Medical Device Start-Up Generates Controversy

In his latest post on GoozNews,  Merrill Goozner asks; “Why Is Tom Friedman Championing Higher Health Care Costs?” Goozner is referring to a recent op-ed piece in the New York Times in which Friedman gushes about a medical device start-up called EndoStim that he says “is the epitome of the new kind of start-ups we need to propel our economy: a mix of new immigrants, using old money to innovate in a flat world.”

This new-style start-up has no headquarters and keeps expenses low by depending on “teleconferencing, e-mail, the Internet and faxes — to access the best expertise and low-cost, high-quality manufacturing anywhere,” according to Friedman. EndoStim also plans on conducting clinical trials for its experimental implantable device in India and Chile where expenses are low. “[O]nly by spawning thousands of EndoStims — thousands — will we generate the kind of good new jobs to keep raising our standard of living.”



Sounds good, so far. So why does Goozner accuse Friedman of “championing higher health care costs?” The problem, according to Goozner, is that EndoStim’s goal is to develop and sell a device that will be surgically implanted in the wall of a person’s lower esophagus to prevent acid reflux—a widespread, usually intermittent condition that he says is well treated with inexpensive, over-the-counter medication for some 92% of sufferers.

And EndoStim’s  financing comes from a venture capital firm whose co-founder is described as having “a real nose for medical investing and what could be profitable in a clinical environment.”

The 60 million people who experience heartburn at least once month and the 21 million who have been diagnosed with GERD (gastroesophageal reflux disease) would seem to present a very tempting target for investors looking to hit it big with profits.

Here’s the problem: Most of those 60 million people don’t need an implantable device to treat their heartburn. They can manage their occasional symptoms with OTC drugs and long-term, could prevent heartburn by cutting down on smoking and eating high-fat foods, lose weight and make other lifestyle choices. Studies have found that only 1-2% of GERD sufferers are not helped by medication and lifestyle changes.

The other problem is that EndoStim is hardly the first company to target surgical solutions to GERD: More than a half-dozen implantable devices and minimally-invasive surgical techniques have been developed and undergone clinical trials in recent years to treat GERD. In 2002, for example, Medtronic, the giant medical device company, began conducting clinical trials of an esophageal barrier made of contact lens-like material that a surgeon would put in place via endoscopic surgery. The trials were halted in 2007 because of lack of efficacy—and reports of significant side-effects. For an in-depth discussion of all the surgical techniques and implantable devices devised to treat GERD (none of which have been shown to be effective), check out this Clinical Policy Bulletin published by Aetna.

In the past, too much weight has been put on developing medical devices and technologies such as digital mammography, cardiac stents and orthopedic implants that could be “profitable in a clinical environment” and too little weight has been put on proving that these new, expensive technologies actually improve outcomes beyond existing treatments.

The history of treating heartburn and GERD is already checkered. Goozner mentions the “lengthening pharmacopeia devoted to [acid reflux’s] control,” including the blockbuster Prilosec and its me-too successor Nexium (with sales upwards of $6 billion) that offer little benefits beyond OTC formulations that can be bought for one-third the price.

“Now, back to the people who have chronic heartburn and for whom none of these products work. Is an electro-mechanical implanted device that dams up the esophagus a solution? How much will the device cost? How much will the operation to implant it cost? Is there any reason to think it will work any better than the drugs that are already on the market?” asks Goozner.

“The answers to those questions won't come cheap. Unless the company is able to use a loophole at the FDA that allows companies to avoid clinical testing by claiming the device is similar to something already on the market (i.e., not innovative), the company will need to find surgeons willing to enroll hundreds if not thousands of patients who failed drug therapy.

“And if it passes that test, there's nothing in the law that limits its use only to patients with chronic disease who don't respond to other, less costly treatments."

Friedman might be right when he waxes on about the future of new-style start-ups and the benefits of the nimble and globally-oriented techniques they use to innovate. His mistake is choosing to write about an industry and a field that he clearly doesn’t understand. Medical innovation needs to move away from the profit-driven motive that has led to expensive new technologies that drive up health care costs without a comparable effect on improving the nation’s health. In these changing times, as the government revisits how devices are tested and approved and comparative-effectiveness studies—not marketing—will help doctors decide which treatments are best, companies like EndoStim will face a far rougher road to success.

11 thoughts on “Medical Device Start-Up Generates Controversy

  1. Mr. Friedman is not right about more than just health care.
    His little prodigy of a venture may be creating half a dozen executive jobs in this country, but that’s about it. The rest of the jobs and the actual manufacturing are somewhere else where wages don’t have to include health insurance.
    Please don’t say that those six executives will need a few dozen folks in St. Louis to service their wealth and miscellaneous needs.
    Whether Mr. Friedman understands this or not, most people are not born CEOs and if all R&D and production work is done abroad, there is no place for Americans to learn how to be CEOs. Maybe it’s telling that the founders are from other, more productive, countries.
    We are just supposed to consume the products, increase health care costs, increase deficits, and get poorer and dumber in the process, all so that 3 investors and 2 boys wonder can get rich in this land of opportunity.
    I would suggest that they start by implanting half a dozen of those gizmos in each founder. And Mr. Friedman should get a couple too as a token of their appreciation.
    Sorry for the rant, but stuff like this is really ticking me off and on top of it all, I happen to live in St. Louis.

  2. The local surgeons in my town are pushing a minimally invasive surgical procedure to treat reflux. What the heck?–give em some Zantac or, failing that, some Prilosec and move on to the next case.
    This is an example of the profit motive making a mountain of a medical molehill. Perhaps there is some way to inject facial Botox at the same time as doing the reflux procedure.

  3. After 10 years of struggling with acid reflux and seeing numerous physicians pursuing “conventional” interventions, I discovered papaya enzymes. Two before dinner; a probiotic before bed; sleeping on a slight incline- the problem is gone. The papaya enzyme suggestion came from my wife’s accupuncturist- who has nothing to do with acid reflux.
    I just wonder how many more years I would have pursued remedies within conventional medicine before I defaulted into one of these implants.

  4. For once I wholehartedly agree with you Maggie. They need to change their diet and make some “lifestyle choices” like exercise! The vast majority of Americans are looking for the easy answer, such as drug or a new medical device rather than a little effort. It’s actually very easy. All you have to do is move a little bit!!

  5. Henry:
    It would be cool if, if fresh veggie and home made meals were more readily available than processed foods latent with fat, sugar, and salt. Unfortunately the issue is cost, availability, and that little thing called individual rights. Fast food restaurants have the right to over populate areas regardless of what we think otherwise it id called a “takings” of the individuals right s to develop their property.
    “Jan Perry, a Los Angeles city-council member, is spearheading legislation that would ban new fast-food restaurants like McDonald’s and KFC from opening in a 32-square-mile chunk of the city, including her district. The targeted area is already home to some 400 fast-food restaurants, she says, possibly contributing to high obesity rates there — 30% of adults, compared with about 21% in the rest of the city. Nationally, 25.6% of adults are obese, according to the Centers for Disease Control and Prevention.” http://online.wsj.com/public/article/SB121668254978871827.html “Exiling ‘The Happy Meal’”
    So what is the logic for doing so? Lets do the numbers: 400 “fat and fast” drive-thrus, walk-ups, and carts or ~ 12 per square mile, or 1 per an ~ 2.4 million square feet, or 1 per 1250 people. Anyone still think we are stomping on the rights of people to get their “hot and greasy” when so many exist already? Think any of those fast food places are providing healthcare insurance to their workers as they delve out and into those chunks of fat, salt, and sugar?
    In these neighborhoods, the availability of fresh and nutitious at a reasonable price is limited.

  6. As I write this comment, my esophagus is burning and I have a horrible acid taste in my mouth which is also burning and erroding my throat away. I have been in this state for 4 years now, have tried every medication (maximun allowed dosage), every remedy and went to every doctor in my area and NYC (I live in New Jersey). I eat helthy, exercise and I got hit with this disease out of the blue when I was only 31- but I know teenagers who are suffering from this nowadays.
    I am appalled and disgusted by previous comments posted here by people who obviously are very ignorant to what GERD and LPR can do to a person and honestly very insensitive. There are people who respond to traditional therapy but actually this treatment is just a bandaid, not a cure, and there are those that don’t respond to any of that. As someone whose life got destroyed by this disease, I am putting all my hopes in a device like this one that would potentially give me a chance to a better, normal life, one in which the dominant thought wouldn’t be getting cancer and dying young, but one in which I can make plans and think of more than the immediate future.
    I don’t wish on any of you to one day wake up like this and live in hell- so please educate yourselves before you post such comments.

    • Irina–

      I totally sympathize.

      I once burned my esophagus by taking too many Tylenol. (I
      was waiting for my new dentist to be able to remove an abscessed
      tooth. He, quite rightly, wanted to wait until is was no
      longer so infected. What he didn’t know (and I didn’t mention) was that I was popping Tynenol
      to get through the pain.

      This is s very painful–but compared to what you have gone through, this was a minor problem.

      I’m afraid I don’t know enough about the medical device your are write about to predict whether it could help you. But I very much hope that it can and will give you “a chance to a better, normal life.”

      Thank you for writing. I think that health care blogs need to hear more from patients–as well as
      health policy folks and doctors.

      In the end, health care reform should be all about: “will it be better for the patients?”

    • I couldn’t agree more. I’ve been struggling with GERD for over 3 years now. I’ve tried every single medication that’s out there to treat it, including every type of PPIs, prokinetics and the like. I’ve had TWO Nissen fundoplications both of which have failed in correcting reflux/symptoms. I’m in constant fear for my life given the possibility of esophageal cancer. And the reflux is still there. What else can I do? I may as well give the EndoStim a chance. I live in Mexico and plan on going to Chile to get the procedure done.

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