Changewave Research: Golden Age of Cardiac Care

ChangeWave Research: Golden Age of Cardiac Care

ChangeWave Research Report:

Golden Age of Cardiac Care

Implantable Defibrillators Thrive–Coated Stents Steady But Not Yet Stellar

Abstract

The findings of our March 2003 report on stents and defibrillators showed sales of Implantable Cardiac Defibrillators (ICDs) would exceed analyst projections, but new drug-eluting stents would launch somewhat slower than expected. Subsequent events have shown both Alliance findings to be on target.

During the week of August 19-25, 2003 we went back to our Alliance Healthcare members to learn more about new trends in cardiac devices and treatments. A total of 101 members participated in the survey. Some key findings:

The ICD Market Continues to Thrive. The ICD market is expanding rapidly and the private marketplace is following Medicare's lead.

· By nearly a 6-to-1 margin (59% vs. 12%), respondents believe ICD use will continue to expand due to increasing usage by new patients.

· 45% believe ICD sales are solely achieved by educating customers and supporting physicians who use the devices. Medtronic (56%) is considered the leading brand.

· 53% of respondents believe hybrid devices (pacemaker and defibrillator) will steadily replace pacemaker-only units if covered under Medicare.

New Coated Stents are Doing Steady, but Not Yet Stellar. The new drug-eluting stents are continuing to capture market share at a steady, but not yet stellar pace.

· 72% expect a "Rapid" or "Dramatic" adoption rate of 25% or more for drug-eluting stents over the next 12 months. But while 41% see rapid physician acceptance, 47% see physicians adopting these devices at a rate typical for any new cardiac device.

· By a 56% to 12% margin, respondents said patients are eagerly seeking information about the new drug-eluting stents.

Other Key Findings:

· Cardiac scanning technology is emerging as a major growth area.

· BioSite's Triage BNP cardiac test has a modest 28% brand recognition, which may pose problems as it appears headed for a serious challenge from big competitors.

Bottom Line: The key trends first underscored in our February 2003 survey – stronger than expected ICD sales and a steady but not yet stellar rise in market share for coated stents – will continue to shape these markets at least through mid-2004.

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Table of Contents

Summary of Key Findings 3

The Findings 4

Drug-Eluting Stents 4

Implantable Cardiac Defibrillators (ICDs) 8

Other Cardiac Devices and Treatments 10

Summary and Analysis 15

ChangeWave Research Methodology 17

About ChangeWave Research 18

I. Summary of Key Findings

Overview

The findings of our February 2003 report on stents and defibrillators showed sales of Implantable Cardiac Defibrillators (ICDs) would exceed analyst projections, but new drug-eluting stents would launch somewhat slower than expected. Subsequent events have shown both findings to be on target.

· Drug-Eluting Stents

· Implantable Cardiac Defibrillators

· Other Cardiac Devices and Treatments

II. The Findings

A. Drug-Eluting Stents

(1) Question Asked: How would you characterize the probable rate of change from traditional to coated or drug eluting stents over the next year?

Current Survey Aug 2003 / Previous Survey Feb 2003
Dramatic - 50% or more of all new procedures within one year / 23% / 28%
Rapid - 25-50% of all new procedures within one year / 49% / 47%
Typical - 10-25% of all new procedures within one year / 18% / 21%
Measured - less than 10% of all new procedures within one year / 2% / 2%
Don't Know / 8% / 0%
No Answer / 1% / 0%

Coated Stents Will Gain Momentum in Coming Year. Nearly three-quarters (72%) of respondents see either a "Rapid" or "Dramatic" adoption rate (i.e., 25% or better) for drug-eluting stents from the older, traditional stents during the next 12 months. These results signal a pick-up in momentum for coated stents. Meanwhile, only 18% anticipate a typical changeover rate (i.e., 10% - 25% of all new procedures within one year).

(2) Question Asked: Based upon statistical analyses of clinical trials by manufacturers, the new coated stents offer a materially better set of outcomes for patients than traditional metal stents - but they also cost three times as much. How are physicians and other health care professionals responding to this clinical trial data?

Physicians and other health care professionals are accepting coated stents at a very rapid rate, and they will dominate the market within six months / 41%
Physicians and other health care professionals are accepting the new stents at a rate similar to their acceptance of other new cardiac devices and treatments / 47%
Physicians and health care professionals are somewhat skeptical of claims by manufacturers, and acceptance of coated stents will be slower than that of other new cardiac devices and treatments / 2%
Don't Know / 11%

But Doctors' Level of Acceptance May Temper Adoption. Two-in-five respondents (41%) believe that rapid physician acceptance of the new coated stents will result in market dominance within six months. However, 47% see the new coated stents being adopted at a rate typical for any new cardiac device or treatment. The relative closeness indicates that swift acceptance of coated stents may be tempered over the near term by moderating forces in the healthcare community.

(2A) Question Asked: Please elaborate.

The question of costs versus benefits is at the center of most of the responses on this issue. Respondents who see a rapid rate of acceptance for coated stents generally believe their efficacy overrides cost considerations.

Alternatively, respondents who see the acceptance of coated stents as being on par with other new cardiac devices, believe that the adoption of any new medical technology – no matter how useful – takes time to overcome obstacles – such as reimbursement issues and limited field experience.

Sample of Alliance Member Responses

a. Members Who Said: “Physicians and other health care professionals are accepting coated stents at a very rapid rate, and they will dominate the market within six months” (41%)

· RID4768 writes, “As a physician, you always offer the best to the patient. In this case, if the stent has materially better outcomes, it could be more cost effective in the long run.”

· DDY0175 writes, “The coated stents have significantly better outcomes. There is not likely going to be a problem getting cardiologists to recommend them to patients. The holdup will be the insurance companies' willingness to pay for them. “

· KER5863 writes, “At our institution the use of coated stents has increased dramatically. The results have had a significant reduction in the number of CABG procedures performed at our institution resulting in a 20% reduction of operative coronary artery bypass grafting in the last year.”

· QUA1514 writes, “It is a matter of risk management. Physicians are risk averse (the great majority). The coated stent gives them a parallel or redundant system (the mechanics of the wire and the drug).”

· JEF7065 writes, “Several cardiologists I work with from different groups are very excited about using the coated stents and only wish they had them available sooner.”

· CLI1209 writes, “The coated stents have the best - lowest - rate of restenosis by far. Patients and doctors will want the safest therapy and best possible outcome. In addition, no surgeon will risk legal complications if restenosis follows use of traditional stents.”

· SOM4483 writes, “Demand for J&J's stents is high. Only problem is lack of supply of these stents. Many patients are already aware of the new drug eluting stents and are demanding them. BSX stent will not arrive in the US market until early Q1 2004 in my opinion. Cost of stents is justified by their efficacy and the cost savings of not having to go back to the cath lab for correction of a restenosis. Medicare is already willing to pay $2,800/stent. I can't remember the last time I saw this type of reimbursement by Medicare for a therapy that hadn't even hit the market yet.”

· WPW6938 writes, Anytime a materially better outcome can be assured, the product will be recommended and requested more often. What stent do want in your coronary artery, a cheap one or one with better known outcomes that costs more?”

b. Members Who Said: “Physicians and other health care professionals are accepting the new stents at a rate similar to their acceptance of other new cardiac devices and treatments” (47%)

· WIL1338 writes, “Adaptation takes time. Any new therapy needs time to get accepted. Enough data will help to convince, but medical professionals need time to absorb information and adapt. Apart from that, hospitals require debate on their purchasing policies, and the same applies for insurance with regard to reimbursement.”

· DJA1158 writes, “Limiting factor is not doctors it is payors; but with Medicare agreeing to pay, the new technology has a great head start in the market place.”

· EBE8160 writes, “Until further clinical information is available from independent sources, there is likely to be no real change in the acceptance rate or utilization of these devices.”

· FER6435 writes, “Patients are already aware of the lower closure rate of these stents. If it continues to pan out the word will rapidly spread. Patients' needs still count. Doctors still listen to them. The HMOs have learned some lessons already about withholding superior treatments.”

· MOJ6686 writes, “Physicians may be initially resistive but I think this will be countered by increased patient demand/desires as they hear about and become educated about the improved outcomes.”

· SGO4526 writes, “Cost/benefit ratio to be determined. Insurance will always balk at higher costs until the evidence is overwhelming. At that point, the cost of failures plus litigation risk tilt in the balance of the more expense procedure.”

· WAL7128 writes, “Cardiologists will have to balance their desire to use a promising new treatment against the caution of a new treatment with limited experience in humans. Since uncoated stents are still a very viable intervention treatment, cardiologists don't have to rush to judgment to adopt the use of coated stents. Doctors will also be heavily influenced by reimbursement practices.”

· GOL8321 writes, “There seems to be a lot of confusion not solely from standpoint of costs -- but more importantly from legal standpoint. Will they get sued if they don't opt for the more expensive and effective stent?”

· MIK3319 writes, “We are trying to be selective as to who we use these on, limiting them to lesions that are more inclined to restenose (LAD) or to areas that have restenosed already.”

· GAR6917 writes, “Hospitals are pressuring physicians to temper their use of eluting stents for inpatients as hospital reimbursement would be based on admitting diagnosis (DRG) rather than on actual costs incurred. For hospitalized patients it's a loser for hospitals trying to make a dollar.”

c. Members Who Said: “Physicians and health care professionals are somewhat skeptical of claims by manufacturers, and acceptance of coated stents will be slower than that of other new cardiac devices and treatments” (2%)

· JBU7649 writes, “There are some serious adverse events that are occurring with the coated stents. These things happen when a new therapy opens up to include the entire population. A prudent surgeon will go slowly with this new therapy, waiting to learn some information from outcome trials over the longer term.”

(3) Question Asked: Are patients actively inquiring about the new coated stents?

Yes / 56%
No / 12%
Don't Know / 32%

Patients are Anxious to Learn About the New Stents. By better than a 4-to-1 margin (56% vs. 12%) respondents said patients are eagerly seeking information about the new drug-eluting stents.

(4) Question Asked: Patient opinion often affects treatment procedures. Do you believe current patient knowledge about the new coated stents is adequate enough that a significant number of patients (i.e., 20%+) will be asking for the new stents over the next 12 months?

Current Survey Aug 2003 / Previous Survey Feb 2003
Yes / 44% / 50%
No / 39% / 40%
Don't Know / 18% / 10%

Patient Education has Room to Improve. By 44% to 39% respondents believe enough patients are "in the know" that at least 20% will be asking about new coated stents during the coming year. Surprisingly, the margin has tightened since our February 2003 survey, when we asked this same question.

B. Implantable Cardiac Defibrillators (ICDs)

(1) Question Asked: Will Implantable Defibrillators continue to grow in terms of usage by new patient populations, or will their growth slow over the next year?

They will continue to grow in usage by new patient populations / 59%
Their growth in usage by new patient populations will begin to slow over the next year / 12%
Their growth in usage by new patient populations will slow appreciably in the next year / 4%
Don’t Know / 24%

Implantable Defibrillator Usage Will Continue to Grow. By close to a 6-to-1 margin (59% vs. 12%), respondents said ICD usage will continue to expand – thanks to increasing usage by new patients.

(2) Question Asked: Medicare granted new reimbursement rates for the use of Implantable Defibrillators for a new patient population earlier in the year. The population was smaller than anticipated by some. Do you believe Medicare will expand the target patient population for Implantable Defibrillators within the next 12 months?

Yes / 28%
No / 30%
Don’t Know / 42%

But Will Medicare Increase the ICD Patient Population in the Year Ahead? Respondents were evenly split (28% vs. 30%) over whether Medicare will expand target patient populations for ICDs during the coming year.

(3) Question Asked: It is fairly common industry practice for insurance companies to provide reimbursement rates and guidelines similar to Medicare's. In the case of Implantable Defibrillators, however, that could prove expensive given the cost of these devices and the procedures required to put them into a patient.