DTC for Medical Devices May 26, 2005

DTC for Medical Devices

May 26, 2005CONFIDENTIAL

Health Advances, LLC • 9 Riverside Road • Weston, MA 02493 • Tele 781 647 3435

www.healthadvances.com

Prepared by Amy Siegel for:

Is Your Product Right for DTC?

2 © 2005

MassMEDIC Medical Device DTC SeminarMay 26, 2005

Traditional Pacemakers

MIS Knee Replacement

More Accurate Pap Smears

Uterine Fibroid

Embolization

Novel Acne Treatment

Stress Incontinence Treatment

Acute Stroke Device

Which Treatments Will Benefit Most from DTC?

A new product which offers a large, dissatisfied patient population a new treatment alternative with “consumer” benefits is likely to benefit from DTC.

Best DTC CandidatesH

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Size of Ball Indicates

Number of Relevant Patients

Weight of “Consumer” Benefits Relative to Other Benefits

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Examples of “Consumer” Benefits

Shorter duration of treatment course– Fewer / shorter visits– One-time treatment vs. continuous

treatment

Faster recovery time

Less pain during or after treatment

Lifestyle preservation / improvement – e.g. sexual function, continence

Improved patient appearance– Less visible scarring– Smaller visible device (e.g. hearing aid)

Consumer benefits are those advantages beyond clinical efficacy and safety that will matter more to the patient than to the clinician or institution.

More Obvious Less Obvious

More convenient site of care

Allay fears of unlikely but disastrous complication or risk

Reduce patient out-of-pocket expenses

– e.g. procedure vs. drug therapy

4 © 2005


Intensity of DTC Need

DTC can address a range of sales and marketing challenges for medical device companies, assuming the effort will disproportionately benefit your product / company.

Create a NewCreate a NewSelf-Pay MarketSelf-Pay Market

Break a Referral Pattern Break a Referral Pattern LogjamLogjam

Expedite Technology Adoption Expedite Technology Adoption by Clinicians / Institutionsby Clinicians / Institutions

Urge de-incentivized clinicians to present all treatment options

Enlist patients to create new referral patterns

Intensity of DTC Need HigherLower

Generate patient demand and willingness to pay

Build physician willingness to offer non-reimbursed treatment options

Demonstrate patient demand to physicians and hospitals - “If you build it, they will come”

Develop the market prior to attractive reimbursement

5 © 2005


Case Study – Device-Based Acne Treatment

A company developed a device-based treatment for acne requiring the purchase of a fairly expensive piece of capital equipment by physician offices.

Create a New Self-Pay Create a New Self-Pay MarketMarket

Break a Referral Pattern Logjam

Expedite Technology Adoption Expedite Technology Adoption by Clinicians / Institutionsby Clinicians / Institutions








6 © 2005


Seen by a Physician

4MM

Severe0.3MM

Not Seen by a Physician 20MM

Mild1.6MM

Moderate2.0MM

Case Study - Acne Market Overview

The acne market is large, however the majority of patients self-treat with OTC products.

Total Estimated US Acne Population

7 © 2005


0%

5%

10%

15%

20%

25%

Almost Always Majority of theTime

Occasionally Rarely

0%

20%

40%

60%

80%

Sun Sensitivity GI

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10

15

No Change <10% 10-24% 25-49% 50-74% 75-99% 100%

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Tetracycline Minocycline Doxycycline

Dissatisfaction with Existing Acne Treatments

Respondents reported relatively high levels of side effects and low levels of efficacy; not surprisingly, compliance was also spotty.

Reported Side Effects Reported Compliance

Reported Efficacy

8 © 2005


Patient Type

Parent Teenager

Results of Qualitative Analysis

Unprompted Reaction to Treatment Concept

Efficacy

Efficacy

Pain

Pain

Safety

Convenience

How it Works

CostPatient Type

Convenience

Cost

Safety

How it Works

Least Emphasized

Most Emphasized

DTC Target

Parent Teenager

Primary DTC

Message

Treatment is safe Stops acne at the

source Psychological

benefits Reduced potential

for scarring

Excellent clearance results

Clearance begins in as little as 30 days

Skin stays clear for a long time

New Therapy vs.

Current Treatment

No constant daily reminders to take medication

Minimal side effects

No daily hassle of creams / pills

No more dry, irritate skin and sun sensitivity

DTC marketing should reflect that teenagers are impressed by efficacy and worried about pain, while parents are interested in how it works, safety, and cost.

9 © 2005


Price Demand Curve for New Acne Treatment

$0

$2,000

$4,000

$6,000

$8,000

$2,400 $2,000 $1,600 $1,200 $800

Purchase Price of Treatment Course

Re

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Revenue Generated per Derm

Percent of Patients

A significant percent of patients would be willing to pay $1000 per treatment course for the new acne treatment based on a realistic efficacy and pain profile.

10 © 2005


Year 3Year 3

Marketing Timeline

Because the device involves an initial capital equipment investment, a short-term DTC campaign combined with physician marketing could help jump start the market.

Acne Indication Approved

Clinical Data

Referral Source Marketing

Limited DTC Campaign

Year 1Year 1 Year 2Year 2

Dermatology Market Drive

Market Drive in Other Specialties

11 © 2005


Case Study: Uterine Fibroid Embolization Device

A new treatment for uterine fibroids which competes with hysterectomy has not been widely adopted despite being less invasive.

Create a New Self-Pay Market

Break a Referral Pattern Break a Referral Pattern LogjamLogjam

Expedite Technology Adoption by Clinicians /

Institutions








12 © 2005


Referral Pattern Challenge

A recent Wall Street Journal article picked up on the referral pattern challenge when economics do not favor the referring physician.

Silent Treatment

Hysterectomy Alternative Goes

Unmentioned to Many Women

Gynecologists Often Don't Cite

Less-Invasive Procedure

To Treat Fibroid Tumors

Bailiwick of Other Specialists

By KEVIN HELLIKER and LAUREN ETTER

Staff Reporters of THE WALL STREET JOURNAL

August 24, 2004; Page A1

13 © 2005


Revenues to OB/Gyns: Hysterectomy vs. UFE

Quantitative data verifies the revenue exposure when embolization substitutes for a procedure.

Diagnosis Medical Management Follow-upProcedure

Services

Total Revenue

2 visits @ $50 = $ 100

Diagnostic Exam* = $ 35

$ 135

2 visits @ $50 = $ 100

1 physical @ $100 = $ 100

$ 200

2 physicals = $ 200

4 visits = $ 400

$ 600

Total OB/Gyn Revenue = $ 2,345**

Hysterectomy 90% = $ 1400

Myomectomy 10% = $ 1500

Weighted $ 1410

1 Year 3 Years

Diagnosis Medical Management Follow-upProcedure

Services

Total Revenue

2 visits @ $50 = $ 100

Diagnostic Exam* = $ 35

$ 135

2 visits @ $50 = $ 100

1 physical @ $100 = $ 100

$ 200

2 physicals = $ 200

2 visits = $ 100

$ 300

Total OB/Gyn Revenue = $ 635

-

-

$ 0

1 Year 3 Years

* OB/GYN may not receive this reimbursement. **Numbers have been changed to protect client confidentiality.

Scenario 2 : UFE following Medical Management

Scenario 1 : Medical Management Resulting in Hysterectomy

14 © 2005


Interventional Radiology Perceptions of UFE Growth Drivers

According to interventional radiologists, DTC and physician marketing will do more to drive UFE growth than better reimbursement or FDA approval.

None Small Medium Large

Potential Impact of UFE Company Efforts

* Average scores based on Health Advances survey of 140 U.S. Interventional Radiologists.

15 © 2005


Other Devices Potentially Benefiting from DTC Advertising

Device DTC Rationale

Stress Urinary Incontinence Device

Procedure not likely to be reimbursed Benefits are consumer-oriented (e.g. replace adult diapers)

Prostate Cancer Cryoablation

MIS procedure with fewer “lifestyle” side effects (e.g. incontinence) Referral pattern and reimbursement issues Targetable population (older men and their spouses)

Disposable Pain Pump

Lack of reimbursement barrier surgeon/ASC adoption Efficacy hard to document, more perceptive Competitive ASC environment in some geographies

Glaucoma Therapy One time treatment vs. daily medications Drugs require higher out-of-pocket expense for Medicare patients

Prenatal Screening Many “worried well” tests are self-pay Targetable population (pregnant women)

Health Advances has encountered a number of medical devices where DTC would be beneficial or even crucial to developing the market opportunity.

Documents

DTC for Medical Devices May 26, 2005