CMS put out a price comparison and recommendation for NPWT pump pricing

EXECUTIVE SUMMARY
OBJECTIVES
(1) To compare the prices that suppliers paid for new negative pressure wound therapy pump models to Medicare’s purchase price for the pumps.
(2) To describe how suppliers acquired these new pumps.
(3) To describe the extent to which suppliers reported providing
required services to Medicare beneficiaries who rented these pumps.
BACKGROUND
Negative pressure wound therapy pumps (the pumps) are portable or
stationary devices used for the treatment of ulcers or wounds that have
not responded to traditional wound treatment methods. Medicare pays
for the pumps under Part B coverage of durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS) as a capped rental item.
Between 2001 and 2007, Medicare payments for these pumps increased
583 percent, from $24 million to $164 million.
When Medicare first started covering pumps in 2001, it covered only one model, which was both manufactured and supplied by Kinetic Concepts,
Inc. (KCI). Medicare reimbursed KCI for this pump based on the
purchase price as identified by KCI. Beginning in 2005, Medicare
expanded its coverage to include several new pump models that are
manufactured by other companies. Medicare reimburses suppliers for
these new pumps based on the purchase price of the KCI pump.
This study compares the prices that suppliers paid for new pump
models to Medicare’s purchase price. Although the new pump models
currently account for a small percentage of the pump market, their
market share may grow rapidly if there is a large difference between the
amount that suppliers pay for these pumps and the amount that they
are reimbursed by Medicare. Wide profit margins may also make
pumps vulnerable to fraud, waste, and abuse.
FINDINGS
Suppliers paid an average of $3,604 for the new pump models,
compared to Medicare’s purchase price of $17,165.
Suppliers
purchased 171 of the 223 new pump models that were provided to
beneficiaries in the first half of 2007. Suppliers paid an average of$3,604 for these pumps. Medicare reimbursed suppliers for these pumps based on a purchase price of$17,165, which is more than four times the average price paid by
suppliers. On a monthly basis, Medicare reimbursed suppliers $1,716 for these pumps for the first 3 months. At this rate, suppliers recouped the average cost of a new pump model in about 2 months. Further, beneficiaries’ coinsurance
payments for pumps cover a substantial portion of the average cost of anew pump model. After just 4 months of rental, a beneficiary’scoinsurance of $1,286 covers over one-third (36 percent) of the average cost of a new pump model.
Suppliers acquired one-quarter of the new pump models byleasing, renting, or exchanging them. Suppliers acquired nearly
one-quarter (52 of 223) of the new pump models provided to
beneficiaries in the first half of 2007 through methods other than
purchasing them. They acquired these pumps through lease-to-own
agreements, daily rentals, hourly rentals, or exchanges of old pumps for
new ones. Suppliers reported not always communicating with beneficiaries’
clinicians, as required; however, they appeared to meet other
standards. Suppliers are required to communicate with the
beneficiary’s treating clinician toassess wound healing progress and to determine whether the beneficiary continues to qualify for Medicare
coverage of the pump. In addition, suppliers must meet certain
standards that include providing delivery and instruction on equipment
usage (either from the supplier or another qualified party), maintaining
and repairing the equipment as needed, and responding to beneficiaries’
questions and complaints about the equipment. Suppliers reported not
having contact with clinicians for almost one-quarter of thebeneficiaries. Suppliers reported delivering the pumps and educating
almost all of the beneficiaries, as well as providing maintenance and
repairs when needed.
RECOMMENDATIONS
Based on the findings in this report, we recommend that CMS:
Reduce Medicare’s reimbursement amount for pumps.
CMS should:
consider two methods to reduce its reimbursement amount for pumps.
CMS should:
Use its inherent reasonableness authority to reduce the reimbursement
amount for pumps. CMS should consider using its inherent
reasonableness authority to reducethe amount that it reimburses
suppliers for pumps.
•Include pumps in the second round of the the Competitive Bidding
Acquisition Program. CMS should include pumps in the second round
of the Competitive Bidding Acquisition Program. This could better
align Medicare’s reimbursement amount for pumps with the amount
that suppliers pay for the new pump models.
In addition,
CMS should: Monitor the growth of the new pump market.
CMS should continue to monitor the growth of the new pump market by tracking trends in market share among different suppliers.
Educate suppliers of new pump models on the importance of
communication with beneficiaries’ treating clinicians.
CMS should:educate suppliers of new pump models that the continued need for a
pump can be determined only through clinician input and that it isinappropriate for suppliers to submit claims for continued pump use
without this input. Follow up on the pump claims that may be inappropriate.
CMS should follow up on the claims in which suppliers: (1) reported having no
contact with the beneficiaries’ treating clinicians, (2) could not be
located, or (3) did not submit any documentation. To help CMS address this recommendation, we will forward information about these claims in
a separate memorandum.
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL
RESPONSE
CMS concurred with four of our recommendations and will consider the
remaining recommendation. It noted that it has worked on a number of
regulatory and administrative initiatives related to the prescription
Equinox Medical is just launched their smallest and lightest negative pressure wound therapy pump system in the wound care market. Halo Mini is a great alternative for any K C I wound pump when trying to win any hospital and nursing home accounts for DME and HME companies in the US.
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 The Halo Mini negative pressure pump system is priced for less than $3,000. Affordable and cost effective K C I wound pump alternative in the wound care market.

GOP looks to Medicare Advantage cuts for political edge – Effing Republicans cutting our seniors benefits again!

 

 

  • A new round of cuts to a popular program that provides health care to seniors will touch off a spate of partisan finger-pointing in the coming weeks, handing Republicans a new opportunity to blast the Obama administration.

 

 

  • Posted Mar. 24, 2015 at 8:30 AM

    WASHINGTON — A new round of cuts to a popular program that provides health care to seniors will touch off a spate of partisan finger-pointing in the coming weeks, handing Republicans a new opportunity to blast the Obama administration.

    The Centers for Medicare and Medicaid Services (CMS) is expected to announce in April how much it will cut from payments in 2016 to health insurers for Medicare Advantage, the popular program that covers seniors through private HMO and PPO plans. CMS in February recommended a 0.9 percent cut, though the agency may cut up to 0.95 percent, which would result in seniors paying higher premiums.

    The Affordable Care Act (ACA) requires cuts to the Medicare Advantage program to bring it into alignment with traditional Medicare programs. Those cuts have already been made. In recent years, the Obama administration has cut another 10 percent off the Advantage program.

    The program insures more than 15 million seniors nationwide, through either HMOs or PPOs. Projected costs reached $156 billion in 2014.

    And Republicans are already preparing to take advantage when CMS’s final decision is announced on April 6 — when lawmakers are home for the Easter recess.

    “Your work to protect Medicare Advantage is a topic your boss cannot talk about enough,” a top official at the National Republican Congressional Committee (NRCC) told GOP staffers in an email on Friday. “This would be a great opportunity for your boss to speak directly to seniors in the district about this important issue.”

    Both parties have used the other side’s proposals as wedges to appeal to seniors, a vote-rich bloc that is sensitive to benefit cuts. Democrats have routinely attacked Republicans over Wisconsin Rep. Paul Ryan’s budget proposals, which would have cut Medicare spending by $129 billion over a decade, according to the liberal Center on Budget and Policy Priorities. Republicans have fired back, accusing Democrats of cutting $716 billion to Medicare — and $156 billion to Medicare Advantage — under the ACA.

    “It was President Obama and Congressional Democrats that cut $152 billion from the popular Medicare Advantage program when they passed ‘Obamacare’ without a single Republican vote,” said Ian Prior, an NRCC spokesman. “Now that those cuts are starting to negatively impact Medicare Advantage and the 15 million seniors covered by the program, it’s important for voters to remember that it is the Democrats that are solely responsible.”

    Democrats pointed to the House Republican budget, released last week, which would turn Medicaid into block grants and reduce funding for Medicare.

    “Democrats have continually fought to strengthen Medicare while Republicans have been working to weaken it. This contrast comes into sharp focus on a day when the House Republicans released yet another budget that would end Medicare as we know it,” said Matt Thornton, a spokesman for the Democratic Congressional Campaign Committee.

    Medicare Advantage’s political clout has grown as reliance on the program has increased. In 1991, 18 percent of all Medicare recipients were enrolled in the Advantage program; today, it’s 30 percent. In states like California and Florida, Advantage enrollees account for 38 percent of all Medicare patients, according to the Kaiser Family Foundation.

    An analysis sponsored by America’s Health Insurance Plans, an industry group that opposes the reductions, found the cuts would cost between $40 and $120 per member, per month over a three-year period.

    An increase in health care costs is likely to play a role in the battle for the Senate in 2016, where Republicans hold an eight-seat advantage. Republicans will attack Democratic candidates running in GOP-held states like Illinois, Pennsylvania and Wisconsin for voting to implement the steep cuts.

    In Florida, one Democratic candidate is already playing proactive offense. Rep. Patrick Murphy, who is likely to formally announce he will run for Senate next week, co-signed a letter last week with Rep. Brett Guthrie, R-Ky., urging CMS to maintain current payment levels. The letter attracted 239 signatures from Democrats and Republicans; a similar letter earned support from 53 senators.

    “Further cuts to this important program could limit health care options and deprive beneficiaries of the services they need,” Murphy said in a statement. “The seniors I represent cannot afford higher out-of-pocket costs and slashed benefits.”

    But some party strategists wonder if the familiar attacks over cuts to Medicare Advantage, which dominated the airwaves in 2010, 2012 and 2014, still carry the same political sting. While the ACA made up a huge percentage of GOP advertisements in 2010, and the Ryan budget handed Democrats a potent weapon in 2012, some think voters aren’t paying attention anymore.

    “I think the dueling Medicare attacks are falling on deaf ears. We need to figure out how to frame this argument in a new way so that voters will actually believe this could affect them,” said one Democratic strategist who was involved in crafting attack ads on Medicare Advantage. “It may be that when voters hear ‘Medicare cuts’ they just tune out.”

    Republicans, too, used the ACA less in 2014 than they had in previous years — and that number continued to drop as the campaign progressed. Analysis by Kantar Media’s Campaign Media Analysis Group in 2014 found the number of Republican ads attacking Obamacare declined precipitously throughout the year, while the economy became a more dominant issue.

    Equinox Medical is the fastest growing negative pressure wound therapy (NPWT) pump and black foam dressing company in the USA. FDA approved wound dressings are mandatory to use in nursing home and hospitals.

 

KCI AND ITI PATENT BATTLE IS BLOODY

The bloody patent battle over a healing machine


How a simple device for closing wounds made fortunes for its inventors, for its marketers, and for Wake Forest University – until rivals claimed it was too simple.


A negative-pressure wound-therapy device made by Kinetic Concepts Inc.

FORTUNE — A patent royalty is a beautiful thing. It is so much sweeter than found money because it is more than just good luck. It means that one party is paying another to use an invention. And before the lawyers got to arguing over claim constructions and prior art, before the government regulators and hospitals screamed enough was enough, and before the Russians came to Texas to explain Soviet-era library policies, there were few things more beautiful or lucrative in the world of patent royalties than the VAC.

It’s pronounced “vack” and stands for vacuum-assisted closure. Here’s what it is: You cut a piece of foam to size and place it in a wound as a barrier and protector. Then you cover the wound and seal it up. One end of a tube goes through the seal and the other goes into a small pump. The pump produces negative pressure, creating an even vacuum through the foam, and the wound is pulled together and heals. If it sounds simple, it’s because it is simple.

For much of the past 20 years this device was controlled by a San Antonio company called Kinetic Concepts Inc. The VAC transformed KCI from a second-tier medical manufacturer into a global juggernaut.

For Wake Forest University, which licensed the VAC patents to KCI, the device has meant about $500 million in royalties. Based almost entirely on the VAC deal, the university was ranked fifth by the Association of University Technology Managers in its most recent survey of licensing income, trailing only Columbia, New York University, Northwestern, and the University of California system. In recent years the KCI payments have propped up the bottom line of the university’s medical center, and the VAC money has paid for research, recruiting, and construction that probably wouldn’t have happened otherwise.

As you might imagine, all that success gave KCI and Wake Forest a powerful incentive to build a fence, to protect the patents at all cost. And it gave everybody else an equally powerful incentive to find a way through the fence.

MORE: Bad to the bone – a medical horror story

This is the story of what happens when there are billions of dollars wrapped up in a prosaic piece of technology that at its core is closer to your kid’s science-fair entry than the Human Genome Project, one that despite all the commercial success and some 4 million or so patients still has its share of doubters in the medical community. It’s a story about luck and timing and the squeezing of the health care dollar. It is about betrayal and wrangling over patents. And mostly it is about invention, the tenuous and uncertain act of breathing life into an idea that may or may not have been yours all along.

Dr. Louis Argenta says he invented the VAC, and he has the patents to prove it. He’s a plastic surgeon at Wake Forest Baptist Medical Center in Winston-Salem, N.C., but is quick to point out that he isn’t that kind of plastic surgeon. He deals with messy and nasty injuries that often can’t or won’t heal on their own. One night in the late 1980s, he was lying in bed and unable to sleep. He was reading The Gulag Archipelago and was worried about a patient who was slowly dying from an infected wound that couldn’t be closed with surgery because the stitches would make things worse. “And, just suddenly,” he would say later, “the concept of just using a giant vacuum — we had played with vacuums in the laboratory a little bit, but this was the concept of using a giant vacuum to pull this whole thing together.” He sketched a rough drawing in the margins of his book, and his wife told him to go back to sleep.



The next morning he talked to his lab manager, Michael Morykwas, a biomedical engineer, and they began working on a prototype. They tried it with success on pigs. But before they could put a device on a patient, they needed the approval of the hospital’s ethics committee, which hemmed and hawed but eventually consented. The primitive VAC, Argenta would say, saved his patient’s life.

For the next few years Argenta and Morykwas tinkered with their invention. In 1991 the university applied for a patent on their behalf and began shopping the device around. Wake Forest agreed to pay them half of any royalties, which to date has meant about $120 million apiece. But back then, getting rich seemed like a pipe dream. The leading medical journal for plastic surgery rejected a paper on their research, and there was little interest from the health care industry’s biggest players. A licensing deal was struck in 1993 with KCI, which had a business renting and selling medical beds with air chambers. It already had products that used pumps. This would be one more. The first VAC hit the market in 1995, two years before the patents were granted and any research was published.

Negative pressure is suction, and suction has long been used to drain wounds and draw infections to the surface. What’s different in wound therapy is that the pressure is maintained. Before the VAC came on the scene, the prevailing belief was that long periods of suction would damage the healthy skin that surrounds a wound.

MORE: The great stem cell dilemma

By 1999, KCI had built a $50-million-a-year VAC business through word of mouth, a go-go sales force, and top-notch customer service. That’s nothing to sneeze at, but it was only the beginning. In late 2000, Medicare began reimbursing for the use of the VAC, and suddenly a therapy on the fringes came with its own revenue stream as doctors used the devices to treat diabetic ulcers and pressure sores. With the government’s seal of approval, VAC revenue climbed to nearly $500 million by the end of 2003, on the way to becoming a billion-dollar product line.

That brought the money. Respect came in the field hospitals for U.S. troops in Iraq and Afghanistan.

In clinical language, the immense destruction caused by an improvised explosive device, or IED, is referred to as a high-energy soft-tissue injury. These can be devastating wounds, prone to infection and hard to close. Slight variations in healing can mean the difference in whether or where a limb is amputated. Dr. Chris Coppola operated on these wounds during two trips to Iraq. The dust and sand swirled everywhere, forcing the surgeons to use shipping containers as ORs. The VAC became such a critical part of their treatment that the medical staff pushed the military brass to give the device quick clearance for use during the airlift of wounded soldiers from the field to hospitals in Germany.

“We got our Ph.D. in the VAC over there,” Coppola says, and there is little enthusiasm in his voice when he remembers this education. Now a pediatric surgeon in Danville, Pa., Coppola has written two memoirs of his time in Iraq, and he was one of the authors of a widely circulated medical journal article on the use of the VAC for treating traumatic injuries. “Little by little we gain knowledge,” he says, “and it’s a quite sad reality that we learn more about surgery and trauma during the years of war than we do in the time between wars.”

It is not surprising that a low-tech product with such a fantastic combination of margin and mission would attract attention from competitors. Medical devices are particularly vulnerable to being copied because, unlike pharmaceuticals, the patents tend to build on previous discoveries and they don’t rely on a unique molecule. And over time, as a company fights to hold on to its patents, it is forced to draw an ever sharper line between what’s covered by the patent and what isn’t.

The first chink in KCI’s armor came in 2006, when a small company named BlueSky won the right to sell a competing product that used gauze instead of foam dressings. Other companies rushed into the market, including the British health care giant Smith & Nephew, which snatched up BlueSky and began planning a larger challenge.

Most doctors preferred foam dressings over gauze. The foam version was tested and proven, backed by years of KCI’s research. So as Smith & Nephew and others sought to break KCI’s lock, it became clear that they would need to offer foam dressings, and to do that they would have to show that the device of Lou Argenta and Mike Morykwas didn’t really deserve patent protection, that the two men may have thought they invented the VAC but had really done no such thing.

At the heart of much of patent litigation is the concept of prior art: whether earlier research or invention makes a patent invalid. It can be tricky terrain because researchers — particularly in that distant era before the web brought everything to our desktop — aren’t always aware of everything in their discipline.

MORE: Nu Skin and the short-sellers

If you are a patent attorney hunting for undiscovered prior art on wound care, the place to search is Russia, which had both a tradition of innovation in this area and its own war in Afghanistan in the 1980s to push surgical advancements. That’s how, in 2008, Smith & Nephew found the research of Nail Bagaoutdinov, who had been a surgeon in Kazan, a provincial capital some 500 miles east of Moscow. In 1985 he began using negative pressure — including foam dressings — to treat infected wounds. A year later he wrote a brief paper on the results. This was the prior art that Smith & Nephew had been looking for. In late 2008 the company began selling foam-based therapy in the U.S., eager for a court fight.


Dr. Nail Bagaoutdinov began using negative pressure to treat wounds at a hospital in Kazan, Russia, in 1985.

KCI obliged, and the battle moved to a federal courtroom in San Antonio. KCI tried to exclude Bagaoutdinov’s work, arguing that the decay and disarray of the Soviet Union’s library system meant that the research fell into an abyss known as “gray literature” and didn’t qualify as prior art. Smith & Nephew countered with its own experts, including a top deputy of the Russian Federation’s Department of Libraries, flown into Houston to be deposed.

KCI lost the argument, and Bagaoutdinov’s work was allowed at trial. He testified about his research and how he had tried to get a patent, or what in the Soviet Union was called an inventor’s certificate. But he said his request was rejected because his invention too closely resembled the Bier Cup — a glass cup attached to a tiny hand pump — which has been around since the 1890s.

In March 2010 the jury rejected Smith & Nephew’s arguments and said that KCI’s patents were still valid, at least in the U.S. But eight months later the verdict was set aside. The patents, wrote Judge Royal Furgeson, were invalid based on the concept of obviousness, meaning that a person with skill in this area could have taken the existing research and arrived at the VAC. “The Bagaoutdinov references, while they may not have been easily accessible to the inventors, disclose almost all the claims asserted,” his ruling said.

KCI and Wake Forest filed a notice of appeal, and they started figuring out how to maintain market share in a new environment, one where there was no monopoly and customers knew it.

Smith & Nephew, a company with annual sales of $4.2 billion, has been a global player in bandages and wound care for years, but Thomas Dugan, the president of its North American wound-care business, said the company struggled to find traction in the negative-pressure market. “We didn’t have foam dressings. We just had gauze,” Dugan says. “We were in there, putting our feet in the water, learning a lot, getting beat up a little bit, and then as we progressed, we obviously extended our presence as we got into the foam market. And that’s what really started to open up the opportunity.”

That opportunity, the competition in pricing and products, brought growth in KCI’s VAC business to a halt. Since 2008 it has been stuck at about $1.4 billion in annual revenue. At trial, Dr. Jim Leininger, the company’s founder, grimly recited the list of customers who had already abandoned the VAC for less expensive systems. There were hospitals in Laredo, Texas, and Memphis and Nashville, and nursing homes in Texas and beyond. Each of these switches underscored the scramble among both health care providers and suppliers to protect their bottom lines.

One of the most bitter fights has taken place at San Antonio’s University Hospital, which occupies a sprawling campus just a few miles from the KCI Tower. University Hospital gets a third of its revenue from the taxpayers of Bexar County, and it is pushing hard and with considerable success to transform itself from the area’s public hospital to an institution that attracts more affluent — i.e., better insured — patients.

University was an early adopter of the VAC, but the relationship soured as costs increased. In 2009 the hospital spent $2.2 million on VAC expenses — a third more than in the previous year — at a time when it was feeling a squeeze from all directions. Moreover, it was getting little sympathy or relief from KCI.

“We were spending a lot of money, and it was becoming very expensive for the health system, these wound VACs, and we were getting direction from the C-suite that we needed to find a way to minimize the bleeding, if you will,” says Francine Crockett, the hospital’s vice president of supply-chain management.

Her team brought in another vendor, a company called Innovative Therapies Inc., which had been started in 2006 by former KCI employees. It uses a competing patent developed in Sweden in the 1970s that had languished until KCI made negative pressure a commercial success.



KCI has sued Innovative Therapies, alleging patent infringement and the violation of confidentiality and noncompete agreements. The litigation is still pending.

“This is bullyism,” says Richard Vogel, Innovative Therapies’ president. “It’s a patent that should never have been issued, because it’s anticipated by all sorts of prior art, but you have a right to that patent, and you are going to declaim loudly to the world that these are your patents, you own this space, and you are going to bully anybody and everybody into submission. And what’s more, you actually do it. You will spend tens of millions of dollars beating up on small companies and on large companies. You’ll sue customers. You’ll sue doctors. Well, after a while, people just throw up their hands and say, ‘We don’t want to have to deal with this.’ And to a large extent, that’s what happened.”

Beginning in 2010, the surgical-supply cabinets at University started carrying both KCI and ITI pumps and materials, and the upstart quickly gained a third of the business while officials evaluated the products. The hospital recently gave ITI single-vendor status for most of its operations.

Health care spending doesn’t exist in isolation, and one treatment can often prevent a more expensive expenditure at a later date. But it’s not often that providers get credits from payers for avoiding a future expense. Doctors like negative pressure because they can discharge patients sooner and don’t have to change bandages as frequently. But as Medicare’s negative-pressure payments grew from $24 million to $164 million per year between 2001 and 2007, the agency wasn’t looking only at the length of stay. It just saw an exploding line item with a huge markup. Pumps were being reimbursed at an average annual price of $17,000, about four times what suppliers paid for the equipment.

MORE: Fantastic voyage – medicine’s tiny helpers

In 2009, Medicare cut negative-pressure reimbursements by 9.5%. Now it’s rolling out competitive bidding in the industry, having companies vie for the right to sell pumps in some of the nation’s largest markets.

As part of that process, the government tried to answer some key questions. First, were foam dressings better than gauze? And second, was there any difference between the devices? KCI had claimed there were differences on both counts, with the hope of getting its own billing code — and reimbursement rate. A report commissioned for the Department of Health and Human Services said there were no differences.

But the wound healers may have bigger problems. The government’s report also contained this finding: “None of the high-quality reviews concluded that negative-pressure wound therapy provided additional benefit when compared to other interventional treatments.”

Dr. William Lineaweaver is a Mississippi plastic surgeon who specializes in burn reconstruction and is the editor of the Annals of Plastic Surgery, which 15 years ago published the first research paper on the VAC, in a sense paving the way for all that was to happen by reporting that the device promoted healing.


Expansion of the Comprehensive Cancer Center at Wake Forest’s Baptist Medical Center. The school has collected nearly $500 million in royalties on VAC patents.

Lineaweaver wasn’t the editor then, but he dismisses negative pressure as overused and unvalidated, a patient-management tool that is less about healing wounds than about cutting surgical costs. “It took advantage of the fact that reconstructive surgery has more and more to offer but is being reimbursed less and less,” Lineaweaver says.

There is plenty of evidence that negative pressure works by increasing blood flow and encouraging the formation of healthy tissue. But the research studies tend to be anecdotal, unlike the randomized trials that might be required of a drugmaker to gain FDA approval. The industry has told the government that it needs to look beyond clinical data and pay more attention to expert opinions and compelling observational studies.

In August the U.S. Court of Appeals for the Federal Circuit reversed Judge Furgeson’s invalidation ruling and sent the case back to San Antonio. The patents are still valid, for now. But KCI was by then no longer a party to that action. Instead of joining with Wake Forest in protecting the patents, as it first said it would do, the company reversed course and said the ruling from Texas — along with similar rulings in Europe — had freed it from the licensing agreement because there were no valid patents to license. Its last royalty payments, of $86 million, were in 2010. The patents expire in 2014. Wake Forest and KCI have gone to court, each accusing the other of acting in bad faith.

KCI said the university was dragging its feet on arbitration and wanted an exorbitant payout of more than $200 million for what courts here and in Europe had ruled were invalid patents. Wake Forest said KCI had abandoned its partner at a time of need, had been shorting it on payments for two years, and had timed its legal action to squeeze inside a deadline of having to pay a semiannual royalty payment of more than $40 million.

Wake Forest officials declined to be interviewed but released a short statement saying the university was pleased with the appellate court’s ruling and intended to enforce its patents against those using them without compensating the university. (Update: On Nov. 1, Smith & Nephew said it had reached a settlement with Wake Forest. The full terms weren’t disclosed, although the company’s third-quarter results and discussion with analysts suggest the agreement cut into profit by around $8 million and wouldn’t have a significant long-term impact on its wound-care business.)

John Bibb, the general counsel for KCI, says, “I wouldn’t say the relationship deteriorated so much as the strength of the patent portfolio, frankly, deteriorated. If you think about it from the context of the commercializing company, it’s hard to pay royalties for patents that have been invalidated everywhere they’ve been asserted.”

KCI was bought in 2011 for $6.3 billion by a private equity firm, Apax Partners, along with two Canadian pension funds, an arrangement that gives it the ability to retool and reinvest out of the glare of Wall Street. Shortly after the deal closed, Apax moved in a new management team, replacing KCI’s chief executive and the head of its global VAC business. Joe Woody, the new chief executive, spent six years at Smith & Nephew and was one of the architects of the company’s assault on KCI’s dominance. He says that despite that history, he’s gotten a warm reception as he repositions KCI to move past the days of product exclusivity. That means cutting costs, being sensitive to price, and keeping the focus on innovation and customer service as the company tries to grow here and abroad, where diabetes and related circulation problems are surging.

“The competitive environment is much like any other medical device company would face now that we have patents that are invalidated and we are in a different market position,” Woody says.

With all that’s happened, including shifts in a legal position that had been at the core of KCI’s corporate culture, I asked Woody and Bibb whether the Wake Forest patents should have ever been granted by the U.S. Patent Office. The line went quiet, and after an awkward period of silence, a spokesman said it was a speculative question and time to move on.

Not that long ago, an MIT student came out with a prototype for a hand-powered negative-pressure pump that she said could sell for $3 and be a boon in the developing world, where most people can’t afford the Cadillac-priced products of Western health care. Perhaps unsurprisingly, amid the praise for her resourcefulness was ridicule that she had done little more than cobble together a device from products found at a hardware store.

That’s the argument used against the VAC, and it both misses and is exactly the point. Maybe the VAC was there all along, just waiting to be found. But somebody had to find it and — more to the point — claim ownership. The patents gave the idea value, and the value helped create a market, and the market created fortunes. KCI’s founder, Jim Leininger, is a billionaire. Lou Argenta and Mike Morykwas have split about $250 million in royalties, and Wake Forest’s portion has helped build its campus and its reputation. And then there is one more inventor, a Kansas doctor named David Zamierowski, who received more than $200 million from KCI. His patents on the use of negative pressure predated the VAC and were licensed in part as a precaution, just to be safe — a fence around the fence.

Nail Bagaoutdinov never got inside that fence. He just helped tear it down. For his time, Smith & Nephew paid him $350 an hour, far less than the million-dollar bonus he originally sought.

He left Russia in 1995 and emigrated to the U.S., where he learned English so he could continue to practice medicine. Like many doctors born overseas, he now works in rural America, rotating through emergency rooms in eastern Kentucky. When we talked, he had just come off a night shift and apologized for being tired.

There was no bitterness in his voice about what might have been, and he said he was surprised when his work became the central piece of evidence in patent trials around the world.

“Negative pressure, it’s not complicated,” he said.

Bagaoutdinov doesn’t claim to be the inventor of the VAC. To this day he has never used one. His device was a much cruder affair. He said he thought he had come up with something new, but there was no way to know for sure. At the time, he was just a surgeon at Kazan City Hospital No. 8 and was unable to take his idea to the next step.

Equinox Medical Offloading webinar on March 3rd 2015 at 10 am EST

Please join us on March 3rd, 2015 at 10:00 am EST

Hosted by Holly Desimone, RN, BSN, WCC

Location: Online (Webinar)

Subject: Offloading application using the UNI NPWT black foam dressing kit by Equinox Medical

How long is the webinar? Approximately 20 to 30 minutes

How can I join? Please complete the registration form by clicking ont he link below.

Register now!

Once Registered, you will received an email from EquinoxO2 with all the webinar informations.

offloading wound dressing change

FDA’s approach to regulatin medical device and accessories

FDA’s New Approach to Regulating Medical Device Accessories

FDA 510 10 (k)

The US Food and Drug Administration (FDA) has outlined a new framework for classifying and approving medical device accessories, making clear that device accessories can be brought to market more quickly than their parent devices in certain cases.

Background

an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is –

  • recognized in the official National Formulary, or the United States Pharmacopeia, or any supplement to them;
  • intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
  • intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.”

Medical devices are brought to market, in general, in one of four ways:

  • The Premarket Approval (PMA) – This process is intended to evaluate and approve high-risk devices or devices with no known predicate.
  • The 510(k)/Premarket Notification – This process expedites the review and approval of devices that are highly similar to an already-marketed predicate device, or that are subject to certain controls on their manufacture.
  • The De Novo Process – If a low-risk device is deemed ineligible for the 510(k) process because it lacks a predicate, a manufacturer may petition FDA to review it through the de novo process, which allows FDA to make a risk-based classification of the device.
  • 510(k) Exempt — Some low-risk devices, such as bandages, are explicitly exempted from FDA’s premarket review process and can be brought to market almost immediately as long as they conform to established standards (“general controls”).

Medical Device Accessories

That general framework, however, has proven a bit confusing for manufacturers of medical device accessories. Accessories function in tandem with another device, known as a “parent device,” which is often (but not always) cleared or approved as a separate device.

As defined by FDA, a medical device “accessory” is a device “intended to support, supplement, and/or augment the performance of one or more parent devices,” while a parent device is a device “whose performance is supported, supplemented, and/or augmented by one or more accessories.”

At issue is how FDA should evaluate each device accessory. For example, if a parent device was deemed to be “high risk” but a subsequent accessory is inherently low-risk, should the accessory be judged on its own merits, or should it inherit its parent device’s “high-risk” status?

A Nuanced Approach to Risk

FDA’s guidance, Medical Device Accessories: Defining Accessories and Classification Pathway for New Accessory Types, is meant to clarify some of the ambiguity in this space.

As noted by FDA, a key consideration in the agency’s assessment of risk is the accessory’s relationship with its parent device. Some accessories are critical to the proper function of a device, such as a rechargeable battery for an AED. Other accessories allow the parent device to perform new functions, but are not necessary to its core functions. Still other accessories allow a parent device to perform its functions better or more safely.

“FDA intends to determine the risk of accessories and the controls necessary to provide a reasonable assurance of their safety and effectiveness according to their intended use in the same manner that is used to determine such for devices that are not accessories,” the regulator explains in its guidance.

FDA goes on to explain that it plans to access the risk of a device “when used, as intended, with the parent device.” However, it does not plan to simply pass on a parent device’s risk classification to its accessory. “The risk profile of an accessory can differ significantly from that of the parent device, warranting differences in regulatory classification,” FDA wrote.

The regulator also recommended the use of the de novo classification pathway for many device accessories, which it said would help in allowing some manufacturers to get their products to market more quickly.

– See more at: http://www.raps.org/Regulatory-Focus/News/2015/01/19/21106/FDAs-New-Approach-to-Regulating-Medical-Device-Accessories/#sthash.q5WOTR1Q.dpuf

Equinox Medical is offering a educational webinar training about Bridging two wounds with NPWT Black Foam

Equinox Medical is offering a free educational training on how to use the black foam dressing for BRIDGING application.

The webinar is hosted by their wound care certified nurse Holly Desimone, RN, BSN, WCC.

When: Tomorrow! January 20,2015

What Time: 10:00 am Eastern Standard Time

How can I join?

Click on the link below and register for free!

How to bridge two wounds together using black foam dressing kits when using negative pressure wound therapy?

negative pressure wound therapy pump

Bridging two wounds using NPWT Black Foam Dressing Kits

Dressing for Success:
9 Principles of Negative Pressure Wound Therapy Dressing Techniques

Dressing application, as noted above, provides an opportunity for us to educate our patients.

 

And just how did you acquire your own knowledge and skills around the application of NPWT dressings? Most of us learned by observing another clinician doing dressing applications, or from a manufacturer’s representative. We likely just imitated what they did, largely improvising. In my work over the past few years, I have been surprised to learn that many excellent clinicians have gaps in technical ability.
The information provided in this section is intended to review principles of NPWT dressing application to increase the accuracy of your techniques. These tips are distilled from principles that are typical of manufacturer guidelines. It is always recommended that you read and follow the manufacturer’s guidelines for the product that you are using. Read More

Join Our Webinar

Wound Bridging Technique Webinar
January 20, 2015 at 10am Eastern Standard Time

Our goal is to teach our clinical and distribution partners on how to bridge a wound using our UNI foam dressing kit.  Learn how to

off-load and bridge a wound.  This webinar will fill up fast, please make sure to sign up early, webinar space will be limited.   Sign up today.

THE MARKETING HELP YOU NEED
Equinox Medical Clinical and Marketing Value Added

Equinox Medical offers all our distributors marketing support.

 

We support all our distributors by providing all our distributors webinar support.  This webinar covers how to set up our UNI foam dressing kit and how to operate our Halo and Cobaltt NPWT pumps.  In addition, we provide all our distributor marketing collateral to show their customers our product brochures, post cards and flyer.

 

Our clinical support is able to all our clinical and distributors. We have a clinical wound care nurse to help answer and assist any customer with a clinical wound care question.  We also have videos available, to help provide a quick reference guide to all our customers.  All our educational videos are on our website at www.equinoxo2.com.

 

Smith and Nephew’s stocks plummet and in trouble

Smith & Nephew slips despite continuing hopes of £13 a share bid

UBS analysts raise price target for company but reduce recommendation from buy to neutral


Smith & Nephew has slipped back despite analysts continuing to believe there is a chance US rival Stryker could strike.

The medical device company’s shares are down 22p at £11.58 as UBS moved from buy to neutral but raised its target price from £11 to £11.75.

The bank reckoned there could be a takeout bid of £13 or more and said:

As we have argued previously we see a chance that Stryker makes a bid for Smith & Nephew, based on historic multiples including Zimmer Biomet, at a price of £13 or more. We have also examined, in depth, the possibility of a three way deal with Coloplast amongst the bidders for the wound care business.

We have no insight on if or when a deal might be proposed. Our price target is now the midpoint of our upside (a takeout at £13) and downside (standalone valuation of £10.50) scenarios.

At the fourth quarter results on 5 February we expect two areas of focus. (1) Tough fourth quarter Orthopaedic comparisons after a strong final quarter last year, possibly due to patient confusion over the impact of healthcare reform which won’t repeat. (2) Wound care’s continued improvement after a weak first half.

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