(Updates with closing shares in fifth paragraph.)
Nov. 2 (Bloomberg) -- Edwards Lifesciences Corp. accepted restrictions on its Sapien heart valve that may cut U.S. sales $100 million in 2015 in exchange for guarantees Medicare will pay for its use in patients too sick for chest-opening surgery.
The company backed most limits sought by the Society of Thoracic Surgeons in Chicago and the American College of Cardiology in Washington as it awaits regulatory approval to sell the first less-invasive heart valve in the U.S.
The Food and Drug Administration is expected to clear Sapien as soon as this week, said Jan Wald, a senior analyst with Morgan Keegan & Co. in Boston. Curbs would limit its use to hospitals with equipment necessary for the procedure and teams of doctors trained on the device. Hospital oversight boards would be required to approve doctors for the procedure and monitor the device’s use in patients with a narrowing of their aortic valve.
“I’m not really sure what options they had once the societies wrote the letter,” Wald said in an e-mail.
Edwards shares gained 1.2 percent to $74.37 at the close in New York. The company’s stock has declined 8 percent this year.
Global revenue for the Irvine, California-based company’s heart device will fall to $597 million in 2012 and $1.1 billion in 2015 because of anticipated restrictions on use, Michael Weinstein, an analyst for JPMorgan Chase & Co., wrote in a note to clients Oct. 4. No curbs on the product would have generated $615 million in sales in 2012 and $1.4 billion in 2015, he said.
Weinstein estimates U.S. sales of $492 million in 2015 compared with a consensus from analysts of $584 million, he said. Edwards’s sales forecast has remained unchanged at $20 million to $25 million in the first three months after the device is introduced in the U.S. and $150 million to $250 million in the first full year, said Sarah Huoh, a spokeswoman, in an e-mail.
The societies’ proposed restriction policy “provides a sound basis for CMS coverage policy,” Huoh said. Edwards also agrees with the societies that the U.S. health plans should pay only for FDA-approved uses in inoperable and high-risk patients at this time.
If it gains approval, the Edwards device would be the first transcatheter valve sold in a U.S. market estimated to reach $1.1 billion by 2014, according to a report from Bloomberg Industries. The valve has been available in Europe since 2007.
Sapien can be implanted by a catheter threaded through the leg or ribs rather than conventional chest-opening surgery.
About 300,000 people in the U.S. suffer from severe aortic stenosis, which is a narrowing of the valve, according to Edwards. Two-thirds undergo standard chest-cracking surgery to replace the valve, while the risk of surgery may be too high for the rest.
The Centers for Medicare and Medicaid Services imposes curbs on the use of drugs and devices it covers. Medicare is the U.S. health program for the elderly and disabled. Medicaid is the state-federal health program for the poor.
Edwards is expected to work with U.S. regulators to minimize the effects that limitations will have on patient access to the valve, Wald said.
The Centers for Medicare and Medicaid Services is expected to make a final decision on its payment policy for Sapien by June 26.
Medtronic Inc., the world’s biggest maker of heart-rhythm devices, began a clinical trial in December of a competing less-invasive valve. Thomas Armitage, vice president of clinical research for the Minneapolis-based company, wrote Medicare officials Oct. 28 urging flexible coverage policies for the class of devices, known as transcatheter heart valves.
In backing limits on Sapien, the two medical societies told Medicare officials that regional centers performing procedures should have an “acceptable patient volume in valvular heart disease,” a benchmark the organizations plan to establish. Edwards disagreed.
No correlation exists between outcomes and the number of patients treated and such requirements would limit the number of patients who could receive the devices, Dirksen Lehman, Edwards’s vice president of government affairs and reimbursement, wrote regulators Oct. 27.
Representative Brian Bilbray, a California Republican, also opposes patient volume restrictions and asked Medicare officials for flexibility in their coverage decision.
“In order to ensure adequate patient access, a broad range of qualified hospitals should be permitted to demonstrate their ability to deliver high-quality results,” Bilbray wrote in Oct. 26 comments to Medicare.
Edwards has vetted the first 250 sites to use Sapien, Wald wrote yesterday in a note to clients. The company had targeted 400 medical centers for the first year of the product’s use and narrowed its focus after society and regulator feedback, he said.
Edwards said it plans two days of training with doctors at a company location and will make a physician available for consultations at medical centers using Sapien until the company determines it’s being used correctly.
--Editors: Adriel Bettelheim, Andrew Pollack
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