[EW, ABT] Tricuspid Coverage & Sales Trajectory

We briefly summarize the distinctions between these previous coverage policies in the table below, but a review of Medicare fee-for-service (FFS) claims also shows that, despite the earlier TAVR NCD having laid the groundwork for future cardiac device policies like M-TEER that rely on integrated care models, multi-disciplinary heart teams, and registry participation via Coverage with Evidence Development (CED), the utilization ramp has remained noticeably shallower for the latter, both in terms of YoY growth and its relative proportion of more traditional surgical approaches.

Our expectations for the TTVR policy under review are informed by the public comments submitted in response to the June 20 request, most notably those of prominent medical societies [e.g., Society of Thoracic Surgeons (STS), American Association for Thoracic Surgery (AATS), American College of Cardiology (ACC), Heart Rhythm Society (HRS), Society for Cardiovascular Angiography & Interventions (SCAI), the American Society of Echocardiography (ASE)], with the key outstanding questions being the extent of facility / operator criteria needed for coverage. In our view, this will likely include the intra-procedural participation of 2-3 separate practitioners, including a cardiac surgeon, interventional cardiologist, and an interventional echocardiographer.

Source: Capital Policy Partners

More specifically, we suspect facilities wishing to initiate a TTVR program will be required to demonstrate their having performed at least: (1) 20 TEER and 100 TAVR procedures per year; (2) 20 tricuspid valve surgeries in the prior two years; (3) 200 transesophageal echocardiography (TEE) services each year; and (4) 50 open heart surgeries in the previous year. Based on the societies’ recommendations, each operator must also have performed at least 50 career structural valve procedures, with 25 having been TEER.

Source: Capital Policy Partners

In contrast, EW recommends that the procedure be performed by either a cardiac surgeon or interventional cardiologist, with facilities meeting just one of the following two volume criteria: (A) ≥ 20 mitral or tricuspid valve procedures per year, with ≥ 10 having been transcatheter; or (B) ≥ 5 tricuspid valve surgical procedures per year and ≥ 10 transcatheter services targeting any valve (e.g., tricuspid, mitral, aortic).

As outlined in EW’s own comment submission, the threshold for such standards can have a meaningful impact on accessibility, and therefore sales of a company’s device.

Source: Capital Policy Partners

With EW estimating 7+ years before a likely required CED study can be completed and the NCD criteria reevaluated, how these criteria are applied will govern utilization for the foreseeable future.

It should therefore be noted that, of the 46 public comments submitted (excluding form letters), 21 (46%) called for facility / operator volume requirements more in keeping with the above medical societies (i.e., ≥ 20 TEER per year) than the EW recommendation, with another 8 (17%) suggesting CMS should delay coverage altogether, or at least until complete data from the TRISCEND II Pivotal Trial can be reviewed by the Medicare Evidence Development & Coverage Advisory Committee (MEDCAC).

Conversely, we count 5 (11%) comments as largely mirroring EW’s recommendations, with another 11 (24%) calling for CMS to omit the typical volume requirements altogether, and just 1 (2%) suggesting that an open-ended policy, without CED registry / study criteria, should be pursued.

Revenue Implications

While many investors have focused on the potential growth of facility-based transcatheter programs (e.g., TAVR, TEER) [see below chart] to glean insights into the potential sales trajectory, we have taken a more wholistic approach that we hope better allows for upper- and lower-bound estimates.

We start with EW and ABT’s own projections of 800 and 150 Medicare fee-for-service (FFS) procedures in FY25, respectively, included in the most recent inpatient rule. With FFS representing 49.5% of total beneficiaries – the remaining 50.5% being enrolled in Medicare Advantage (MA) plans, which must use any NCD as its coverage baseline – this would imply ~1,600 Evoque services next year. At EW’s price point of $49K per device, this would generate $79M in Medicare sales.

We suspect that ABT’s TriClip projection of 150 FFS units (~300 for FFS + MA) in FY25 – equating to just $12M in Medicare sales at the company’s $40K price point – is likely artificially low given the absence of a coverage policy review schedule at the time the rule was written. However, with CMS targeting completion of a T-TEER NCD by July 2, or 3/4 of the way through FY25, the 12-month run rate would be ~600 (~1,200 for FFS + MA), or ~$48M.

We next trended these two baselines forward using several precedent transcatheter metrics, including not only the number of facilities offering TAVR, M-TEER, and left atrial appendage closure (LAAC) [e.g., Boston Scientific (BSX)], but also YoY growth in the volume of services being done at each site and the proportion of each transcatheter approach relative to traditional surgical techniques in the years following their NCDs.

This results in the following estimates, which are reflected in the line chart on page one.

Source: Capital Policy Partners