Download - AdvaMed Facts
The Role of the Medical Device Sector in Transforming American
Healthcare
June 9, 2004
Blair ChildsExecutive Vice President, Strategic Planning & Implementation
AdvaMed Facts• Founded in 1974 as the Health Industry
Manufacturers Association (HIMA)
• Now grown to 1,200 + member companies and subsidiaries (devices, diagnostics, HIS)
• Members manufacture 90% of the medical technologies sold in the US & 50% sold overseas
• $17 million budget, 60 staff with global expertise
• 45 - member Board of Directors
Our Goals
• Rapid approval by FDA
• Adequate payment
• Speedy coverage determinations here and abroad
• Access to international markets
• Communicate the Value of Medical Technology
Today’s Presentation
How Medical Technology is Transforming Healthcare
Why the future for Innovation has never been brighter
Overcoming the Challenge to Innovation
What is Medical Technology?
Devices Diagnostics Health information systems
Not: Drugs Medical procedures
Focus on the Patient But clear economic value as well…
Patient Care
Lasers
Minimally invasive surgery
Artificial joints
Diagnostic Imaging
Cardiovascular
…no exploratory surgery, less costly treatment
…quick recovery
…faster return to work
… shifting care to less expensive settings
…independence Health System Efficiency
Productivity
Lab Tests…Preventing disease
Key Industry Facts
Short product life-cycles (2/3rds of sales from technologies < 2 years old)
Sometimes high up front costs, long-term value
Highly competitive; Prices decline over time Few stand-alone breakthroughs Lengthy time to market, high R&D costs Small companies = big breakthroughs; 90%
of industry have 1-100 employees
A Technology’s EvolutionThe ICD Example
1980s 2000Weight 280 g < 100 gSurgery Thoracic Pect.(1 incision)Stay 14-24 days 2 daysAnesthesia General LocalBattery Life 2-3 years 9 yearsOper. Mortality 9 percent < 1 percentComplications Significant Virtually noneTotal Cost $99 K $44 K
A Technology’s Evolution Spinal Fusion Surgery
FEATURES 1985 TODAY
Incision Open surgery Open surgery and Minimally invasive surgery
available (in cases where appropriate).
Length of Hospital Stay 9 1
OR Time 4.2 hours 1.6 hours
Return to work 27% 75%
Cost of Procedure Devices enabling spinal fusion surgery were not available until the late
1980s.
$43,676
Non-union rate 40% 6%
A Technology’s Evolution Total Joint Replacement
FEATURES 1973 1993 TODAY
Incision Size 8”-10” 6”-10” 4”-6”
Length of Hospital Stay 12.5 days 5.5 days 4 days
OR Time 140 minutes 65 minutes 45 minutes
Recovery time Several weeks in the hospital
10 days 3-4 days
Feature Improvements Cement used for implants, not as durable and led to cracks. 10 year implant life.
Increased use of non-cemented implants that encouraged bone growth into the implant.
Ceramic, metal on metal and improved polyethylene implants improve durability and implant life to 15 years or more.Minimally invasive outpatient procedure.
Cost* NA $11,196.74 $11,494.87
*Cost data based on Medicare charges (include outliers). Total charges calculated assuming a 50% cost to charge ratio and adjusted for inflation. “Today” values are 2002 data.
Transformative Impact of Medical Technology
Faster recovery Faster, more accurate diagnosis Improved provider productivity Improved job productivity Increased societal wealth
• “Earlier diagnosis and treatment”
• “Safer and less invasive” surgeries
Faster Patient Recovery
Faster Recovery
Source: The Lewin Group analysis of American Hospital Association Survey data 1980 - 2001
Inpatient Surgeries
Outpatient Surgeries
0%
20%
40%
60%
80%
100%
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01
Faster, More Accurate Diagnosis: Early Breast Cancer Detection = Lower
Treatment CostsEarly Detection = Survival Early Detection = Lower Costs
Improving Provider Productivity
Inputs for Cataract Surgery
-0.50
0.51
1.52
2.53
3.54
4.5
1969 1972 1979 1985 1994 1998
Uni
ts =
1 n
ight
in h
ospi
tal
Hospital NightsOROutpatientSurgeon
Shapiro, Shapiro, Wilcox. March 1999
Increasing Workplace Productivity
Putting A Focus on Value
Value Group Collaboration: AdvaMed American College of
Cardiology American Hospital
Association Federation of American
Hospitals Healthcare Leadership
Council National Pharmaceutical
Council PhRMA
Overall Value of Innovation, Findings:
Since 1980, per capita expenses are up $2,254, but: Overall death rate is down 16% Life expectancy from birth is up by 3.2 years Disability rates are down 25% for people over 65* 56% fewer days are spent in the hospital
Health gains of $2.40 to $3.00 per dollar invested
*Value of this improvement not quantified.
206millionmore
days inhospital
470,000moremore
deathsdeaths
Value of Innovation
Where would we be in 2000 without innovations since 1980?
$2254 per capita
in savings
2.3millionmore
disabledpersons
470,000more
deaths
Heart Attack:Improvement in Outcomes
Mortality cut nearly in half
Death within 30 days cut from 1 in 4 to 1 in 8
$1.10 back in value for every $1 spent in Medicare
345.2
186.9
1980 2000
Death Rate Due to Heart Attack(Age-adjusted, per 100,000)
Source: www.cdc.gov/nchs
Stroke:Improvement in Outcomes
Mortality cut by 37 percent
Stroke-related disability after 3 months reduced
$1.55 back in value for every $1 spent in Medicare
96.2
60.8
1980 2000
Death Rate Due to Stroke(Age-adjusted, per 100,000)
Source: www.cdc.gov/nchs
Breast Cancer:Improvement in Outcomes
Mortality cut by 21 percent
Five-year overall survival rates increased from 76.9% to 86.6%
Risk of developing metastatic disease declined from 40% to 15%
$4.80 back in value for every $1 spent in Medicare
32.3
25.4
1980 2000
Death Rate Due to Breast Cancer(Age-adjusted, per 100,000)
Why A Bright Future?
Increasing demand Building blocks of Innovation are
in place Significant policy progress
Under 5.0%
5.0% to 12.4%
12.5% to 20%
Above 20%
Increasing DemandPercent of Population Age 60+: 2000
Source: U.S. Census Bureau, 1999
Under 5.0%
5.0% to 12.4%
12.5% to 20%
Above 20%
Increasing Demand,Percent of Population Age 60+: 2025
Source: U.S. Census Bureau, 1999
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+
US Discretionary Income
$10,000
$8,000
$6,000
$4,000
$2,000
$0
Per Capita By Age Group
Source: The Conference Board, 1999
Building Blocks of InnovationBuilding Blocks of Innovation
Rapid Patient Access
Robust R&D
Transparent, Consistent Product Approval
Efficient Post-Approval Regulation
Predictable, Pro-InnovationReimbursement
Competitive Market
&
Competitive Companies
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FDA Product Approval Accelerating
Medical Devices User Fee and Modernization Act of 2002 Stemmed the staffing and resource decline in
CDRH Clear performance goals Office of Combination Products Regulation of reuse of single use devices Third party inspections
Major Reimbursement Reforms Hold Real Promise
Medicare Modernization Act, 14 provisions impacting Medical Technology, valued at over $1 billion New technology DRGs and add-on payments National Coverage deadlines Clinical trial coverage for breakthrough technologies Maintenance of the local coverage system Chronic care improvement demo Council for technology and Innovation Reforms to Accelerate Health Information Technology
What Stands in the Way of Continued Progress?
Cost pressures Limited health care budgets Increasing focus on evidence
standards, coverage restrictions, payment levels
Inadequate recognition of the value of innovation
Thank YouThank You
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