St. Jude applying for national CMS reimbursement of CardioMEMS heart monitor to stem sliding sales

CardioMEMS's HF System for monitoring heart failure--Courtesy of St. Jude Medical

New St. Jude Medical ($STJ) CEO Michael Rousseau has a simple and straightforward communication style.

"At the beginning of 2015, we said that our success would depend on performance in AF, neuromodulation, and CardioMEMS. As we close out the year, we achieved success in two of those three areas. We still have work to do to grow our CardioMEMS business. While it is on track from the perspective of patient care, physician demand, and economic impact, the technology remains under pressure from a reimbursement standpoint," he said during the company's Q4 2015 earnings call.

Naturally, the focus of the call was on the underperforming CardioMEMS heart failure monitor, on which on the company has staked its future. St. Jude estimated 2016 sales will be $65 million, lower than the $80 million projected for 2015.

To fix chronic reimbursement issues, the company is applying for a National Coverage Decision from the Centers for Medicare & Medicaid Services. Unsupportive local coverage decisions from Medicare Administrative Contractors (MACs) have hurt sales of the device, which costs about $18,000 a pop.

In mid-2015 MAC First Coast Medicare, which covers the crucial Florida market and Puerto Rico and the U.S. Virgin Islands, made a negative coverage decision. Another, Novitas, which covers 11 states, is threatening to make a negative decision as well.

Word from CMS on the application for national coverage will take about a year to arrive. A positive National Coverage Decision would be binding on the MACs, and tremendously helpful to CardioMEMS sales, according to company officials, who claim that customer feedback has been positive.

"I also want to highlight the November 2015 edition of The Lancet, which published a prospective, longitudinal analysis that demonstrated the long-term effectiveness of the CardioMEMS heart failure system. This prospective data from the CHAMPION study showed that, after a mean of 31 months of follow-up, heart failure patients managed with CardioMEMS had a 48% reduction in heart failure hospitalizations compared to patients managed with the current standard of care," Rousseau said.

But MDDI last year noted a report by the Institute for Clinical and Economic Review, which found that "there is a reasonable chance that CardioMEMS would not confer incremental benefit in all subsequent studies or settings."

In the short term, St. Jude plans to sponsor additional studies of the device and continue outreach to the MACs, company officials said. But the lower sales projection says all you need to know about the company's level of confidence in the success of those efforts.

On the bright side, CMS' 2014 decision to give CardioMEMS bonus reimbursement on account of its innovative nature, known as New-Technology Add-On Payments, bodes well for the chances of a positive National Coverage Decision.

In addition to improving CardioMEMS reimbursement, St. Jude needs to get its cardiac rhythm management unit back on track by filling gaps in the portfolio.

"We expect the U.S. to continue to be a challenging (cardiac rhythm management) market for us in 2016 due to our temporary product gap with MRI-compatible devices. We anticipate FDA approval for our MRI-compatible pacemaker in the first half of 2016 and MRI-compatible ICD in the first half of 2017. We are also expecting approval of our MRI-compatible ICD in Japan during the first half of 2016," Rousseau said during the earnings call.

But he was correct to note the two bright spots. Neuromodulation sales rose 9% to $128 million, and sales of atrial fibrillation devices rose 4% to $276 million. Overall the company reported quarterly net sales of $1.47 billion, up 1% year-over-year, and 7% on a constant currency basis.

- read the earnings release
- here's MDDI's take

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