Boston Scientific Corporation
(
BSX
) received a major breakthrough for its Alair Bronchial
Thermoplasty ("BT") system with the Centers for Medicare and
Medicaid Services ("CMS") acknowledging the benefit of the
treatment.
As a result, effective January 1, 2012, Medicare will be
reimbursing the Alair catheter through a "pass-through" payment
when the procedure is performed in an outpatient hospital setting,
in addition to reimbursing the bronchial thermoplasty procedure.
This should therefore encourage private insurers to provide
reimbursement for bronchial thermoplasty.
The reimbursement decision from Medicare does not surprise us
since the company had previously presented positive results of the
treatment procedure. Data from the Research in Severe Asthma
("RISA") trial found that patients with severe refractory asthma,
when treated with Alair BT system, experienced stability in lung
function without clinical complications over a five-year
period.
Long-term safety data from the RISA trial also concurred with
another five-year data from the Asthma Intervention Research
("AIR") study. The AIR trial comparing BT with the standard of
care, for patients with moderate-to-severe asthma, also condoned
the long-term safety profile of the BT system.
Moreover, findings from the Asthma Intervention Research 2
("AIR2") trial showed persistence of safety and effectiveness of BT
after two years. Besides, results from AIR2 trial after one year
also demonstrated positive outcome with respect to reduction in
asthma attacks (by 32%), emergency room visits for respiratory
symptoms (84%) and days lost from work (66%).
Alair was inducted in Boston Scientific's portfolio with its
acquisition of Asthmatx in October 2010. The Alair BT system
provides long lasting and improved asthma control for adult
patients suffering from severe asthma who have not benefited from
current inhaled medications.
Alair has been approved in both Europe and the US and is the
first device-based asthma treatment approved by the US Food and
Drug Administration (FDA). Alair has been available in the UK since
June 2011 and in other European countries since September 2011.
Asthma is one of the most common ailments in the world that
involves a costly treatment process and afflicts more than 20
million Americans. Besides, the prevalence of asthma has grown in
recent decades without any cure. Approximately 5% of
Americans suffering from asthma are diagnosed with severe
persistent asthma.
Our Take
We believe that favorable decision from CMS should lead to
better acceptance of Alair going ahead. The company is banking on
the product to strengthen its offering of pulmonary devices and
should contribute to growth and diversification of the Endoscopy
business in future. The stock carries a Zacks #2 Rank ("Buy") in
the short term.
However, the current scenario is challenging for MedTech
companies when the core segments of stents and defibrillators are
struggling for growth due to pricing pressure and a loss of market
share. Boston Scientific is not alone and its peers
Medtronic
(
MDT
) and
St Jude Medical
(
STJ
) are also witnessing similar challenges. In this scenario, the
company is working on reviving its top line by expanding its
product portfolio, either through pipeline development or strategic
acquisitions.
Over a long-term perspective, we have a Neutral recommendation
on Boston Scientific.
BOSTON SCIENTIF (
BSX
): Free Stock Analysis Report
MEDTRONIC (
MDT
): Free Stock Analysis Report
ST JUDE MEDICAL (
STJ
): Free Stock Analysis Report
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