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Campaign Fuels Sales Beyond Expectations

Originally Published MX September/October 2004

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Medical Device Marketing

ADVERTISING, DISTRIBUTION, & SALES

When Encore Medical Corp. (Austin, TX) introduced its new Keramos ceramic-on-ceramic acetabular (hip socket) implant system, the challenge was more complex than simply announcing a new addition to the Encore line.

The in-house marketing group of Encore Medical Corp. demonstrated its knowledge of the product, media, and marketplace with a campaign that combined a standout concept with stylish execution and a clear, concise message. Encore's advertising communications director Michael Droege (below) says reliability and longevity were key messageson.
(click to enlarge)

The Encore in-house marketing group also needed to clearly differentiate its new product from other ceramic-on-ceramic implants that were already on the market. The solution? A standout advertising and direct-mail program that caused an immediate stir and generated sales beyond all expectations.

VC funding highlights

Originally Published MX September/October 2004

BUSINESS NEWS

Alveolus Inc. (Charlotte, NC) has raised $10 million, which it will use for the commercial launch of its tracheobronchial stent technology system. MDS Capital Corp. (Toronto) led the investment.

IntraPace Inc. (Menlo Park, CA) has raised $14.6 million, which it will use to complete a U.S. safety trial for its endoscopically delivered gastric pacemaker.
Toucan Capital Corp. (Bethesda, MD) and Oxford Bioscience Partners (Boston) led the investment.

LipoSonix Inc. (Bothell, WA) has raised $27 million. LipoSonix develops noninvasive cosmetic therapy procedures based on high-intensity ultrasound technology. Three Arch Partners (Portola Valley, CA) led the investment.

Zonare Medical Systems Inc. (Mountain View, CA) has raised $34 million. Zonare is developing an ultrasound platform. Montagu Newhall Associates (Owings Mills, MD) led the investment.

AngioScore Inc. (Alameda, CA) has raised $15 million, which it will use to complete the U.S. clinical trial for and to initiate the worldwide launch of its scoring catheter.

Stent Recall May Raise Quality Expectations

Originally Published MDDI September 2004

NEWSTRENDS

The stents' failure to deflate was caused by a narrowing, or focal neck-down, of the 
inflation-deflation lumen on the catheter shaft (click to enlarge).

Erik Swain

Boston Scientific Corp. (Natick, MA) made headlines by recalling almost 100,000 stents owing to what appeared to be a rare manufacturing problem. Industry observers expect the company's reputation and bottom line to recover. The question that remains is whether the rest of the device industry can expect to be held to such stringent quality measures, especially since most firms couldn't afford to absorb such a financial hit.

Since its Taxus drug-eluting stent had its U.S. launch in March, Boston Scientific had received several reports that the delivery catheter balloon had failed to deflate within one minute after the stent deployment. At first the company attributed the problem to usage errors, not manufacturing.

Then, after finding that the complaints all came from two lots, the firm recalled those lots, about 200 systems, on July 2. Two weeks later, Boston Scientific revealed that additional tests turned up similar problems in other lots. So on July 16, it issued a recall for about 85,000 Taxus systems and 11,000 bare-metal stent systems that it could not prove were unaffected by the problem.

The “no-deflation” condition was caused by a narrowing, called focal neck-down, of the inflation-deflation lumen on the catheter shaft. The shaft has two lumens, and on the affected products, the outer one would weaken because of a manufacturing defect. When sufficient pulling force occurred, the weakened area would collapse and the balloon would not deflate. The company reported 43 complaints (including one death and 18 serious injuries) on 500,000 Taxus systems and 52 complaints (including one death and 25 serious injuries) on 600,000 bare-metal systems. The defect occurred on less than 1 in 10,000 systems manufactured.

Despite the rarity of the problem, Boston Scientific decided that it could not take a chance that more incidents would occur. Soon after the launch, the company implemented a new laser welding process and two enhanced inspection steps. Lots that had not been through all three were recalled. The new welding process makes the proximal balloon weld more robust. The first inspection verifies the minimum outer diameter of the catheter at the proximal balloon weld. The second monitors the parameters of the bonding process.

“Our goal is to come as close as possible to eliminating the no-deflation complaints,” said Paul LaViolette, a Boston Scientific senior vice president who is also group president for cardiovascular products. “We know that 99.9% of what's coming back is good. But maybe some are bad, and we can't specifically identify those in the field. So we're calling them all back. This action is about quality and patient safety.” Stents already implanted are not affected by the recall.

The company expects to lose $95 million in the short term, $45 million from reversal of sales and the rest from unused inventory. It did not expect much disruption of U.S. distribution, but said there could be some disruption in international sales.

Industry observers said that Boston Scientific did the right thing and that it has the financial resources and the good reputation with cardiologists to recover from a recall of this magnitude. 

“They've administered this perfectly appropriately, and from what I see, there is nothing inherently wrong with the product,” said Patrick Driscoll, president of MedMarket Diligence (Foothill Ranch, CA). “They are a well-respected company, and at the end, this will be seen as a normal blip in the process of introducing products.”

Thomas Gunderson, a device industry analyst at Piper Jaffray (Minneapolis) said that the recall should not have a significant long-term impact, but another incident in the near future could cause problems.

“The most reasonable position I've heard from doctors is from those that are saying, ‘I like Boston Scientific and I like my [sales] rep, and they've just used up their get-out-of-jail-free card,'” he said. 

Of greater effect, he said, could be the heightened expectations for quality that the incident could bring to the device industry as a whole. “This could mean that an issue that affects 1 in 10,000 or 1 in 100,000 products is now one to be concerned about, which would take things to a new level,” he said. “I would say this is an outlier, because Boston Scientific had the incentive and the ability to do this kind of recall. This action can't be expected every time there is a problem that small. But for medical device manufacturers, the spotlight is on them now.”

That, he said, could mitigate whatever advantage Boston Scientific's competitors may believe the recall gives them. “It opens the door a bit, but leads them into a room that's a bit more stressful,” he said. “On the one hand, it may give them the sense that the market leader is vulnerable, but on the other, they'll now have to make sure that there's not a problem that affects 1 in 100,000, and to make sure they have enough inventory in case of a total recall. The standards are rising.”

In the short term, the only U.S. competition to Taxus, Johnson & Johnson's Cypher, will see a boost, but even that could be mitigated, said Daniel Lemaitre, a managing director in Merrill Lynch's Boston office who analyzes the device industry. “Even though the J&J stent is probably being used a lot since the recall, J&J does not have the ability to immediately ramp up production to service the whole U.S. market, and we are sure as heck not going back to bare-metal stents,” he said. “Many doctors feel that Taxus is an extraordinarily good product and that Boston Scientific deserves kudos for being so conservative.” 

Also encouraging for Boston Scientific, Lemaitre added, is that soon after the recall announcement, FDA granted the company approval to begin clinical trials using its newest stent device, Liberte, for applications with Taxus. “If Boston Scientific were in FDA's doghouse, I doubt they would have gotten that,” he said. “FDA seems satisfied with what they've done.”

Copyright ©2004 Medical Device & Diagnostic Industry

Trials and Tribulations

Originally Published MX September/October 2004

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Conducting clinical trials for combination products will lead manufacturers into a whole new world.

Peter Adams, Alan Davies, Eduardo March, William K. Sietsema

Development of therapeutic products containing a drug and medical device in combination has blurred the traditional demarcation that exists between the two. While drug-device combinations have existed for some time (e.g., catheters coated with heparin and bone cements containing antibiotics), new device systems capable of delivering drugs in a controlled manner are entering the market (e.g., drug-eluting stents for the treatment of cardiovascular disease). It is anticipated that the number of such products, utilizing well-known medicinals in combination with novel drug-delivery systems, will grow significantly in the coming years. This growth will in turn be accompanied by increasing difficulties in determining the path for approval by regulatory agencies.

Drugs versus Devices

Integrated Technologies Transform Healthcare Delivery

Originally Published MX September/October 2004

COVER STORY

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From Image to Vision

When people think of healthcare delivery, they tend to focus on the doctor-patient relationship as the critical nexus for the provision and receipt of care. But the business flow of healthcare is actually much more complex, encompassing a large number of interdependent processes.

Coordinating such varied processes can be a healthcare provider's nightmare—and it isn't always done successfully. Under optimal conditions, for instance, it might take 5 minutes to perform a CT scan, 5 minutes to read it, and 10 minutes to transcribe the report. But successfully managing workflow is a challenge for most institutions. For example, typical turnaround time from physician order to receipt of a CT report can be anywhere from 8 to 26 hours.

Enter the concept of the integrated digital healthcare enterprise.

(click to enlarge)

Expanding Brand Borders

Originally Published MX September/October 2004

ADVERTISING, DISTRIBUTION, & SALES

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Medical Device Marketing

The world of diabetes is universal and diverse. Addressing such diversity, the marketing approach of LifeScan Inc. (Milpitas, CA), a Johnson & Johnson company, offers an example of a brand remaining true to its vision, but with the flexibility to build relationships with multiple audiences.

Anderson DDB San Francisco developed a TV commercial featuring BB King to reach a specific audience for the OneTouch brand of blood-glucose monitors by LifeScan Inc.
(click to enlarge)

LifeScan and its agency of record, Anderson DDB San Francisco, worked together first to understand and establish the core values, vision, and essence of the OneTouch brand of blood-glucose monitoring systems. The brand vision—defined as the goal of striving for that which may seem to exceed our grasp—is "creating a world without limits for people with diabetes." Once this vision was understood and embraced throughout the company, Anderson DDB was able to expand the brand to multiple audiences.

Award-winning team members for Anderson DDB San Francisco at MMA's 2004 In-Awe presentation ceremony (left to right): Mark Spurr, vice president and director of client services for domestic healthcare (Toronto); Rory Phoenix, copy writer; Russell Messner, strategic planner; Jill Regan, senior art director; Michael Ling, vice president and managing director; Spring Utting, account director; Laura Reynolds, copy writer; and Ron Howard, cocreative director (Toronto).
(click to enlarge)

A key hallmark of marketing for the OneTouch brand is insight into the needs of each target audience. This can be seen in the brand's award-winning campaigns in the Medical Marketing Association's 2004 In-Awe competition. Each campaign was based upon market research and validation that enabled Anderson DDB to identify a single relevant insight on which the communication could revolve.

Influencing Public Policy

Originally Published MX September/October 2004

GOVERNMENTAL & LEGAL AFFAIRS

The activities of medical device firms in Washington, DC, encompass a whole lot more than just lobbying.

Moderated by Steve Halasey

Healthcare provision in the United States is largely a federalized industry. Its epicenter is the seat of national government, Washington, DC. There, policy is made through healthcare-related and specifically medical technology–related legislation and via the regulatory and reimbursement decisions of federal agencies that oversee aspects of healthcare delivery ranging from new product introduction to payment for services.

User-Fee Increases May Prompt MDUFMA Reassessment

Originally Published MDDI September 2004

NEWSTRENDS

Table I. Fee types and FY 2004 and FY 2005 fee rates (click to enlarge).

Erik Swain

FDA's user-fee rates for premarket approvals (PMAs) are increasing by double digits again, despite the agency's delaying one rate adjustment. As a result, industry will be seeking changes to the user-fee agreement.

User fees for PMAs will rise 15.7% in FY05 to reach $239,237 for most applications and $90,910 for companies with annual revenues under $30 million. However, 510(k) user fees are rising less than 1% (see Table I).

The jump comes despite FDA's decision to put off including a “compensating adjustment” from FY04 user-fee revenue shortfalls until FY06 or FY07. The agency says the reason is that at that point, the exact amount of the shortfall will be known. Including the compensating adjustment in FY05 could have pushed the PMA fee increase above 30%, as it did for FY04.

Despite the temporary relief, both major industry trade associations decried the new fees as too high and vowed that changes will be made.
According to AdvaMed, the double-digit increase results from FDA's too-conservative estimate of the number of PMA applications to be filed in FY05. The agency is projecting 51, but AdvaMed projects more than 80. For FY03 and FY04, FDA had overestimated the number of PMA submissions. 

“Our members, who have the best sense of the state of medical technology innovation, are telling us that the innovation pipeline is full,” said Pamela G. Bailey, AdvaMed's president. “The user-fee increase is excessive, given the positive outlook for innovation. Even if one-third of [our] projected applications do not materialize, a single-digit increase is still justified.”

The Medical Device Manufacturers Association said the rate of increase indicates that fundamental problems exist in the funding scheme, and that these problems need to be addressed by the industry.

“We appreciate FDA's effort to minimize the fee increase for FY05, but it is not empowered to deal with significant problems in the program,” said Mark Leahey, MDMA's executive director. “That's why we need to start working with Congress to make the necessary changes to sustain the program moving forward.”

A July 15 meeting between representatives of AdvaMed, MDMA, and FDA may have helped lay the groundwork for such a dialogue. At that session, FDA officials explained why such a fee increase is required, and the associations aired their short-term and long-term concerns. 
Under terms of the Medical Device User Fee and Modernization Act of 2002, industry has the right to revisit the user-fee agreement if Congress fails to increase CDRH appropriations or if FDA fails to meet performance goals. The former happened in FY03 and FY04. 

Leahey said MDMA would like to see alterations agreed to by the end of September 2004, since FY05 begins the following month. But he said that might be difficult because of the upcoming presidential election. 

Specifically, MDMA has called for abolishing the “compensating” and “workload” adjustments, which adjust fees for one year based on revenue shortfalls or excessive workloads from previous years. “Unless modifications are made to eliminate [those], the industry is looking at a minimum of 20% increases for the next two years,” Leahey said. “By FY07, we will have PMA fees exceeding $350,000.”

Copyright ©2004 Medical Device & Diagnostic Industry

CROs: Filling the Resource Gap

Originally Published MX September/October 2004

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

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Trials and Tribulations

With the burgeoning complexity of regulatory and clinical data requirements for combination products involving drugs and devices, full-service clinical research organizations (CROs) are being called upon to play an increasingly active role in product development programs.

CRO regulatory personnel are typically involved in many product development programs, and are therefore broadly familiar with global regulations as well as unwritten expectations. More importantly, these regulatory specialists have often observed firsthand which strategies have been successful and which have failed, making them well qualified to guide device and drug development teams to the best choices for their programs.

Integrated Technologies Transform Healthcare Delivery

Originally Published MX September/October 2004

COVER STORY

Return to Article:
From Image to Vision

When people think of healthcare delivery, they tend to focus on the doctor-patient relationship as the critical nexus for the provision and receipt of care. But the business flow of healthcare is actually much more complex, encompassing a large number of varied and interdependent processes.

The task of coordinating such varied processes can be a healthcare provider's nightmare—and it isn't always done successfully. Under optimal conditions, for instance, it might take 5 minutes to perform a CT scan, 5 minutes to read it, and 10 minutes to transcribe the report. But successfully managing workflow is a challenge for most institutions. For example, typical turnaround time from physician order to receipt of a CT report can be anywhere from 8 to 26 hours.

(click to enlarge)

Enter the concept of the integrated digital healthcare enterprise.