By John Strong, Co-founder and Chief Consulting Officer, Access Strategy Partners Inc
April 2024 – The Journal of Healthcare Contracting
New “budget busters” for 2024 and beyond
Pulse Field Ablation Catheters (PFA)
Little has changed in treating Atrial Fibrillation (AF) over the past 15 years – until now. AF is an irregular, often very rapid beating of the heart. Conventional therapy uses a catheter to deliver extreme heat or cryothermy to create lesions in the heart to stop AF. Although somewhat rare, this energy can damage surrounding structures, including the esophagus, leading to complications and even death.
Since late 2023, both Medtronic (PulseSelect™ is a novel procedure called renal denervation) and Boston Scientific (FARAPULSE™) have won FDA approval for their proposed treatment of AF. Johnson and Johnson and Abbott could follow in the market with their own solution1.
In Europe, early users are reportedly paying about double the cost of their current ablation catheters. There are significant advantages to these new treatments in terms of safety and patient care, and significant growth of this category is expected in the next ten years2.
Expected Price
2X
Current Prices
Market size
$11 Billion
by 2028
CAGR
24.2%
through 2033
High-Priced Drugs
Not only are some new drugs costly – but they increase the complexity of care delivery as well3.
| Drug | Annual Cost Per Patient | Eligible Targeted Patients |
| GLP-1 Antagonists for Weight Loss | $16,200 | 142 Million |
| Hemgenix Gene Therapy | $3.5 Million per patient | 3,300 |
| Leqembi® (lecanemab) for Alzheimer’s | $26,500 per patient | 100,000 |
Chart4 adopted from Advisory Board Company.
More Robots
Da Vinci
The da Vinci 5 robot is coming, possibly as soon as 2024 according to Intuitive Surgical CEO Gary Guthart5.
10,000X
The processing power of the da Vinci 5, compared to its predecessor.
21%
Rise in fourth quarter Intuitive procedure volumes.
13-16%
Projected procedure growth in 2024.
Orthopedic Robots
Orthopedic companies, including Stryker and Zimmer Biomet, have been promoting robotic knee surgery as more accurate.
60%
…of Stryker’s knee procedures were performed using their Mako® robotic system at the end of 2023. There have been some physician doubts about the evidence supporting robotic assisted total knee arthroscopy (TKA), however. Researchers, including Lucas Nikkel, performed a study of 9,220 cementless TKAs between 2017 and March 2020 that met eligibility criteria. 45% were performed with robotic assistance. All patients were 65 years or older. The results?
“Some patients desire robotic-assisted TKA because they’ve heard it is better, but we’ve shown that there isn’t a true benefit in terms of the likelihood of needing another surgery in the early period.”6
FTC requests public comment to understand lack of competition and drug contracting prices
The Federal Trade Commission handed drug wholesalers and national group purchasing organizations a Valentine’s Day gift this year when they announced they were investigating how contracting practices might be contributing to drug shortages. They’ve started a 60-day period seeking public comment. The size and shape of the U.S. drug market is enormous7.
$1.6 Trillion
Size of the global market for prescription drugs
27%
U.S. share of the global prescription drug market
4%
U.S. share of the global population
For more information from the FTC on this investigation, go to: www.ftc.gov/news-events/news/press-releases/2024/02/ftc-hhs-seek-public-comment-generic-drug-shortages-competition-amongst-powerful-middlemen.
Shortages continue to add costs, compromise care in hospitals
Senators Dick Durbin (D-IL) and Richard Blumenthal (D-CT) have requested that the Government Accountability Office (GAO) review the Food and Drug Administration’s oversight of drug recalls. They cited both the number of most serious recalls and growing volume of adverse event reports as reasons for the request.8
A survey conducted by ECRI and ISMP9 of more than 200 respondents last July showed clearly that there is a profound impact on both patient care and economics because of these shortages.
| Concern9 | Respondents Answering “Yes” |
| Adding back-up inventory for crucial drugs, supplies or equipment | 90 % |
| Rationing or restricting drugs, supplies or equipment in short supply | 86 % |
| Patient treatments have been delayed | 49 % |
| Respondent aware of at least one medical/medication error related to a drug supply or device shortage | 24 % |
Medical device industry continues to grow
The size and scope of the United States medical device industry continues to grow and become even more complex. Since 1980 the industry has grown from 6% contribution to GDP to 16%10.
125,000 Number of medical device companies operating in the U.S.
Market for on-shore masks and gloves has collapsed
Like many “fads” in healthcare, the market for U.S. made masks has collapsed.11 “About 70% of the 100 or so U.S. mask companies during the pandemic have closed, according to industry estimates.5” Hospitals have gone back to cheaper, foreign suppliers as the pandemic receded.
While the cost of foreign-made masks may be less, the cost to the federal government is significant. During the pandemic the Feds distributed about $1.5 billion so that U.S. companies could build plants for N95 masks, gloves, and other PPE. Where did some of it go?
$123 Million
. . . went to build the nation’s first nitrile butadiene
$60 Million
. . . amount needed to hook up utilities to the plant
$170 Million
. . . the amount needed to build the adjacent glove factory
Will Canadian drug importation solve drug shortage, high costs in the U.S.?
9 states have been cleared by the FDA13 to import drugs from Canada. However, the consumption of drugs in the United States is 9X that of Canada14. Canadian health experts are worried that exportation of their drug supplies could result in their own shortages and increasing prices. While there is broad public support for this idea, there are a number of barriers to success, including branded manufacturers who have contracts with Canadian wholesalers that prohibit the practice of exporting their drugs to other countries. Once an application is approved, the FDA must also approve drug packaging and ensure that the drugs are genuine, a process that could take considerable time against the two-year approvals they grant states.
States with FDA approval to import drugs from Canada:
1Kelly, Susan, “4 heart device trends shaping the MedTech sector in 2024”, MedTech Dive, January 30, 2024.
2Future Market Insights, accessed February 14, 2024.
3Advisory Board Company, “What CEOs Need to Know in 2024”, accessed January 14, 2024, at advisory.com.
4Ibid, p. 18
5Kelly, Susan, “Robot reveal: Intuitive submits 510(k) for next-generation system”, MedTech Dive, January 24, 2024.
6Taylor, Nick Paul, “Robotic knee replacement revision rate no better than traditional surgery: study”, MedTech Dive, February 13, 2024.
7Keckley, Paul, “The Four Conflicts that Hospitals must Resolve in 2024”, Keckley Report, Monday, February 19, 2024, p. 2.
8 Kadakia, K., Rathi, V., et. al, “Reforming The Medical Device Recall Process—A Call For Accountability”, February 15, 2024, at DOI: 10.1377/forefront.20240212.968662.
9ECRI and ISMP, “ECRI and ISMP Drug, Supply, and Equipment Shortage Survey” at clientservices@ecri.org, accessed January 19, 2024.
10Modic, Elizabeth Engler, “6 insights about medical device manufacturing”, Scibic Specialties, accessed January 8, 2024.
11Tita, Bob, “Demand for U.S.-Made Masks Collapses”, The Wall Street Journal, Monday February 5, 2024, p. B3.
12 Becker’s Hospital Review, accessed January 10, 2024 at www.beckershospitalreview.com/supply-chain/123m-nitrile-glove-plant-in-stasis-after-temporary-shortage.html.
13Advisory Board Company “Daily Briefing”, January 10, 2024.
14https://Thehill.com/opinion/healthcare/4241929