this year compared to the last round in 2006," Biegelsen wrote. "The MHLW (Ministry of Health, Labor, and Welfare) survey last year showed an average discount rate of about 8.7%, which implies an average r-zone cut of about 4.7% given the 4% discount allowance."

He noted that decisions on price cuts "are made on a category-by-category basis and individual product categories could be subject to above- or below-average cuts."

Biegelsen's report added: "It is our understanding that ICDs [implantable cardioverter-defibrillators], drug-eluting stents (DES), intraocular lenses (IOLs), hips and knees will not be hit with an FAP cut this year; however, some tissue heart valves and some spinal devices could be hit with modest ... cuts."

An FAP cut of more than 15% is phased in over a two-year period, while an FAP cut of less than 15% is implemented all at once.

As Biegelsen noted in his report, the Japanese government sets the reimbursement rates for medical technology products. These prices are reviewed and usually reduced every two years.

"Japan adjusts prices according to a process called the reasonable zone or R-zone," he said. "The MHLW surveys its hospitals for prices paid to distributors, and allows for a reasonable margin (or zone) for discounts off of the government's reimbursement rate. The MHLW then cuts the reimbursement price by an amount equal to the difference between the actual discounting rate and the allowable discounting rate."

Biegelsen noted that Japan adopted the foreign average pricing system in 2002. "This system calls for the revision of reimbursement rates on the basis of prices paid for medical technology products in the U.S., France, Germany and the UK," he said. "Devices already on the market in Japan cannot exceed 1.5 times the FAP."

A category can only be subject to one type of cut — an R-zone cut or an FAP cut — but not both, Biegelsen said.

1st cardiac pacing exam issued in Japan

The International Board of Heart Rhythm Examiners (IBHRE; Washington) has issued the first standardized cardiac pacing exam for Japanese allied professionals. This marks the first time the IBHRE exam, considered a key benchmark of professional competency in cardiac pacing, defibrillation and electrophysiology, will be tailored to the needs of a global healthcare system outside of the U.S.

"With the ICD growth rate around 50% and no signs of decreasing, the importance of credentialing Japanese professionals is all the more urgent," said Charles Love, MD, president of the IBHRE board of directors. "Newer devices are highly complex and require a much greater level of technical knowledge and expertise to implant and maintain."

IBHRE said it hopes its partnership with the Japan Heart Rhythm Society (JHRS) will serve as the model for future exam tailoring and administration in countries such as China, Russia, and India.

"Given the growing number of heart rhythm patients around the world and the variations of healthcare systems globally, the need for certification and credentialing is of utmost importance to enhance positive patient care," said Love.

The knowledge base of the exam, which includes device functions, is for the most part a global standard, IBHRE said. However, it said patient management questions and an understanding of the clinical culture and medicines used in Japan "were considered when tailoring the exam."

The organization said translation also was taken into account, as word usage and meanings may differ.

The IBHRE said the Japanese Ministry of Health has mandated that in addition to allied professionals, sales representatives, technical advisors and anyone else having contact with patients from the medical device industry must be certified. "This mandate is meant to ensure a meaningful standard of knowledge for those involved in assisting physicians and other healthcare workers in the implantation and management of pacemakers and ICDs," the organization said.

More than 7,000 individuals in the U.S. have taken the IBHRE exam to date. Nearly 645 allied professionals in Japan already have signed up to take the first-of-its-kind, computer-based test. Results will be announced in March.

IBHRE is an affiliate, independent body of the Heart Rhythm Society (HRS; also Washington). HRS said participation in the exam is consistent with the society's overall purpose to improve the care of patients by promoting research, education and optimal healthcare policies and standards.

Working together to standardize the profession, IBHRE and the Heart Rhythm Society provide the most current testing and professional development tools with advances in heart rhythm management to enhance knowledge and delivery of healthcare to patients.

Canadian pharmacy benefits software accord

SXC Health Solutions (Milton, Ontario), a provider of pharmacy benefits management services and healthcare IT solutions to the healthcare benefits management industry, reported a $3 million software license agreement with the Ministry of Health in the Canadian province of British Columbia for an upgrade to the province's PharmaNet System.

The agreement includes a license to use SXC's Drug Information System solution, which provides government and commercial clients access to proven electronic medication history management and HL 7 Version 3 claims-processing technology.

SXC's software will be the core processing engine for health record transactions in the PharmaNet System. This marks the second provincial licensing agreement of SXC's DIS software applications, the first being on behalf of the province of Newfoundland and Labrador.