The New Medtech Economic Reality MassMEDIC Annual Meeting Susan Posner Vice President sposner@healthadvances.com May 1, 2012
The New Medtech Reality The economic downturn coupled with the focus on health care costs has changed the medtech market. All constituencies across the health care continuum have no choice but to become more economically responsible. We see all players increasingly capable of measuring economics and increasingly aware of the economic implications of clinical decisions. The New Medtech Economic Reality 1
Panelists Susan Posner Vice President Maria B. Stewart Director, Health Economics and Reimbursement, Endoscopy Division Jeffrey H. Burbank Founder & CEO NxStage Medical, Inc. Elijah White Director, Marketing Haemonetics Corporation The New Medtech Economic Reality 2
Saving Money is in the Eye of the Beholder Economic benefits are not the same across all constituencies and are not equally valuable across the continuum of care. Payer Hospital MD The New Medtech Economic Reality 3
Saving Money is in the Eye of the Beholder A salaried hospital clinician is more likely to value time savings or convenience benefits, while an office-based physician values increased revenue and profit. Payer Hospital MD The New Medtech Economic Reality 4
Composition of US Hospital Costs The costs of medical devices continues to be scrutinized, however personnel costs account for over 70% of hospital costs. Percentage of Hospital Costs* by Type of Expenses Other Products (e.g. Food, Medical Instruments) 14% Wages, Benefits, Professional Fees 73% Prescription Drugs 6% Other Services 7% * Does not include capital. Source: Health Advances analysis based on AHA analysis of Centers for Medicare & Medicaid Services data, using base year 2006 weights. The New Medtech Economic Reality 5
Saving Money is in the Eye of the Beholder Decreased product costs, labor costs, or length of stay are more valuable to the hospital but may not be enough to convince physicians to adopt a product. Payer Hospital OR MD Economic benefits may help physicians justify new technologies to administration, once convinced of the clinical or convenience benefit. The New Medtech Economic Reality 6
Saving Money is in the Eye of the Beholder Innovation that decreases the cost of diagnosis, chronic disease management, or reduce hospital visits are examples of valuable savings to payers. Payer Hospital MD The New Medtech Economic Reality 7
Evolution of Reimbursement Accountable care will integrate the continuum of care. The potential for shared savings will incentivize high-quality and lower-cost care. Cost-Plus Capitated (DRGs and APCs) Integrated Continuum of Care Retrospective review of hospital charges for all services Traditional Medicare reimbursement before 1983 Shift from retrospective to prospective Standard reimbursement rate based on primary diagnosis at admission Future accountable care reimbursement will cover patient throughout the continuum of care, so complications or longer recovery will reduce shared savings for which the care provider would be eligible The New Medtech Economic Reality 8
Product Position/Value of Segments Industry should continue to thoughtfully assess and define the best target market as a product s economic benefit often varies by segment. Value-based Price High unmet needs Decrease LOS Avoid invasive procedure Nurse and patient convenience Alternative treatment option Severe Moderate Mild Patient Segment The New Medtech Economic Reality 9
Panelists Susan Posner Vice President Maria B. Stewart Director, Health Economics and Reimbursement, Endoscopy Division Jeffrey H. Burbank Founder & CEO NxStage Medical, Inc. Elijah White Director, Marketing Haemonetics Corporation The New Medtech Economic Reality 10
Bronchial Thermoplasty delivered by the Alair System Maria Stewart Director, Health Economics & Reimbursement Boston Scientific Corporation May 1, 2012 11 Endo-79416-AA 2012
Alair Bronchial Thermoplasty with the Alair System has been approved by the FDA for the treatment of severe persistent asthma in patients 18 years and older whose asthma is not well controlled with inhaled corticosteroids and long-acting beta-agonists. Alair Catheter a flexible tube with an expandable wire array at the tip (introduced into the lungs through a standard bronchoscope) Alair Radiofrequency (RF) Controller supplies energy via the Catheter to heat the airway wall 12 Endo-79416-AA 2012
Asthma: Management and Unmet Needs 5-10% have severe, persistent asthma (NAEPP) Many patients remain symptomatic despite standard of care medications Medications limited, require adherence, can have serious side effects 4 Est. $20.7B healthcare costs and resource 3 utilization 2 5 6 High-dose ICS + LABA + Oral Corticosteroids and Consider Omalizumab High-dose ICS + LABA and Consider Omalizumab Medium-dose ICS + LABA Low-dose ICS + Long-acting Beta 2 -agonists (LABA) or Medium-dose ICS Low-dose Inhaled Corticosteroids (ICS) Alternatives Needed 1 Short-acting Beta 2 -agonists Adapted from National Asthma Education and Prevention Program (NAEPP) Guidelines. Expert Panel Report 3: Guidelines for the Diagnosis and Management of Asthma. National Heart, Lung, and Blood Institute, NIH Publication No. 07-4051, Revised August 2007. Endo-79416-AA 2012 13
Bronchial Thermoplasty Clinical Studies 14 Endo-79416-AA 2012
Bronchial Thermoplasty Clinical Outcomes Summary at 1-Year 1 Improved asthma-related quality of life compared to control (AQLQ score) 79% of BT treated patients achieved 0.5 increase Effect persistent across 6, 9, and 12 months Improved clinical outcomes compared to control: 32% decrease in severe exacerbations 84% reduction in ER visits for respiratory symptoms 73% reduction in hospitalization for respiratory symptoms 66% less days lost from work, school and other daily activities due to asthma No unanticipated device-related adverse events or deaths Acceptable safety profile 1. Castro, Am J Respir Crit Care Med. 2010;181(2):116-24 BT = Bronchial Thermoplasty 15 Endo-79416-AA 2012
Summary: Why Bronchial Thermoplasty? Additional therapeutic treatment options are needed not a me-too technology Well-designed, well-executed, rigorous clinical trials demonstrating both safety and effectiveness Detailed reimbursement strategy Addresses values of changing healthcare environment with linked clinical / economic benefits Reduces healthcare resource utilization (hospitalizations, ER visits) Positive societal impact (reduces missed work) Improves patients asthma-related quality of life Fits Boston Scientific s core competencies and priorities 16 Endo-79416-AA 2012
Thank You! maria.stewart@bsci.com Endo-79416-AA 2012 17
Brief Statement of Relevant Indications for Use, Contraindications, Warnings, and Adverse Events: The Alair Bronchial Thermoplasty System is indicated for the treatment of severe persistent asthma in patients 18 years and older whose asthma is not well controlled with inhaled corticosteroids and long-acting beta-agonists. The Alair System is not for use in patients with an active implantable electronic device or known sensitivity to medications used in bronchoscopy. Previously treated airways of the lung should not be retreated with the Alair System. Patients should be stable and suitable to undergo bronchoscopy. The most common side effect of bronchial thermoplasty is an expected transient increase in the frequency and worsening of respiratory-related symptoms. Caution: Federal (U.S.) law restricts this device to sale by or on the order of a physician. Alair, Elevate and are unregistered or registered trademarks of Boston Scientific Corporation or its affiliates. 2012 Boston Scientific Corporation or its affiliates. All rights reserved. 18 Endo-79416-AA 2012
Rethinking the Dialysis Paradigm Daily Home Hemodialysis (HHD) with the NxStage System One 2012 NxStage Medical, Inc. NxStage is a registered trademark of NxStage Medical, Inc. System One and PureFlow are trademarks of NxStage Medical, Inc. CAUTION: Federal law restricts these devices to sale by or on the order of a physician.
Economic Competence Know the detailed economics of all stakeholders Provider Payor MD Patient Patient s employer Identify challenges and opportunities 2012 NxStage Medical, Inc. NxStage is a registered trademark of NxStage Medical, Inc. System One and PureFlow are trademarks of NxStage Medical, Inc. CAUTION: Federal law restricts these devices to sale by or on the order of a physician.
The Launch Challenge How do you launch a product without the total cost of care comprehensive study completed Can you target one stake holder to launch with one message with a view to a longer term strategy 2012 NxStage Medical, Inc. NxStage is a registered trademark of NxStage Medical, Inc. System One and PureFlow are trademarks of NxStage Medical, Inc. CAUTION: Federal law restricts these devices to sale by or on the order of a physician.
NxStage Home Hemodialysis Launch with value proposition for the Provider Payor mix Additional medically justified treatments While we Conduct large total cost of care trial to develop data for the payor value proposition Long term clinical outcomes and mortality rates Hospitalization costs Drug utilization Etc. 2012 NxStage Medical, Inc. NxStage is a registered trademark of NxStage Medical, Inc. System One and PureFlow are trademarks of NxStage Medical, Inc. CAUTION: Federal law restricts these devices to sale by or on the order of a physician.