CMS Holding Pattern a Blow to J&J
BY JOHN MCCORMICK, MAY 2, 2005
Last week, the United States Centers for Medicare & Medicaid Services (CMS) issued a "hold" decision on whether or not to issue 2006 add-on payments for procedures using J&J's Charité artificial lumbar disc.' This flies in the face of apparently good data in the Charité's FDA clinical trial and the presumed promise of artificial lumbar discs generally. 'As a background, the Charité is currently the first and only FDA-approved artificial disc for any region of the spine.' Other discs from manufacturers such as Synthes, Medtronic and Spinal Motion are queued up for the lengthy FDA PMA approval processes (see our table in this weeks' Spinal Motion article) in hopes of getting to market.' The CMS continued evaluation holding pattern can't be welcome news for the other disc manufacturers either.' In fact if J&J fails to rebut CMS on it's current stance, this could be potentially damaging for the artificial lumbar disc market as a whole.'
What happened?
CMS has a special reimbursement program for promising new technologies that demonstrably advance the clinical outcomes of Medicare patients.' If a new and more costly medical device technology can achieve a better outcome than a control (such as spinal fusion in this case) then procedures using the device can receive temporary supplemental payments from CMS.
What CMS said was that, at least in Charité's case, artificial lumbar discs may be no better than lumbar fusion.' Further study is warranted and further data is welcome.
Below is the relevant text from the ruling:
"We are continuing to review the information on whether the CHARITE™ Artificial Disc would appear to represent a substantial clinical improvement over existing technology for certain patient populations. Based on the studies submitted to the FDA and CMS, we remain concerned that the information presented may not definitively substantiate whether the CHARITE™ Artificial Disc is a substantial clinical improvement over spinal fusion. In addition, we are concerned that the cited IDE study enrolled no patients over 60 years of age, which excludes much of the Medicare population, and we are concerned that the device is contraindicated in patients with "significant osteoporosis," which is quite common in the Medicare population. We invite comment on both of these points and on the more general question of whether the device satisfies the substantial clinical improvement criterion."
"Despite the issues mentioned above, we are still considering whether it is appropriate to approve new technology add-on payment status for the CHARITE™ Artificial Disc for FY 2006. If approved for add-on payments, the device would be reimbursed up to half of the costs for the device. Because the manufacturer has stated that the cost for the CHARITE™ Artificial Disc would be $11,500, the maximum add-on payment for the device would be $5,750. In the final rule, we will make a final determination on whether the CHARITE™ Artificial Disc should receive new technology add-on payments for FY 2006 based on public comments and our continuing analyses."
It is clear that add-on payments have not been denied for Charité, however so this should not be misinterpreted as the death of artificial discs.' To date, as many as 1,200 - 1,400 surgeons have been trained at J&J and as many as 1,000 are scheduled for more training and J&J's training facility is booked through November.' We have heard of many cases where patients would gladly trade a few thousand dollars in exchange for relief from a lifetime of back pain. It seems that CMS is telling these patients that their chances are equivalent with fusion, however.'
While we are keeping our 2014 market forecast for lumbar and cervical artificial discs at $1.6 billion intact, it won't take much more for us to reduce the lumbar component of our forecast which stands at approximately $700 million for the year 2014.
Other Notable CMS Rulings Last Week
We understand that CMS denied add-on payments for Stryker's Trident ceramic-on-ceramic bearing surface used in hip and knee replacements.' This system was approved by the FDA over two years ago. We were surprised.
Smith & Nephew announced that CMS expanded its coverage of the Company's ultrasound EXOGEN™ Bone Healing System for the treatment of all nonunion bone fractures, regardless of whether the fracture has had prior surgical intervention.' Medicare has reimbursed the cost of using the EXOGEN™ device since 2000 in nonunion fracture cases where surgery has failed to heal a fracture. Medicare will now offer reimbursement for the use of the EXOGEN™ system for all nonunion, regardless of whether they have had prior surgical intervention.
