Medicare rejects Cyberonics depression device
Last Updated: 2007-02-06 9:25:27 -0400 (Reuters Health)
By Susan Heavey
WASHINGTON (Reuters) - U.S. Medicare officials dealt the latest blow to troubled device maker Cyberonics Inc. on Monday by refusing to cover its implantable depression device, sending its shares down at least 11 percent in after-hours trading.
In a draft decision, the nation's insurance program for the elderly and disabled questioned Cyberonics data, ruling it "does not believe there is a treatment effect directly attributable to VNS therapy based on the current evidence."
Following the late afternoon ruling, shares of the company were volatile and at one point fell at least 11 percent in after-hours trading. The shares earlier closed at $22.55 on the Nasdaq.
Cyberonics, which had asked Medicare for a national coverage decision on its VNS Therapy device, said it was disappointed.
"We will not rest until all eligible patients have full parity in access to VNS Therapy," said George Parker, Cyberonics' interim chief operating officer.
Private health insurers, which often follow Medicare's lead in setting reimbursement policies, have so far resisted paying for the device except on a case-by-case basis.
But Medicare officials flatly rejected the device and raised new concerns about the FDA's 2005 decision to approve VNS for patients with treatment-resistant depression.
Medicare's own analysis found a major Cyberonics clinical trial failed and that other data gave "little weight" to support use of the device.
While depression is a disorder that is hard to understand, there is sufficient evidence to show that VNS Therapy was "not reasonable or necessary," the agency said.
Industry analysts had been awaiting Medicare's key ruling, citing its potential as the nation's largest payer for health care and the large number of potential patients who could have received the device.
Still, others have said a ruling either way would have done little to quell concerns from skeptical doctors. Many consumer advocates, as well as at least one U.S. lawmaker, have raised concerns about whether data has proven the device works.
The Medicare decision follows a string of bad news for the company, which has faced shareholder pressure after accounting errors led two top executives to resign in November.
Last month, Cyberonics also said it was concerned about patient enrollment in ongoing clinical trials of VNS for depression and agreed to give away the device to those who signed up.
Medicare is expected to make its final decision in May after receiving public comments.
