Spine Surgeons, Spine Surgery Companies and Crossing the Line

We look at medical technologies and consider their potential improving clinical outcomes competitively (including cost). Ultimately, we are interested in gauging the market outlook for industry participants so that we can identify opportunities and challenges. Occasionally, we have to point out challenges that really have less (if any) bearing on the technologies themselves and nearly everything to do with how companies run their businesses, including common sense decisions that have the potential, if handled badly, to completely pull the rug out from their market potential.

We have previously addressed decisions like Merck and how they handled Vioxx and its heart attack and stroke complications. We have discussed Johnson & Johnson’s and Boston Scientific’s responses to the elevated risk of late stage thrombosis with their drug-eluting stents, and we talked about Guidant’s ICDs problem (now Boston Scientific’s headache). For reference, these are from the make-sure-you-don’t-make-bad-things-worse department.

Today in the Orange County Register writer John Gittelsohn details the uncomfortable situation that surgeon-owned Allez Spine has put itself in by creating an intrinsic link between these surgeons’ financial positions and their clinical decision-making regarding spine products. Does anyone really believe that surgeons need only disclose a financial link to a company if that company is public or has more than 500 private investors? (Does the size of the surgeon’s company matter to the patient?) Can anyone really make a legitimate argument that the simple existence of a potential incentive for a surgeon to favor one device over another doesn’t cross the line?

As challenging as the medtech industry is, navigating the tortuous route from concept to patent to regulatory approval to reimbursement to manufacturing to commercial launch, do we really need a detour down the “kickback road”, even if it is only the semblance of impropriety?

Spine surgery remains a hugely profitable medical technology market in an era when pricing pressure is becoming intense for almost all medtech sectors. In large measure, this is due to the fact that degenerative disc disease, spinal stenosis, scoliosis, spinal trauma and many other spinal conditions have long been inadequately treated, but now are now much more successfully being handled by new spine surgery technologies that provide substantial improvements in clinical outcomes. These improved outcomes are a real bulwark against the price pressures that are challenging margins in other medtech sectors. With spine surgery therefore continuing to demonstrate healthier margins than many other clinical areas, it’s not surprising that spine surgeons want to own more of the supply chain. However, when they cross the line from clinician to owner, their assurances that their financial interest won’t bias their clinical decisions will be a hard sell in the business of healthcare with its increasing proclivity toward federal oversight.

See MedMarket Diligence report #S245, “Worldwide Spine Surgery: Products, Technologies, Markets & Opportunities, 2008-2017“, which details the full range of products and technologies in spine surgery and the current and hopeful market competitors seeking to succeed in this huge and uncharacteristically growing medtech market.

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