FOCUS GROUP ORTHOPEDIC SURGEONS. ActiveCare +S.F.T. Fort Lee, NJ, Tuesday, March 3 rd, 2009

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1 FOCUS GROUP ORTHOPEDIC SURGEONS ActiveCare +S.F.T. Fort Lee, NJ, Tuesday, March 3 rd, 2009 For: Accelmed March 9, 2009 P.O. Box 319 #3658 Rte. 44 Brownsville, VT PH: FX:

2 TABLE OF CONTENTS Subject: Page Number I. BACKGROUND... 1 II. OBJECTIVES... 1 III. METHODOLOGY... 2 IV. DETAILED FINDINGS... 2 A. Clinical Background... 2 B. Deep Vein Thrombosis... 3 C. Drug Therapy... 3 D. Unmet Needs... 4 E. Concept... 6 V. CONCLUSIONS VI. RECOMMENDATION... 11

3 I. BACKGROUND Management is working with Accelmed in its assessment of a potential investment in Medical Compression Systems Ltd. (MCS), to support commercialization of its Deep Vein Thrombosis product for total-hip and total-knee replacement surgery patients. This product is designed to replace the need for expensive and potentially risky blood thinners typically used in these cases and, therefore, provide both clinical benefits for the patients/surgeons, and economic rewards for the hospitals. We discussed and agreed that a focus group format would be ideal for presenting the physical product and its supporting clinical information. Orthopedic surgeons are the primary decision makers regarding the choice between use of a drug or device for totalhip and total knee procedures, and will be the primary target to ascertain the merits and likely use levels for the MCS device. We did consider involving hospital administration but decided it was too removed from the process. R.F. Caffrey & Associates, Inc. is a management consulting company that provides marketing research services to companies in the health care industry. We have completed numerous studies, such as attitude and use, market penetration, brand awareness, etc., in a variety of health care markets. Because of this experience and expertise, you have requested us to conduct this assignment. II. OBJECTIVES The objectives of this research are to: 1. Understand the attitudes towards and use levels of blood thinners during total-hip and total-knee procedures; 2. Establish the level of concern among surgeons regarding the risks associated with blood thinners; 3. Measure orthopedic surgeons reactions to the merits of the new concept; 4. Understand the effect of introduction of new blood thinners on the model; 5. Isolate clinical issues, if any, and identify ideas to address them; and 6. Develop a sense of the best product story to support the product for clinical benefits and economic rewards. 1

4 III. METHODOLOGY A focus group was conducted on Tuesday, March 3, 2009, in Fort Lee, NJ with seven orthopedic surgeons. All were in private practice, from a range of solo to 6-person groups. Two of the surgeons had been in practice less than 10 years and five for more than 20 years. Two surgeons performed less than 10 total knees and hips per month and five did more than 10 procedures. All the participants were local physicians and represented the typical orthopedic surgeon population, rather than the key opinion leaders. The group was held in a commercial market research facility. Participants were paid an incentive for cooperation and R.F. Caffrey & Associates, Inc. was identified as sponsor of the research. However, the MCS identity was presented when the product was introduced. The session was audio and video recorded and copies have been provided. IV. DETAILED FINDINGS (Participants comments in italic font) A. Clinical Background The number of total procedures is increasing slightly but there is a swing to more knees and, therefore, fewer hips. One participant noted a slight decrease in total procedures due to the current economic environment. All other participants indicated they still make the decision regarding choice of products but in one hospital they were only able to select from one supplier s offerings, since a contract was in place that they could not circumvent. Also, hospitals will consider new costs if they lead to new income. Hospitals are not against spending more money, provided they re making more income. They re better at tracking these aspects now. For example, patient-specific MRI based implants, if the hospital gets the MRI maybe they re not as adverse to spending more money on the implant. The number one clinical concern related to total-hip and total-knee procedures is fatal pulmonary embolism. It was ranked 5, on a 5-point scale of 5 = highest to 1 = lowest. One participant indicated infection was his major concern. 2

5 B. Deep Vein Thrombosis Everyone indicated that Levonox is the protocol to prevent the risk of fatal pulmonary embolism. Unless the patient was on Coumadin or whatever before. In long-term cases, we use it as a bridge therapy and then go to Coumadin for four to six weeks, if it s a long-term case. We re probably one of the unusual ones, however. No monitoring, still the standard and it works. It is viewed as effective, requires no monitoring, and it works. Studies in Europe refer to the oral dose. However, they also indicated they were waiting for the new oral dose form to be released, and indicated clinical studies were ongoing in Europe. C. Drug Therapy Levonox is the standard of care in this area of the country, but either patients or surgeons do not prefer it. It is simply the acceptable current standard of care for many areas. A more recent trend seen in some areas of the country is mechanical compression in combination with aspirin and very early mobilization. No one is happy about having to inject themselves twice a day. Systemic bleeding or gastric bleeding is the issue with Levonox. It s the major issue; I ve had two people in the last year. There might be a bit more chance of bleeding with a knee. A hematoma in the knee is far more of an issue than a hematoma in the hip. We are surrounded by lawyers. Some areas of the country do not use Levonox at all. Aspirin and early mobilization, some are sending patients home within a day of surgery. Most participants did not know the cost of Levonox, but they indicated that administration would know the cost. No one is aware of a pending release of generic version of Levonox. 3

6 Everyone is aware of the AAOS and Chest Guideline situation, but participants indicated any issue between the two has been resolved. Surgeons now have three options and are satisfied with them. The degree of concern regarding a major bleed is high, with the incidence level about one in one hundred. Documented it is 5%. Administration does not get involved in the decision process regarding branded vs. generic drugs, but the Pharmaceutical Committee is very involved. They ll switch quickly, without our even knowing about it. A lot of the companies give deep discounts to the hospitals. Some hospitals are adding Doppler ultrasounds to the treatment protocol, however participants viewed them as income generating but ineffective. Mechanical prophylaxis is now acceptable. They re also getting Doppler ultrasounds. We re pretty aggressive and don t do these anymore. The hospitals make money on them, even if they re useless. Superficial thrombosis is common. And they tend to over-treat these, which is problematic. D. Unmet Needs Unmet needs focused on mechanical devices. They are generally viewed as positive but there are issues, particularly regarding patients ability to tolerate them. Early mobilization, particularly for younger patients. British studies say nothing vs. all other medications show no difference in outcomes. I expect articles to come out in the future to show the value of mechanical boots and other devices. The downside is the compliance by the people who are supposed to help you. You come into the room and it s off to the side not being used. I ve never used it myself; it wouldn t be easy for the patients to tolerate. Once an oral for Levonox comes out, that s what people will use. But it s a shame you can t use something mechanical. 4

7 Patients often don t remember whether they ve taken their pill, for example a grandmother. That happened just this morning in my office. But with a mechanical device you don t have that issue. The biggest issue will be how long you have to use it for. I haven t seen any study showing the time period. When asked their interest in the concept of an efficient device, assuming patient comfort, etc., using a 5-point scale regarding appeal, virtually everyone rated it a 5. Oral Levonox was rated a bit lower, mostly 4. Asked to pick between the two mechanical device or oral pill opinions were spit between the two. 5

8 E. Concept The concept was presented Adi Dagan, of MCS, presented the concept. The presentation included a Power Point presentation, physical demonstration, and verbal explanation. The following represents key questions and observations by the participants during the presentation but prior to the open discussion regarding its merits: Does this machine know that you are wearing the device? What happens when you are done with ten days of use, the device goes back to the company, or what? Were the studies done with both legs? Who owns the device? I m missing the point. This thing goes back to the hospital when the patient leaves? Did you use it for hip-fracture patients? Used more than 20-hours per day? In these studies did you notice any correlation between lack of compliance and DVT rate? The battery is good for seven hours, so is there a plug for plugging it in? How many hours per day does it have to be plugged in to charge it? Can the patient get through the whole day or do they have to plug it in during the day? Do you have a card? Is this available now for purchase by the hospital? 6

9 Initial reactions to the concept were very positive. On a 5-point scale of Excellent, very good, good, fair, or poor, three rated it Excellent and four rated it Very good. Written reasons for the ratings included: Excellent : Seems to work. Smart new technology. Clinical results. Ease of use, minimal risk, appears to have efficacy. Very good : Mechanical efficacy is more advantageous than drugs due to safety concerns. High efficacy with potentially high level of compliance. Initial studies seem to attest to efficacy with no appreciable complication rate. Optimize mechanical devices with monitoring devices. Verbal comments immediately after the ratings were also very positive, with only a few suggestions regarding potential improvements. The clinical results proved very powerful, everyone saw the device as more efficacious than drugs, they envisioned patients being compliant with its use, and they saw it as easy to use, and potentially applicable for trauma patients, as well. Do you have a card? (Question to Adi as he was about to leave.) Is this available for purchase by our hospital now? (Question to Adi as he was about to leave.) Impressive clinical results from pretty prestigious institutions, with pretty strict surgeons. They get the same velocities with lower levels of impact; it makes a lot of sense. It certainly favors the mechanical device as efficacious as drugs without the risks associated with drugs. It is optimizing what they currently have out there and also monitoring usage very well. At least you know if your patient is compliant. In the hospital it would be phenomenal; it s much better than the crap we use. Then most people go to rehab for up to 10 days. To me, I am not to sure about all those cords. You may not have 80% compliance at home, but in rehab it s great. 7

10 I don t see any issues when the patient goes home. And I don t see as much of a compliance issue as everyone else seems to. Patients use bone stimulators at home with no problems. If you tell them that it increases the likelihood they ll see their grandchildren, grandma and grandpa will be inclined to use it. And trauma patients can certainly use it. It would be nice if the charge would last longer. (Most agreed.) And the size of that thing is very small. Perceived surgeon s advantages included personal protection, efficacy, and reduced patient safety issues. The surgeons were particularly attached to the potential legal protection the device would provide in what they view as a litigious environment. It is always nice to do something can t hurt someone, and it can protect you as well. It affords you a level of protection and it can color your decision. Plus with the legal environment, it tells you how compliant the patient is, which you can t tell with Levonox. They can tell me they are but they may not be taking it. I worry more about that with Coumadin more than Levonox. Every so often you see that. Patient disadvantages related mostly to the mechanics of using the device. Time consuming. It dangerous, those patients are on narcotics cumbersome, and with all those cords they could trip. If you have a hip, I don t know how you are going to put those on. The device is a bit heavier than I thought. Does insurance pay for this? If you compare this with aspirin against Levonox, you d have a lot to show 8

11 Issues with using the device dealt mostly with older equipment the device would have to replace, and compliance at rehab centers. Age of the hospital, the whole paperwork and bureaucracy of getting this approved. I d love to, though. You d probably replace the current compression devices, but the hospitals already own those. I d worry about the rehab centers. Levonox is very easy; it s once they give an injection. Here, if a person goes there on day four, you re so dependent on the facility follow-up and keeping the patient compliant. Who knows what is going on? It s a lot easier to give them Levonox once a day. Participants expect to utilize the device on all candidate patients, not just a selective group. In addition, everyone anticipated that patients would be compliant during use. I d have all my patients on this and aspirin, if it were available and I could sell it to the patients and institution. All or nothing. (All agreed.) It might be used a little longer for hips, but no difference in its utilization for both hips and knees. There was little concern regarding anticipated protocol for using the device. We d give patients the literature, if it were convenient. I wouldn t be very involved other than encouraging them to use it. It would be put on in the hospital, so there d be a nursing education requirement, and you d run in and say you have to use this. You d also have to educate the rehab person. And if the patient went home, I just might be inclined to have them seen in the office just to insure compliance. Most thought administration would endorse use of the new product as long at it meets key criteria they the surgeons define. I think the big issue is, does it meet the core criteria? If it s accepted for that, they d go for it. A mechanical device in and unto itself fulfills compliance requirements already in place. 9

12 Likelihood to use ratings were very high, both alone and with the assumption for introduction of an oral Levonox. Ratings were on a 5-point scale, from Extremely likely to Extremely unlikely. However, the presence of an oral Levonox did have some influence on the ratings. Rating Alone With Oral Levonox Extremely likely 5 2 Somewhat likely 2 5 Neither likely nor unlikely - - Somewhat unlikely - - Extremely unlikely - - Written comments included: Fewer safety concerns with mechanical devices, if as efficacious. I would switch all patients to pumps (new product) and ASA, less bleeding concern. Lower risk of bleeding. Feel this is a great improvement over present mechanical devices. Still might consider drug therapy, especially for hips. Decreased bleeding. Verbal comments were also very positive, and usually included a stipulation that the device would have to work as claimed. There was also the very relevant comment that aspirin alone did not have a proven history in terms of preventing DVTs. The rating would drop a bit with the introduction of the new drug. I d still want a little time before jumping on the new-drug bandwagon. You can recall Celebrex and Vioxx, and they were the greatest things. But sometimes it just doesn t pan out that way. So, maybe it would impact use of this device if the drug proved safe after a couple of years. I d have a lot more reservations about use of a new drug than use of a new device. (Everyone agreed.) I d be inclined to go with this along with aspirin for the knees, in combination with aspirin. If you have a hip, it s treated longer and then I m not as worried about the drug. Then if I saw this was working (for knees), I might jump for hips, as well. I would be happy to change all my patients. The problem with aspirin alone is we re not sure what it does for DVTs. And this (device) seems to do something, even by itself. 10

13 An additional comment at the end of the discussion was: It has potential for use in fractures, for hips, femurs, and all kinds of things. All seven participants requested additional information on the new product as soon as it becomes available. Their contact particulars have been requested from the research facility and will be forwarded as soon as available. V. CONCLUSIONS a. The device was extremely well received by the participants. b. There were very few reservations regarding its use, and none were significant. c. The established use of mechanical devices has set the stage for immediate use of the device. d. Drugs have an associated and significant negative history, which appears to prompt physicians to prefer devices to drugs, given equal outcomes. e. The potential introduction of an oral Levonox did slightly lessen the likelihood to use ratings, but the ratings still remained very positive. f. There were some concerns regarding cords and the potential for patients tripping, particularly those with mental or other physical disabilities. However, these were not significant enough to influence likelihood to use ratings. VI. RECOMMENDATION The results of this focus group are among the most positive we have observed in the past five years of conducting marketing research evaluations of new medical devices. We recommend the company move forward with its plan to invest in the technology. 11

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