The potential is high for TAVR adoption in emerging markets, according to Venkat Rajan, an analyst at Frost & Sullivan. “It is, however, coming in at a higher price point than traditional valves,” he says, which might limit adoption outside of Western Europe, Japan, and the United States. “But, over time, you can definitely have significant utilization outside of those geographies,” he adds. The relative ease of use of TAVR products bodes well for their global adoption. “It is an interventional approach that is pretty straightforward, so [it could be performed] by an interventional cardiologist or cardiac surgeon or even some other interventionist,” Rajan says. “In some of these emerging markets, where maybe they don’t have full cardiac surgery capabilities, you could see a technology leap.”

The largest share of the TAVR market currently is in Europe and is controlled by Edwards and Medtronic, although a number of other companies are vying for market share. As many as 30% of European patients with aortic stenosis are treated with TAVR, according to Keith Dawkins, MD, global chief medical officer for Boston Scientific. The Millennium Research Group (MRG) predicts the European market will grow at just under 20% per year through 2015. Germany boasts the largest number of TAVR procedures. Because Germany is a maturing market, MRG estimates that growth will hover around 12% through 2015. By contrast, the TAVR market in France is expected to exceeding 30% in average growth rate in the next few years. There were restrictions on the use of TAVR in France, resulting in pent-up demand among patients eligible for the procedure.

Sapien and CoreValve, both of which debuted in Europe in 2007, are the most mature TAVR technologies. Edwards launched the second-generation Sapien XT valve in Europe in early 2010. That product was developed to treat a wider patient group and to reduce vascular complications; it features a lowerprofile delivery system than the first generation of the device.

The New TAVR Frontier

The United States represents TAVR’s next conquest. Investment banking firm Canaccord Adams estimates that the U.S. transcathether valve market could be worth $2.5 billion. At present, Edwards has a lock on the U.S. market, as its first-generation Sapien device is the only TAVR product approved by FDA, but it has been indicated for a specific subset of patients.

Medtronic is now conducting a U.S. pivotal trial for CoreValve to lay the groundwork for regulatory approval in the country. “There are two studies within the trial—the extreme risk study was completely enrolled in January. And we expect the high-risk study to be completely enrolled sometime later this summer,” says Kathleen Janasz, director of public relations, cardiac and vascular group at Medtronic. “We anticipate the CoreValve could be approved by FDA in 2014.”

FDA first approved Sapien in November 2011, when it cleared the way for its use via transfemoral delivery in inoperable patients with severe symptomatic aortic stenosis. FDA’s decision to approve the Sapien device could substantially open the market for TAVR, assuming that the indications for use continue to expand. According to analysts' estimates, the U.S. market for these devices could be as high as 100,000 patients per year.

When Sapien was first approved for commercial use in the United States, the device was already available in 41 countries. FDA’s decision to approve the device boosted Edwards’ transcatheter valve sales 67% in the first quarter of 2012 to $122 million, explained Michael Mussallem, chairman and CEO in a statement.² At the time of writing, Edwards declined to be interviewed; the company stated that it was in a “silent period” as it awaits FDA’s decision to expand the Sapien’s indication to patients at high risk to open-heart surgery.

The Legal and Competitive Landscape

Medtronic and Edwards have been battling one another in the courts, with each side accusing the other of patent infringement related to TAVR. In one case, a judge at the Delaware District Court awarded Edwards $73 million but dismissed its attempt to block Medtronic from marketing the CoreValve in the United States. Medtronic plans on appealing that decision.

Speaking on that case, Nathan Lowenstein, a partner at Goldberg, Lowenstein & Weatherwax LLP (Los Angeles) says that “$73 million is certainly a large number. It’s in the top 10% of patent jury verdicts for cases between January 1, 2005 and December 4, 2011. Of course, Medtronic has a market cap of $39.84 billion, so it is all relative,” he adds. “The litigation between the two companies is also notable because of the sheer number of cases filed against one another.”

The bigger threat in patent litigation relating to the medical device industry, however, is often not monetary damages—which can be significant—but rather the possibility of an injunction, Lowenstein says. “That being said, some courts have been reluctant to grant injunctions in cases involving medical devices, such as in the Edwards/Medtronics case,” he explains. “If a patent dispute results in a running royalty on a device whether by settlement or otherwise, the royalty may affect the product pricing or the profit seen by the manufacturer."

Another consideration for both Sapien and CoreValve is the steep learning curve for physicians. A study at the Mayo clinic reported that physicians may need up to 30 procedures before they achieve proficiency. Valve positioning depends largely on the physician, and the valves are not repositionable, which makes optimal positioning of the devices critical. In addition, the two devices are susceptible to paravalvular leak after implantation. Boston Scientific hopes to address those issues with its Lotus valve, which is designed to minimize aortic leaking and is both fully repositionable and retrievable prior to release.

Also competing in the European market are the German firm JenaValve Technology and Swiss-based Symetis, both of which received a CE mark for their TAVR products in late 2011. Other players looking to enter the market include Direct Flow Medical and Heart Leaflet Technologies. Medtronic is also readying its Engager device to expand its European product portfolio. Some of the smaller TAVR players could ultimately be acquisition targets for big device companies looking for growth opportunity.

Meanwhile, Edwards is working on Sapien 3, its next-generation balloon-expandable valve that is designed to reduce paravalvular leaks. The company is also developing a low-profile, repositionable self-expanding valve that makes use of a motorized delivery system to enable deployment by a single clinician.

Other players looking to enter this market include St. Jude Medical, whose Portico valve has been generating some buzz. “They are someone to consider as being highly competitive, given their size and their presence in other valve markets,” Rajan says. “Boston Scientific is another interesting competitor because it wasn’t in the traditional valve segment,” he adds. “They don’t do the mechanical and traditional tissue valves. But they saw this as enough of an opportunity that they made some strategic acquisitions, and they have a product that is being evaluated.”

FDA Clears Path for Wider Use of TAVR

At present, FDA has approved TAVR only for patients with severe aortic stenosis who are deemed inoperable. On June 13, 2012, the agency’s Circulatory System Devices Panel voted 11–0 to expand the indication for the Sapien to include high-risk patients with severe aortic stenosis who are deemed suitable for surgery. One panel member abstained from voting.

“It is pretty clear that [the Sapien] is likely to be expanded now to the more broad claim,” says Jonathan S. Kahan, a partner at Hogan Lovells (Washington, D.C.) who specializes in FDA-related matters pertaining to medical devices. “I think there is still a lot of concern about the risk of stroke, but this product has been on the market overseas for a number of years; I congratulate FDA for finally coming to their senses on this. Obviously, the postmarket studies are going to be critical here but, right now, it looks like the benefits outweigh the risks,” he says. “I think the only question will be whether there will be adoption in the medical community now or whether it will take some time for people to get comfortable with this [technology].”

A Watershed Reimbursement Decision at CMS

CMS announced its first TAVR decision on May 1, 2012, explaining that it would cover the Sapien transcatheter heart valve for Medicare patients under limited conditions for current and future FDA-approved indications.

The CMS reimbursement for the Sapien depends on a range of criteria including a face-to-face patient evaluation by two or more cardiac surgeons. The coverage requires that a multidisciplinary team of surgeons and interventional cardiologists perform the procedure. It also specifies the types of facilities that may apply for reimbursement, requiring the institution to have a heart-valve surgery program with a cardiac catheterization lab or a hybrid operating room with appropriate imaging systems.

The CMS coverage decision is one of the first to be completed under a mutual memorandum of understanding between CMS and FDA, which aims at streamlining reimbursement decisions for life-saving new technologies. “This decision is particularly important as it highlights cooperative efforts among CMS, the U.S. Food and Drug Administration, the Agency for Healthcare Research and Quality, medical specialty societies, and the medical device industry,” explained CMS acting administrator Marilyn Tavenner in a statement.

The final decision was by no means easy to reach, however. “I sometimes feel like I should get the Nobel Peace Prize for this [decision], and I don’t mean to negate the people who actually did earn a legitimate Nobel Peace Prize,” said Louis Jacques, MD, director, Coverage and Analysis Group at CMS in a meeting organized by the Society of Thoracic Surgeons. Reaching a decision involved obtaining consensus between “about eight different parties who could all agree on maybe 60–70% but who had very strong opinions about the remainder.”

Speaking on behalf of FDA at the aforementioned meeting, Bram Zuckerman, MD, director of the FDA division of cardiovascular devices explained that the multiparty collaboration behind the CMS’s decision represents “a new paradigm” that reflects the needs of the 21st century.

It remains to be seen whether the decision marks the beginning of a new reimbursement paradigm at CMS. However, it was “watershed in many ways,” according to Scott Gottlieb, MD, a resident fellow at the American Enterprise Institute who previously served as a senior policy adviser at CMS. “There are a lot of aspects to this coverage decision that are unprecedented from a policy standpoint,” says Gottlieb.

For instance, the decision marks the first time CMS has required coverage with evidence development for the labeled indication. The clinical trial will monitor patients who have received the TAVR technology for at least one year to monitor their incidence of death, strokes, death, heart attacks, and so forth. “For the first time, they are requiring rigorous postmarket studies— not just registries for the unlabeled uses,” Gottlieb says. “They are requiring manufacturers to pay for the studies, even though they are turning it over to a third party to do.” Such studies would presumably be used to expand the label, he explains, “so now the manufacturers are going to have to try and negotiate how they both satisfy FDA and CMS at the same time."

CMS plans on convening a Medicare Evidence Development & Coverage Advisory Committee meeting in roughly two-and-ahalf to three years to look at forthcoming clinical data related to TAVR. “We will know everyone who has had the procedure,” Louis Jacques said. “We will know certain big outcomes whether that is hospitalization, death, stroke, whatever.”

Looking to the TAVR Future

Future generations of the devices must address risk of strokes, vascular complications and aortic insufficiency, which were side effects for some patients implanted with early versions of the valves. In addition, questions regarding the valves’ durability compared with those implanted by open-heart surgery must be answered. If those goals are met, TAVR could become the standard of care for replacing heart valves and could even be used for treating low-risk patients.

The TAVR market is likely to be strong in the long term, potentially outpacing demand for other cardiovascular products such as stents, balloons, and pacemakers. “I think it definitely has a strong long-term opportunity,” Rajan says. “You have all of these factors that are well profiled in terms of the addressable patient population who currently are not qualified for valve replacement.”

Looking forward, as more clinical evidence and information becomes available on transcatheter valves, the procedure will likely become safer and more widespread. Rajan predicts that future generations of TAVR technology will address some of the “glitches” of existing products. “But, ultimately, TAVR likely won’t completely cannibalize the traditional valve market,” he says. “If a patient is healthy enough, ideally he or she should be getting one of the traditional valves. Given the dynamics of TAVR in terms of ease of implantation, however, it is a significant opportunity,” says Rajan.

As for which company has the competitive advantage in the TAVR market, it is hard to overlook the sizable head start of the Sapien in the United States. “Edwards should be predicted to hold onto its market share over time. In the years to come, the big TAVR players could go into a price war to steal and recapture that share, which also might increase adoption of the technology,” says Paul Stein, president at SoCal Preclinical Services (Santa Ana, CA).

Venkat Rajan agrees that the cost of the technology will likely come down, spurred by competition among the big players. “But with regards to competition and price, I think price affects these high-end implants only to a degree,” he explains. Ultimately, the selection of TAVR devices will likely be largely based on clinical outcomes. “Sometimes it is hard to compare trial data for one product to another,” Rajan says. “But anything that comes out that shows that one is easier to implant, is safer, has lower complication rates, [and provides] better long term survival, that is probably going to impact the market more.” As with the stent market, Rajan says, the company that ultimately wins the largest share of TAVR market will be the one with the best long-term clinical trial information.

References

1. Transcatheter Aortic-Valve Replacement, [online] (Waltham, MA: New England Journal of Medicine, [September 8, 2011]); available from Internet: www.nejm.org/doi/full/10.1056/NEJMc1108223.
2. Edwards Lifesciences Corporation’s CEO Discusses Q1 2012 Results - Earnings Call Transcript, [online] (Seeking Alpha); available from Internet: http://seekingalpha.com/article/524551-edwards-lifesciences-corporation- s-ceo-discusses-q1-2012-results-earnings-call-transcript.