thoratec announcement...

Thoratec has traded 42K and up 3% pre market trading.
VCR will be hurt by this as 2-3 years is a long time to be on the sidelines.

PLEASANTON, Calif., Oct 2, 2003 /PRNewswire-FirstCall via COMTEX/ -- Thoratec Corporation (Nasdaq: THOR), a world leader in products to treat cardiovascular disease, said today that the Centers for Medicare & Medicaid Services (CMS) has issued a National Coverage Decision Memorandum for the use of left ventricular assist systems (LVAS) that are approved by the FDA for treating Destination Therapy in end-stage heart failure patients. Thoratec's HeartMate XVE LVAS is currently the only such device approved for Destination Therapy by the FDA.

The company will be hosting a conference call for investors at 8:30 a.m., Pacific Daylight Time, today, October 2. The dial in number is 719-867-0660. A replay of the call will be available until October 9. To access the replay, call 719-457-0820; the passcode is 535807.



Key elements of the coverage decision included:
-- CMS indicated that Destination Therapy will be reimbursed under a
revised DRG (diagnosis-related group) 525, which effectively increases
the base level of reimbursement by approximately 25 percent to
approximately $70,000. In addition, the company estimates that in many
cases the actual payments to hospitals under this revised DRG will be
higher -- and in some cases as much as double the base payment -- based
on geographical location and other factors. Hospitals can also qualify
for additional payments under outlier payment policies, depending on
the hospital's actual charges.
-- Initially, reimbursement will be available to Medicare-approved heart
transplant centers, as long as they can demonstrate that they have
performed at least 15 bridge-to-transplant or Destination Therapy VAD
(ventricular assist device) implants, with devices approved for either
commercial or investigational use, since January 1, 2001. Thoratec
believes that this makes approximately 60 centers eligible initially
and that these centers have accounted for approximately 80 percent of
all VAD procedures done in the U.S.
-- CMS has indicated that any center that falls short of the 15 implants
requirement, but believes that it is capable of providing comparable
quality Destination Therapy services, can submit its request to CMS
immediately, and CMS will promptly review these applications for center
approval. Longer term, CMS noted a more formal accreditation process
will be created for hospitals, providing additional centers the ability
to qualify for Destination Therapy Medicare reimbursement going
forward.
-- The patient eligibility criteria for Medicare reimbursement are
consistent with the FDA-approved indications for Destination Therapy.
CMS is also requiring center participation in a qualified registry.

As is frequently the case, an effective date of coverage initiation was not included as part of the National Coverage Decision, but it is expected to be announced by CMS within the next 30 days.

"We are extremely gratified to receive a favorable Medicare reimbursement outcome for Destination Therapy, and are very encouraged by the content of the Decision analysis itself. The conditions outlined by CMS as part of this coverage analysis are very much in line with what we had envisioned as the market opportunity for this indication. We believe that they are based on the discussions CMS has had with hospitals and surgeons utilizing the HeartMate for Destination Therapy as a life-saving cardiac innovation for end-stage heart failure patients. We applaud the diligent, responsive and cooperative manner in which they conducted their deliberations," said D. Keith Grossman, president and chief executive officer of Thoratec.

As reported yesterday, CMS also issued a technical correction to the DRG 525 payment.

"We are also encouraged by the latest adjustment to DRG 525 and recent comments from CMS in which they indicated that they would continue to evaluate changes to DRG 525, and would be considering data associated with Destination Therapy procedures as part of their DRG review process. We will continue to work closely with CMS in the coming months to further optimize the Medicare reimbursement for these patients. CMS also noted that Medicare's outlier payment policy will help to offset unusually expensive cases," Grossman noted.

"It appears that CMS has included in the coverage policy update many elements of the favorable recommendation from the Medicare Coverage Advisory Committee (MCAC) and input from the cardiology and surgical communities. We believe that the CMS National Coverage Decision Analysis Memo drew significant direction from the scientific input of leading physicians, particularly Dr. Eric Rose of Columbia University;

Dr. Leslie Miller of the University of Minnesota; Dr. James Long from LDS Hospital; and Dr. Lynne Warner Stevenson of Brigham and Women's Hospital. Clearly, CMS also relied on the compelling results of the REMATCH trial, as reported in the New England Journal of Medicine, and the dramatic need of end-stage heart failure patients who have no other treatment options," Grossman continued.

"Given that many patients do not qualify for transplantation and there is a very limited supply of donor hearts available, we are hopeful that this will be an increasingly adopted treatment for patients who have no other options," he added.

In November 2002, Thoratec received FDA approval to market the HeartMate for Destination Therapy, enabling the company's device to be used for permanent support for some portion of the many end-stage heart failure patients each year in the U.S. who are not eligible for heart transplantation. It marked the first time that a ventricular assist device received approval for Destination Therapy -- or permanent support -- for these patients.

"This is a major milestone in the adoption of our device for this indication. We anticipate that a significant portion of Destination Therapy patients will be covered by Medicare," said Jeffrey Nelson, president of the company's cardiovascular division. "At the same time, we have had a very positive response from private payers as well. The Blue Cross/Blue Shield (BC/BS) Association and Aetna have completed positive technology assessments and an increasing number of BC/BS plans are now providing reimbursement for Destination Therapy," he continued.

"We initiated our sales and marketing and training programs immediately after receiving FDA approval and the initial response from our centers has been very positive. It is very encouraging that the centers eligible initially for this coverage account for the overwhelming majority of VAD implants. We believe that this announcement from CMS will be a catalyst for even greater interest from the medical community in our device," Nelson added.

"With bridge-to-transplant, we found that the early adopters were the larger, more active centers and that over time, the device found increasing acceptance in a broader range of centers. We have been particularly heartened by the findings of recent market research that suggest that the majority of cardiologists would refer a patient for VAD treatment versus the traditional medical therapy that they have typically prescribed in the past. Clearly, we have had extensive experience in developing markets for assist devices and believe we have the training and customer service strategies that will facilitate our expansion into this market," Nelson said.

The FDA approval for Destination Therapy was based on the results of the landmark REMATCH trial that compared the experience of patients supported by the HeartMate LVAS with those being treated with optimal medical management. The results of that trial demonstrated meaningful survival benefits and improved quality of life for patients supported by the device. Under the approval, the device can be used to support patients with New York Heart Association Class IV end-stage left ventricular failure who have received optimal medical therapy for at least 60 of the last 90 days, have a life expectancy of less than two years and are not candidates for cardiac transplantation.

REMATCH stands for Randomized Evaluation of Mechanical Assistance for the Treatment of Congestive Heart Failure. The trial compared patients who did not qualify for heart transplantation randomized to the HeartMate VE with those randomized to treatment with optimal medical management involving drug therapy, diet and exercise. The study was a collaboration among the National Institutes of Health, Columbia University and Thoratec and was coordinated by Columbia's International Center for Health Outcomes and Innovation Research (InCHOIR). The study took palace at 21 prestigious transplant centers in the U.S. with 68 patients implanted with the HeartMate VE and 61 treated medically. The primary endpoint of the trial was all cause mortality, with adverse events, quality of life and cost of care evaluated as secondary endpoints.