waiting for a possible medicare decision, page-2

Realistically, the US Medicare decision should have no effect on the VCR shareprice, given that the VentrAssist device is not likely to be approved for sale in the US for at least 5 to 8 years, if ever, (in its current format).

However, company and followers hype, could give VCR's shareprice a temporary boost.

The following article, from a US commentators perspective, is interesting.


http://money.iwon.com/jsp/nw/nwdt_rt.jsp?section=news&news_id=reu-n03174922&feed=reu&date=20030903&cat=INDUSTRY

Medicare Faces Dilemma Over New Technology Costs.

Wednesday September 3, 2:35 PM EDT

By Kim Dixon

CHICAGO, Sept 3 (Reuters) - Sixty-seven year old Gloria Happel credits a $15,000 back surgery for alleviating 35 years of suffering, but it took two years of legal wrangling and a court order to get her insurance company to pay for it.

The pain became so great she couldn't lift her legs while lying on her back. Insurance wouldn't cover the cost of the operation so Happel took out a loan to pay for it.

"It was absolutely worth it," she said. And finally, after the operation proved to be a success, the insurers agreed, paying the cost that doctors had long ago recommended.

Gloria's plight is emblematic of the factors pushing health care coverage to the forefront of the national agenda: Baby-boomers are marching toward Medicare age as health care costs skyrocket due to new medical technologies with price tags in the thousands of dollars per treatment.

Although the federally-funded Medicare and private insurers say medical evidence is paramount in decisions about what to pay for, experts say the ballooning cost of new treatments is a factor that they increasingly cannot ignore.

"It's inevitable that cost is going to weigh more and more," in healthcare coverage issues, said Stephen Findlay, director of research and policy at the National Institute for Healthcare Management. "Everyone is tuned into this: both Medicare and private insurers."

The medical device industry is arguing that several recent rulings already show that patients are being denied the best treatment in part based on cost.

In June, the U.S. Centers for Medicare and Medicaid Services, which runs the Medicare health insurance program, decided it would only cover a limited number of patients in special situations for Guidant Corp. (GDT)'s defibrillators, which carry a $25,000 ticket price, for example.

And Thoratec Corp. (THOR) is stuck in limbo after Medicare twice delayed a ruling on payment for expanded access to Thoratec's $60,000 left ventricular assist device, a costly implanted heart pump.

Underlying the struggle is an undeniable statistic: Health care spending in the United States is set to double to $3.1 trillion in 2012, when it could hit nearly 18 percent of the Gross Domestic Product, up from 14 percent in 2001, according to government estimates.

"Over the long haul, technology is the biggest driver of health care costs," said Alwyn Cassil of the Center for Studying Health System Change, a policy group.

Medicare now covers 41 million people, and the program faces huge financial pressures as those numbers swell in coming years as the baby boomer generation retires.

Closing the gap Medicare faces between revenues and expenditures for hospital spending -- a big component -- would require that Medicare benefits be slashed 42 percent, the government said earlier this year.

Most U.S. citizens over the age of 65, regardless of income, qualify for Medicare.

SEE-THROUGH SYSTEM

Guidant Chief Medical Office Joe Smith said the agency's decision will affect how the company takes its products to regulators in the future.

In Guidant's case, Medicare rejected advice from major doctors' and health groups, including the American College of Cardiology and American Heart Association, which supported covering thousands more people than Medicare did.

"We've learned that coming forth with the science is not going to be enough," Smith said after the decision.

The regulatory body will reconsider the decision when it gets results from a National Institutes of Health study due next year.

A Medicare agency spokesman said that decisions on coverage have always been, and continue to be, based on the medical necessity and effectiveness.

Yet, the official noted, "If they see something coming in that is going to be a huge drain on the Medicare trust fund, they are likely to look a little more closely."

"The decisions are getting tougher because the volume of new technologies is increasing," said Alexander Arrow, analyst at Lazard Freres, who covers device companies.

In the late 1990s the agency moved to publicly-held hearings, from a secretive decision-making process. The focus on cost taking place at the same time the funders open up the process of deciding which treatment will get funding, analysts said.

The process used to be more mysterious, "more of a black box," said Keay Nakae, a medical technology analyst at Wedbush Morgan Securities, referring to the mystery of the process. "They've started to say, 'Look there are a lot of things we'd like to cover but we've got a pie and we've got to divide it up among everybody.'"

PRIVATE INSURER DECISIONS

Health maintenance organizations often take a cue from Medicare on reimbursement issues, experts say.

"Medicare does set the cadence for the third party payers," Arrow said, adding he thinks Medicare is generous in its payment decisions.

In some cases, though, Medicare can be stingier than private HMOs -- an industry hit with criticism in recent years for denying patients' care.

In the case of Guidant's heart device, many private plans, including Cigna Corp. (CI) and Aetna Inc. (AET), say they'll ignore the Medicare ruling and continue to offer the stopwatch-sized device to thousands more patients than the government.

"Private insurers are working in parallel," Findlay said. "They are grappling with this issue."






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