The use of implantable devices to treat heart disease, orthopedic complaints and other conditions is growing strongly because of advancing technology, increasing demand from an ageing and overweight population, and greater acceptance by physicians and patients of implantation as an alternative or a complement to medication. With an estimated 35 million Americans suffering from conditions that can be treated by the devices, and only some 2.5 million actually using them, the potential for growth is huge.
Some devices now in use or being tested were described at a recent conference sponsored by Wharton’s Emerging Technologies Management Research program. The conference brought together academics and business leaders for discussions on developments in a number of areas, including medical technology.
Technology can take credit for about one third of the 40% decline in the U.S. incidence of heart attack and stroke since 1980, noted conference speaker Paul Citron, vice president of science and technology at Medtronic Inc., a leading maker of implantable medical devices.
But the nation’s cardiac problems aren’t going away. Heart disease is still the leading cause of death in the U.S. and the number one reason for hospitalization among people over 65. Five million people a year suffer from heart failure, half of those will die within five years, and the incidence of heart disease is expected to double within the next five years because of increasing obesity and sedentary lifestyles, Citron said.
Growth in the market for implantable technology is also being driven by an ageing population that requires more devices like pacemakers, defibrillators, artificial hips, and neurological devices to control diseases such as Parkinson’s. The industry is responding with equipment that is smaller, smarter, more reliable and less power consuming
The ECG Loop Recorder, for example, is the size of a small cigarette lighter. Implanted under the skin, it monitors and records heart activity, and allows the physician to interrogate it non-invasively to obtain a clear description of the patient’s condition and detect any danger signs. The device, already commercially available, can also be used to treat epilepsy following the discovery that a large number of epileptics really have cardiac arrhythmia – an irregular heartbeat – indicating that they need a pacemaker rather than anti-seizure medicine.
Another implanted device called a hemodynamic monitoring system – currently in clinical testing – measures vital signs including blood pressure, pulmonary artery diastolic pressure and heart rate. The data can be downloaded to the physician’s computer from the patient’s home via another device attached to the patient’s phone line, facilitating timely decisions on treatment.
Technology’s advance has also reached into ophthalmology where work is being done to create an artificial retina with a chip inserted in the back of the eye. And in neuroscience, a technique known as Activa Tremor Control Therapy can control trembling, such as occurs in Parkinson’s Disease, by using an implanted device that can deliver electrical stimulation to certain areas of the brain. “We are making the devices constantly more intelligent so that we can better identify problems and deal with them in an appropriate way,” Citron said.
A developing field is cardiac resynchronization therapy in which an implanted electronic device corrects the tendency – widespread in heart-failure patients – for the heart chambers to contract at the wrong time, forcing the heart to work harder and increasing the risk of a heart attack.
“By achieving a resynchronization of the chambers, we are seeing a remarkable improvement,” Citron added. “The patient not only has fewer symptoms but tissue that has become not as efficient then becomes more efficient.”
Billion Dollar Markets
Another product that’s expected to see vigorous growth is the drug-coated stent. This improves on an existing device that is permanently inserted in a coronary artery to keep it open. The new device builds on that by delivering a controlled flow of m edication into the patient’s bloodstream for a limited period.
The device, for which Johnson & Johnson is awaiting approval from the Food and Drug Administration, is expected to sell for twice as much as a standard stent and result in a dramatic increase in the size of the market, currently worth some $2.5 billion a year, according to Phil Nalbone, a medical devices analyst at RBC Capital Markets in San Francisco.
The market for implanted defibrillators – devices that shock the heart back to a normal rhythm – is expected to see even sharper growth because of a recent official clinical trial that tripled the number of patients eligible to receive them to some 900,000. That could boost the value of the market to as much as $13.5 billion a year from the current $2.2 billion. The devices, which cost between $20,000 and $25,000 each to implant, are about the size of a pager.
RBC projects growth in implanted defibrillators at an annual 14% for the next five years although Nalbone says that’s too conservative, and the true figure is likely to be about 22%. Among other sectors of the cardiac market, pacemakers are expected to grow by 5% a year from a current $3 billion, and devices designed to counter congestive heart-failure are seen surging 50% a year from a modest $1 billion base.
Overall, the implantable technology market has sales of about $25 billion a year, and that’s been growing by 9-10% over the last five to seven years, according to David Louthson, a medical device analyst at UBS Warburg.
Demand for implanted defibrillators received a big boost after Vice President Dick Cheney was fitted with one. “You can almost trace the increase in inquiries about the device from the day of his implant,” said Nalbone. “This is a life-saving device, and for him to walk out of the hospital looking robust and healthy and then start running the country is a pretty strong endorsement of the technology.”
The industry’s prospects are enhanced by the fact that implant technology saves money, according to AdvaMed, a Washington, D.C. lobbying organization. Coronary stenting, for example, costs about $15,000 and takes 90 minutes compared with $27,000 and two to four hours for open bypass surgery, the group says.
The potential of devices such as implantable defibrillators to save money will be the key to whether the insurance industry is willing to pay for them, suggested Sean Nicholson, professor in the health care systems department at Wharton. If they are proven to prevent heart attacks or give early warning signs of problems that would otherwise be more expensive to treat, they will be more attractive to insurers, but that argument is not yet settled.
“The jury is out on whether these devices can reduce costs,” Nicholson said. “But it’s a strong sign that Medicare is willing to pay for the kind of defibrillator that Dick Cheney has fitted. Private health insurers will often follow.” The commercial potential of the devices will also depend on whether people are willing to pay for them over and above their regular health insurance premiums, he added.
The outlook is helped by the federal government whose agencies have both approved new products and quickly provided insurance codes for devices coming to market, ensuring reimbursement for patients.
Medication Over Surgery
Lifestyle choices also seem to point to increased demand. The increasing obesity of the U.S. population, notably among young people, suggests an enduring need for artificial measures such as coronary stents to keep clogged arteries from closing up altogether. “It’s an extremely positive outlook,” said Nalbone. The upbeat prospects have led stocks of leading manufacturers such as Medtronic, Johnson & Johnson and St. Jude Medical to outperform the stock market as a whole.
But growth is restrained by physicians’ reluctance to use the technology until they see clear evidence of the devices’ benefits, and by some resistance from patients who may avoid implantation because it involves surgery. Until all parties are convinced, medication is likely to remain the first choice overall.
“Implants are always the therapy of last resort because they are invasive and involve surgical risk,” said Louthson of UBS.
The market is also prevented from reaching its potential by diagnosis that doesn’t make a clear case for implantation. Hip replacements, for example, could in theory be performed on the estimated 20 million Americans with osteoarthritis, but in some cases the disease may not have progressed sufficiently to warrant hip replacement; in others, the patient may choose to defer the operation for as long as possible for reasons of lifestyle.
Physicians are understandably cautious about adopting new technology, said Medtronic’s Citron. “There’s a conservatism in the clinical community not to jump headlong onto the newest bandwagon. It sometimes takes a number of years to show how safe the technology is.”
The first cardiac pacemaker, for example, was developed in 1959 for just a few patients and has now become a multi-billion-dollar market. Implantable defibrillators were initially seen as having a limited market and are now used for about half a million patients a year, Citron said. Together, pacemakers and implantable defibrillators make up a $5-$6 billion market.
While the industry’s prospects are currently bright, it may be challenged in the long term by the ability of the nation’s health-care system to pay for it. With higher federal budget deficits resulting from tax cuts and more spending on the military and national security, Medicare spending is unlikely to keep up with the demand created by and for the new technologies.
“Unless the tax base increases dramatically, we are going to have to start rationing,” Citron noted. “At some point, Medicare is going to have to turn off the spigot.”