With rival heart valves set to debut this year, longtime market leader Edwards Lifesciences ($EW) is fighting to stay ahead of the pack by working with hospitals to control the expenses associated with heart valve replacement surgery. During the J.P. Morgan Healthcare Conference in San Francisco, Edwards CEO Michael Mussallem said the Irvine, CA-based company's goal is to help minimize the amount of time patients stay in the hospital after the procedure, according to Bloomberg.
The revelation comes at a time when Edwards is facing huge pressure from rivals. Medtronic ($MDT) expects to introduce its CoreValve device in the U.S. this year, while Boston Scientific ($BSX) is getting ready to commercialize its Lotus valve overseas. Edwards, meanwhile, revealed in December that it expects its Sapien line of heart valves to bring in between $700 million and $820 million this year, well below what analysts had predicted.
Heart valve replacements typically cost around $42,000 at community hospitals--$30,000 of which comes from the Edwards device, Bloomberg estimates. Medicare claims data shows that insurers paid $51,000 on average for the procedure in 2012. At a time when the implementation of health reform is requiring hospitals to operate more efficiently, high-cost procedures such as heart valve replacement surgery are being scrutinized. Helping hospitals to reduce the length of time patients stay after the surgery would be one way to relieve the cost pressure, Mussallem reasons.
"In the U.S., the focus for hospitals switched pretty early in the year from 'Can I do great procedures' to 'I need to make money with this thing,'" Mussallem said during the J.P. Morgan event, according to Bloomberg.
Medtronic is also looking for creative ways to make its valve both appealing and cost effective, CEO Omar Ishrak told Bloomberg. For example, the Minneapolis company plans to package CoreValve--which is currently awaiting FDA approval--with other products.
As for Edwards, it's counting on new iterations of Sapien to help the company hold onto its market-leading position. Edwards expects to win FDA approval for its lower-profile Sapien XT in the first half of this year. And it's currently testing Sapien 3, which the company says will offer several improvements, including a reduced risk of dangerous leaking around the valve.
- here's the Bloomberg story