BBI Associate

CLEVELAND – Joseph Iannotti, MD, PhD, chairman of the department of orthopedic surgery at the Cleveland Clinic, saw the 2005 Medical Innovation Summit, with its focus on orthopedics, as being particularly timely. Prior to the opening of the annual Cleveland Clinic Foundation-organized conference, Iannotti discussed the revolution in the orthopedic sector over the past decade. The third incarnation of the summit, which is sponsored by CCF Innovations, the clinic’s innovation arm, drew an audience of 855 attendees to the InterContinental Hotel on the Cleveland Clinic campus in the latter part of October.

Iannotti noted that arthroscopy, or minimally invasive surgery (MIS), has been used as a tool in the orthopedic sector much longer than in general surgery, and that the trend toward minimally invasive approaches “is just an extension of what the orthopedic profession has developed on its own accord and what the public want and accepts.” While that may be the case, he said that “between MIS concepts and navigation and better instrumentation, traditional open prosthetic surgeries [will] become less morbid.”

Another factor that will contribute to increased uptake of prosthetic devices in such areas as hips, knees and shoulders, he said, is the increasing durability of orthopedic devices along with the improved surgical techniques to implant them, so that there are fewer surgeon-related failures due to poor execution of procedures. With increased confidence in outcomes, he said, “[Surgeons] are becoming more and more aggressive about putting prosthetics in younger and younger people and more and more active people.”

Peering into his crystal ball for the next 10 to 20 years, Iannotti said the major push will be to get better bio-fixation for orthopedic implants. “Are there better materials that are going to more durable and applicable in a younger patient?” he asked. He also said that orthopedic surgeons would continue to look for ways to make the surgeries that they perform more tissue-sparing, “so that you’re not giving away so much bone.”

Looking at the biological side, Iannotti said that is going to be an area where a huge evolution still needs to occur. “I don’t think we’re even close to having the full impact of that,” he said. He called the current market of growth factors, bone graft substitutes and soft tissue patches for ligament tendon repair “immature.”

A problem for the biologicals market, Iannotti said, is the fact that the surgeons who are the end users of such products aren’t currently being trained to use them. “They don’t understand the biology,” he said noting that today’s orthopedic surgeons aren’t being exposed to these materials during their residency. “It’s not just the guys that are 15 or 20 years in practice who are unfamiliar with them. These are guys that are leaving residency training now that don’t have the basic understanding of some of these biologics that are out there now.”

He said, for example, that many new scaffolding materials are being approved as devices via the FDA’s 510(k) process, which implies “substantial equivalency” to existing approved products, which in his opinion raises questions about their ultimate usefulness to doctors based on the amount of long-term data available. “The level of regulation for devices is nowhere near that for drugs or biologics,” he said, “and so the level of evidence to put a product on the market [via the 510(k) process] is pretty modest. They basically have to show safety and good manufacturing principles targeted off of 1976 or prior equivalency.”

To prove these materials out, Iannotti called for well-designed controlled, randomized studies. “Until then, he said, you’re not going to prove efficacy in say, rotator cuff repair, which is one of the bigger markets for some of these biologic soft-tissue reinforcement patches.”

Another obvious concern for surgeons as well as hospitals and companies developing new products is how to pay for new technology, a question that is likely to never be fully solved to all the parties’ satisfaction.

While he noted that even if the Centers for Medicare & Medicaid Services (Baltimore) provides reimbursement for a new product that may help a physician get paid, hospitals in general are what he termed “break-even” institutions just trying not to lose money. And in such a setting, he said, “you bring in some of this new technology that breaks the bank.”

As an example, Iannotti pointed to a recently approved development in his own specialty area of the shoulders. He said the new reverse shoulder replacement device listed for close to $9,000. That prosthetic, he noted, “costs almost twice as much as the standard shoulder replacement.” While he acknowledged that the new device is indicated for patients “where the results clearly are better than they would be if you put a standard shoulder prosthetic in, it’s not as if [hospitals] are getting reimbursed from the insurance company for that extra $3,500 in implant costs.”

And therein lies the timeless quandary: how to provide patients with the latest technology without breaking the bank.

“This is where government and industry and doctors and patients have to come to some common agreement, but it has to be based on evidence-based medicine,” Iannotti said.

Having a conference such as the Medical Innovation Summit that brings together many of the heavy hitters from the different parts of the equation that make up the sum is, he said, a critical step to potentially solving some of those problems.

“There’s no question that having this kind of forum really does help lead to better discussion in the future,” he said, adding that while not enough clinicians attend this event, the ones that do go “obviously are thought leaders and the right kind to go to it.”

Iannotti said that it doesn’t happen often enough that one gets academia, venture capitalists and major companies in the orthopedic industry to get together to talk about some tough issues “and really listen to what some of these thought leaders have to say.”

He added: “I think it’s a great idea, I just wish we could get together more often in orthopedics than once probably every decade.”

Spine technologies, regulatory issues debated

With the focus at this year’s summit on orthopedics, it was only appropriate that one of the panels was on spinal products, one of the fastest-growing sub-sectors of the field.

Panel moderator Gordon Bell, MD, vice chairman of the Cleveland Clinic Spine Institute and vice chairman of the department of orthopedic surgery at the clinic, noted that the group he was presiding over represented a good cross-section of the industry, with large international companies, smaller local and national companies and recent start-ups. “So we have the whole gamut of companies here,” Bell said. While he noted that they represented different facets of the business, “the common thread is that they’re all devoted to product development and to improve patient outcomes.”

He asked the panel which technologies would change the face of spinal surgery over the next five to 10 years.

What is truly needed, according to Edward Benzel, MD, chairman of the Cleveland Clinic Spine Institute are new platform technologies “that allow existing technologies to go another level or to improve existing technologies in a stepwise manner.”

Drilling down, Jerry Binder, president of Abbott Spine (Austin, Texas), discussed the current and future use of biologic products. While he said that these products currently are used primarily as a supplement to spinal fusion, “we think that they have the ability to mitigate the disease process itself over time.”

Binder said that since disc degeneration is both a mechanical and biological syndrome, “we think that therapies that may well wind up being effective in this regard are therapies that do in fact combine mechanical devices that rest the disc space in combination with biological agents.”

On the subject of robotic navigation, Isador Liberman, MD, director of the Minimally Invasive Surgery Center at the Cleveland Clinic, joked that “a fool with a tool is still a fool.” That being said, he did acknowledge that it would have a role. “I don’t see navigation or computer spinal surgery making bad surgeons good surgeons. I see it making very good surgeons perfect surgeons.”

The panel also discussed the issue of FDA regulation and reimbursement, with Richard Mott, president and CEO of Kyphon (Sunnyvale, California) – developers of kyphoplasty, a minimally invasive surgical procedure treating osteoporotic and osteolytic fractures – discussing his company’s initial struggles in the former area in particular.

Based on its early talks with the FDA, he said the company believed it was on the path for an approval for the bone cement via the premarket approval (PMA) process, particularly when the instruments used in the procedure received rapid clearance from the agency without having to perform a single procedure on a patient.

Instead, it took nearly four years and a 510(k) to get the bone cement cleared for use in the treatment of pathological fractures of the vertebral body due to osteoporosis, and Kyphon essentially developed its own bone cement specifically for the kyphoplasty procedure.

The company learned its lesson when it came to the reimbursement front, Mott said, and now collects clinical data that will help it when it makes its case for reimbursement.

“I think it behooves all of us when you consider clinical trials not just to think about the therapeutic aspects but also the economical aspects of the trial,” he said, “and as we invest in our clinical research, fully half of the data that we are collecting in our clinical trials is [now] economical data.”

Bell asked Helmut Link, managing director of Waldemar Link (Hamburg, Germany) and the developer of the Charitié artificial disc, which was acquired by DePuy Spine (Raynham, Massachusetts) in 2003, if he thought the artificial disc would become a wildly successful product, or merely serve a niche market.

Link said he expected these devices to be more of “an evolution than a revolution,” meaning that it will takes some time to ramp up to the big numbers that investors hope for.

Pointing to the artificial knee prosthetic as a good example of where he sees the prosthetic spinal disc heading, he said that in 1974, there was only one artificial knee on the market. In 2005, there are literally dozens of specialized differentiated knee products on the market as opposed to the one-size-fits-all approach of the past.

“What I want to say is that the investment plan of the total disc replacement should go the same way as the knee,” Link said. “We should make small evolutionary steps with the disc for investment purposes.”

On the issue of diagnostics, Benzel said that techniques and systems that help to diagnose problems early and allow for early intervention “will allow for salvage of implants, salvage of procedures, and perhaps ultimately a much less-costly way of managing our patients.”

Of course a classic issue that had to be addressed by the panel was the issue of the cost of new technology and the possible issues associated with gainsharing, which would allow hospitals to provide financial incentives to physicians in an effort to reduce overall costs.

According to Richard Randall of TranS1 (Wilmington, North Carolina), a privately held firm focused on developing minimally invasive product solutions for the treatment of lower back pain, including the Axial Lumbar Interbody Fusion (AxiaLIF) system, new technology value is not always seen in the initial pricing, but rather in such measurements as shorter hospitals stays and quicker recovery times

“If you can demonstrate though clinical evaluation of the product that you can actually lower the cost or beat the cost and can prove that clinical benefits for the patient are better,” he said, “you can maintain a pretty healthy price for the product that you spent a lot of time effort and dollars to develop.”

Benzel added: “Make no mistake – any new technology that’s developed has to have cost-effectiveness or value in its equation. If a new technology does not offer sufficient value, it will not make it in the long run.”

Teamwork stressed to ensure flow of innovation

What can all the parties involved in the orthopedics sector – indeed, the healthcare sector overall – do to ensure the continued flow of new innovation? That was the focus for Stephen MacMillan, president and CEO of Stryker (Kalamazoo, Michigan), who spoke to the summit attendees via a live hookup from Beijing, China, where he was conducting business. He said that while institutions like the Cleveland Clinic are producing medical miracles every day, “our [overall] perceptions of the healthcare system are gradually eroding.”

MacMillan quoted a New York Times article from this past summer that showed that 55% of patients surveyed were dissatisfied with the quality of their healthcare, which was up 11 points from just five years ago. Indeed, 40% of those surveyed said that the quality of healthcare had gotten worse in the last five years. “So while there are some great things going on, there are some overall slippages,” he said.

Overall, MacMillan noted that nearly three-quarters of the patients surveyed in The Times article were dissatisfied with the way the healthcare system is currently run, “despite great physicians, great healthcare institutions and frankly some very strong medical device companies.”

With all that is perceived as going wrong, MacMillan cited a list of things that patients want that they are not getting with regularity. On their wish list, he said, are early diagnosis and prevention, personalized treatment and rapid recovery, as well as a good dialogue with their doctors and of course, a reasonable cost.

Continuing a theme that was echoed throughout the three-day conference, MacMillan said that if the hospitals, physicians and medical device companies would all work together, “we could take the patient experience to another level.” When you think about how all this comes together, he said, “You think [that] medical technology advancements plus the excellent physicians, nurses and healthcare providers and an enhanced hospital environment will all lead to greater satisfaction among our patients.”

MacMillan said that med-tech companies bring new products and the ability to integrate systems to provide greater efficiencies. One thing that is in the favor of the U.S. healthcare system is its ability to access new technology, he said. “That allows our patients to lead more active, healthier lives and ultimately in ways that we can continue to work on reducing the cost of healthcare delivery.

Taking a crack at defining what better quality breaks down to in terms of healthcare, MacMillan said it translates to “outstanding results.” He said it also means better materials and products and reduced errors, as well as new and better surgical techniques and responsible science.

Stryker is working on ways that it can contribute to the overall efficiency of the healthcare system via innovative technology, he said, helping to drive down costs. MacMillan showed photos of what he termed the “operating room of the future,” an actual OR that exists at the Cleveland Clinic. The facility, the result of a collaboration between the company and the clinic, features a number of Stryker products that he said have allowed the hospital to clean up much of the clutter that once occupied such facilities. That has allowed nurses and surgeons better access to patients, he said, adding that the new room’s patient turnover time “has changed dramatically, so we can [now get] one more surgery per day.”

One thing that MacMillan said has helped surgeons is the ability to remotely connect with other physicians throughout the country and the world. “They can interact live with the surgeon doing the case; they don’t have to be in the room.” A boon to the patient in the new OR is the use of new navigation systems that help with minimally invasive surgery. He said these new systems are starting to be used in the orthopedic space to “help things like leg length positioning, particularly as we’re working through smaller and smaller incisions to make sure that the implants are positioned properly.”

Another cost-saving device he pointed to is the digital X-ray. “As things become digitized,” MacMillan said, “they can move much more efficiently through the system right into the operating room.” Asset-tracking technology, such as radio frequency identification and barcode systems, are helping hospitals lay their hands on needed equipment and supplies much more quickly than has historically been true, he said.

On a different note, MacMillan responded to a question on the growing trend toward direct-to-consumer marketing and how it impacts the symbiotic relationship among all the parties involved in the practice of healthcare. “The patient around the world is clearly demanding more and more information,” he said. And while medical device manufacturers feel obligated to provide that information, he added that “I do think that we need to make sure that we provide information that sends them back to speak to their surgeon, because unlike the pharmaceutical world, it is the surgeons who are doing the surgery and will ultimately be making the decision about what is right for the patient.”

In wrapping up his long-distance talk, which in itself served as an example of the impact of new technologies, MacMillan stressed the need for finding harmony among all the members that comprise the healthcare team. “If we think about the future,” he said, “we really want to encourage a world where we are working together as partners to enhance the patient experience, the healthcare system and ultimately, the image of all of our industries.”

Collins: Innovation must overcome many obstacles

The medical device industry faces many challenges to developing innovation in the field. That was the general theme of a presentation by Art Collins, the chairman and CEO of device powerhouse Medtronic (Minneapolis), who is even more uniquely qualified to speak on the topic due to also serving as chairman of the Advanced Medical Technology Association (AdvaMed; Washington). “We are now spending approximately 15% of our gross domestic product [GDP], or approaching $1.3 trillion,” he said, “and by all estimates that I have seen, by 2012 that is likely to move up to in excess of $3 trillion, between 18% and 19% of GDP.” Couple that, Collins said, with the aging demographics in the U.S. and many parts of the world, and the question isn’t whether we will spend more money on healthcare as a percentage of GDP, since that appears to be inevitable. The real question, he said, “is how do we get more value for every dollar that is spent?”

Not surprisingly, Collins said that he believes that medical technology will be part of the solution to lowering healthcare costs rather than contributing to their continued upward spiral. He said that medical technology sector by and large “is the most rapidly changing industry of any healthcare product that you can think of.” By way of example, he noted that two-thirds of his company’s most recently reported revenues came from products introduced over just the last couple of years.

With the increasing use of information technology in healthcare and the heightened use of biologics and pharmaceutical compounds, Collins said that medical technology will continue to expand and I would submit expand at a much more rapid pace.” He said the industry has changed its whole paradigm so that instead of merely looking at the time to market for a product, it has evolved to a more timely standard of care that can hopefully address the question of when will all those people who legitimately have a need for that technology obtain access?

One of the first barriers to new and innovative technology access, Collins said, has been the FDA, particularly since Mark McClellan, MD, left that agency’s top post to become administrator of the Centers for Medicare & Medicaid Services (CMS; Baltimore) in March 2004. His successor, Lester Crawford, MD, left the post in September, just two months after being confirmed to the position, further contributing to an instability that has yet to be fully addressed with yet another acting commissioner in Andrew von Eschenbach, previously director of the National Cancer Institute (Bethesda, Maryland). Collins said that aside from its leadership woes, the FDA also is under great pressure with the recent issues at Guidant (Indianapolis) concerning its ICDs and pacemakers, the agency’s failure to approve the Plan B birth control as an over-the-counter option for women and the massive recall of Vioxx, to name but a few problems.

In light of these recent issues, he said device companies can expect the already conservative organization to become even more rigid. “That means that all the companies in this room, whether you’re large or small, you’d better be paying a great deal of care when constructing your clinical trials and running those clinical trials,” Collins said. “They need to be done effectively in a timely way so that there aren’t any questions when submitting that data.”

He said that AdvaMed has been concerned by a noticeable delay in premarket approvals (PMAs) from the agency. In fact, he said expedited PMAs are actually taking longer than normal PMAs to make it through the system, this even after the industry agreed to user fees in order to pay for the manpower needed to clear the regulatory logjam.

Collins did note that the issue of device recalls, particularly those that are already implanted in the body, such as Guidant’s products, are now being discussed. “I think out of this will probably come a better clarification of ongoing performance.” The question of how products are paid for also needs to be addressed. While he noted that McClellan in his position at CMS is interested in reimbursing new technology more quickly than that agency has in the past, there is the proviso that it be merited on evidence-based medicine and post-reimbursement data tracking.

With the focus of the Medical Innovation Summit being on orthopedics, Collins noted the “raging debate” in Congress over specialty hospitals, which is particularly important, he said, for the orthopedic and cardiovascular industries, “where most of the growth in specialty hospitals is taking place.” A moratorium on development of new specialty hospitals is set to expire, but the House and Senate are at odds on whether to lift that ban. Ultimately, he said McClellan “holds the cards” on how this stalemate will ultimately play out.

Another issue that Collins said would play out in the near future is that of pay for performance, or gainsharing. Gainsharing would allow hospitals to provide financial incentives to physicians in an effort to reduce overall costs. But the cost-effectiveness goal, many opponents say, could reduce quality of patient care and restrict access to new technology – the latter result clearly not welcomed by the medical device and med-tech sectors. “This is a very contentious subject,” he said, noting that “historically, Stark laws have prohibited physicians from having any financial benefit from how they chose therapy.”

As for tort reform, he said that there probably would be no significant changes from Congress in the near future on that issue, due to the powerful lobbying efforts of the trial lawyers. However, he said that on a state level, things are beginning to happen on that issue.

While Collins said that these are heady times for the healthcare field. “In the 30 years that I have been involved in the medical industry, I have never seen a time where the opportunities were greater,” he said, but he also sounded a cautionary note. “I have never seen a time when there were greater challenges, not simply for suppliers but also for providers and for insurers and the only way that we are going to sort this out effectively is if we get all the parties together and work things out.”