Wednesday, March 31, 2010

Sales Credentialing, Just Another Brick in the Wall.

"We don't need no education, we don't need no thought control, no dark sarcasm in the classroom, teachers leave them kids alone, Hey Joint Commission, leave them kids alone."

In 2009, TSB wrote an article regarding hospitals charging salespeople for credentialing in order to gain access to the operating room. Yet, there has been a recent uproar within the industry over sales rep credentialing, meaning, salespeople must be trained and certified in understanding operating room and HIPAA protocol. This includes standards in how to behave in the O.R., being inoculated for bloodborne pathogens, respecting patient privacy, understanding aseptic technique, in addition to being knowledgeable with regards to the instruments and implants that the surgeon is using. Interestingly, there seems to be the illusion in the industry that sales people in general provide education, service and collaboration on all levels. It may be argued that the people representing the spine cartel are more apt to be educated and trained on standards when comparing them to some of the independent distributors that work on a daily basis in the operating room.

Many years ago, the salesperson played an integral role interacting with the surgeon, especially, when it came to developing new ideas into functional products or emerging technologies. Usually, the salesperson was the conduit performing due diligence before an engineering team was brought in. As the industry became saturated with commodity products, the entire strategic objective of early growth stage companies was to generate quick revenue at whatever expense there was associated with a new distributor. So who is to blame for all these ridiculous mandates? The government? The facility? The Joint Commission? The AORN? The early growth stage companies that have acted irresponsibly, placing no value on training and focusing only on revenue (TSB is excluding companies with so called emerging technologies)? Somewhere along the way we have lost all sense and sensibility. If the company you represent is required to have product liability insurance, and you are trained by the company, why should a rep be required to acquire their own insurance? Because some lawyer said so?

Some surgeons have argued that they have a sense of security when a company representative is available in the O.R..... Yet, TSB must ask the question, why would anyone want a surgeon operating on them if they did not know how to use the tools of their trade? Would Slash have been the lead guitarist for Guns N' Roses if he wasn't a virtuoso? Maybe the reason sales people need training, and surgeons need a pacifier, is because no one takes the time to get to know the nuances of a system. Could it be that many believe that a screw is a screw, and, a plate is a plate? Regardless, if there are over 500 pedicle screws, each system has its own footprint. Would you get into a 777 and take a transpacific flight if the pilot was not capable of navigating the plane without a flight instructor?

Since when did we make selling and servicing so complex? If you have common sense, you can be a valuable asset, if you don't, there's no hope. Selling is an art. Do your due diligence. Understand hospital protocol, and get to know all the key players. If you have no business in the operating room, don't be hanging around, especially when the day is starting and patients are being prepped in the pre-op area. If it is mandatory to sign in, sign in. Be respectful of the rules until you are given an invitation to the party. Your role is not only to show up for the case and make money, your job is to educate the staff on your instruments and implants. The smarter they are, the less they will depend on you, providing you with the time to make new sales calls. Don't overlook the people in central services because they are just as curious as others in understanding your instruments and implants. A little bit of attention can go a long way, especially if you are bouncing sets around from one account to another. If you are in the operating room, get to know everyone and identify the role they play during the procedure. This includes understanding the flow of the procedure and the surgeon's tendencies. The surgeon is the conductor and you are a piece to the orchestra. Lastly, the most important part of your job is to get to know all the people that make key financial decisions that could potentially effect your business or opportunities within that account. If you are going to consider yourself a businessman, then start acting like one, it just may save your a**. TSB wants to know what our readers think?

All in all it's just another brick in the wall..............

Tuesday, March 30, 2010

Conflict of Interest or Conflict of Virtue, You Decide

In October of 2006, the Stanford University School of Medicine implemented a program called SIIP. The acronym stood for Stanford Industry Interactions Policy. This policy governs interactions largely in the clinical and educational arenas with pharma, biotech, and medical device companies. The provisions in this policy address gifts from these industries, access of sales and marketing reps on campus, and industry support of education.

Stanford was among the first institutions to embrace such a policy. Considering the scrutiny that academic institutions and physicians are under, it's a wonder that more institutions are not promulgating the importance of this type of policy, or are they? The concern that Stanford has is that all interactions between physicians and industry must be ethical, cannot create conflicts of interest that could result in compromising patient safety, data integrity, the integrity of the educational and training program, and the reputation of faculty members at the institution. Individual physicians must consciously and actively divorce clinical care decisions from any perceived or actual benefits expected from a company. Stanford believes that it is unacceptable for patient care decisions to be influenced by the possibility of personal financial gain. It comes down to the old adage, "give a surgeon a hammer, everything becomes a nail." More on that later.

The concerns for Stanford include:

Gifts and compensation (Buying dinner, fee for attending a dinner presentation, etc)
Financial support for educational and other activities (Reps paying for educational programs that involve use of company products, i.e. AO Courses as an example)
Full disclosure of relationships with industry (Consultancies, Stock Options, Royalties, Honorarium's, etc.)
Access to the facility by sales and marketing representative
Providing scholarship or any other educational funding to residents

The Dean's concerns are legitimate in that a faculty member's relationship, whether it be a full-time or adjunct professor, could tarnish the University's image. Immediately, the Jeff Wang/UCLA, Zdeblick/Wisconsin and Polly/Minnesota scenario come to mind. Philip Pizzo's concern is the deteriorating image of the surgeon in the eyes of the public let alone the potential affect it can have in patient care. But we're not here to rehash old news. The purpose of the post is to ask our readers their opinion on the interaction between physician and company. Does a conflict of interest exist? Can a physician's judgement be influenced by their financial ties to a corporation and the success of a product? Have surgeons behavior, mostly influenced by commercial remuneration, distorted the fine line between outcomes and clinical marketing? Should there be two sets of guidelines, one for private practice, and one for academia? Or should there be stricter rules on how a surgeon can market his skills? In the larger picture, medicine has become no different than other areas of business, where everyone has a spokesperson for a brand. The real question is, if they weren't getting paid, or did not have a financial stake in a product, or a company, would they really care? Would they really use some of these products?

Maybe, Dr. Pizzo is on to something, or, maybe he is just missing out on an opportunity to maximize Stanford's ability to generate capital by commercializing the department at the medical school? It's an interesting time within the industry. Wall Street and it's analysts' have lowered the bar for the industry as a whole, yet, forecasted that the spine cartel should achieve their financial objectives by adjusting revenue and foreign currency in hope that the industry is still appealing to lure future investors, and, also to drive up the value of their own investments in these companies.

So in the spirit of debate, are you hearing other major academic institutions across the U.S. addressing their concerns about the commercial relationships between their faculty members and the industry? Or, is this an isolated situation?

The sacred Hindu scripture known as "the Gita" once said, "the fruits of action, are emphatically not the point of action." TSB wants to know want our readers think?

Want to Sell Something, Just Use the Words Best in Class

Recently, there has been an onslaught of press releases ranging from new executives being hired to companies achieving PMA milestones, to launching "new me too" products (isn't that an oxymoron), to surgeons promoting clinical results. None of this news has been truly earth shattering, nor is it going to create a major shift in spine care, nor, is this going to change some of the challenges that these early-growth stage companies face. What TSB finds interesting is the common buzz words that all these press releases contain, "best in class."

Many years ago, as more and more graduate school business executives started to infiltrate our industry, it seems the use of the description "best in class" became more the norm than the exception. It's almost like using the word "love" endlessly. It loses its meaning. So we thought that we would do a bit of investigative work to identify just what does it mean to be "best in class." When utilized does this mean that the product that someone is describing exhibits the highest current performance level in the industry? Maybe, but usually its your word against mine unless you have the revenue to prove it. What happens if there are only three or four products? Would that truly constitute using the word "best in class." Would four products even qualify as a class? What happens if someone is attempting to use these words to set a standard or benchmark, and that individual is not an authority? Would that be deception or marketing?

You have to love when someone hires a new VP of Sales, and that person is quoted as saying, "I look forward to working with the sales management team to build a best-in class sales organization as we grow our market penetration in minimally invasive surgery." Huh? Wasn't the sales team that you inherited best in class? Or, is the company calling a timeout and looking towards free agency to rebuild the organization? Is this the NBA? LeBron is available for the right price. Or, when launching a new product someone is quoted as saying, "the company's mission is only to provide best in class products." Does that mean that it hasn't been launching best in class products? Does anyone have anything interesting to say anymore? How canned can some of these comments be? Is there any creativity or artistry to our speech?

In closing, our research shows that the term "best-in-class" is given to the dog who has been judged the best specimen of its particular class at a confirmation show probably like the Westminster Dog Show. So TSB must ask the question, is it the dog, or is it best-in-class? We probably won't know until this years Spine Technology Awards ceremony in Orlando, until then keep doing your homework because you never know when someone will call you the best-in class.

Sunday, March 28, 2010

2010 Preservation of Motion in the Spine

If my memory serves me correctly, April 7th -10th will mark the 6th Anniversary of the Preservation of Motion in the Spine Meeting. When it originally started it was called Preservation of Motion in the Lumbar Spine. My how the worm has turned. Duck Key is a great resort in the Florida Keys that will afford everyone the opportunity to escape reality and spend some time polishing up on their surgical and fishing skills. This meeting has definitely evolved from a boutique meeting to a recognizable academic and surgical skills lab. In addition, the program has added some new surgeons to infuse (is that a commercial plug) some life into the program. Yet, TSB always loves coming to this meeting. The industry gets to experience the wonderful advancements that have been made in motion preservation, along with a first hand look at some of the faux pas' that have been made. Unfortunately, after reviewing the Agenda, the audience will not be treated to Brazilian Samba music as the background to Shakira dancing up and down a stairwell after reconstructive surgery for a failed disc, nor will we have to hear one of the presenters tell the audience that David Paul is a genius (I thought Einstein was a genius). But there is hope. Maybe one of the presenters will bring back the 2001 Space Odyssey music for his presentation on total disc replacement. So fellow readers, pack up your Tommy Bahamawear along with your sandals and catch a flight down to Miami International and don't forget to fill out your disclosure form.

Saturday, March 27, 2010

Spine Blogger Sunday Editorial

The week ending March 28th will become known as "TW3," or That Was The Week That Was. No fellow readers, it's not the old 1962 British satirical television comedy hosted by David Frost. It's a political comedy called America. How can anyone in their right mind not revel in lampooning the American government, considering, there has been a systemic failure not only by the Democrats, but also the Republicans? Somewhere along the way, OUR SO CALLED LEADERS HAVE FAILED US. In many respects the United States is beginning to disintegrate like the Roman Empire. The transformation is complex, yet, it will not take over three hundred years. This could be the end of capitalism and free markets as we have come to know them. The parallels are precedented. Over expansion, budget deficits, the need to raise taxes unless you want your children to bear the onus of subsidizing a war and having to speak Chinese, the fleecing of America by Wall Street, and the cost of healthcare reform. We are on the brink of self-immolation. Hypocrisy, deception, greed, childish name calling, bigotry, finger pointing, death threats, homophobia, xenophobia and a fundamental breakdown of a major religion. Could I find anymore nouns to define where this once great republic lies? Have we become a nation that lacks civility?

In 2009, the History Channel broadcast a documentary entitled, "JFK, 3 Shots that Changed America." In the past three years, a real life documentary has been unfolding. It will be called, "The 3 Shots that killed America." The 3 shots that TSB is referring to are, America declaring war in the Middle East (the Bush Administration), the death spiral and fraudulent behavior of Wall Street (the Bush and Clinton Administration), and Healthcare Reform (the Obama Administration). In order to perform an autopsy, one has to inspect and dissect the victim to determine the cause, and unless people are willing to do this, the future is bleak, for everyone. Today we scream fiscal irresponsibility, yet the government failed us a long time ago, and we have no one else to blame except ourselves. We continue to vote septuagenarian's and octogenarian's into office at a time when these individuals lack the mental faculties and stamina to make prudent decisions. Politicians continue to anesthetize the American public for votes while catering to special interest dollars. The time has come to legislate and enact term limits if this behavior does not change.

The U.S. is a melting pot of diverse ethnic and cultural groups that have succeeded by working hard. No one is a pedigree American. Regardless of class, everyone wants to build a better life for themselves. Opportunity remedies failure. Unfortunately, America has lost the passion to endure, everyone wants instance gratification and entitlements, regardless whether you are rich or poor. Today, the pundits criticize this country's disease for debt, yet, when previous administrations (the liberals and conservatives) were making irresponsible decisions our attitude was "let the good times roll," never thinking about the consequences.

America was built on a middle class foundation, yet, today we have become a two-class system. We have people with diminishing wealth, and then we have the super rich. No need to worry about a foreign entity bringing the United States down to its knees, we are doing an exceptional job at it ourselves. Healthcare will be running a $4 trillion dollar deficit by 2012 and whether we like it or not everyone is an accomplice, unfortunately what we have learned about ourselves is that we do not accept accountability. So in the end, one has to wonder whether our behavior, expectations, and lack of respect in our industry is nothing more than a microcosm of the bigger picture. You know what the Yogi Berra always said; "When you come to a fork in the road, take it."

Friday, March 26, 2010

Is This an Epic Battle To Mimic the Disc?

Hydrogels have been used in breast implantation, dressings for burns and soft-tissue, topical drug delivery and in contact lenses. The effects of polyvinyl alcohol and (PVA) and polyvinyl pyrrolidone (PVP) have been studied for many years indicative of this materials versatility and ability to mimic a degree of flexibility similar to natural tissue. Scientists have been studying the effect of these co-polymers for many years, especially its potential in the spine. Some of the original studies focused on the replacement of the nucleus pulposus (NP) in the intervertebral bodies of the lumbar spine. These studies analyzed how dehydration affected the mechanical behavior of rehydration gels demonstrating the feasibility of nucleus replacement.

Lumbar discectomy has been proven to be an effective therapy for decompression of patients with herniated disc. So the question was asked, can the nucleus pulposus be regenerated, or as TSB would say remodeled? By identifying the viscoelastic properties of the nucleus pulposus the objective was to create a scaffold capable of integration without mechanical compromise. Many scientists believe that the swelling properties of blending PVA and PVP might allow spine surgeons to replace the NP endoscopically vis-a-vis a posterior approach.

Over the past ten years, companies have raised a tremendous amount of capital, and have also burned through an incredible amount. Some of it for research, some of it for marketing and of course some of it for its own personal use. Yet, the question, must be asked, is there a viable market of this material in spine? Some of the companies that surfaced believed if they could prove this materials efficacy, a windfall would occur. But somewhere along the beaten path it seems that the market for this material, as originally intended, is not as large in spine as it may be in other segments of medicine. So the question must be asked of our readers, is there hope for this material? And, how large of a market exists? And, do some of these companies stand the chance to execute and capitalize on their strategic objectives? Or, are their expectations greater than the reality that awaits them? TSB wants to know what our readers think?

Tuesday, March 23, 2010

Show Me the Money!!!!

Based on a recent survey by NASS, 24% of spine surgeons responded that if mandated reductions in Medicare reimbursements occur, they will no longer participate in the program. Additionally, more than one-third of those respondents would opt out of Medicare for two years, and privately contract with Medicare patients. So what does that mean? Does this mean the end of spinal care for Medicare eligible patients? In all likelihood, no. What it means is that on the surface there are 76% of spine surgeons that will either provide services or are undecided as to how they should react until there is more clarity as to what the government's plan is.

Dr. Baker was quoted as saying that "these findings are indicative of the fears resonating among physicians nationwide." TSB could hear the conversation;

Spine surgeons have just told Dr. Baker that they are not going to participate in Medicare

Dr. Baker: That's great!

Spine Surgeons: Are you listenin'?

Dr. Baker: Yes!

Spine Surgeons: That's what we're gonna do!

Dr. Baker: What can I do for you?

Spine Surgeons: It's very personal. Hell, it's our motto. Are you ready Ray?

Dr. Baker: I'm ready.

Spine Surgeons: We want to make sure you're ready Ray. Here it is: Show me the money. Oh-ho-ho. SHOW! ME! THE! MONEY! A-ha-ha Ray, doesn't it make you feel good to hear us say that! Say it with us one time Ray.

Being a surgeon in today's healthcare environment must be stressful. First there is an assault by the DOJ on their abilities to act as consultants, then, there is a contingent that are complaining that the reps are making too much money, of course the CEO's are truly underpaid, then, they want to own distributorships because by doing so they will drive down the cost of healthcare, and now in all likelihood the potential exists that they will be paid less for providing medical care for medicare patients. Maybe its time to stop worrying about everyone else and just focus on the task at hand. So what's the alternative? Some speculate that there will be an early exodus by some very talented surgeons because of what transpired today. If that's the case, TSB must ask the proverbial question; What are your going to do? Become a hedge fund manger? The government is putting in regulations on shorting. Go to work for Goldman Sachs? Maybe you can make millions packaging and selling sub-prime mortgages? Nope! Gold is the next thing. Open a laundromat? Become an artist? Become a salesrep? I mean snap out of it! Surgeons have one of the greatest and most noble professions that a person can have while at the same time earning a respectable living. And if you're not happy being a surgeon, then you were never intended to be one. So in the spirit of debate, maybe, just maybe, its time to hang up the spurs and ride off into the sunset, or move to Paris.

You know what TSB says; "I was a free man in Paris, I was unfettered and alive, there was nobody calling me up for favors and no ones future to decide. You know I'd go back there tomorrow but the work I've taken on stoking the star maker machinery behind the popular song."

It's a New Day, A New Way, and Only Time Will Tell

Today, the POTUS officially signed the Healthcare Reform Bill of 2010, though the bill has to survive an arduous process within the Senate before its finality. The last few years have exemplified the best and worst of America. Somewhere along the way we lost our moral compass, and it's just not issues pertaining to healthcare. It involves total disregard for rules and regulations. We have become an entitlement society that simply cries; "that shouldn't have to apply to me." Many questions have been asked about how this bill will affect our industry or the medical device industry in general. Unlike some CEO, TSB does not have to prognosticate because the spirit of a true entrepreneur will always prevail. As successful as the last ten years have been in spine, it has also led to irrational exuberance, delusional thought and schemes not only amongst executive management, but also the rank and file of this industry. One has to wonder was it really about enhancing the quality of patient care with emerging technologies, or, was it about the deal? Why would anyone invest in some of the start-up or emerging companies that glut the market with products and continue to flounder in "Otherworld" if they didn't believe that there was an opportunity for a windfall?

Yet, hope springs eternal. Based on the climate within the investment community, it is apparent that the days of investing into companies with traditional hardware is coming to an abrupt halt. As was stated in a previous blog, peripheral spine technologies/real innovation is the wave of the future. The companies that continue to slog along bringing out their me too products will eventually crawl to a grinding halt for one reason or another, whether it be lack of capital and sales, market forces driving down the cost of implants and biologics, or just surgeon consultant attrition. The subculture companies that exist to create cheap and quick products, i.e. inter-body devices and pedicle screws, while playing roulette will be limited to local markets or local surgeons. But who will want to buy them? Besides, these ventures are about a quick profit rather than long-term viability, and then it will be on to the next new thing.

If the last few days of stock market activity is a barometer of things to come, the insurance and device companies stand to benefit from this reform. Contrary to opinion, when one door closes another one opens. There will be more people with healthcare coverage, people with pre-existing conditions will not be denied, and young adults up to the age of 26 will be able to be covered under their parents insurance plan. You don't need to argue with TSB just look at the demographics, numbers don't lie. One way or another, those of us that have insurance end up footing the cost, just think about it, there have been greater increases in healthcare insurance over the last few months than over the last few years, and we didn't even have a healthcare bill. There is no question that a government mandate on insurance with a penalty is an infringement on individual rights, but if we were willing to spend hundreds of trillions of dollars (thank you fellow reader) on the two wars without a financial analysis and stood by while Wall Street was bailed out, why do we behave so irrationally when it comes to healthcare? As I have argued, there is a difference between having a right to basic healthcare versus the privilege to pick and choose. For those that argue that it is a fundamental threat to free market enterprise, personal freedom, and innovation, this will likely separate the innovators from the imitators.

Let's be realistic, if the industry is going to be taxed 2.3% per annum beginning in 2013 who will carry the brunt of this tax? Will it be the start-up or early growth stage company, or, will it be the Spine Cartel and major medical device companies? Besides, how many of these large companies actually have the creativity and wherewithal to organically develop emerging technologies? Retrospectively, most of their new products have been acquired rather than developed organically, along with the fact that they have exhibited a poor ability to integrate some of these acquisitions without complete chaos (just look at what Medtronic did). Look at Stryker, NuVasive, Synthes, DePuy, Medtronic, and Zimmer, what have they produced in comparison to a entrepreneurial venture? Not much. The definition of innovation is introducing new things, not buying new things that were developed by entrepreneurs so that you can acquire greater market share. There is a major difference between being a manager of a big company and an entrepreneur. One minimizes risk to maximize profits, while the other relishes risk.

In closing, most of us don't really know how this is going to effect or affect the industry at the end of the day, because until all the final details are hammered out, it's your word against mine. It's funny how all the people in the industry that espouse that change is good are the people that are having the toughest time accepting the fact that either this legislation will succeed or it will fail and only time will tell, because as the late, late, late, Lowell George from Little Feat said, "Time Loves a Hero."

Monday, March 22, 2010

Squawking with Steve on MSNBC

On Monday, March 22nd, Steve MacMillan CEO of Stryker provided the public with a snapshot opinion on the effect the healthcare reform bill will have on the medical device industry. Beginning in 2013 over 8,000 medical device companies will contribute $2 billion per year in tax revenue as a result of a 2.3% excise tax. (You can do the math)

MacMillan opined that the device industry doesn't need a tax considering that the industry is attempting to develop innovative products while creating additional jobs. Yet, some salient points were made by MacMillan as to the nature of our industry. The medical device industry is fragmented when compared to major pharma, dominated by many small players where the capital cost of entry to the market is low. One point, that TSB must argue is that we are no different than pharma where we are dominated by the big players. All one has to do is look at a market analysis regardless whether it is spine, recon or trauma. The big boys dominate. The one major difference that exists is that in today's climate, one that was fostered over the last 8-10 years, it was the start-up and early-growth stage companies that had contributed in terms of producing emerging technologies. The Cartels of the industry spend more time on marketing and acquisitions.

MacMillan spoke of the short-term and long-term concerns. In the short-term most of us will figure how to survive by adapting and creating new strategic objectives and by managing our capital with more prudence. Gone will be the day of frivolous spending and no accountability. In the long-term, the country could be straddled with a greater federal deficit. After the cost of the Iraqi and Afghan Wars are we really all that upset with another couple of billions of dollars in spending? Let's face it, we bailed out Wall Street to the tune of billions and there wasn't nearly half the public rancor that has existed of Healthcare Reform.

In closing, one has to admire MacMillan's salesmanship when he lumped Stryker in the same breath as Microsoft and Google. Stryker a legendary company in the device industry? Yes. Comparing it to Microsoft and Google is taking it a bit too far. Overall an informative and calm analysis of what awaits all.

Sunday, March 21, 2010

Sunday Op Ed Piece - The Big Lebowski

This is the story of "the Dude" and Walter (most of our readers know who they are) collaborating to sell an artificial disc in 2003 only this time to pull the old switcheroo on DePuy. Rather than "the Dude" and Walter having to figure out that there wasn't a million dollars in the briefcase, it was DePuy that was left holding the bag. While "the Dude" and Walter rode off to the bowling alley, DePuy was scurrying to beat every other competitor to the marketplace with Charite. Yes fellow readers, based on the latest news reports, it seems that the Charite has been put to rest, and that a new and improved version has replaced it. The new device as many of you know is called the In Motion, preferably it should have been called Slo- Motion. You have to love our industry, it does come up with some banal names.

Based on many retrospective studies that have been published, it seems that artificial discs seem to show fair to good results. Yet, like any spine surgery, there are always reports of complications associated with subsidence, wear, adjacent disc degeneration, migration and facet joint degeneration. Posterior fusion has been the gold standard for many years and with the advent of the artificial disc spine surgeons and Wall Street started seeking the new new thing. Much of the hype back then was that "in theory" the procedure was to have advantages over fusion, minimizing the potential for ADD since fusion eliminates motion and causes overloading on the adjacent discs. Yet, some estimated that ADD would occur 10 years down the road. Some investigators even found no evidence that long-term disc results were any better than fusion.

Back then the race was on. Bring on the marketing studies and financial forecasts! Should we be the first? Would it be better to be second? Many strategies abounded. TSB remembers hearing some oracles of the industry claim that 65-75% of fusion patients will be candidates for an artificial disc. Back in 2003 or 2004 one of the major investment banks even put out an analysis on the potential payback. In retrospect, $5,000 per level was an entertaining forecast. But who are we to laugh at Wall Street? They always get it right, don't they? Artificial Disc replacement was going to create a major paradigm shift. Once DePuy acquired Charite, " V-III" sold ProDisc to Synthes, Stryker in its haste acquired Tom Errico's SpineCore device, while Medtronic feverishly labored on Marverick. The industry didn't even have a two year retrospective follow-up in the US market and companies were touting their devices as first gen, second gen, third gen without any rhyme or reason. At that time, the industry hadn't answered the question whether a device should be constrained, semi-constrained or unconstrained. Should it be metal on poly? Poly on Poly? Metal-on Metal? PEEK?

If the Charite is to be remembered as having attained legendary status because it opened the door to motion preservation, it was quite an expensive door opening. If the device was approved by the FDA in 2004, and to date there have been 5,000 implantations, (assuming this is US data) on average DePuy and its surgeons are averaging an estimated 833 procedures per year. Would our readers consider this to be a windfall? Considering that statistically people over 60 have more back problems than younger people, what were we expecting when CMS issued non-coverage decisions for all lumbar disc devices for patients over 60?

So this week "the Dude" and Walter stood over the cliffs of LaJolla and eulogized the old boy, opening the coffee can with the remnants of Charite and throwing it into the wind. May it RIP. TSB wants to know what our readers think?

Thursday, March 18, 2010

Patent Crusader

Inventors Digest recently ran an article on Gary Michelson and published his letter to Congress supporting patent reform legislation. Michelson, a board certified orthopaedic surgeon and independent inventor is known as a single named inventor on over 900 issued patents, or pending applications throughout the world, and just shy of 250 issued patents in the United States, has taken up the gauntlet for patent reform.

Dr. Michelson is well known throughout the industry for slaying the mighty dragon. In a unprecedented decision, Dr. Michelson became a billionaire as a result of his infringement lawsuit against Medtronic. He slay the industry giant on its home court in Memphis in front of a packed house. Dr. M's, message is that the USPTO is in dire need of patent reform, citing a three year backlog of over 8oo,000 patents, if cleared, could potentially open the door to new jobs and technologies that would enhance the lives of millions of Americans.

After years of fighting for his individual rights, Dr. M. crusades for patent reform legislation. To paraphrase Bono "it's alright, it's alright, it's all right, he moves in mysterious ways." TSB wants to know what our readers think about patent reform?

A Hostile Environment or A New Trend?

TSB was surfing various internet spine portals and came upon an article stating that recent capital placements by various investors into the spine market was beginning to pick up some traction. Over $200 million has been invested within a five month period, yet, when one looks at the profile of these investments we are seeing a unique trend. No longer are investors dumping millions into any company, let alone a hardware company. We had investments into
neuro-modulation products, an artificial disc company, a fibrin sealant, a nitinol instrument to be used in conjunction with PMMA that provides a scaffold for VCFx, an annular repair device, a hemostatic agent, a synthetic cartilage, tissue engineering, and a bio-ceramic.

The appealing aspect of these placements is that investors are selectively choosing to invest in peripheral spinal companies. Hopefully this is a good sign for our future and a bad sign for companies that are intent on saturating the industry with additional "me too" products into a zero-sum market. So let's take our hats off to those that were able to be part of a growing trend, and hope that those that entered this industry with the irrational exuberance get the hint, the train left the station and you no longer are on the same track. Please ingratiate our followers and twitters with your thoughts, TSB wants to know what our readers think about some of these technologies?

Tuesday, March 16, 2010

Irrational Exuberance, Is It Running Its Course?

Recently, TSB posted asking our readers if they had heard anything regarding a company called Medical Dynamics? The initial response that we received was, "was this the best that we can do, considering that the AAOS was meeting in the Big Easy?" Based on some of our readers comments, and TSB's conversation with some of our "eyes on the street," there wasn't anything really earth shattering at this year's academy meeting.

TSB has never believed in attending the AAOS. Years ago, spine broke off and created its own venues. As one reader so eloquently stated, "there are way too many meetings in this industry." Besides, why would we attend a meeting that really caters to the reconstructive, sports, and trauma markets? But that's not what this post is really about. Today, we wanted to discuss the irrational exuberance that still exists within our industry, especially when one looks, or can't avoid looking at the stock performance of some companies over the last few weeks. How does one company's stock decrease, and then increase an estimated 63% on news that there were no reimbursement issues to begin with? Yet, another company can report that they have had one of their best quarters ever and the stock continues to "slog" along? Obviously, much has to do with the analysts' spin on what is hot and what is not. In addition, one must speculate as to how much of their own capital do they have invested in specific stocks?

Do any of our readers, let alone the analysts' understand the long-term strategy of some of these companies, and, is there a defined road map to where they are going? Or, will some of these companies continue to ride an existing product in hope of finding the next new, new thing for their portfolio? It is apparent that many of the early growth stage companies take umbrage when TSB asks the question, who are these companies? Some of our readers believe that it is an assault by TSB or the legacy companies on their existence and survival. Is it an attack on their freedom to operate, or are they responding to their vulnerabilities in a free market? Yet, it is evident that any business where you can sell a product and make fast money is going to attract some nefarious characters. In many respects we are a mirror image of those that create mortgage bonds out of sub-prime loans hoping to sell their portfolio to the larger investment houses. The problem that all these companies face is that they have been exposed as having much of the same thing, looking to operate in small markets, avoiding too much exposure.

It will be interesting to witness how many of these companies attend the next set of meetings. Minimizing one's expenditures has been important for many of these early growth stage companies in order to survive in the current economic climate. When OTW advertises asking the question, are there too many spine meetings, or, are there too few good spine surgeon meetings, you know they industry is pulling all stops to keep people spending their money. And if OTW is offering subscriptions at 30% off the current rate, are they looking for new subscriber's or is this a sign of the times? TSB wants to know what its readers have heard about the current climate in the industry? You voice, is the only voice that matters.

Sunday, March 14, 2010

Spine Blogger Alert - Who is Medical Dynamics?

To our readers:

Recently someone sent an e-mail to TSB asking if we have ever heard of a company called Medical Dynamics? After using the Google Search Engine we were not able to locate anything pertaining to the this company, as far as spine is concerned. Our curious reader stated that they were looking to launch an ALIF? If so, do we need another ALIF? As for our reader's interest in understanding the approval process, usually, if there is a predicate device the FDA will approve the product on average in 90 days, unless you are unlucky enough to be cursed with a specific reviewer. TSB wants to know if any of our readers have heard of this company and if so are they legitimate?

Wednesday, March 10, 2010

Could This Be the Start of a Beautiful Relationship?

On Monday, March 8th it was announced that X-Spine and Gamma Spine had entered into a business relationship to develop and distribute a minimally invasive spinal fixation technology c0-invented by Vijay Goel, PhD, and Aaron Maytas (Aaron TSB will give you equal billing) a doctoral candidate at the University of Toledo.

This cage will act as a spacer. Dr. Goel expressed his enthusiam regarding partnering with X-Spine. Can the synergy between these two entities allow them to develop a less costly implant with a minimally invasive approach, only time will tell. But how can you go wrong with Dr. Goel on your side, he is one of the good guys in the industry. In addition, to this product, it was reported that Vijay (which means Victory) will be launching the Core Trainer in the early summer, an exercise and conditioning device for the core. Look out Christie Brinkley and Chuck Norris you've got some real competition coming your way. PS: Dr. Goel you can probably sell a few of them to some people in our industry. Good Luck!

Tuesday, March 9, 2010

Surgeon Admits Guilt to Sham Consulting Deal

In a case that could establish a precedent for the on going investigation into sham consultant agreements in the spine industry, it was reported by Orthopedics This Week that the first surgeon to be secretly paid off to endorse a company's product without ever having performed any training room, operating room or consulting services plead guilty to one count of conspiring to commit wire fraud.

Bail was set at $100,000 and a sentencing date is scheduled for June 21st. The surgeon faces five years of imprisonment and a $250,000 fine. If the DOJ intends on sending a message to our industry, maybe its time the Judge in this case throw the book at the individual in this case. Unfortunately, for every surgeon that truly contributes and deserves to be compensated for contributing to the development of innovative and emerging technology, there are too many of their peers that are involved in sham consulting agreements. TSB wants to know what our readers think? Do you believe the DOJ intends on cleaning things up or do you believe that this is all a big ruse?

Monday, March 8, 2010

Round and Round We Go.......

Recently, TSB received e-mails from various readers regarding the dealings by some of the smaller start-ups or early growth stage companies that specialize in interbody devices. The two companies that have been mentioned in particular have been Spine 360 and Verticor. Both of these websites seem to be camouflaged in the sense that 360 only exhibits a pedicle screw while Verticor has a family of interbody devices. We had heard that the FDA had put a halt to 360 for using non-medical grade PEEK. What have our readers heard about these two companies? It seems that they have been making some waves within the industry, while flying below the radar. TSB wants to know what you know?

Round and around we go where it stops nobody knows........

Sunday, March 7, 2010

Kabins Rolls the Dice and Comes Up Snake Eyes

TSB could hear Dr. Mark Kabins singing the Irving Berlin hit Blue Skies. Blue skies are smiling at me, yes siree, nothing but blue skies that's all that he sees. On March 7th, the Las Vegas Journal reported that one of NASS' finest, Dr. Mark Kabins, agreed to pay $800,000 to settle a slander lawsuit filed against him by an anesthesiologist. Obviously, the Nevada judicial system, which is completely broken, allowed him to settle with absolutely no admissions made as part of the settlement, and it was another vehicle to give Dr. Kabins closure. How long is the judicial system in this state and country going to pander to white collar criminals, no less one that hides behind the identity of a medical doctor? As part of his punishment, the government should have made Kabins spend the next twenty years walking the Strip in Vegas wearing his Civil War Costume carrying an advertisement placard for the Crazy Horse Lounge.

In addition to this lawsuit, the physician that Dr.Kabins made false and defamatory statements about his competancy, is looking to proceed in a lawsuit against John Thalgott, another well know Las Vegas contemporary. Obviously, Kabins, the model citizen, has also agreed to pay his victim another $3.5 million to avoid prison time.

Surely NASS must be proud of the behavior and shenanigans of two of its finest. POD's, Consultancies, Conspiracies, who knows what awaits our industry next? TSB wants to know what our readers think? Come on someone has to have some insight, it seems every time TSB posts something about Vegas, it stays in Vegas.

Saturday, March 6, 2010

Weekend Op-Ed Piece

It was an interesting week to say the least. In addition to being busy at work, our blog had a great response from our readers. TSB is referring to the posts on PEEK Wars, the Spine Technology Summit, all the follow-up commentary on Trans 1, and of course, the industry woke-up to the breaking news on Monday that Baxter had acquired Apatech. Contrary to a few "Dennis Miller" rants by our readers, many of our followers have learned that TSB does provide a forum where industry professionals can have a civil and intelligent discussion on the pro's and con's surrounding the launch of a potentially novel or emerging technology, the efficacy of a biologic, the strategic rationale behind an acquisition, and some of the real challenges start-up or early growth stage companies are faced with, while educating those that are not industry insiders. TSB doesn't claim to be the Executive Business Program at the Stanford Business School, but what we offer those that whine is an opportunity to listen to what is being said about their companies, their technology, their sales strategies, but most of all their management philosophies and how they treat their employees. Sometimes a little introspective due diligence can take you a long way, even TSB reads the comments that are directed at our posts. But you know what Alonzo said in Training Day, "Bone up Dawg!" With that said, one of our readers made a great observation about the Baxter acquisition and the potential ripple effect that it will have within the industry for other biologic companies.

To paraphrase our reader, since Stryker failed in its bid on Apatech, who will they direct their attention to? This reader felt that Orthovita was a likely candidate. Considering their portfolio, TSB thinks that there may be some synergy that would benefit the big "S". It may be time to take OP-1 and retire it to the Ponderosa with Ben, Little Joe, Hoss, Adam, Hop Sing, John Brown and Ned Lipes. In addition to their pending legal issues, how much more capital, man power, and commitment can this company continue to pour into a product that is classified as an HDE? This may be a classic example of an organization that jumped into the fray by placing the cart before the horse some fifteen years ago. It would be ironic if the Harvard Business School did a case study on Stryker. A side bar to the Stryker boys, please spare TSB the rant about NuVa, I don't work for them, but I do admire Alexis' moxie and panache, something more than a bunch of stiff suits have to offer.

Once again, this acquisition creates a shift in the industry's axis, where an outsider purchases a company that takes it out of its comfort zone. Some of the past acquisitions have proven to be miserable for industry outsiders, just look at Abbott Spine. As quickly as they got into the game, they got out. But let's look at that for a moment. That was hardware and there were many different synergies that needed to be fostered between the parent company and its child. TSB believes that this will be different. In all likelihood, the $90 million in milestone payments are a rider that will be paid out in multiple tranches so that Apatech assures its distribution network that during the interim nothing will change especially their two big distributors. These two distributors were generating roughly $18-$23 million in revenue, based on industry sources. It behooves Baxter to keep it transparent, something that Stryker's former employees said that they failed to do with the Howmedica integration. But how does this deal benefit the other biologic companies?

The first aspect to this deal is that it established a precedent as to what the potential multiplier is if you are looking to buy a biologic. Without knowing the details, let's say Apatech's sales were $45 million on the low end, and $60 million on the high end. That's 4X to 5.5X. And even if your sales are not that high, today, you're on every hardware or software companies radar screen, considering that biologics is being touted as "the new new thing in healthcare." Hardware is important but its become too cluttered and passe, it almost reminds TSB of the "5" and I'm not talking rush hour traffic. Yet, you need it to compliment your portfolio or ability to keep the competition out of the game. Stem Cells are the new buzz word, and if you have any upstream marketing in your organization, you know you're looking at the future. That's what visionaries get paid for.

So TSB wants to know what our readers think? Will the next company to go be ISTO? NovaBone? GeneX? You know what TSB says, "they got room for you (the other biologic companies) at the booty house. if you've never been to the booty house, the big boys make you grab your ankles." Have a great weekend.

Wednesday, March 3, 2010

Spine Blogger Alert

On March 3rd, 2010 TSB received a request from Amedica's legal counsel that we remove a comment by one of our readers that counsel claims is "patently false, misleading and defamatory," regarding the company's cages. This comment was made on our blog post on "PEEK Wars." In the spirit of our blog, we caution our readers not to make any inflammatory statements regarding the performance of this company's products unless it can be publicly substantiated.
Once again, thank you for your cooperation.

Spine Technology Summit

Like many of our readers, our investigative team of industry sources were surfing the internet and examining the many websites and portals that exist for the spine industry. No readers, we haven't found John Malkovich, yet, but I did see John Cusack yesterday. What struck our fancy was OTW's advertisement on their website for the 5th Annual Spine Technology Summt. As usual, we will give RY a plug, the meeting will be held April 26th, in the city named after Phillippe II, Duc d'Orleans. Registration is $750 dollars, and compared to an annual marketing report, this is well worth attending if you are looking to keep your hand on the pulse of the industry. TSB has attended this meeting since its inception, yet, this year's meeting is showing signs of a lagging economy. Regardless what some analysts are predicting, there is a lack of start-up or early growth-stage companies that always claim to have novel or emerging technologies. If there ever was a venue to exhibit your hardware and software this is the venue.

Outside of a few technologies, it has become apparent that innovation is being bred by the mid-to-large cap companies within the industry. This year we will miss Disc Dynamics, Innovative Surgical Technologies and Vertebron (thank heavens we won't have to sit through another presentation by Bruce Khalili on Total Joint Kinematics). Yes, readers there still are some stranglers. These include Disc Motion Technologies (How long has this been goin' on), X-Spine with the Capless Pedicle Screw (I thought they had problems with that screw), and Mazor (they've been around so long my children have grown up).

Oh where, oh where are those so-called "Others?" Where is Amedica, Atlas, Eminent, Lanx, Captiva Spine, Custom Spine, Vertiloc, Vertecor, Spine 360, Spineology TruFuse, etc., etc., and so on? Weren't these the companies that as recent as a few years ago claimed that they have something novel or emerging? Why isn't Robin doing a segment on Facet Fusion with dowels? If there ever was a controversial and debatable topic in spine, this would be the perfect forum to discuss, outcomes, selection criteria and retrospective data.

Do we have to sit through another Scott Blumenthal presentation? No offense Scott, but been there, done that. So in the spirit of debate, TSB wants to know what our readers think?

Tuesday, March 2, 2010

The PEEK Wars, It's Time to Get It On!

Recently one of our readers solicited TSB's opinion about the monopoly that exists in the spine industry regarding PEEK (Poly-Ether-Ether- Keytone) material for manufacturing of ACDF, PLIF, TLIF, and ALIF interbody devices. At this stage I would think it appropriate to include PEEK rods and artificial discs. Could this be the beginning of a rebellion by the industry, similar to the movie Chocolate Wars? Rather than a young man rebelling against the ingrained heirarchy of an elite Catholic school, is the industry getting tired of Invibio's antics? I mean where's the competition?

So the question posed to our readers is when will Zeniva Peek be available? Zeniva is one of the most chemically resistant plastics available with high strength and stiffness, plus excellent toughness and fatigue resistance. Yet, it seems that Solviva has been giving the industry the same old run around when it comes to getting their material approved along with the time lines for commercial release? It was also mentioned that Modern Plastics is another innovator, when as of this posting it seems to be nothing more than an imitator.

How long will we keep paying "Infibio" the $225,000 -$250,000 for their licensing agreement?

Looks like Brother Leon has stacked the deck and that we need the FDA's ability to review the quality of Solviva's and Modern Plastic's material, along with some good old Catholic school boy rebellion? TSB wants to know what our readers think?

Monday, March 1, 2010

So, What's the Rationale Behind This Acquisition?

Many of you are aware of the buzz that has been circulating throughout the industry since Baxter announced that it had acquired Apatech for $330 million. This consists of an upfront payment of $240 million with an additional payment of $90 million when certain milestones are met. Many of our readers, and those that TSB has spoken with are totally aghast that Baxter would pay this much for Apatech. But you know what TSB says, who cares what we think, all that matters is that Apatech accomplished its objective.

But you know what they say, when one door closes, another one opens. So how long will it be before all those Stryker distributors and reps are calling NovaBone (the closest competitor), or for that matter someone else? Having been involved in numerous acquisitions and integrations, TSB can report, that as we write this post, salespeople are brainstorming about the potential scenarios that will develop over the next few weeks and months.

As with any acquisition, Baxter has evaluated the business distribution model and has not rendered any decision as to what will happen until their game plan is in place. This will leave distributors and salespeople apprehensive as to how long they will continue to sell this product. Of course, the cost of sales with their current distributors will be evaluated, along with those contracts. With that in mind, Baxter bought this portfolio to enhance their ortho-biologic portfolio, especially since their reps have been attacked by Orthovita over the past four years with the introduction of Vitagel to their armamentarium.

But does this mean that Baxter is finished with anymore acquisitions? Knowing that this company has a direct sales force, it is a matter of time before they start eliminating some of the current distributors. Why would you pay high commissions when you can get your direct sales people to distribute this product? Is it a matter of time before we hear of Baxter buying a hardware company to compliment this acquisition? TSB wants to know what our readers think?

PS: Companies in Orthobiologics should build a shrine and pay homage to the CEO of Baxter, he couldn't of set a better precedent than what he paid for Apatech. Put your hand under the radio, can you feel Jesus?

Baxter Announces Acquisition of Apatech

Earlier today, it was reported through one of TSB's sources that Baxter announced the acquisition of Apatech. The tentative numbers are that the acquisition cost Baxter an estimated $240 million dollars up front with an additional $90 million if certain milestones are met. I guess this confirms an e-mail that TSB received over the weekend from one of our readers who thought that this deal was imminent.

If the deal rings true, it looks like Baxter is positioning itself in the industry as a potential foe of Orthovita. This will compliment their hemostasis line and potentially allow them to start evaluating other options. TSB wants to know what our readers have heard? Looks like any company that has a nice synthetic stands to cash out as the economy continues to rebound at a slow pace.

Monday Mornings Scratch Sheet on NuVasive

This past weekend figured to be a relatively quiet one, when all of a sudden on Friday TSB felt like I was at the first race at Santa Anita, and "the race for first place" was back on. Of course "The Race for First Place" is this years spine industry version of the of the run for the roses. Back in November and December there was angst and skepticism amongst the investment community when word circulated that NUVA had some reimbursement issues for its thoroughbred, XLIF.

Within days, there were analysts conference calls by NuVasive to quell rumors that the race for first place had not suffered a setback. Within days of Lukianov's calls, analysts held there own conference calls, and also conferred with a reimbursement specialist. Though the track had gotten a bit muddy, there is no doubt that through it all, NuVasive exhibited that it can be considered a mudder. The Judge for this race against time was the insurance companies that were questioning XLIF. Hedging their bet on their thoroughbred, NuVa was able to cover by having NASS, the spine industry's version of the Racing Commission, step in and clarify what XLIF is, or is not. By enlisting NASS' help, Lukianov was betting that his horse would not be out of the money. Considering that he pulled out all stops, Lukianov is parlaying his bet that he will finish 2010 at no worse than fourth place. The morning line for this money rider is $40 per share.

Now that the inquiry is over, its post time for NuVa. The question must be asked of our readers, will NuVa be able to step up to the gate and run with the other thoroughbreds in our industry? The track conditions have been firmed up by Friday's news, the question is whether the jockey can continue to spin his magic on XLIF, or, is he wishing for a race that he can't win? Besides, Lukianov would look cute in purple and silver silks. We'll find out by Wednesday if there was any truth to a rumor that something's happening at Apatech. TSB wants to know what our readers think?