Use and Cost of a Hypoglossal Nerve Stimulator Device for Obstructive Sleep Apnea Between 2015 and 2018 | Medical Devices and Equipment | JAMA Otolaryngology–Head & Neck Surgery | JAMA Network
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Figure 1.  Hypoglossal Nerve Stimulator Annual Sales, 2015-2018
Hypoglossal Nerve Stimulator Annual Sales, 2015-2018

Annual sales estimated assuming constant average selling prices in both the United States ($23 400 per unit) and Europe ($22 300 per unit). These values are consistent with pricing in 2018.

Figure 2.  Cost Drivers of Medicare Reimbursement for Hypoglossal Nerve Stimulator Implantation in 2018
Cost Drivers of Medicare Reimbursement for Hypoglossal Nerve Stimulator Implantation in 2018

Device production cost estimated assuming gross margin of 80.1% and average selling price in the United States of $23 400 per unit. Manufacturer markup reflects difference between device average US selling price and estimated production cost. Physician reimbursement estimated assuming 18.52 relative value units allocated for procedure (Current Procedural Terminology code 64568).

1.
Inspire Medical Systems Inc. SEC Filings. Inspire Medical Systems, Inc. https://investors.inspiresleep.com/investors/financials-and-filings/sec-filings/default.aspx. Published 2019. Accessed June 12, 2019.
2.
Strollo  PJ  Jr, Rogers  RM.  Obstructive sleep apnea.  N Engl J Med. 1996;334(2):99-104. doi:10.1056/NEJM199601113340207PubMedGoogle ScholarCrossref
3.
Skirko  JR, Weaver  EM.  Shooting STAR: caution in interpreting long-term cost effectiveness from a short-term case-series.  Sleep. 2015;38(5):665-667.PubMedGoogle Scholar
4.
Strollo  PJ  Jr, Soose  RJ, Maurer  JT,  et al; STAR Trial Group.  Upper-airway stimulation for obstructive sleep apnea.  N Engl J Med. 2014;370(2):139-149. doi:10.1056/NEJMoa1308659PubMedGoogle ScholarCrossref
5.
US Food and Drug Administration. Post-Approval Studies (PAS). https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpma/pma_pas.cfm?t_id=511695&c_id=2573. Published 2017. Updated July 15, 2019. Accessed July 16, 2019.
6.
Bryant  M. GE, Medtronic among those linking with hospitals for value-based care. https://www.healthcaredive.com/news/ge-medtronic-among-those-linking-with-hospitals-for-value-based-care/519039/. Published March 29, 2018. Accessed July 16, 2019.
Research Letter
August 22, 2019

Use and Cost of a Hypoglossal Nerve Stimulator Device for Obstructive Sleep Apnea Between 2015 and 2018

Author Affiliations
  • 1Massachusetts Eye and Ear, Boston, Massachusetts
  • 2Harvard Business School, Boston, Massachusetts
  • 3The Warren Alpert Medical School of Brown University, Providence, Rhode Island
  • 4Department of Otolaryngology, Harvard Medical School, Boston, Massachusetts
JAMA Otolaryngol Head Neck Surg. 2019;145(10):975-977. doi:10.1001/jamaoto.2019.2366

More than 17 million patients in the United States have obstructive sleep apnea,1 a condition associated with sequelae such as daytime somnolence, motor vehicle crashes, and cardiovascular disease.2 Continuous positive airway pressure devices are the first-line treatment for obstructive sleep apnea, although the effectiveness of such treatment is often limited by patient noncompliance.2 Second-line treatments (eg, oral appliances and palatal surgery) exist, but the available evidence offers limited support for such alternatives.2

In April 2014, the US Food and Drug Administration approved the Inspire II Upper Airway Stimulator (Inspire Medical Systems) for the treatment of moderate to severe obstructive sleep apnea (specifically, apnea-hypopnea index scores between 15 and 65) in adults unable to tolerate continuous positive airway pressure with favorable anatomy (ie, without complete concentric soft palatal collapse).1 This hypoglossal nerve stimulator (HGNS) is designed to open the airway during sleep by protruding the genioglossus muscle with inspiration. No other manufacturers have received approval to market HGNS devices to date.

A number of major insurers have recently issued positive coverage determinations for the device. However, the cost-effectiveness of the HGNS device remains uncertain.3 We therefore sought to characterize the extent and cost of HGNS use.

Methods

We reviewed publicly available financial statements submitted by the manufacturer to the US Securities and Exchange Commission to assess device use and expenditures.1 For each year between 2015 and 2018, we extracted the total US and non-US (ie, European) revenues. We then divided revenues by current US and European average selling prices to estimate the number of units sold. Using information provided in Securities and Exchange Commission filings, we additionally estimated the total Medicare payment per HGNS device placement in 2018 and procedural cost drivers (device production cost, manufacturer markup, hospital reimbursement, and physician reimbursement). We used descriptive statistics to characterize trends over time and cost drivers of Medicare payment.

Results

Between 2015 and 2018, global annual HGNS device sales increased 6.3-fold, from 346 to 2175 units; a total of 4459 units were sold during this period. Sales growth was primarily driven by increased utilization in the United States, with a 7.2-fold increase, from 262 units sold in 2015 to 1896 units in 2018 (Figure 1). Total US sales in this period accounted for nearly 85% (3786 units; 84.9%) of global sales.

Between 2015 and 2018, annual US sales revenue increased 7.2-fold, from $6.1 million to $44.4 million, totaling $88.6 million for this period. In 2018, Medicare payment—including both hospital ($27 700) and physician ($667) fees—for HGNS device placement totaled $28 367 per procedure (Figure 2). Manufacturer markup (estimated as average US selling price less production cost) accounted for roughly two-thirds ($18 743; 66.1%) of total Medicare payment.

Discussion

Our findings demonstrate adoption of HGNS into clinical practice, following initial approval by the US Food and Drug Administration in 2014, at a cost of nearly $90 million. This growth in sales from 2015 to 2018 reflects successful marketing concentrated on otolaryngologists and other sleep specialists in the United States.1 HGNS device utilization was much lower in Europe, where the manufacturer has limited commercialization efforts owing to the lack of established reimbursement pathways.1

In the absence of definitive cost-effectiveness data,3 otolaryngologists contemplating adoption of the HGNS device should consider the available clinical evidence carefully. The device has shown great promise to date, with 5-year follow-up results in the phase 3 cohort revealing sustained improvements in patient-reported daytime somnolence and in disease-specific quality of life of the majority of patients treated with the device.4 However, these findings should be tempered by the fact that over one-third of phase 3 patients (43/126) did not respond to treatment.4 In addition, approximately 6% of phase 3 patients required surgery for device revision/repositioning or replacement.5 These findings and the high cost of the HGNS device underscore the need for cost-utility analysis of this technology.

Until such analysis is both available and accepted, HGNS devices may be well suited for value-based pricing models. These models already exist for devices such as insulin pumps and antibacterial mesh and have the potential to promote cost-effectiveness in a manner beneficial to patients, payers, and manufacturers by promoting adoption while lowering prices.6 For example, the manufacturer could enter into outcomes-based purchasing contracts that refund device costs when patients require replacement or prove unresponsive to HGNS therapy.

This study has limitations. Our analysis does not include postimplantation costs (eg, for treatment of adverse events). Further research examining postimplantation expenditures is necessary to more fully characterize the cost of the HGNS.

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Article Information

Accepted for Publication: June 30, 2019.

Corresponding Author: Vinay K. Rathi, MD, Massachusetts Eye and Ear, 243 Charles St, Boston, MA 02114 (vinay_rathi@meei.harvard.edu).

Published Online: August 22, 2019. doi:10.1001/jamaoto.2019.2366

Author Contributions: Dr Rathi had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis. Dr Rathi and Mr Kondamuri contributed to this work equally.

Concept and design: Rathi, Kondamuri, Metson.

Acquisition, analysis, or interpretation of data: Rathi, Kondamuri, Naunheim, Gadkaree, Scangas.

Drafting of the manuscript: Rathi, Kondamuri.

Critical revision of the manuscript for important intellectual content: Rathi, Naunheim, Gadkaree, Metson, Scangas.

Statistical analysis: Rathi, Kondamuri, Gadkaree.

Administrative, technical, or material support: Kondamuri, Naunheim.

Supervision: Rathi, Naunheim, Metson, Scangas.

Conflict of Interest Disclosures: None reported.

References
1.
Inspire Medical Systems Inc. SEC Filings. Inspire Medical Systems, Inc. https://investors.inspiresleep.com/investors/financials-and-filings/sec-filings/default.aspx. Published 2019. Accessed June 12, 2019.
2.
Strollo  PJ  Jr, Rogers  RM.  Obstructive sleep apnea.  N Engl J Med. 1996;334(2):99-104. doi:10.1056/NEJM199601113340207PubMedGoogle ScholarCrossref
3.
Skirko  JR, Weaver  EM.  Shooting STAR: caution in interpreting long-term cost effectiveness from a short-term case-series.  Sleep. 2015;38(5):665-667.PubMedGoogle Scholar
4.
Strollo  PJ  Jr, Soose  RJ, Maurer  JT,  et al; STAR Trial Group.  Upper-airway stimulation for obstructive sleep apnea.  N Engl J Med. 2014;370(2):139-149. doi:10.1056/NEJMoa1308659PubMedGoogle ScholarCrossref
5.
US Food and Drug Administration. Post-Approval Studies (PAS). https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpma/pma_pas.cfm?t_id=511695&c_id=2573. Published 2017. Updated July 15, 2019. Accessed July 16, 2019.
6.
Bryant  M. GE, Medtronic among those linking with hospitals for value-based care. https://www.healthcaredive.com/news/ge-medtronic-among-those-linking-with-hospitals-for-value-based-care/519039/. Published March 29, 2018. Accessed July 16, 2019.
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