Artificial Disk Meets Reimbursement Resistance

When FDA approved the Charité artificial disk last October, some industry analysts speculated that the device could experience a rapid rate of adoption similar to those experienced by new joint-replacement technologies or drug-eluting coronary stents. To clinch their case, the experts cited pent-up demand for the device, which has been available to patients around the world for more than 17 years; the incidence of 200,000 spinal fusion surgeries performed each year in the United States; and the estimated $50 billion spent annually to treat back pain.

Despite such promising indicators, however, early reports suggest that the Charité artificial disk is running into reimbursement roadblocks—from both government and private insurers. The Centers for Medicare and Medicaid Services (CMS; Baltimore) limits reimbursement to approximately half the estimated $11,600 cost of the device. While Medicare's population of patients age 65 and over is not the target demographic for Charité, CMS's reimbursement rulings are typically seen as guidelines for the private insurance sector. The average age in clinical trials of artificial disks was 40, and the typical spinal-fusion patient is under 50.

Charité is manufactured by DePuy Spine Inc. (Raynham, MA), a Johnson & Johnson company. The artificial disk was developed in the 1980s by Waldemar Link GmbH. DePuy Spine acquired the Link Spine Group in 2003 for $235 million. DePuy Spine reports that more than 5000 of the disks have been successfully implanted worldwide. More than 350 have been implanted in the United States since FDA approval.