Photo: Flickr ReSurge International
Implanted medical devices are one of the most profitable businesses of the U.S. healthcare industry.While many devices help extend and improve quality of life, a great many others may not be necessary.
In some cases devices such as stents, screws, and artificial joints do not work well or are not any better than a cheaper procedure; in others, the risks may not be worth the benefits.
All of the devices place a large cost-burden on U.S. medical spending, whether entirely effective or not.
On a yearly basis, medical device companies across the world bring in over $200 billion in revenue. In the U.S. alone, these companies take in over $85 billion a year. A large portion of that is for devices that are implanted in the human body.
On the whole, there is little concentrated information on the industry. Data on which company makes what device; sales figures of each individual implants per medical device companies; or the number of procedures done for each implant each year are not always readily available. More troubling, there is little information gathered in any one place about the potential dangers and flaws of these devices, or the complications that occur due to their implantation procedure.
24/7 Wall St. has examined National Health Survey data, multiple professional physician services, peer-reviewed journals, and SEC filings to complete a list of the most frequently implanted medical devices today. While many of these are life saving, controversy swirls around several others. In some cases, we found exact total costs from self-reporting by physician sub-specialties. In others, we estimated costs based on medicare outlays, industry reports, and academic publications.
Many of the devices implanted are medically necessary and do their jobs extending lives and improving quality of life, the 24/7 Wall St. research shows. Some products, such as artificial knees may even be underutilized. Others, like implantable cardio-defibrillators, may be over-utilized. What is certain in most of the cases we reviewed is that the effectiveness of these devices is not as well researched or understood as their widespread use may imply.
> Number of procedures: 133,262
> Total annual expenditure: $5.5 billion
> Average cost per procedure: $40,000
> Major manufacturer: Medtronic (40%), St. Jude Medical, and Boston Scientific
Cardiac arrhythmia, or improper electric signaling in the heart, occurs in millions of people a year. While the vast majority are benign, a select few--usually in patients with a history of heart attack or heart failure--can be fatal if not treated promptly.
Implantable cardioverter defibrillators (ICDs) are devices that monitor and treat these rhythms when they are detected by sending a large jolt of electricity to the heart, and basically pressing the reset button. Newer models can also function as pacemakers, combining two devices into one. In 2009, according to the World Society of Arrhythmias, 133,262 ICDs were implanted in the U.S., an increase of 12% from 2005. Complications of ICDs are similar to their pacemaker siblings: 1%-2% rates of infection and up to a 4% rate of lead failure.
While these devices are major life-saving technology, the U.S. Department of Justice has been investigating the industry since March 2010 due to the widespread practice of implanting the devices too soon after a major cardiac event.
One of the major manufacturers, Boston Scientific, acknowledged that the investigation is likely to hurt sales in the short term. St. Jude Medical, which is the second largest manufacturer behind Medtronic, was the only one of the big three manufacturers to post an improvement in sales of ICDs from 2009 to 2010, with total sales increasing 14% to $1.1 billion in the U.S.
> Number of procedures: 230,000
> Total annual expenditure: $10.5 billion
> Average cost per procedure: $45,000
> Major manufacturers: Zimmer (24%), Stryker, DePuy/J&J, Biomet, Wright Medical
As people age and gain weight the wear and tear on their joints builds up. In particular, more than 20 million Americans suffer from degenerative osteoarthritis, which is the leading cause of chronic disability in the U.S.
As one of three major weight bearing joints in the leg (the others being knees and ankles), hips are put under a lot of stress over a lifetime. This stress commonly leads to the wearing down of cartilage and the painful friction of bone rubbing against bone. Hip replacement can lead to a decrease in pain and an increase in mobility in over 90% of recipients. In 2007, the last reporting year, 230,000 procedures were performed, an increase of 4.5% from 2003.
Major complications are relatively rare at about 3% for first time procedures and 8% for revisions. But when friction or a faulty manufacturing process wears down the replaced joint at a faster rate than anticipated, replacement of the hip can be necessary earlier than expected.
In August 2010, DePuy of Johnson & Johnson recalled a hip replacement system that had already been implanted in 93,000 patients worldwide. The recalled joints failed in one out of eight patients after only five years. These failures, in addition to requiring a new hip replacement, can leave behind fragments that can become focal points for infections, cause nerve and vessel damage, and possibly even lead to death. Major class-action lawsuits have been filed, and it will be years before the complete impact of this recall is known on DePuy and Johnson & Johnson.
This is likely good news for market leader Zimmer Holdings, which had approximately $750 million in U.S. sales of hip replacements in 2010.
> Number of procedures: 235,567
> Total annual expenditure: $4.5 billion
> Average cost per procedure: $20,000
> Major manufacturers: Medtronic (40%), St. Jude Medical, Boston Scientific
As with ICDs, pacemakers are used to treat abnormal rhythms in the heart. While ICDs treat otherwise fatal rhythms, pacemakers are used when the heart's internal clock is not maintaining a fast enough pace. Pacemakers override the aberrant signals in the heart by passing small jolts of electricity to multiple parts of the heart muscle, providing its own rhythm.
Modern pacemakers will increase with exercise and decrease with rest to meet the body's minute to minute needs. In 2009, according to the World Society of Arrhythmias, 235,567 pacemakers were implanted in the U.S., an increase of 5.5% from 2005. Complications of the surgery include a 1%-2% rate of either short- or long-term infection and, more importantly, up to a 4% rate of lead malfunction.
In 2005, Medtronic, the industry leader, voluntarily recalled 40,000 pacemakers found to have a 0.17%-0.30% lifetime failure rate, with approximately 100 known device failures found overall. In the 2011 fiscal year, Medtronic posted $1.9 billion in worldwide sales of pacing systems (approximately $1 billion in the U.S.).
This was a slight decline from the previous year caused by pricing pressures and a delay in the FDA approval of Medtronic's newest pacemaker system.
> No. of procedures: 366,000
> Total annual expenditure: $992 million
> Average cost per procedure: $3,351
> Major manufacturers: Allergan, Mentor
Breast augmentation with implants is the most frequently performed plastic surgery procedure in the U.S., beating out nose jobs (252,261), eyelid surgery (208,764), and liposuction (203,106) by a significant margin. Over 296,000 procedures were done in 2010 for purely cosmetic reasons, with an additional 70,000 done for reconstruction after a mastectomy, a rise of 39% and 18%, respectively, since 2000.
The American Society of Plastic Surgeons reported $992 million spent on breast augmentation in 2010, but did not give an amount for reconstructive surgeries. In the mid-1990s, Dow Corning Corporation sought and received bankruptcy protection in the face of 19,000 silicone breast-implant sickness lawsuits.
Due to the increased public criticism, the FDA has since closely monitored breast implants in the U.S., with implants of only two companies currently approved by the FDA for cosmetic use. Allergan, an independent pharmaceuticals company, which also manufactures Botox, pulled in sales of $319.1 million from breast augmentation. Sales numbers are unavailable for Mentor, a stand-alone business unit of pharmaceutical giant Johnson & Johnson.
> Number of procedures: 413,000
> Total annual expenditure: $10 billion
> Average cost per procedure: $25,000
> Major manufacturer: Medtronic (35%)
Spinal fusion surgeries are performed for a variety of back problems, mainly for pain and weakness. The surgery essentially fuses two or more vertebrae with the help of hardware such as screws and rods.
An alternative in a number of these cases and a simpler procedure overall, decompressive surgery removes part of the bone to free a trapped nerve. Despite evidence that fusion is no more successful than the less costly decompressive surgery in many cases, the frequency of fusion surgeries rose 111% from 1998 to 2008. That's compared to a 1.2% decline in decompressive surgeries over the same period. While some of this increase may be warranted, a report published in The Wall Street Journal in December 2010 revealed a troubling relationship between some surgeons and the leading spinal device manufacturer, Medtronic.
The screws used in these surgeries to drill into bone cost less than $100 each to produce, while reimbursement comes out to between $1,000 and $2,000, depending on the model. A manufactured bone-growth protein also used in many of these surgeries sells for roughly $5,000 per pack. A surgery fusing two vertebrae together can cost $15,000 just for the hardware. Patients of these fusion surgeries are most likely to have the least amount of benefit.
A clinical trial now underway is comparing fusion and decompression should have data reported in the next couple years. Hopefully, this will resolve the controversy. In the meantime, Medtronic posted spinal hardware sales of $3.4 billion worldwide during the latest fiscal year, $2.5 billion of which from the U.S. market.
> No. of procedures: 425,000
> Total annual expenditure: $340 million
> Average cost per procedure: $800
> Major manufacturers: Teva Pharmaceutical Industries and Bayer HealthCare
IUDs are extremely popular worldwide and are the preferred method of contraception for almost 25% of women in the rest of the developed world. In the U.S., however, IUDs fell out of favour after a rash of problems with the Dalkon Shield IUD in the late 70s and early 80s. Only 1%-2% of American women were using the device in 2001.
As of 2008, nearly 6% of American women using contraception were using IUDs, and that number is likely to increase. This month, the American College of Obstetrics and Gynecology released a Practice Bulletin recommending IUDs and another implant as the most effective reversible contraception--performing better than the pill, the patch and the ring. The most serious complications associated with the devices today are uterine perforation, which occurs in 0.1% of patients, and pelvic inflammatory disease (PID), which occurs in 0.2% to 0.9% of patients.
Two forms of IUDs are available in the U.S., with an approximately even split of market share: Paragard, a generic copper-coated IUD offered by Teva Pharmaceutical Industries Ltd; and Mirena, a progesterone-releasing IUD offered by Bayer HealthCare.
> Number of procedures: 453,000
> Total annual expenditure: $4.5 billion
> Average cost per procedure: $2,000-$20,000
> Major manufacturer: Synthes (50%)
Bone fractures are one of the most common injuries, occurring in all age groups for a multitude of reasons. Of over one million fractures that are admitted to the hospital every year, roughly half require surgical intervention to realign and stabilise the bone, a procedure called open reduction and internal fixation.
This procedure occurs on almost every bone in the body, from tiny carpals in the wrist secured with plates no more than half an inch long, to femurs (the largest bone in the body) requiring foot-long rods, screws and pins to hold the bone together. In 2007, the last reporting year, there were 453,000 procedures performed, an increase of 6.8% from 2003.
While the techniques and implants needed to perform these surgeries on the different sites of the body vary widely, the provider of those implant materials usually does not. Synthes has been the dominant force in the market since the merger of Stratec Medical and Synthes USA in 1999. It brought in approximately $1.4 billion in U.S. sales of traumatic-repair devices in 2010.
> Number of procedures: 560,000
> Total annual expenditure: $7.5 billion
> Average cost per procedure: $13,000
> Major manufacturer: Boston Scientific (46%), Abbott Laboratories
Coronary stents are small tubes, usually coated with a drug (drug-eluting stents), that are placed into the arteries that supply blood to the heart. Stents are regularly implanted into patients with unstable angina (unpredictable chest pain) and recent heart attack patients whose coronary arteries have been partially blocked by atherosclerotic lesions (cholesterol).
In 2007, the last reporting year, 560,000 stent procedures were performed, a decrease of 2.4% from 2003. Complications from stents include stent thrombosis (clots), stent fracture, and re-occlusion (blood-vessel blockage). However, the risks of these complications are hard to quantify when overall decrease in death and disability is taken into account. One of the three major manufacturers, Johnson & Johnson recently decided to withdraw from the market.
Meanwhile, Boston Scientific, the owner of a 46% market share as of 2010, has recently disclosed a new recall of 100,000 unimplanted stents due to failure to deploy (those already implanted are not at an increased risk of failure). These two events pose a great opportunity for Abbott Laboratories, whose worldwide sales of stent products increased 18.6% to $3.2 billion in 2010 compared to 2009.
> Number of procedures: 715,000
> Total annual expenditure: $1 billion-$2 billion
> Average cost per procedure: $1,000-$4,500
> Major manufacturer: N/A
Otitis Media, or middle ear infection, is one of the most frequently diagnosed childhood diseases with at least 80% of pre-school aged children affected. Billions of dollars are spent every year on doctor visits, medicines, and, in chronic cases, surgery.
In 2006, the last reporting year, there were 715,000 procedures performed, an increase of 40% over 10 years. In contrast to the rise in numbers, multiple long-term studies have concluded that as many as a third of these procedures are unnecessary. The surgery itself, known as myringotomy and tube placement, is the most commonly performed pediatric operation.
It's very safe, very quick, and has very low complication rates. Due to the incredibly low cost of the tubes, and the fact that they have been evolving for well over 50 years, no one manufacturer appears to dominate the market.
> No. of procedures: 2.582 million
> Total annual expenditure: $8 billion -- $10 billion
> Average cost per eye: $3,200-$4,500, depending on lens type
> Major manufacturers: Alcon Laboratories/Novartis, Abbott Laboratories, Bausch & Lomb
Cataracts are a problem faced by millions of elderly Americans yearly, many of whom will require surgical replacement of their own lens with an artificial one, known as a psuedophakos or intra-ocular lens. These lenses come in many configurations, such as single-focus (like glasses for distance vision), multi-focal lenses (like bifocal glasses), and hi-tech variable-focus lenses (like real eyes).
In 2006, the last reporting year, there were over 2.5 million procedures performed--an increase of 43% over 10 years. While the vast majority of cataract surgery is safe and effective, there is a 1%-2% chance of retinal detachment over the rest of the patient's lifetime. If this occurs and is not treated promptly, patients can completely lose their vision in the effected eye.
While researchers are examining non-surgical treatments for cataracts, surgery is currently the only real treatment or cure. The market leader in intra-ocular lenses, Alcon Laboratories, had sales of $1.2 billion in 2010. Alcon recently merged with Novartis.
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