Troubled medical device maker Cyberonics received yet another blow when Medicare said it wants to decline national reimbursement for the company’s implantable device for treating depression.
The Centers for Medicare and Medicaid Services (CMS) issued a draft decision Monday afternoon, and Cyberonics is still feeling the fallout. During Tuesday trading the Houston, Texas based company’s stock plummeted more than 10 percent to $20.12 from $22.55.
, Texas stock plummeted more than 10 percent to $20.12 from $22.55. The company’s pacemaker-like generator, which is implanted in the chest just under the skin, aims to be a therapy of last resort for those suffering treatment resistant depression. Connected to the generator is a wire used to send mild electrical pulses to stimulate the left vagus nerve in the neck. The Houston-based small cap built the technology with belief that there is a link between vagus nerve stimulation and brain activity.
Connected to the generator is a wire used to send mild electrical pulses to stimulate the left vagus nerve in the neck. The Houston-based small cap built the technology with belief that there is a link between vagus nerve stimulation and brain activity.But the government isn’t buying it. “There is sufficient evidence to conclude that vagus nerve stimulation is not reasonable and necessary for treatment of resistant depression,” according to a CMS decision summary.
Such strong sentiments led the government agency to propose denying national coverage for Cyberonics’ depression device. The price for the device and implanting it is about $25,000.
The company’s device was approved in 2005 and is the only implantable device on the U.S. market for people with treatment resistant depression. Typically, only patients who have not responded to four or more antidepressant treatments are considered for the implant.
company’s device was approved in 2005 and is the only implantable device on the U.S. market for people with treatment resistant depression. Typically, only patients who have not responded to four or more antidepressant treatments are considered for the implant. But its effectiveness has come under heavy scrutiny. For the most part, trial data has suggested the device works for about 30 percent of folks.
Nonetheless, some have said that’s 30 percent more than what drugs have been able to do. Even with questionable effectiveness, the company has been pushing to give patients greater access to the technology.
A big sticking point has been the lack of national coverage to pay for the device and its accompanying procedure. And with CMS’ draft decision, things aren’t looking good. The public now has 30-days to comment.
Call for Help
Cyberonics is already clamoring for folks to speak up. “We encourage all who seek parity in access to treatment for those with mental health disorders to make their voices heard,” said George Parker, Cyberonics’ Interim COO in a statement.
But some analysts don’t think it’s going to help.
Lazard Capital Markets analyst Alexander Arrow doesn’t see CMS changing. “Hence we believe the already-modest market for the company’s implantable neurostimulator is likely to get smaller still,” he said in a research note.
Much of the coverage that the company has scored for the depression device has come on a case-by-case basis from Medicare and private insures.
But the latest hit by CMS is just the latest problem for Cyberonics. The company’s challenges include questions about stock options backdating, the arrival of Carl Icahn as investor to shake up management, and the fallout that followed the resignation of the company’s CEO (see Cyberonics Denies Impropriety,Cyberonics Board Fight Continues,Corporate Raider Takes Cyberonics Stake, and Cyberonics CEO Resigns).