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March 26, 2019  
HEART NEWS: Feature Story

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  • Price of Heart Device May Mean Rationing

    Price of Heart Device May Mean Rationing


    September 01, 2003

    NEW YORK (AP) - The high price of a new heart device called a HeartMate may lead to rationing with perhaps one of every 15 people who need it actually getting it.

    Financially struggling hospitals probably will not absorb the roughly $95,000 to $145,000 gap between what it costs and what Medicare is willing to pay for it. If everyone who needed one received one, it could cost Medicare $15 billion to $20 billion a year.

    Ron Johnstone is a very lucky man.

    Three years ago, he thought he was dying of chronic heart failure. Then 70, he wasn't a candidate for a heart transplant because of other health problems, and medicine wasn't working. Two years ago, he was given a device, called a HeartMate, and today he hunts, fishes and plays golf around his Hugo, Minn., home and runs a small antique store.

    "I've got a new lease on life," Johnstone declared.

    Indeed, he has lived more than twice as long as the 8.5-month average for patients who receive a HeartMate, but not everyone may be so fortunate.

    Johnstone didn't have to worry about that because he received the device as part of a clinical trial.

    But experts say there are about 100,000 people a year like Johnstone who could benefit from the device, and the manufacturer, Thoratec Corp., estimates it will be selling just 5,000 to 15,000 a year in three to five years.

    "If hospitals could make $100,000 from implanting one of these, I'd be giving you different sales projections," said Thoratec president and chief executive D. Keith Grossman.

    While some insurers have agreed to pay for the device, Medicare is crucial because it is the government insurer for the elderly, the biggest group of chronic heart failure patients. Medicare is expected to announce shortly that it will pay $55,000 for hospitals to install a HeartMate, but that's still far short of the estimated $150,000 to $200,000 it actually costs.

    HeartMate's evolution illustrates the nexus of a health care system beset by an aging population, rising costs and limited resources and the longing for lifesaving technology often made by companies seeking to maximize profits. The conflict is expected to become more heated as more expensive technologies and procedures are developed, and at least in their infancy are not overwhelmingly effective. It will be especially difficult for Medicare, facing the baby boomer retirement wave and already searching for a way to finance a prescription drug benefit.

    "Technology is being created faster than our ability to put in any kind of a financial, ethical and moral framework," said Dr. Allen Korn, chief medical officer of the Blue Cross and Blue Shield Association, which issued a report saying the device qualified for reimbursement.

    "Nobody wants to hear they are going to die. But somewhere there needs to be a bottom line," Korn said.

    Adds Art Caplan, chairman of the department of medical ethics at the University of Pennsylvania's medical school, "We are headed for a big political debate about rationing health care - a debate no one wants to have."

    HeartMate originally was used as a bridge for patients awaiting a heart transplant. In 2002, the Food and Drug Administration approved it as a permanent solution for people with chronic heart failure who are ineligible for a transplant.

    HeartMate is a left ventricular assist device implanted near the heart. Blood drains through a tube from the left ventricle, the heart's main pumping chamber, and is circulated through the body. A second tube extends outside the body and is attached to a battery pack, worn on a shoulder holster.

    A clinical trial of 129 patients sponsored by The National Institutes of Health found that the average patient lived 8.5 months after getting a HeartMate. Patients had a 52 percent chance of surviving for one year, compared with 25 percent of those being treated only with medicine. The two-year survival rate was 23 percent for the HeartMate group, 8 percent for the others.

    However, the frequency of severe complications such as infection and bleeding was 2.35 times greater with the HeartMate, which had a 28 percent infection rate within three months.

    And as with any new technology, there are bugs. Johnstone's first HeartMate, in fact, malfunctioned because of a problem with the valve and had to be replaced. Overall, in its first two years, the device had failed 35 percent of the time, and 10 patients needed a replacement.

    Grossman said the device costs between $60,000 and $65,000. Discounting the price is difficult, he said, because Thoratec needs to recoup its development costs and continue pushing $30 million into research to improve HeartMate.

    In 2002, Thoratec's revenues reached $131 million and it finally made a profit. At such a small company, even a moderate sales increase can propel earnings. Analysts anticipate that even with rationing, Thoratec's earnings will jump 30 percent next year because of the Medicare decision.

    Grossman added that Thoratec will help hospitals apply to Medicare for additional money and hopes to bring reimbursement to $100,000.

    Doctors and analysts expect reimbursement levels to rise and prices to eventually fall, especially if there is competition. World Heart Corp. hopes to get approval for its version by the end of the year.

    A panel of outside experts recommended that Medicare pay for the HeartMate, and Medicare typically follows the panel's advice. A decision is due by Sept. 16, though Medicare has missed two other self-imposed deadlines.

    Dr. Sean Tunis, chief medical officer of the Centers for Medicare and Medicaid Services, said price isn't a factor in the decision, but he acknowledged there is greater scrutiny of something that will cost the agency billions of dollars.

    Reimbursement levels are based on complicated formulas involving what hospitals charge for related procedures. Often the levels are too high or too low, but officials said hospitals should break even.

    The agency also wants to establish a system to monitor the device's effectiveness since approval would mean more people receiving it. Also, Tunis said the device had "extremely high costs for an end-of-life technology" which he considered "marginal."

    "Marginal is a loaded word," Tunis said. "Six to 12 months of life is important, but this doesn't strike me a breakthrough technology that many patients will go for."

    Tunis said part of Medicare's mission to pay for new technologies despite flaws so companies and the medical community can improve them.

    Some suggest Medicare will limit the centers that can implant the device, which leads to de facto rationing. But doctors say that isn't a negative because only advanced cardiac care centers should do it.

    "You don't want hospitals putting this stuff in willy nilly," said Dr. Mehmet Oz, director of the Cardiovascular Institute at New York Presbyterian Hospital-Columbia University. "You don't want them to make the same mistakes we did."

    Oz said his center will absorb the losses to advance the field.

    Dr. Lynne Warner Stevenson, co-director of the heart failure program at Brigham and Women's Hospital in Boston, said only a few of its patients will receive the device because of the cost.

    "The fact that resources are finite is something the U.S. is waking up to very late," Stevenson said. "We ration care all the time."

    ---

    On the Net:

    www.thoratec.com

    www.cms.gov/ncdr/searchdisplay.asp?id79


    Last updated: 01-Sep-03

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