One thing everyone in health care can agree on is the unprecedented level of uncertainty swirling around our industry. The new administration has promised change for the better, but we don’t yet know what that change will look like or to what extent any new programs will affect the health care modifications already underway. While we wait and speculate, I can pass along some market insights for hospitals, physicians and supply chain leaders on cardiovascular medical devices.
Over the past two years several revolutionary medical devices were introduced in the U.S., including leadless pacemakers, bioresorbable scaffolds, stented heart valves and the left atrial appendage closure device. Each introduction promised better patient outcomes and all included a significant price tag.
So what’s the next big thing?
Transcatheter mitral valves
Suppliers believe transcatheter mitral valves are one candidate. Driven by the prevalence of mitral valve disease, suppliers are investing billions in the development of this valve. At the same time, the U.S. market for the aortic valve continues to expand, with additional devices forecasted to become available in 2019.
The U.S. market for transcatheter mitral valves does not yet exist. However, over the past several years, the large cardiovascular suppliers have invested in acquiring technologies, patents and in developing transcatheter mitral valves.
So why are suppliers investing in this market segment? The driving factor is that the prevalence of mitral valve disease is significantly greater than aortic valve disease in the U.S. The prevalence of valve disease increases sharply with age and mitral valve disease affects approximately 9 percent of the over-age-75 population, almost double the rate of aortic valve disease.
The existence of this large underserved population and the success of transcatheter aortic valves are driving development in this market. The statistics on mitral disease prevalence are dramatic for large suppliers looking to grow sales in an emerging market or to maintain their existing market positions.
The economic impact of transcatheter mitral valve technology will be significant. Due to the success of suppliers’ pricing models for the transcatheter aortic valve, we can expect that a similar pricing model will be used for mitral valves. Reimbursement for a transcatheter mitral valve procedure should exist by the time of or shortly after the device’s U.S. approval. It is also not unreasonable to assume our experience with the release of the transcatheter aortic valve will be similar when predicting this product’s hospital availability and profitability.
Transcatheter aortic valves
While focus appears to shift to transcatheter mitral valves, the transcatheter aortic valve segment continues to grow. In 2016, physicians in the U.S. implanted an estimated 68,000 transcatheter aortic valves. Industry estimates expect this number to reach 100,000 by 2020. Until now, product choice has been limited. Suppliers have successfully maintained high device prices. Additional devices are in U.S. clinical trials and forecasted to be available in late 2018 or early 2019.
The economic impact of transcatheter aortic valve technology will continue to grow. The transition from surgical valve implantation to transcatheter valve implantation will erode hospital profitability. Based on the success of the current supplier pricing model, hospitals should not anticipate significant price decreases anytime soon.
Adding pressure on the hospitals, CMS will continue to reduce reimbursement payments to reflect the improving procedural efficiencies. As a result, transcatheter aortic valve procedures will remain neutral to unprofitable for most providers.
Endografts
A third evolving product segment seeing growth and innovation is endografts. This group of devices introduced into the U.S. in 2006 has become the standard of care for the treatment of abdominal aortic aneurysms. New device designs and surgical techniques continue to reduce procedural complications, improve patient outcomes and contribute to the increase market segment growth.
The endograft market is also seeing its share of innovation. According to Medtech Ventures, the 2015 global aortic endograft market estimate was $1.8 billion, having grown by 6 percent over the prior year. Device development trends in this market are focused on the reduction of the implant profile, reduction in endoleaks and anatomy-specific device designs.
Data from Millennium Research forecasts a 15 percent increase in procedures over the next 10 years with most of the growth coming from increased thoracic aortic aneurysm procedures and fenestrated abdominal endografts. Reimbursement for endografts exists but it is anticipated that CMS will monitor reimbursement coverage and make annual adjustments to reflect improving procedure efficacy and product pricing. This may also be a procedure CMS targets for a future bundled payment.
Innovation drives the U.S. market and its health care sector. This year like never before, hospitals are under increasing price pressure. Administrators are seeking millions of dollars in savings from supply chain. This will be a very interesting year, and the only guarantee is that there will be uncertainty and change.
