Devices In Drug Land: Med-Tech Firms Try To Break Into Pharma Territory

From the April 2, 2007, issue of "The Gray Sheet"

Medical device companies are targeting everything from headaches to psychiatric disorders and from digestive diseases to cardiac conditions in an effort to win over just a portion of these and other multibillion-dollar drug-dominated markets.

They have their work cut out for them, experts and company reps suggest. Physician turf battles, patient reluctance and arguments about cost to the health care system are just a few of the likely barriers firms face when trying to move into to a therapeutic market already claimed by pharmaceuticals.

"There is this inherent bias against devices towards pharmaceutical therapy because of the cost and ease of administration and all of that," Bob Yayac, president of BizDev Resources, a consulting firm focused on identifying barriers to adoption for new products, told "The Gray Sheet."

When drugs are available for a certain type of treatment, they "are probably going to be preferred by physicians, probably by patients and probably preferred by hospital administrators and reimbursement agencies," he said. "We are pretty good at popping pills."

Without a doubt, there are cases in which device solutions have become established in markets where drugs are an option. The most prominent examples are, perhaps, balloon catheters and stents used in conjunction with medical therapies to unblock plaque-laden coronary arteries. Major results reported just last week at the American College of Cardiology annual meeting, however, underscore the tension that exists with the use of devices, even with highly entrenched practices of interventional cardiology.

Even in clearly drug-dominated therapeutic areas, there are market openings, companies suggest. Because of the inherent systemic activity of most drugs, side effects or drug resistance are always potential issues. Further, medical regimens may require strict patient compliance and, over time, costs can add up. Meanwhile, devices generally take less time to develop and get to market than drugs.

"The Gray Sheet" examined the strategies of three companies looking to make the case for their devices.

Physician Education Key For Hypertension Device

Company: CVRx (founded 2001)

Device: Rheos implantable neurostimulator

Condition: hypertension

Dominating Drugs: ACE inhibitors, beta blockers, diuretics, calcium channel blockers, angiotensin II receptor antagonists

Hypertension represents one of the largest therapeutic areas almost exclusively associated with oral drugs. Pharmaceutical spending for this indication accounts for more than $25 billion in annual U.S. healthcare spending. At least one development-stage device firm hopes to stake a claim in this sector.

Minneapolis-based CVRx recently began a 50-site pivotal trial of 300 patients to support PMA approval of its Rheos implantable stimulator to treat high blood pressure.

According to CVRx CEO Nadim Yared, a quarter of patients in the United States with hypertension are either resistant to hypertensive drugs or are not complying with their medications. These individuals are the company's initial targets.

Rheos works through a different mechanism than blood pressure medication. The pulse generator is implanted near the collarbone with leads attached to the carotid arteries. When the baroreflex system is stimulated, the central nervous system signals the body to reduce blood pressure by dilating blood vessels, reducing heart rate and promoting kidney fluid excretion.

As for patient compliance, "It comes automatically with the devices," Yared noted.

However, it is the very size of the drug-resistant market, estimated at between 2 million and 4 million, that represents the first big challenge for the company.

In the United States there are about 8,000 nephrologists, 25,000 cardiologists and 125,000 internists, most of whom regularly see patients with hypertension, Yared explained.

"For a device company, especially a start-up our size, we don't have the resources of a big pharmaceutical company to go and educate all of these thousands of physicians," Yared said. "So this will be the interesting challenge ahead of us."

Yared sees a clearer path to convincing payors and patients of the value of the Rheos technology.

Direct and indirect costs of hypertension totaled $66 billion in 2006 in the United States. CVRx hopes to show payors that the substantial upfront cost of the Rheos technology - which it estimates will be similar to that of implanting a deep brain neurostimulator - can reduce costs downstream for hypertension-related health conditions.

The company has been in discussions with CMS and major private payors for the past four years to make sure its trials are designed to support reimbursement for Rheos.

Yared expects only limited resistance from patients who might question having a device implanted instead of relying on oral medications.

"Patients today accept the notion and the idea of undergoing surgery to try to reduce their cardiovascular death risk," he said, pointing to the 160,000-180,000 carotid endarterectomy surgeries that are done in the United States each year to prevent stroke.

For the first indication CVRx is seeking for Rheos, patients will continue to take their blood pressure medications. The firm's "roadmap for the future" includes studies to widen the indication, including looking at patients with less severe hypertension, Yared said.

The next major trial CVRx begins in Europe will seek to claim medication reduction benefits - which translate to cost savings and improved quality of life - as a result of Rheos treatment.

"It will be easier to convince patients if we can make the claim regarding the medication reduction. But since we cannot [at this point] ... we will rely on physicians to explain to the patient the danger of having continuously very high blood pressure," Yared explained.

The CEO cited research showing that a 20 mmHg reduction in systolic blood pressure equates to cutting a patient's cardiovascular death risk in half.

Feasibility data from 21 patients presented March 25 at the American College of Cardiology meeting in New Orleans showed that after six months of Rheos therapy, patients' systolic blood pressure was down an average of 21 mmHg. CVRx's pivotal trial will follow patients for 13 months.

Heart Failure Filter: New Data Drives Economic Case

Company: CHF Solutions (founded 1999)

Device: Aquadex FlexFlow ultrafiltration system

Condition: heart failure fluid overload

Dominating Drug: diuretics

CHF Solutions, based in Brooklyn Park, Minn., has spent the past five years trying to promote its Aquadex FlexFlow ultrafiltration fluid removal system for treatment of heart failure patients who have failed standard drug therapy.

Aquadex FlexFlow (formerly System 100) extracts and filters a patient's blood to remove excess fluid before returning the blood to the patient over the course of several hours. Of the more than one million patients hospitalized for heart failure in the United States each year, about 90% have fluid overload, but those patients are almost always treated with diuretics - drugs that increase urine discharge.

"If you look at the history of the company, we got FDA 510(k) approval in 2002 and really have struggled for a number of years," CEO David Springer said.

CHF Solutions decided to scale down its operations two and a half years ago and focus on generating more data to supplement the 20-patient study that led to Aquadex's clearance.

The result of that effort, a 200-patient randomized controlled trial comparing Aquadex to treatment with diuretics was published in the Feb. 13 Journal of the American College of Cardiology.

The UNLOAD trial found that after 48 hours, even though patients' assessments of breathing difficulty were similar, weight loss was significantly greater in the ultrafiltration group compared with patients treated with diuretics (5.0 kg vs. 3.1 kg), as was net fluid loss (4.6 liters vs. 3.3 liters).

"For the last few years it's been kind of the early adopters. ... We had to do a lot of missionary work one by one to convince people to [use Aquadex]," Springer said. "Now that we have data, we're seeing people start to shift." The company recently increased its sales force from five to 18 people.

Arming itself with new data is only part of the battle for CHF Solutions, however. "If I had to boil it down, change is hard in anything. Even when you change to something that's better, people just have habits," Springer said. "And we're supplanting a drug that's been accepted for 50 years."

Despite their established use, diuretics have a number of well-known limitations. Long-term use can be especially damaging to the kidneys, and 20%-30% of patients are diuretic resistant while others require escalating doses.

Still, physician prescription patterns are difficult to change and CHF Solutions is working to fit Aquadex into those practices by telling physicians, "All you have to do is prescribe this like a drug" - say how much fluid the machine should extract and at what rate. The system itself is operated by nurses.

Springer said the firm also has faced turf wars among physician specialties that either take "ownership" of their hospitals' Aquadex machines to require other specialists to refer their patients for treatment, or refuse to send patients to specialists who use the system because they worry they may not get those patients back for future treatment.

As it attempts to change physician practice, CHF Solutions is even more focused on using the UNLOAD trial data to convince an equally important group of the benefits of its technology - hospital administrators.

"If you don't have a strong economic story, it doesn't fly," Springer explained. "But hospital administration is skeptical, because every company ever known goes in saying we can save you time, we can save you labor, we can save you money."

CHF Solutions' UNLOAD trial found that after 90 days, 18% of ultrafiltration patients were rehospitalized for heart failure, compared with 32% of the diuretic group. The ultrafiltration group also had significantly fewer days of rehospitalization per patient (1.4 vs. 3.8).

According to the firm, heart failure costs the U.S. health system $29 billion each year; more than half of that cost is for hospital admissions. These patients drain hospital resources with long inpatient stays, Springer explained.

The company calculates from the Medicare Provider Analysis and Review Database that hospitals lose an average of about $650 per heart failure admission after receiving the roughly $5,000 that Medicare pays hospitals for patients discharged under hospital inpatient diagnosis-related group (DRG) 127: heart failure and shock.

Treatments with Aquadex and with diuretics are both paid for under this DRG, but while the drugs cost a few dollars per dose, the device costs $900 per treatment. That is in addition to the $19,500 capital investment hospitals make for the machine itself.

CHF Solutions would like to convince hospitals that adopting Aquadex could save money down the road by reducing readmittance rates. And if Aquadex can get a patient out of the hospital a day earlier (which would save almost $1,300), treatment with the device pays for itself, Springer maintained.

As for patients, only those for whom diuretics do not work are considered candidates for the Aquadex procedure. "If diuretics are working, a patient's not going to sign up for this," Springer admitted. But as their disease progresses and drugs become less effective, Aquadex offers an attractive alternative, CHF Solutions says, because it could help delay the onset of kidney failure and need for dialysis.

When it gains broad enough awareness and acceptance from physicians, the firm will consider direct-to-consumer advertising.

CHF Solutions is not the only company that has tried to break into the diuretic market for heart failure. In 2001, Johnson & Johnson/Scios launched Natrecor, a drug that relieves symptoms of fluid overload by dilating other organs to clear the lungs. Two doses of the drug cost about $1,000, also paid under DRG 127.

Unlike Aquadex, Natrecor was generating annual sales of $400 million by 2004. Revenues fell sharply in 2005 when studies suggested the drug worsened kidney function and increased mortality, but Johnson & Johnson still reaped $63.8 million in Natrecor sales in the first six months of 2006, according to data from IMS Health, which tracks prescription drug trends.

Natrecor's initial success suggests that simply being a drug may guarantee adoption more so than good data; but Springer sees a silver lining: Hospitals were willing to spend $900 on Natrecor even when it did not address underlying fluid overload and lacked robust safety data. Now that hospitals have backed away from Natrecor, they have freed up $900 to spend on Aquadex.

Migraine Closure: Focus On Careful Patient Selection

Company: AGA Medical (founded 1995)

Device: Amplatzer PFO closure device

Condition: migraine

Dominating Drugs: Imitrex (sumatriptan succinate), Migranal (dihydroergotamine), Depakote (divalproex sodium), beta blockers, anti-epileptics, calcium channel blockers, antidepressants, serotonin antagonists, NSAIDS

AGA Medical is one of several device firms racing towards the severe migraine market, which to date has been controlled by drugs reaping annual U.S. sales of more than $2 billion.

One limitation of many available drugs is that the mechanism of action for migraines is not well understood. Patients are treated with beta blockers and anti-epileptic drugs, for example, which can have serious side effects, and even the best drugs may only be effective in half of people treated, AGA's Chief Operating Officer John Barr explained.

Minneapolis-based AGA is exploring whether a physiological mechanism - a patent foramen ovale (PFO) opening between the upper chambers of the heart - could be a cause of migraine in some patients as suggested by retrospective studies.

The firm's Amplatzer PFO closure device is a disc-shaped nitinol mesh inserted into the PFO through a catheter to provide a frame for tissue growth to close the hole.

Other firms with PFO closure devices in development to treat migraine include NMT Medical (BioSTAR) and St. Jude Medical (Premere).

AGA began a randomized U.S. pivotal trial for Amplatzer (PREMIUM) in July with a primary endpoint of 50% reduction in migraines in 50% of the population. So far, 25 trial sites are eligible to enroll, with another 15 expected to be through institutional review board approval by mid-year, Barr said. The firm plans to enroll about 400 patients and follow them for one year.

AGA estimates the market size for the trial population, patients with substantial PFOs who have failed at least two migraine drug regimens, is more than one million patients in the United States and Western Europe and amounts to well over $1 billion.

Unlike CHF Solutions, Barr foresees no problems with sparring specialties blocking the device's diffusion. In fact, AGA Medical has designed its PREMIUM trial so that each site has both a cardiologist and a neurologist principle investigator.

He noted, however, that the two specialties take very different approaches to treatment.

Cardiologists, who will perform the Amplatzer procedure, tend to be fairly aggressive, Barr said.

Neurologists, on the other hand, who will screen migraine patients for treatment, are a more conservative group in their demand for high-quality, evidence-based medicine.

"We're being very careful on screening, on patient selection, on really adhering closely to the protocol," Barr explained. "Because in the end, we could hit the endpoints, but if there's much debate in the neurology community about the quality of the data, we won't make much headway."

AGA will rely mostly on private payors to cover the outpatient Amplatzer implant due to the relatively young age of migraine sufferers. The cost of the procedure will be about $8,000-$10,000.

Like CVRx, AGA hopes it can produce cost savings with Amplatzer by reducing patients' medication burdens, though that is not what the pivotal trial is trying to show. In addition, other research has shown that the cost of lost productivity from migraines can run into the billions, Barr said.

Barr added that AGA's cost benefit argument could be enhanced if the cryptogenic ischemic stroke trial that it is conducting in parallel for the device is a success.

"Then one could justify it on two grounds ... not only preventing the migraine attacks, but also potentially ... preventing this individual from experiencing a stroke at some point in their life," he said.

Barr said that with such a large migraine market untapped by devices, it will be important that AGA keep a restrained focus.

"You don't want to get carried away in patient selection," he said. "It's a big market, so make sure the patients really will benefit."

Drugs And Devices Working Together

CHF Solutions, CVRx and AGA Medical face an uphill battle. But ultimately it is not a case of device versus drug. These firms are not attempting to replace pharmaceutical treatments, but work with them or pick up where the effectiveness of the medicines leave off.

Many suggest that device firms focusing on how their products can best work with drug regimens will have the most success.

This can mean everything from designing trial protocols that take both, separate treatments into consideration, to developing a device-drug combination product, in the model of highly profitable drug-eluting stents.

Sam Liang, VP-commercial operations at Cordis Endovascular, says companies looking to break into profitable drug-dominated arenas will increasingly take the latter approach.

"Devices can only bring you so far, and then you have to deal with some of the underlying biologics of what the body does," he said at the Wharton Healthcare Business Conference in Philadelphia in February.

"Ultimately it's going to be a combination device that's really going to unlock a lot of value in these companies, in these markets," Liang said.

- Chloe Taft

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