A lifesaving device the length of a thumbnail soon could drag some huge medical centers toward financial ruin, and experts say the only thing that could save them is cardiologists' self-restraint. The device is the drug-coated stent manufactured by New Brunswick, N.J.-based Johnson & Johnson, which could become available by early April, when the FDA is expected to grant final approval for its use in patients.
J&J's product, Cypher, would replace bare metal stents, tiny wire-mesh tubes hailed as a breakthrough eight years ago for propping clogged vessels open. But in 30% of cases, patients with the bare metal stents encounter restenosis, a reclogging of the vessels.
Cypher reduces restenosis to less than 9% of cases by emitting numbing drugs that prevent scar tissue from forming, J&J says. But this breakthrough could come at a steep price for hospitals, which count on their cardiology departments-usually the most lucrative-to fund other, money-losing departments.
Though J&J has not yet announced a price, healthcare industry analysts expect it will be between $3,000 and $3,200, based on J&J estimates during research. CMS says it will pay $3,800 for the stent under Medicare; insurers are expected to match that.
But the Medicare price is a strict per-case rate, no matter how many stents are installed. With an average rate of 1.5 to 1.7 stents per case, based on cardiologists' current usage, a hospital would lose at least $700 per case. Hospital officials say they also would take a hit from fewer stent "redo" operations, due to the lower restenosis rate, and from a projected 10% drop in bypass operations from expanded use of Cypher.
"If you lose any of the profit from cath labs, that's a major kick to a hospital because it's funding many other programs that don't make a profit," says Lloyd Klein, M.D., co-director of the cardiac catheterization lab at Rush-Presbyterian-St. Luke's Medical Center in Chicago. He says introduction of the stent would take his lab from earning a $1.5 million to $2 million profit to just breaking even.
Only cardiologists like himself can rescue hospitals, Klein says. According to studies, he says, only 30% of patients would actually risk restenosis, and the rest can be given bare-metal stents safely at one-third the cost. Klein says he is chairing a committee of the Society of Cardiac Angiography and Intervention in Bethesda, Md., that will officially embrace the 30% rate in a report in March.
But Klein admits cardiologists will be under pressure from patients, competing cardiology practices and the threat of malpractice litigation to pick the more expensive stent.
If a bare metal device is recommended, "patients are going to be left thinking that this doctor is not using the best possible stent on me," he says. "If (doctors) do not use the stent, there's the malpractice risk. And if they do use the stent, their hospital will be in financial trouble."
At many institutions, such as the Prairie Heart Institute at St. John's Hospital in Springfield, Ill., physicians already have decided to use the new stent 100% of the time.
James Zito, executive director of the institute, says it is a violation of Medicare anti-kickback laws for hospitals to offer cardiologists incentives for bare-metal stent use. But Klein says it would be easier for specialty hospitals to persuade physician-investors, who are financially aligned with its interests.
Mike Servais, CFO of MedCath, a heart hospital company based in Charlotte, N.C., estimates 70% of stent cases actually need the new product. But he adds that a committee of MedCath physicians will release specific guidelines for use, which doctors at each MedCath hospital can consider. Even so, Servais says the company expects to lose $2.9 million from the drug-coated stent in the coming year.
Meanwhile, Cordis Cardiology, the J&J division in Miami Lakes, Fla., that is making Cypher, still has not decided on a price, says spokesperson Terri Mueller. J&J's bare metal stent initially had no competition, but its market share tumbled to 10% after Indianapolis-based Guidant Corp. entered the market and slashed the price by a third.
Natick, Mass.-based Boston Scientific is expected to put its drug-coated stent on the market in 2004. Zito predicts J&J's price will then come down to $2,500 or less. But Klein warns that Boston Scientific's stent is harder to install and uses an entirely different drug.
"Any way you look at this," Klein says, "the hospitals are going to be in trouble."