WASHINGTON_The conditional approval of Genzyme's Seprafilmby an FDA advisory panel on Monday may herald rough sledding forcomplete acceptance of the new technology by surgeons andhospitals.

An increasingly cost-conscious health care marketplace may not findSeprafilm appealing enough to justify its hefty price because of theequivocal endorsement given by the FDA advisory committee. (SeeBioWorld Today, March 26, 1996, p.1.)

Tough forecasts ahead for Seprafilm sent Genzyme's stock(NASDAQ:GENZ) tumbling Tuesday for a second consecutive dayto close at $52.25, a drop of $5. The Cambridge, Mass., company'sstock has fallen 18 percent since Monday.

One industry observer, who spoke on condition of anonymity,described the product's bad showing at the advisory panel as anotherexample of Wall Street analysts promoting a company's productwithout doing the necessary research to determine its side effects andpotential for incorporation into medical practice. "It's a game that theinvestors play. They say the results are great. They raise money forthe biotech company," said the industry insider. "But they don't dotheir homework by talking to the medical community or managedcare plans.

"The results on Seprafilm were equivocal and the analysts chose toignore them," said the source.

Despite the panel's recommendations that Seprafilm be used only inopen pelvic and gynecological surgeries, Genzyme thinks themembrane has far wider applications and expects the FDA to approvelabeling to permit wider use. "It's not clear that the FDA will acceptthe panel's restrictions on use," said Steve Push, Genzyme's vicepresident for communications. "It is possible that we will end up withbroader labeling," he said.

Despite the setback from the advisory panel, Genzyme thinks theproduct will be used in over 3 million surgeries annually. "Ourestimates are that it will be used in 1.8 million abdominal surgeriesand 1.3 million gynecological surgeries if the FDA writes the labelingto permit use with abdominal incisions," said Push.

Assuming each surgeon will use two sheets per surgery, Genzymeexpects to sell $300 million of Seprafilm annually. Although someWall Street analysts said the company one year ago was anticipating$1 billion in sales from Seprafilm in its first year on the market, Pushsaid the $300 million sales figure has not been revised downward.

Tough competition among hospitals to offer the lowest inpatient perdiems in their market tends to exclude any new technology from useunless it is clearly superior to current ones. Incorporation ofexpensive new medical products can mean the difference betweenprofit and loss for certain surgical cases that are bid close to themargin. Consequently, Genzyme would have to differentiate itselffrom its competitors to be purchased by hospitals. "I wouldrecommend its use if it is really effective," said Safa Rifka, agynecological surgeon and fertility specialist at Columbia Hospitalfor Women in Washington.

Rifka disagreed with assumptions that Seprafilm would be used forevery surgery. "It would be used on patients where the tissue isclearly abraded or the organs are traumatized," he told BioWorldToday.

Standard Of Care Debated

Rifka also disputed the notion that surgical absorbable membranesaimed at reducing adhesions have become the standard of care. Citingreports that these membranes actually increase the incidence of scartissue, Rifka said most surgeons administer an intramuscular orintravenous combination medication of steroids and Phenergan, ananti-histamine, to reduce the growth of adhesions.

But the cost of Seprafilm may prove warranted if Genzyme's claimsare borne out in practice. "The cost of $400 per sheet doesn't seemsignificant compared to the cost of another laparoscopic surgery toremove scar tissue," said Rifka.

Genzyme doesn't think price will be a factor. "Price is not animpediment. Surgeons will use this device," said Push.

Genzyme hopes to perform the necessary pharmacoeconomic studiesto convince reluctant hospitals, surgeons and managed care plans toincorporate Seprafilm into use. "We expect the studies to show thatSeprafilm results in a significant reduction in long-term, chronicabdominal pain, small bowel obstructions and infertility as well asimprove the ability of the surgeon to perform a re-operativeprocedure," said Push.

However, that type of detailed outcomes study would take years tocomplete. In the meantime Genzyme will have to rely on itsmarketing staff.

"Genzyme has a superior track record in launching a product. As seenby their success with Ceredase, an expensive therapy for Gaucher'sdisease, they know managed care's hot buttons," said Mark Simon,analyst with Robertson, Stephens & Co. in San Francisco.

In addition, Seprafilm faces an established competitor, Interceed,manufactured by Johnson & Johnson, of New Brunswick, N.J.Interceed was approved by the FDA in 1989. n

-- Michele L. Robinson Washington Editor

(c) 1997 American Health Consultants. All rights reserved.