Spinal implant specialist LDR has been held back by patchy insurance company reimbursement of its flagship device, demonstrating the challenges facing med tech companies as they navigate the tricky payment process in the U.S., where they must contend with the increasingly stingy federal Centers for Medicare & Medicaid Services and a plethora of insurance companies with varying coverage policies.
LDR boasts the Mobi-C, the only artificial cervical disc that’s FDA-approved for the reconstruction of two adjacent discs in the neck (or cervical spine, to be technical). Zimmer Biomet recently announced it has agreed to acquire the Austin, Texas-based company for $1 billion to gain access to the exclusive niche occupied by the device.
But Jeffrey Zigler, LDR’s senior director of reimbursement and health economics, said in an interview that out of 230 million American insured through private plans, only 50 million have access to two-level cervical disc replacement (180 million have access to standard one-level disc replacement, which involves replacing a single disc, and is also performed using the Mobi-C, as well as several competitors).
“Only pockets of regions in the country have approved two levels,” Zigler said. “You could live in any state in the country and randomly receive coverage (depending on which plan you have),” he added.
Zimmer thinks it can solve the problem. “One of the great things I think we’re going to be able to do in the combination is bring even more power to bear on that payer relation side of the business. We have a great market access team today inside of Zimmer Biomet. And we believe that in our modeling and in our dealings with payers during the diligence process, that we’re going to see rapid expansion over the course of the next five years,” the president of Zimmer spine unit, Adam Johnson, told Wall Street following the deal’s announcement.
LDR has long been trying to improve reimbursement as well.
Zigler said Health Care Service Corporation recently agreed to cover two-level disc replacement, giving access to customers of Blue Cross Blue Shield in Illinois, Montana, New Mexico, Oklahoma and Texas. The company is anxiously awaiting word from Anthem, which will decide whether to start covering the device later this year, according to Zigler. Aetna and Cigna are also accepting requests for reconsideration of coverage this year.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Cervical disc replacement is an alternative to spinal fusion surgery. “I think a lot of times payers are scared that we’re opening up a new marker of surgeries that wasn’t there before, but that’s not the case,” Zigler said.
Following removal of a diseased cervical disc, something must go in the space that was occupied by the bone. Surgeons can insert an implant like the Mobi-C, or use a bone graft to fuse the bones one either side of the removed disc together permanently.
LDR tout disc replacement’s superior mobility and range of motion compared to spinal fusion, but payers have been demanding long-term follow-up studies, Zigler said.
To that end, LDR CEO Christophe Lavigne said during the call with analysts that “for two-level indications, you may remember, that we just got the five years peer-reviewed, published evidence emphasizing the superiority of Mobi-C compared to fusions of two-level indication. And we believe that these papers will be critical to achieve coverage of two-levels indication, and we expect at one point to have two levels being covered as one-level cervical disc is covered today, which means this 180 million lives.”
Competition is on the way. Medtronic’s Prestige LP cervical disc is pending approval for the two-level indication. It’s already approved for single-level cervical disc replacement.
Zigler pointed out that the Mobi-C was designed specifically for two-level replacement. He thinks Medtronic’s clinical trials will help improve reimbursement for the new indication generally by adding to the evidence base.
Meanwhile, non-covered patients must continue to file appeals to their insurance company to obtain coverage for two-level replacement procedures. If a resolution isn’t achieved after a set time period (which varies by state), an Independent Review Organization is summoned, Zigler said. Sometimes the independent reviewers force insurance companies to pay for the procedure, and sometimes they don’t.
LDR said cervical disc replacement typically occurs in patients who are too young to receive Medicare, making Mobi-C reimbursement a point of contention with private players.
Studies have shown that there is little consistency between private plans in terms of the surgeries and procedures that they cover.
Lobbyist Stephen Ubl, the former CEO of device trade association AdvaMed, recently called for an “honest conversation” with the insurance industry about transparency, as the new head of drug company association PhRMA.
Image: LDR’s Mobi-C artificial cervical disc from FDA website
