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AdvaMed Facts

The Role of the Medical Device Sector in Transforming American Healthcare June 9, 2004 Blair Childs Executive Vice President, Strategic Planning & Implementation. AdvaMed Facts. Founded in 1974 as the Health Industry Manufacturers Association (HIMA)

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AdvaMed Facts

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  1. The Role of the Medical Device Sector in Transforming American HealthcareJune 9, 2004Blair ChildsExecutive Vice President, Strategic Planning & Implementation

  2. AdvaMed Facts • Founded in 1974 as the Health Industry Manufacturers Association (HIMA) • Now grown to 1,200 + member companies and subsidiaries (devices, diagnostics, HIS) • Members manufacture 90% of the medical technologies sold in the US & 50% sold overseas • $17 million budget, 60 staff with global expertise • 45 - member Board of Directors

  3. Our Goals • Rapid approval by FDA • Adequate payment • Speedy coverage determinations here and abroad • Access to international markets • Communicate the Value of Medical Technology

  4. Today’s Presentation • How Medical Technology is Transforming Healthcare • Why the future for Innovation has never been brighter • Overcoming the Challenge to Innovation

  5. What is Medical Technology? • Devices • Diagnostics • Health information systems Not: • Drugs • Medical procedures

  6. Focus on the Patient But clear economic value as well… Diagnostic Imaging Lab Tests …no exploratory surgery, less costly treatment …Preventing disease Lasers Productivity …quick recovery Artificial joints Patient Care …independence Health System Efficiency Minimally invasive surgery …faster return to work Cardiovascular … shifting care to less expensive settings

  7. Key Industry Facts • Short product life-cycles (2/3rds of sales from technologies < 2 years old) • Sometimes high up front costs, long-term value • Highly competitive; Prices decline over time • Few stand-alone breakthroughs • Lengthy time to market, high R&D costs • Small companies = big breakthroughs; 90% of industry have 1-100 employees

  8. A Technology’s EvolutionThe ICD Example

  9. A Technology’s EvolutionSpinal Fusion Surgery

  10. A Technology’s EvolutionTotal Joint Replacement *Cost data based on Medicare charges (include outliers). Total charges calculated assuming a 50% cost to charge ratio and adjusted for inflation. “Today” values are 2002 data.

  11. Transformative Impact of Medical Technology • Faster recovery • Faster, more accurate diagnosis • Improved provider productivity • Improved job productivity • Increased societal wealth

  12. Faster Patient Recovery • “Earlier diagnosis and treatment” • “Safer and less invasive” surgeries

  13. Faster Recovery Inpatient Surgeries Outpatient Surgeries Source: The Lewin Group analysis of American Hospital Association Survey data 1980 - 2001

  14. Faster, More Accurate Diagnosis: Early Breast Cancer Detection = Lower Treatment Costs Early Detection = Survival Early Detection = Lower Costs

  15. Improving Provider Productivity Shapiro, Shapiro, Wilcox. March 1999

  16. IncreasingWorkplace Productivity

  17. Putting A Focus on Value Value Group Collaboration: • AdvaMed • American College of Cardiology • American Hospital Association • Federation of American Hospitals • Healthcare Leadership Council • National Pharmaceutical Council • PhRMA

  18. Overall Value of Innovation, Findings: Since 1980, per capita expenses are up $2,254, but: • Overall death rate is down 16% • Life expectancy from birth is up by 3.2 years • Disability rates are down 25% for people over 65* • 56% fewer days are spent in the hospital Health gains of $2.40 to $3.00 per dollar invested *Value of this improvement not quantified.

  19. Value of Innovation 470,000 more deaths 470,000 more deaths Where would we be in 2000 without innovations since 1980? 2.3 million more disabled persons $2254 per capita in savings 206 million more days in hospital

  20. Heart Attack:Improvement in Outcomes Death Rate Due to Heart Attack (Age-adjusted, per 100,000) • Mortality cut nearly in half • Death within 30 days cut from 1 in 4 to 1 in 8 • $1.10 back in value for every $1 spent in Medicare Source: www.cdc.gov/nchs

  21. Stroke:Improvement in Outcomes Death Rate Due to Stroke (Age-adjusted, per 100,000) • Mortality cut by 37 percent • Stroke-related disability after 3 months reduced • $1.55 back in value for every $1 spent in Medicare Source: www.cdc.gov/nchs

  22. Breast Cancer:Improvement in Outcomes Death Rate Due to Breast Cancer (Age-adjusted, per 100,000) • Mortality cut by 21 percent • Five-year overall survival rates increased from 76.9% to 86.6% • Risk of developing metastatic disease declined from 40% to 15% • $4.80 back in value for every $1 spent in Medicare

  23. Why A Bright Future? • Increasing demand • Building blocks of Innovation are in place • Significant policy progress

  24. Increasing Demand Percent of Population Age 60+:2000 Under 5.0% 12.5% to 20% Source: U.S. Census Bureau, 1999 5.0% to 12.4% Above 20%

  25. Increasing Demand, Percent of Population Age 60+:2025 12.5% to 20% Under 5.0% 5.0% to 12.4% Above 20% Source: U.S. Census Bureau, 1999

  26. US Discretionary Income $10,000 $8,000 $6,000 $4,000 $2,000 $0 Source: The Conference Board, 1999 Per Capita By Age Group <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+

  27. Rapid Patient Access Robust R&D Transparent, Consistent Product Approval Efficient Post-Approval Regulation Predictable, Pro-Innovation Reimbursement Building Blocks of Innovation Competitive Market & Competitive Companies 11

  28. FDA Product Approval Accelerating • Medical Devices User Fee and Modernization Act of 2002 • Stemmed the staffing and resource decline in CDRH • Clear performance goals • Office of Combination Products • Regulation of reuse of single use devices • Third party inspections

  29. Major Reimbursement Reforms Hold Real Promise • Medicare Modernization Act, 14 provisions impacting Medical Technology, valued at over $1 billion • New technology DRGs and add-on payments • National Coverage deadlines • Clinical trial coverage for breakthrough technologies • Maintenance of the local coverage system • Chronic care improvement demo • Council for technology and Innovation • Reforms to Accelerate Health Information Technology

  30. What Stands in the Way of Continued Progress? • Cost pressures • Limited health care budgets • Increasing focus on evidence standards, coverage restrictions, payment levels • Inadequate recognition of the value of innovation

  31. Thank You 31

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