Thursday, March 31, 2011

Street Beat

Recently, one of our bloggers posted a comment describing one of those precious moments in spine. While meeting with a California hospital purchasing manager, this particular blogger was informed that there were three distributors selling X-Spine's cervical plate with three different ASP's.  If someone attempted to make this up, it wouldn't be possible.  But what does it say about an organization, would that even be an appropriate word, and our industry?  How many company's are building their business models on this platform, and, is this really a business model?  Even Wal Mart and Target has limitations.  It's a wonder why some of these company's can't get out of their own way.  Does this bode well for any organization?  Would anyone really be interested in doing business with, or investing in this type of company?  For the record, TSB is not signaling out X-Spine, because the fact remains that many companies in our industry rely on this type of, ahem, disorganization.  Historically, companies that succeed have had focus, solid technology, organizational structure, managed its capital CONSERVATIVELY, and most important, had someone at the helm that knew how to lead.  And what does it say about the people the run these companies?

Rumors have been swirling that there are a few spine companies ripe for the picking. Why? Because these companies are in a financial quagmire.  Five, six, seven years into their venture and they just can't increase their revenue. But why?  Because many of these companies have no cohesiveness, nor continuity.  It's a game of musical chairs, indicative of the many new hirees and the number of companies that they have bounced around with, not on their own accord.  In this industry, ego's are larger than appendages, and many people have ears of stone.  These individuals and companies will tell you otherwise.  They will tell you that they are victims of a bad economy.  If there ever was an industry were hundreds of millions of dollars have been flushed down the tubes, it is spine.  Companies like Archus, Applied Spine, Innovative Spine, Inion, Disc Motion, Pegasus, Vertebron, Facet Solutions have squandered hundreds of millions of investors dollars.  Some have been sold for pennies.  Our industry is a breeding ground for those afflicted with attention deficit disorder, running in ten different directions, hoping something will stick.  Keep your eyes and ears open, there are deals to be had.  Could it be a Bacterin, a Phygen, a Customs Spine, a Captiva Spine, an Eminent Spine, a Spine 360 (do they even exist), and would some of these companies really be worth anything, outside of some regional or surgeon investor sales?  And would those investor surgeons even continue to use the product after they were paid off?

On the financial front, Amedica/U.S. Spine is gearing up to give its best shot at taking their venture public with Creation Capital offering a pre-IPO Convertible Bond to potential investors. Upon completing $30 million which consisted of $15 million in private equity and $15 million in debt financing it looks like investors are seeking to capitalize on this opportunity. But the question must be asked, is silicon nitride really a game changer in spine? TSB is not going to elaborate on the reconstruction market, but when it comes to spine, will this material really improve the fusion rates?  And when it comes down to manufacturing, how much does utilizing this material on implants increase the cost of the product?  At a time when hospitals are squeezing vendors for every nickel they can get, looks like this might be a great venture to invest in.  TSB wants to know what do our bloggers think?

Tuesday, March 29, 2011

Cervical Arthroplasty: The Future is Now

As start-up and early growth stage companies continue to build their portfolios on "me too" technologies, TSB envisions a day where a large percentage of cervical procedures will give way to cervical arthroplasty.  No fellow bloggers, fusion is not going to go away, so don't panic and throw your cervical plates, inter-body devices and biologics away.  But if I were running your companies, I would place a greater emphasis on cervical arthroplasty, and quick, like yesterday.  If there ever was a segment of the spinal column that lends itself to this device, the C-Spine is where its at.

Most of you would agree that key features in a disc design is the center of rotation, the stability of the product and the material used.  We're just beginning to capture the retrospective data in a manner that provides surgeons with the clarity necessary to make these procedures successful. Over the years we have been introduced to metal-on-metal, ceramic-on-ceramic, metal-on-poly, poly-on-poly, and ceramic-on-poly.  Legitimate arguments can be made as to the pro's and con's of each design.

So the question must be asked of our readers, what is the optimal design? In terms of motion, cervical discs can be classified as unconstrained, constrained, semi-constrained, and disc that mimic movement.  Yet, questions still remain as to the effect this procedure has on disc height and facet joints.  Time and retrospective data is providing the industry with a better understanding of how altering the natural biomechanics of the spine can result in success and or failures of these procedures.  As much as we have learned in the 45 years since the first disc was created and implanted, there is still work to be done.

Unconstrained devices allow for translation which theoretically mimics normal motion, yet may increase shear and torsional loads on the facets. In addition, a greater emphasis is placed on surround soft tissues and the PLL for stability.  Constrained devices are known to minimize loads through the facets but have a fixed axis and required accurate placement.  How many of our bloggers marvel at the claims that many of the players in this arena have made regarding their devices.  Some have called it first gen, some called it second gen, some claimed in was third gen, all without any long-term retrospective data.  The industry was bombarded with marketing at its best, or its worst.  

We have been told that some materials provide better wear resistance (ceramics), some have a higher wear rate but low stiffness (polymers), we've been exposed to keels, teeth, and coatings, yet, the critical feature is the device's axis of rotation and whether it matches the physiological center of rotation.  The challenge is identifying the center of rotation on a level by level basis.  So who has the optimal design?

Is it the Synthes ProDisc C,  is it LDR's Mobi-C, is it Spinal Motion's Kineflex-C,  is it Globus' Secure-C, is it Stykers metal-on-metal CerviCore-C,  is it NuVa's CerPass, is it Medtronic's Prestige,  these are just a few of the prominent players in the market, in addition how big will this market truly be?  When one analyzes the analysts forecasts, one can only shake one's head in amazement.  Some have estimated that this will be a $400-$500 million dollar, but those people are smoking something that many of us have never smoked, or at least you didn't inhale.  Contrary to popular opinion, TSB sees this at max as a $200 million dollar marketplace, as long as the insurance industry and the government don't "fubar" this procedure.  In addition, this is a young person's procedure, (sorry grandma), especially at these prices.  So in the spirit of debate, who has the best design, how big will this market truly be, and is this a procedure for one or for all?  TSB wants to know what our bloggers think?

Monday, March 28, 2011

Breaking News: No News Is Good News

As of Friday, March 25th, 2011, word on the Street is that Disc Motion Technology officially closed its doors in Boca Raton, Florida.  A valiant effort to keep this company a float during these trying times, unfortunately, when you start believing your own press releases, one is doomed for failure.  So the question is, Who's Next?

Meet the New Boss, Same as the Old Boss, We Won't Get Fooled Again!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Sunday, March 27, 2011

Sunday's Funnies

Fellow Bloggers, before you take the time to read tonight's Sunday's Funnies,  I encourage you to  visit the following website  If there ever was a cause that TSB would encourage you to make a charitable contribution, I implore you to consider donating to this organization.  Considering that TSB has never asked any of our readers for a single dollar, please take the time to visit this website, every dollar will help.  Remember, even the smallest of donations helps, now on to the funnies.

On Friday, the San Francisco Chronicle, reported that Aetna was suing six NJ physicians over medical bills that it called "unconscionable" including $56,980 for a bedside consultation, TSB hopes that at least the patient got a back rub and foot massage, and $59,490 for an ultrasound that usually costs $74.  Yet, before the media and general public pass judgement on these fellers, some clarity must be placed on this alleged chicanery.  The usually public demonization of doctors has already started, David Lansky, the president of the SF based Pacific Business Group on Health has already been quoted as saying, "if these charges are accurate, consumers and purchasers should be outraged!"  Really Mr. Lansky?

Whether the public believes it or not,  the fact remains that physicians have been able to flex their pricing  muscles for years when it comes to out-of network benefits.  And if what Arthur Lebowitz, Chief Medical Officer of Health Advocate Incorporated,  an advisor to the insurance industry states is true, "that out-of-network physicians can charge what they want, and rightfully so,  and that the challenge is coming up with an agreeable and acceptable customary rate is an accepted practice in the industry, what is the big deal?

But before the public castigate these physician culprits, let's take a look at Aetna's history in the Garden State.   In 2007, the company attempted to impose caps on out-of-network payments resulting in a fine of $2.5 million (chicken scratch) because the consumer was being forced to pay balances other than co-pays.  In 2009, Aetna, Wellpoint, Cigna and the United Health Group were accused of underpaying out of network physicians BY MANIPULATING THE DATABASE USED TO CALCULATE PAYMENTS, and paid a total of $90 million in fines to the Empire State without admitting any wrong doing (that's TSB's favorite part of all these settlements).  Of course the insurance industry is crying wolf, because they rarely make any money providing insurance for their subscribers.  The fact remains that AETNA's revenue for 2010 was $34 billion, a decrease of 2% over the prior year, yet, THEIR NET INCOME ROSE TO 38% to $1.77 billion.  What other industry can accomplish this?  Maybe if CEO's at these companies weren't so greedy, the lovefest between insurer and provider could come to a resolve?  Does William McGuire earning $124.8 million dollars and backdating stock bring back any memories in the CalPERS law suit, whereas ol' Billy Boy had to pay back $30 million.

Public records indicate that Aetna's CEO Ron Williams took a 6% pay cut in 2009 and still earned more than $18 million dollars, making his package $5 million dollars more than Wellpoint's Angela Bray, whose compensation in 2009 was a 51% increase.  In 2008, Williams earned $24,300,112 in total compensation with more than half coming in option awards.  Isn't something fundamentally wrong with this picture? But then this poses a larger question, isn't the insurance industry making the rules for the game that physicians play in?  Before the general public expresses its outrage, maybe its time to take the insurance industry to task.  As premiums continue to soar, and people are denied coverage for pre-existing conditions maybe its time that the physicians and the public coalesce and fight the fight together.  Until patients comprehend that they have the right to challenge any denial and threaten public scrutiny of these practices, things will continue as usual.

And what does this say about the POTUS?  Didn't he cut a deal with the insurance industry mandating that Americans have insurance coverage utilizing tax dollars to subsidize their premiums?  Isn't this socialized medicine with a different twist, and the only difference being that tax payer dollars are being funneled directly to the insurance industry?  The fact remains that there aren't too many other industries where someone like Mr. Williams can earn a free-market salary while using the government to corral subscribers and the taxing power of the government to pay for your premiums?  But you know what TSB says, when executives earn more in a day than most teachers do in a year, something is fundamentally wrong with the system?   Considering that physicians are not provided a cost of living increase and are only allowed inflationary adjustments, maybe the time has come to challenge the insurance industry?  But then this will be a challenge considering that most state insurance commissioners are former employees of the insurance industry themselves.  So in closing TSB wants to know what our fellow surgeon bloggers think, is it time to stick it to the insurance industry or is this just a strategic plan to force litigation in order to arrive at an acceptable and agreed upon reimbursement for out of network services?

Thursday, March 24, 2011

Stay of Execution, Or Just a Reprieve

Looks like there will be a Stay of Execution Party being held around the pool next week in Duck Key, Florida.   No fellow bloggers, the Governor of Connecticut did not step up to stay the inevitable execution of Applied Spine Technologies.  A holding company by the name of Rachiotek, LLC has stepped in and acquired whatever assets, meaning the intellectual property, for the Stabilimax.  Hopefully Oxford BioSciences, BioVentures Investors, Investor Growth Capital, DeNovo, MB Ventures, and InterWest Partners will take their pennies on the dollar and run.  Run as fast as you can and don't look back. The unfortunate aspect of this venture was that a great guy like Dr. Panjabi, the preeminent authority on spine biomechanics, was doomed for failure from the get go.   If there ever was someone that you would "pull for" it would be Panjabi.

The one aspect about the former management team at Applied Spine was that they did a wonderful job of spending money in addition to the cost of running an IDE.  This company never had any internal continuity outside of Terry Brennan.  If anything it was a management team of musical chairs. Yet, there must be some inherent value to this IP, but many question remain unanswered.  With declining reimbursements due to an uncertain healthcare environment in the the U.S., and additional questions about the clinical efficacy of this technology, will this ever be the market that many expected it to be?  The challenge with most of these ventures is that the inventor entrusted their child (the IP) to a group of people that did not understand the magnitude of commitment to this project.  A nanny cam would have served the investors well in keeping tabs on the day to day operations at AST.   Outside of the few people that remain from the original cast, most of these people were like rats on a ship. Every engineer that TSB spoke with frowned upon the potential success of this product, and those were product development engineers that were being honest about their evaluations.  As one designer commented, "there is a distinction between hope and reality." How quickly have we forgotten about other products that were marketed, and destined for success in the dynamic stabilization market?   And, how much money went to naught?  Up until a few years ago, companies were investing time and money, or had high hopes of introducing a new dynamic stabilization system to the market, only to close the doors on their future?

So TSB must ask our readers, is there any hope for this technology?  Did Rachiotek really get a deal, or did they buy some technology that truly is a dead man walking?  TSB wants to know what our bloggers think?

Monday, March 21, 2011

Looking For A Job - Here's A Real Opportunity

Recently, TSB received an e-mail from our all time favorite platform Stinkedin, oops I mean Linkedin.  Sometimes one must wonder whether the power of the internet is omnipotent that everyone is willing to drink the koolaid.  I mean even the President is gullible enough to believe that Silicon Valley is going to produce more jobs in the U.S..  No doubt, that TSB is guilty by delivering a platform called The Spine Blogger on a weekly basis.  What we don't believe in doing is sharing information, pictures, and other personal information.  Do any of you really give a "rats derriere" whether someone you really don't know, was in Brazil this weekend partying with Barack Obama?  In addition, I disabled my Facebook account when I started getting all these weird e-mails from people that claimed they were my friends.  Truthfully and no offense, TSB doesn't even know whom some of you are.   If one looks up the definition of the word "friends," it means a person attached to another by feelings or affection.  My all time favorite was when someone I really didn't know sent me a picture of himself and his wife, whom of course was exhibiting her decolletage, and TSB is being generous with our choice of words.  Can we talk?  I guess he was proud to show off his trophy wife.  But this isn't really what this post is about.

This morning TSB received an e-mail from someone on Linkedin that was announcing that Life Spine was looking for Regional Sales Mangers Nationwide.  Is this company even in existence?  Hasn't this company gone through more managers than Imelda Marcos went through shoes?  Even Hannibal Lecter would tell you that, "people don't always tell you what they're thinking, they just see to it that you don't advance in life."  Granted, many people believe that their baby is beautiful, but beauty is in the eye of the beholder.  So if anyone is looking for a job, this is a golden opportunity to be tormented like Agent Starling.  By the way, whatever happened to Chris Cochran?  You know what Rick Blaine said in Casablanca, "Louis, this could be the start of a beautiful friendship."  So if you're looking for work, crank up that typewriter and get your resume out there, opportunities like this come once in a lifetime.  TSB wants to know what our bloggers think?

Sunday, March 20, 2011

Sunday Op-Ed Piece

Since most of our readers acknowledge that they follow TSB not only for the content, but primarily for the passionate discourse exhibited by many of our bloggers, we thought it would be interesting to get your take on what has made some spine companies successful and why have some companies floundered in what now seems to be eternal misery?  We all know that IP is one of the most important ingredients in developing a successful start-up. Without innovation and a targeted market, raising capital in today's economy is a moot point.  In addition to the aforementioned, assembling an "empowered" and knowledgeable management team may be the most important ingredient in defining ones success or failures.  Ever work for someone that had what TSB calls the "ADD Spine Business Plan?"  Ritalin and Lovaza would probably not help.  Getting a group of people to understand a plan/objective and remaining focused maybe the most underrated aspect of any business.  Yet, without acknowledging the market and competitive realities, any new venture may be doomed for failure.  So again, TSB asks the question, why have some companies failed while others succeed, sometimes in spite of themselves.

How do ventures that have raised millions have gone on to fail in our market?   Whether our readers agree or not, "process" may be the most important element rather than results.  Unfortunately, for the better part, many investors along with the people that steer a start-up fail to grasp that concept.  Most successful ventures, and by successful TSB means those that actually effected their strategy, reveal two important patterns.  Useful change tends to be a multistep process that creates power and motivation to overwhelm all sources of inertia, and the process is never employed effectively unless it is driven by "high quality" leadership, not just a great management team.

Regardless whether costs are high, products are mediocre, or customers are exhibiting shifting requirements, progress and process may be paralyzed by egotistical leaders, bureaucracy, parochial politics (an all-time favorite), a low-level of trust (ever work for one of these people), lack of teamwork, a lack of focus.  In our haste for the Holy Grail, many CEO's and their boards have derailed many a companies by their petty insecurities.  Do companies like Vertebron, IST or Applied Spine bring back memories?  And what does it say about the leadership and business acumen of many a CEO when one looks at the attrition rate within the industry.  Some will obviously argue that market forces are things that companies and its management team cannot control, yet, TSB differs with that opinion.  It is precisely for this reason that many of these companies have failed,  a leader is like a great conductor of a symphony being able to guide his or her orchestra through the process which usually ends in a great result.  By paying attention to the details, the whole is greater than the sum of its parts.

How many of you have worked for a company that has developed a decent product only to fail for its own inadequacies?  Their inability to respond in a timely manner, their inability to address system short-comings?  Could you think of a few?  Today's business environment demands more large-scale change whether it be vis-a-vis a new strategy, restructuring, mergers or acquisitions, and new product development.  Some of these decisions need to be made quicker in a less than economic environment requiring sacrifice.  Unfortunately, many of these companies have failed to take a conciliatory approach, nor are we a very sacrificing society, but that's what awaits many of us including the companies, hospitals, surgeons, and sales reps.  

Reality has brought many companies back down to earth.  The days of 40% commissions are over,  the days of 20% growth will be far less, unless you are buying products from one of the many companies that have been started by former distributors and/or their physician colleagues.  Realistically, TSB sees a trend in the field, whereas more and more of these small companies are surviving by utilizing every legal resource available to them.  Namely POD's, for the obvious reasons.  And if the big boys are predicting below average expectations, how do some of these smaller ventures continue to show growth, considering that we do play in a zero-sum marketplace?   How many of these ventures were originally positioned to be flipped, only to hear their CEO's now claim that their objective all along was to grow a company and organization, while they move along at a snails pace?   The people that run these companies will argue that their organizations can succeed with incremental change.  A 2% improvement here, a 3% reduction somewhere else and you are growing.  In the short-term that may be true, but how long will it take to get where some of these people claim they are going?

What we are witnessing today is change in the internal structure in many of these companies, surviving on fewer rules and employees.  So in closing TSB wants to know what our bloggers think, have many of these companies failed because of their inability to be risk tolerant, transparent, too slow to make decisions, a failure to empower and trust their employees or as TSB likes to say, were the market conditions bigger than the both of us?  

Wednesday, March 16, 2011

Breaking News

Yes fellow bloggers, last week Medtronic announced at the AANS meeting that they have seen the future, and intend on increasing revenue for fiscal 2011 by launching one of the most innovative and technological medical devices the spine industry has seen in decades.  Where's Monte Hall and Jay Stewart when you need them.   RIP Jay. What's behind Door Number 3 Doug King?  What's behind that Big Box?  Do you want Door Number 3, or maybe Door Number 2?  So what is this breakthrough technology that took over twelve years of clinical history by combining not one, but two emerging technologies into one unique and innovative product?  Come on bloggers I know you're sitting on the edge of your seats, if you haven't already heard.  They are going to launch another anterior cervical plate.  If one looked in the dictionary under the word cannibalization, one would see the entire portfolio of Medtronic Anterior Cervical Plates, did they ever phase out the Orion?   Spine nation the new plate might as well have been named the Supercalifragilisticexpialidocious Plating System.  Times must be tough at the Big M marketing department when you name the plate, Atlantis Vision "Elite" Anterior Cervical Plating System.  I could hear Donovan, aka Donovan Leitch, singing in the background and let me exercise some poetic license:

"Knowing its fate, Atlantis sent out sales reps, to all corners of the spine world
On board was the manager, the sales rep, the physician, the magician and the other
so-called Gods of our industry, though the Gods they were and as the elders of our
time choose to remain blind, let us rejoice and let us sing and dance and ring in the new
HAIL ATLANTIS....................................................................................................

How gullible can customers really be?  Ooh where's all the analysts' clamoring to upgrade Medtronic's stock on the launch of another cervical plate and a Chromaloy Rod, and by the way don't forget to emphasis the "Plus."  Is it TSB or is it Memorex?

Monday, March 14, 2011

Big Time

Everytime I hear one of those stories about  corporate managers interviewing prospective candidates, it makes TSB think of Peter Gabriel when he sings;

Big Time, I'm on my way I'm making it Big Time
Big Time, I've got to make it show, Yeah, Big Time
Big Time, so much larger than life
Big Time, I'm gonna watch it growing, Big Time
Big Time, my car is getting bigger, Big Time, my house is getting bigger
Big Time, my eyes are getting bigger
And my mouuth...................................................

It's been brutally quiet in the industry, of course unless one thinks that the Duck Key meeting is exciting.  It use to be called the Motion Preservation Meeting, but now that Motion Preservation is on the back burner, its called "Current Solutions in Spine."  How many of these meetings can the industry have?  When do some of these people work?  But that's a topic for a later date.   After speaking to a few of my colleagues today, it's time to start a rant on behalf of the people.  You know the real people that carry the burden of generating revenue.  Recently, an industry insider was conveying the gist of an interview that this individual had with a prospective employer for a job.  Ironically, TSB knew the interviewing manager and the history of the company quite well.  What was funny was the criteria that had been established by the company in order to be considered a viable candidate for the position.  Before, elaborating on the interview, let's preface this by saying that TSB knows what sales are all about since I have been in sales so long, that I have probably forgotten more than some people will ever know.   For those wacky investors that have no concept of the selling process in today's pernicious environment, spare us your diatribe.  So here it is, the interviewing manager wanted to know how many surgeons can this prospective candidate bring to the table in a 30, 60, and 90 day period?  I love those conversations, because every time I meet one of these people I feel like ripping off their heads and shoving it up their ass, and then asking them if they could pull their head out of their ass. That's almost as good as asking a candidate what kind of revenue will you generate in the first 30, 60 and 90 days when you are interviewing someone for an executive management position.  Granted, one wants to know whether someone has the necessary skill set to get the job done, but TSB would like to know what ever gets accomplished during that period of time?  The prospective candidate was also asked if they could take the interviewer around and introduce them to their pool of surgeon candidates.  Of course, you would oblige considering that as a candidate you haven't been tendered an offer and will do anything to compromise your contacts just to please this person.  If anything, some people in this industry need a swift boot in the ass. They are so desperate for revenue that they are going to extremes that skate boarders don't go to in the X games.  I mean Charlie Sheen isn't that desperate.  How many times have we heard of VP's from early-growth stage companies going behind the distributors back in an attempt to cut a deal with their sub rep?  Nouns like integrity and ethics no longer exist.  The more one analyzes our industry, the more one can understand why we are viewed no different than Wall Street. Adjectives like, shameless, greedy, nefarious and desperate are just a few words that rightly describe us. And then we wonder why surgeons view many of you with disdain?  Are things really that bad out there for some of these companies? Are they as desperate as they sound?  Are some of you as desperate as you come across.  And what does this say about the people they represent?

TSB's advice to the prospective candidate was, "don't bother pursuing this." This isn't an opportunity, this is a death sentence, indicative of another person in a management position that has no clue as to what the dynamics are like in today's healthcare environment.  Hey, if grand slams were that easy to hit, we'd all be hitting them.  And then you have the lack of support that most of these companies exhibit.  Example:  ever attempt to go out and sell your product without some product information, or literature, to give your prospective customer?   You've got to love the response that one receives whenever there is a request for literature.  "We've run out, and, we are working on a new brochure?  WTF?  You mean, no one thought about that before you ran out of literature?  I'm I supposed to leave my iPad with them? My favorite is, we'll send you a PDF file and you can then print them yourself. WTF?  Who do you think pays for the paper?  The cartridge?  My time?  It's bad enough that we average $70-$100 per week for gas, X amount of dollars on roads that may have tolls, and buy lunch for people we would never think of ever sitting down and breaking bread with.  What many of these business oracles fail to understand is that, "this is the cost of doing business."  It's like requesting samples, it's the cost of business.  The sample costs the company barely zilch, and you make it back tenfold, and then when you leave, they have the audacity to deduct the sample from your check.  So fellow bloggers, as you continue your quest in search for your next job, one has to ask themselves, "are you ready for another throw down?"  TSB wants to know what our bloggers think?

Friday, March 11, 2011

It Might Get Loud

Amplify:  To make larger of more powerful, to exaggerate.  If only TSB was taking about the Jimmy Page, Jack White and The Edge Documentary.  In Medtronic's quest to amplify rhBMP-2, on March 9th, 2011, the FDA displayed a bit of feedback by issuing a non-approval letter.

So the million dollar a day question must be asked, what was the determining factor or factors?  Obviously, cooler heads prevailed.  Was the panel concerned with some of the papers that have been published regarding the role of BMP's in pancreatic cancer?  If there were spine surgeons on the panel, did they come to their legal and ethical senses?  So what's the buzz in the sound system?  TSB wonders what Marshall Urist would say if he was in the here and now?  Over the years there have been many papers and reports of adverse reactions in using rhBMP-2.  Let's take a look at some of these papers.

In 2008 The Department of Pharmacology and Cancer Biology, and Department of Medicine at The Duke University published a paper entitled, "BMP's Induce Pancreatic Cancer Cell Invasiveness through a small Smad1-Dependent Mechanism That Involves Matrix Metalloproteinase -2."  In addition to this paper,  a retrospective study reported in 2008 on 260 patients that underwent cervical spinal procedures with BMP resulting in acute airway obstruction due to extensive soft-tissue inflammatory response that was likely to occur 2-7 days post-op. Then there is the published paper in The Spine Journal in 2008 entitled. "Neurologic impairment from ectopic bone in the lumbar canal, a potential complication of off-label PLIF/TLIF use of BMP-2.

Yes fellow rockers, or may I say bloggers, contingent on whose data one wants to believe, it is estimated that 73-85% of BMP is used off label.  In a September 22, 2010 report, concerns were raised that there was bone formation in unwanted places.  WTF, was anyone listening to the people in the field that were being told by surgeons about their experience?    It doesn't take a spine surgeon to qualify the efficacy of BMP-2.  It takes someone that is willing to admit that BMP-2 is a pharmaceutical and not a device.  Retrospectively, flags were raised back in 2002 when Advisory Panel Members pointed out that 9 out of the doctors that authored the BMP-2 research submitted to the FDA had a financial stake in the product.

Unlike other industry platforms that report the news, TSB must admit, if its open season on INFUSE let's not kiss the ass of two companies that pander to one's commercial needs.  This is a golden opportunity for  everyone that plays in the biologics marketplace.  In all likelihood Medtronic has the capacity to sustain another blow, but this is a great opportunity for every company that competes in this space.  TSB wants to know what our blogger think?

Wednesday, March 9, 2011

Medtronic: I've Got The Power

Since TSB is the people's blog spot, our editorial board decided that we should post a blog regarding Medtronic's watershed moment terminating the Novation and Premier agreements, and analyze the potential pro's and con's of this decision.  As the Rap Artist "Snap" sang in 1990, "I've Got the Power." Yes fellow bloggers, Medtronic's does have the power, considering that historically GPO's are nothing more than another layer of insanity in the hierarchy of needs.  The more one looks at this decision, it becomes evident that Medtronic was correct in terminating these contracts.  The question now becomes, how much of an upper hand will they have, and how will this affect the rest of the industry?  Historically, hospitals have never excelled at negotiating pricing.  It has always been an eleventh hour knee jerk reaction by some financial wizard that decided on going after the implant companies without analyzing the politics of hospital medicine.  For many years, hospitals failed to understand the concept of working with physicians, better known as revenue generators.   And when they did, it was from an adversarial position. An "us against them" mentality existed, and contrary to some opinions this mentality still exists without overture in many areas of the country. What hospital administrators failed to understand was the power of corporate consulting agreements.   So rather than partnering with the revenue generator, they cut off their nose to spite their face.   Today, a new model is emerging. The industry is being challenged with another shift in dynamics with the rise of physician owned distributorships. But more on that later on.

So how does this benefit Medtronic?  Most readers know that Medtronic does not only play in the spine industry, they are a major play in the cardiac arena, one that is not as proliferated with "gnat on my ass" spine companies. Historically, when it comes to working with the medical community, Medtronic has been the leader in both of these specialties.  For once, surgeons from two different specialties have the ability to form an alliance when it comes to choice, especially in many of these hospitals.  As long as there is no backlash from the DOJ or the U.S. Senate,  Medtronic will continue to leverage these relationships based on the volume and revenue that these physicians bring to their respective facilities.   In addition, most purchasing and material management people lack the necessary acumen to negotiate an equitable deal.  By terminating this agreement Medtronic can negotiate on its own terms, considering that Novation opposed pricing confidentiality.  If anything, this relationship was an advantage for Novation in that they were negotiating from a vantage point of strength, by leveraging an economy of scale.   What is even more ridiculous is that Curtis Rooney, president of THIGPA, is quoted as saying, "they're (Medtronic) in this to make money."  Considering that, "Novation and Premier receive less than $10 million annually from Medtronic," what does Mr. Rooney think Novation and Premier are in it for?  As for weakening hospitals negotiating power,  if they hired people that had knowledge, and experience from within the industry, they would understand how to deal with companies like Medtronic.  If Hawkins and his team  will be remembered for anything, it could be that he had the chutzpah to make a stand.  Our industry has way too many wannabe whores that spend their day in a bait and switch, and dropping their shorts faster than a cheap trick.  It's the hospitals responsibility to manage itself in a cost effective manner.  Let's face it, most of the spine industry is a commodity industry with a few technological advancements that allows one competitor to differentiate itself from the rest of the playing field.  The job of the purchasing director, materials manager, and CFO is to work at identifying the haves from the have nots.

So as a new precedent is being establish by the leader in our industry, it will be interesting to monitor how hospitals react to this across the country, and whether they are willing to be better partners with their revenue generators? Legally, if a company can partner with a surgeon in a business venture, why can't a hospital partner with a surgeon?  Some have even raised the possibility of the hospital and surgeon inventor collaborating to bring new technology to the marketplace.  Another example of partnerships has been gainsharing, and with the advent of POD's, aren't these models similar in their objective?  One still shares in the discount and profitability that is passed on to the hospital and the physician?  If anything, a precedent must be established so that there is some balance in how business is conducted. Unfortunately, the problem lies in how much of the pie do you divide in order to keep everyone happy?  A cost efficient system benefits everyone, regardless whether people challenge the belief that quality of care will become a major issue.  But then definition has never been a formidable trait in our industry.   TSB wants to know what our bloggers think?  Is this the start of something beautiful or are we taking two steps forward to go three steps back?

Monday, March 7, 2011

That Was The Week That Was

Good Morning Fellow Bloggers:

TSB took a little time off from the spine world to help a friend with his addiction to a certain drug and young women.  You know what Dirty Harry once said, "a man's got to know his limitations."   So, we're glad to be back on the beat, nothing is more refreshing than the exciting world of market makers, consulting agreements, physician owned distributorships and crazy people.  Sherman Oaks is a nice town, but it was time to get out of Dodge.

Last week was an interesting week in spine.  It started off with The Stem Cell Summit in the Big Apple.  The meeting was a Stem Cell extravaganza, led by no other than self-proclaimed stem cell guru and investor Robin Young. What we learned from this meeting is that there has been tremendous advancement in the field of stem cells, especially in aiding in bone growth and fusion.  As a sidebar to our readers, is there anything that a spine surgeon wouldn't try, to achieve fusion?  Despite these advancements, there is still much work to be done in understand the efficacy of stem cells.  But if you attended the meeting, well,  it was another meeting, and at those prices it made NYC look affordable.  Robin continues his quest to be acknowledged as a pioneer in stem cells, all that was missing was the covered wagons.  But let's get serious, stem cells buzz like neon, but will they ever burn away?   There were about twenty companies.  Considering that stem cells are cheaper than BMP, yet more expensive than DBM, they must be a bargin? At least BMP's have some retrospective papers on its efficacy in spine.   So where's the beef?  Special kudos must go out to the Mod Squad, those are Robin's minions whom without their hard work, these meeting would never take place,  hopefully y'all will get a raise this year.

Other news last week: we received multiple e-mails from the Street with word that Amedica might have raised some capital, if so, TSB would like to know who was crazy enough to invest into another company that is riding the future on silicon nitride?  $30 million?  That 's crazy money.  If so, could hookers, limos and Grey Goose be in the picture?  If there is truth to the rumor, it would behoove investors to keep a tight reign on their money. Considering the sales management team was given unrealistic revenue objectives for fiscal 2011, something could be brewing.  But then again, what do the people running this operation know about selling spine products?  If Globus has had trouble going public, does anyone really believe that Amedica has the legs to do it?  Everyone in the investment community knows that Shappley's goal is to take the company public.

It was also announced that as of March 7th, hmmmmm that must be today, Bacterin will begin trading shares of common stock under the symbol "BONE," very original,  on the NYSE Amex.  For those of you not familiar with Bacterin, they are "the creators and developers of revolutionary bone grafting material," taking the market by storm.  It will be interesting in continuing our watch of this revolutionary company, let's see what the investors believe, will they be desperate or will they exhibit prudence in their choices?

In other news, the state of Ohio provided AxioMed with a $500,000 loan to help the company in its quest to bring a cervical disc to the marketplace vis-a-vis the Ohio Third Frontier, a government sponsored organization (I thought the government was bad) that seeks new technologies through innovation that could result in creating new jobs for the state.  TSB thought that Ohio was having budgetary problems? So the pressure is on AxioMed to give back something of substance in the near future to the hard working people of the  Buckeye State.  Jobs are where its at, so let's give a hand to at least one spine company that's not looking to send development and manufacturing overseas.

So remember fellow readers keep those post cards and memo's coming.  Have a great week!

Tuesday, March 1, 2011

It's Time To Pick on The FDA............Again

It was reported on February 21st, that the House Energy and Commerce Committee planned on scrutinizing the FDA's device approval process, so that the regulatory process does not force U.S. jobs overseas.  Joe Pitts (R) PA, aka as "the Pittstop," recently blogged on "The Hills," that he and his panel want to explore why Europe has gained an advantage over the U.S. TSB must ask Congressman Pitts, where have you been for the last twenty years?  No one ever accused Mr. Pitts of being a medical device expert, considering that he was a math and science teacher before venturing into public service.  Pitts believes that medical device jobs are great.  If he truly believe this, maybe after he is done investigating the FDA, he could start on POD's.  His goal is to make America safer and stronger.  As medical device manufacturing continues its exodus off shore, the question must be asked, is medical innovation truly being destroyed by bureaucracy, or is this just part of a larger problem?

What has provoked this inquiry was CDRH's Director Jeffrey Shuren's comments on February 17th in front of the House Subcommittee that "the (medical device) industry should take more blame for review delays." Obviously, this comment along with his comment that "the U.S. does not use its people as guinea pigs," has raised the ire of many a CEO and entrepreneurs.  As stated in previous blogs, the FDA has plenty of its own challenges.  These challenges run the gamut, from being nothing more than a training ground (attrition) for corporate America, to being overworked and inundated with submissions, to offering a paltry salary, to inexperienced reviewers.  But what about the industry?  Accountability is a two way street, whenever two parties are involved, and that's where the problem lies, and that's why we are at an impasse.  Dealing with the FDA is black and white in terms of transparency, and please spare TSB the rationale that corporations never ever do anything wrong. If we want the FDA to exhibit more speed and transparency, maybe its time that the FDA scrutinize and report back to the Captains of Industry how inefficient some of their employees really are.  It's always interesting to read another websites position on this, considering it is always slanted toward the industry.  God forbid questioning some of our practices.  The efficiency of some 510(k)s is questionable at best.  Lack of clinical knowledge, not knowing predicate devices, and at times comparing it to the wrong devices.  In addition, how many companies have attempted to massage testing data only to have to go back and do it all over again?

Maybe Josh Makower should spend some time analyzing why some of the companies that he surveyed took 2-3 years to get their products to the market.  Considering that time to commercial market is of tantamount importance to any investor, how much of his position is influenced by his investments?  But let's discuss the truth.  The truth is that at times, bringing an emerging technology to market is more art than science.  There are multiple variables going on simultaneously during each project with a unique DNA or blueprint depending on the product or drug.  Most entrepreneurs are focused on one thing and one thing only, time to market and ROI, and anyone that denies that is an outright BS artist.  It's acceptable to deprive a physician and patient a product, if it means safety comes first.  I wouldn't expect anything less than an entrepreneur complaining that time delays innovation, because time is money.

Considering that the government is looking to cut funding across the board, how much leaner can agencies like the FDA get?  Who will determine what a breakthrough device really is, if we ask people to work longer hours, with less experience, with less resources?  Some Congressman who is being greased by special interests?  Privatizing the FDA?  In deference to Jeffrey Shuren, how many of us have sat at meeting in the past and viewed surgeons doing three or four level artificial disc replacements only to have to revise the procedure because the disc spit out or retropulsed, only to find out that this was done south of the border?  How many times have we sat and listened to some surgeon discuss dynamic stabilization only to shake our heads in amazement because the talk was so esoteric that even the surgeon himself did not know what he was looking to achieve?   It has become in vogue to kick and scream at the government, regardless whether you are a democrat or republican.  But what about our own accountability when it comes to doing the right thing?  Remember, as long as it isn't your mother or father, sister or brother, son or daughter or best friend, the reality is that most of us only care about the benjamins, until its your turn, and then it becomes a different story. So, in the spirit of debate, what are the solutions?  We know the challenges, and contrary to industry and investor cheerleaders like Makower, what are the legitimate solutions?  TSB wants to know what you think?