BB&T

NAPLES, Florida – As in the past, this year’s annual meeting of the Advanced Medical Technology Association (AdvaMed; Washington), held at the Ritz Carlton Naples Golf Resort in early March, did not produce much “stop-the-presses” news. But also as in the past, it served to indicate the industry’s major concerns and a sort of bellwether of current industry thinking.

A decade ago, the main issue – and a source of loud complaining – was the FDA and its seeming tardiness in granting market ap-proval to new products. Then and throughout the rest of the 1990s, presentations during the annual AdvaMed gathering featured PowerPoint content citing the agency’s inability to meet its own mandated timelines for accepting, reviewing and then issuing decisions – usually followed by FDA staff presentations promising improved future performance and closer collaboration with industry.

Over the past five years, the ground has clearly shifted (perhaps, we would suggest, with the introduction of device user fees and, maybe, the assumption that if the agency is expected to do more, it also will demand more financial help from the industry.)

During that period, the focus of AdvaMed and the industry has turned to the Center for Medicare & Medicaid Services (CMS; Baltimore) and its tardiness in expanding coverages for new technologies and for new applications of existing technologies.

The 2006 edition of AdvaMed’s annual meeting suggested another ground-shifting alteration in focus, primarily and more broadly to what happens to a medical device after it has won clearance or approval – by the FDA, by governmental policy makers, and in both the domestic and foreign markets.

These were the key issues mulled over at the gathering, with both AdvaMed and government representatives laying out much broader action agendas than they have previously, in response, we would suggest, to events that unfolded over the past year.

• On postmarket issues:

New AdvaMed President Steve Ubl, in his inaugural address to the group, emphasized the “pressure” being felt by the FDA to put in place “tougher postmarket controls.” And he said this should be done by demonstrating the need to support the value of medical devices with more specific and supportable evidence.

And Ed Ludwig, president and CEO of BD (Franklin Lakes, New Jersey) and incoming chairman of AdvaMed, in his presentation, clearly underlined this point.

“[W]e must commit to candor and transparency in all we do, including how we interact with doctors and other healthcare providers and in how we report postmarket information,” he said.

“Currently, we’re actively engaged in discussion with the FDA on issues stemming from recent events” – a rather clear allusion to the multiple implantable device recalls of 2005 – “and we have created working groups to focus on conditions of approval, recalls, reportable events and quality systems.”

And this was even further underlined on the meeting’s closing day by a review of postmarket emphasis from Daniel Schultz, MD, head of the agency’s Center for Devices and Radiological Health, with references to “targeted surveillance,” additional “third-party inspections” and the standard calls for collaboration with the industry, this time though concerning issues of “postmarket safety.”

Significant by their absence were the usual debates concerning meeting regulatory timelines.

• Marketing via value, marketing via quality:

An underlying debate was seen in AdvaMed’s use of the word “value” to describe the benefit of medical technology vs. the frequent use of the term “quality” by Mark McClellan, the former FDA commissioner who now heads up CMS.

The reason?

For AdvaMed, the world “value” refers to the longer-term benefits of medical devices and technology and what they bring to patients by returning them to work and contributing to family and society. For the government, the word “quality” appears to indicate the shorter-term benefits in terms of cost savings. And look for these terms in the coming months to identify the line in the sand separating the two camps.

Thus, Ubl said that a key focus of the association will be to “aggressively define” the standards that will guide “value-based purchasing” of new medical devices and technologies. Without these standards, he said, the “peril” will be “the federal government micro-managing the process by determining which products to use.”

And Ludwig said “the tendency for some [is] to focus on unit cost vs. value delivered. While there may be high up-front costs for our products, there is long-term value in lives saved and improved, and in systemic cost reductions.”

Serving to highlight this difference – and striking the lone spark in this otherwise sedate gathering – was McClellan in a telephone presentation from Washington (the agency’s satellite video connection being on the fritz).

McClellan gave his usual rapid-fire presentation, more than a dozen times emphasizing improvement of quality “at lower cost.” And then, deep into this presentation, he rather off-handedly said that AdvaMed’s “leadership is opposed to better quality of care.” And he urged the association “to work with us to support new medical technologies that improve the quality,” based on demonstrated outcomes.

Responding to this rather sharp dart, Mike Mussalem, president and CEO of Edwards Lifesciences (Irvine, California) and moderator of the session, clearly had to bite his lip in a conciliatory return of McClellan’s serve.

“Our goals are largely aligned with yours to deliver value for patients,” he told McClellan. “We are committed to work with you in a positive way.”

So far, that work has been the association’s call for clear limitations on the agency’s pilot project to demonstrate the value of gainsharing.

Stay tuned for further quality-vs.-value debates.

• On the domestic front:

In his presentation, Ubl promised a larger public relations effort to the general public by “doing a better job of telling the patient part of this [value] story.” This would be done, with a series of advertisements presenting “case studies of individuals, celebrities, even members of Congress who have benefited from medical technology.”

Ludwig referred to this effort as the association’s “‘Value of Technology’ initiative,” and that this initiative “is on its way to changing the public perception of our industry as we showcase our many positive contributions to health around the world.”

And he emphasized AdvaMed members’ commitment to the association’s “Code of Ethics,” as a way of encouraging “consumer confidence” – but without referencing a growing number of charges during 2005 of unethical behavior by some companies. (See sidebar).

• On the international front:

It appeared at this edition of the association’s annual gathering that the group’s presentations were targeted somewhat more, though not greatly so, to international concerns, probably driven more by the growing threat of avian flu than ongoing security and terror concerns.

Thus, Ludwig referred to the “globally connected world [that] presents additional challenges. Diseases do not respect national boundaries, nor do some of today’s most vexing healthcare policy problems. Policymakers around the globe need to meet not only in times of crisis, as they’re doing to prepare for a potential flu pandemic, but also more regularly to address healthcare policy issues.”

Overall, the 2006 AdvaMed meeting appeared to lay out the parameters of an association report card that will be useful in judging industry activities over the short term before the ground shifts again to new issues.

Speaker: Healthcare needs value ‘fix’

Among a series of thought-provoking presentations during the meeting, perhaps the most interesting – and the most likely to stir follow-on debate – was that by Elizabeth Teisberg.

Associate professor at the Darden Graduate School of Business at the University of Virginia (Charlottesville) and co-author of a forthcoming book, “Redefining Health Care: Creating Positive-Sum Competition to Deliver Value,” Teisberg issued an impassioned plea for thinking differently about U.S. healthcare and altering its forms of competition.

In her presentation, she roundly lambasted the current system, saying that it is shot through with “paradoxes” including the wrong kinds of competition, and that it is too often based on treating discrete conditions and paying for the use of discrete procedures rather than rewarding successful patient outcomes.

Most needed in the system, Teisberg said, is “value-based competition to drive improved results over the full cycle of care.” And “value for patients not lowering costs should be the focus” – with that then resulting in lower costs.

Calling for a “new way of thinking” about healthcare delivery, she said that its true value should be measured by what happens to patients, with patient outcomes broadly publicized in order to drive out poor performers. And she charged that the “root causes” of poor healthcare come from “dysfunctional competition at the wrong levels.”

As a basis for her comments she cited two foundational needs: “universal coverage [as] critical for equity – and competitive economic reasons as well”; and “a basic coverage list set by medical experts, not just a recommendation.”

These, she said, offer the basis of determining how well different systems are delivering care, and broad dissemination of this information would enable patients to make informed choices.

One of the key paradoxes of U.S. healthcare, Teisberg said, is that it features “more competition than virtually any other healthcare system in the world,” but the too-frequent results include “over-use” of care, standards of care and best practices slow to develop, and both “common” errors in diagnosis and “preventable treatment errors.”

Among other key points:

• The current system, she said, is “structured around cost reduction and denying claims” which adds to “administration and hassles.” And she estimated up to 50% of healthcare costs are for the resultant waste. Rather than “value-increasing,” this produced “zero-sum competition to shift costs, . . . capture patients and restrict choice.”

• The best form of competition, she said, would “center on medical conditions over the full cycle-of-care” to provide the best results for patients. As examples, she recommended that dialysis patients should see a nephrologists “before their first treatment” – which they don’t – and back fusion surgery more frequently avoided with earlier physical therapy treatment.

• “Good quality [of care] is more efficient, not more expensive,” while the current system encourages poor care by rewarding more procedures. “The good or product here is not treatment but health,” she said.

• “Information on results – [healthcare] outcomes and prices – needed for value-based competition must be widely available,” she emphasized, citing the public reporting of cardiac surgery data as resulting in “dramatic improvements” in this arena. “Fear of measurement is backwards,” she said. And the best results come from “accumulated experience.”

• Critically, she said that the value-based competition she espouses should be “regional and national, not just local . . . the best in the nation or world, not the best on the block.”

• And providing sweet music to the ears of meeting attendees, she said that “innovations that increase value must be actively encouraged and strongly rewarded.”

Specifically targeting her device-oriented audience, she offered some clear recommendations for this community.

Device makers should compete “not for market share but to improve the full cycle of care,” she said, as an example citing the standardization of anesthesia valves and hoses and creating different packaging for different drugs, thus greatly reducing surgical deaths.

“As device manufacturers, you want to ensure that devices are embedded in the right delivery processes. You want to demonstrate value based on careful studies of long-term costs results vs. alternative therapies.

And, “You want to work with providers who report results that they are actually measuring” and that have the necessary “accumulated experience” to provide “the penetration” of that experience.

This, she said, produced a quality cycle: rising efficiency and better clinical data, leading to more fully dedicated teams and more tailored facilities, providing greater leverage in purchasing, thereby encouraging greater capacity in sub-specialization and wider capabilities in the care cycle, offering opportunities for more measurement and faster innovation with better results, thus producing an improved reputation and leading back to deeper penetration of experience.

‘Invisibility’ seen as shield against negatives

Toward the end of his presentation during the initial session of the annual meeting, Humphrey Taylor, chairman of Harris Interactive (Rochester, New York), noted that he himself is a beneficiary of a defibrillator, having been implanted with one within the past year, and added, “But I won’t mention the brand name.”

That comment obliquely referenced one of the key points of his presentation: that the public doesn’t know the names of the companies that manufacture and supply medical devices and other med-tech therapies, and it may be better for the industry that they don’t.

Taylor, who bolstered his credits by noting that the Harris Poll has conducted 8,000 surveys in more than 80 countries – and continually does polls concerning American public opinion of healthcare – offered the view that the “invisibility” of medical device companies is a benefit. Becoming more visible, he said, could only draw attention and the inevitable criticism.

“When you become visible,you become a target,” he said. “The more successful you are.the more vulnerable you become as a potential target,” he said. As support, he noted the current high profile of several pharmaceutical manufacturers and the significant criticism and probing of their ethics as a result of the spate of recent product recalls. “That could happen to medical technology too. The name of the game is to ensure that this doesn’t happen to you,” Taylor said

That was a key backstory to his umbrella message: that Harris’s polling activities indicate that most of those in the general public – even those who are more informed than the average – as well as the physician community, generally have a positive regard for med-tech and see it as benefiting patients. And these groups additionally have no “top-of-the-mind” negatives concerning healthcare technology.

These groups look kindly, Taylor said, on what they see as “advancements” in medical technology, especially in the area of diagnostic imaging and less-invasive surgical techniques, believing that they provide improved quality of life and “absence of worry.” And this absence of worry, he said, was a very large part of the emotional, vs. purely rational views of med-tech.

Additionally, he noted that the large majority of those polled see as beneficial the increased opportunities for use of new information technologies, such as electronic healthcare records, e-mail and PDAs, advanced imaging systems and home monitoring.

“They’re mad about med-tech, but not about its costs,” Taylor said, with this comment introducing the primary downside unearthed by the surveys – and certainly coming as no large news flash to AdvaMed attendees.

But he said that much of the concern over cost is directed more at the system of healthcare delivery than at those making medical technologies and practicing medicine. “Med-tech and healthcare professionals are excused from the furor over healthcare costs,” he said. In part, “the diversity of med-tech diffuses scrutiny,” and, over all, “strong positives override financial concerns” for the industry.

Beyond weighing these broad general views, Taylor said that the Harris surveys indicate that both the public and physicians do have a range of concerns about more specific healthcare issues, such as regulatory processes, recalls and the need to learn about recalls more quickly.

Gainsharing, the proposed practice of financial reward to physicians for use of less-expensive practices and technologies, he said, “is not supported by the general public, the more informed sector of that group or physicians – though he did not say how well their understanding of this concept was tested. And he noted a minority of concerns that “med-tech puts profits before people” as well as concerns about “inappropriate market incentives.”

The “imperatives” that he recommended to the association and its members were to “solidify positives to inoculate the industry” against criticism, and to assume an “offense” characterized by an emphasis on such things as the safety and “under-use” of med-tech, the presentation of ethical behavior by a thriving industry and its ability to “enrich lives”

These are values, he said, that pharmaceutical manufacturers have failed to push successfully, with the public also, he said, in particular not buying the drug company argument that if their profits fall, this will reduce the amount they can put back into research and development.

On some broader issues, Taylor said that any major healthcare reform in the U.S. has come after a major national crisis, guided by “a very strong and effective – and popular – president who makes this a major priority, backed by the support of legislators, corporate America and doctors.” He said he didn’t see this happening “in my lifetime” – that opinion coming from someone looking to be in his early 60s.

Following the presentation, Taylor told Biomedical Business & Technology that he believes that direct-to-consumer advertising hasn’t been of particular benefit to drug companies from a public relations standpoint and that for device companies direct-to-consumer advertising could have “all kinds of scary negative effects.”

And what about his pacemaker? Made by Guidant (Indianapolis).