By VARUN SAXENA – June 13, 2016
Spinal implant specialist LDR has been held back by patchy insurance company reimbursement of its flagship device, demonstrating the challenges facing med tech companies as they navigate the tricky payment process in the U.S., where they must contend with the increasingly stingy federal Centers for Medicare & Medicaid Services and a plethora of insurance companies with varying coverage policies.
LDR boasts the Mobi-C, the only artificial cervical disc that’s FDA-approved for the reconstruction of two adjacent discs in the neck (or cervical spine, to be technical). Zimmer Biomet recently announced it has agreed to acquire the Austin, Texas-based company for $1 billion to gain access to the exclusive niche occupied by the device.
But Jeffrey Zigler, LDR’s senior director of reimbursement and health economics, said in an interview that out of 230 million American insured through private plans, only 50 million have access to two-level cervical disc replacement (180 million have access to standard one-level disc replacement, which involves replacing a single disc, and is also performed using the Mobi-C, as well as several competitors).
“Only pockets of regions in the country have approved two levels,” Zigler said. “You could live in any state in the country and randomly receive coverage (depending on which plan you have),” he added.
Zimmer thinks it can solve the problem. “One of the great things I think we’re going to be able to do in the combination is bring even more power to bear on that payer relation side of the business. We have a great market access team today inside of Zimmer Biomet. And we believe that in our modeling and in our dealings with payers during the diligence process, that we’re going to see rapid expansion over the course of the next five years,” the president of Zimmer spine unit, Adam Johnson, told Wall Street following the deal’s announcement.
