Analysis of the Peripheral Nerve Repair Market in the United States

Kurt Brattain, MD**
Magellan Medical Technology Consultants, Inc., Minneapolis, MN

Overview/Summary

Based on research and analysis, the U.S. market for the repair of transected peripheral nerves in the extremities is $1.32 to $1.93 billion dollar per year. (See Figure 1.)

apnrm-figure1

Importance of Transected Gap Length – Transected peripheral nerve injury (PNI) repair involves sizing up each patient’s capacity to regain the use of their damaged nerve and the risk associated with the repair attempt. To be sure, every repair approach technique or device carries with it the potential for failure at a cost of life-long morbidity. This risk of morbidity is not confined to the nerve injury site alone since having a paralysis or loss of sensation leaves the patient more vulnerable to other risks such as falling or an inability to sense skin trauma. The risk of a poor outcome is greatest with transected nerve injuries, which is the focus of this paper and market estimation model. Compression type injuries where blood supply and cellular organization remain intact at some level carry with them a greater likelihood of recovery with repair or protection interventions. With each millimeter of a gap separation on a transected nerve there are associated greater repair challenges and more complicated treatment decisions.

“No Gap” or” Short Gap” Length Repairs – Short or no gap transected nerve repairs can be attempted by approximating the nerve ending margins with suture. This may also include the use of protective wraps or coaptation aids to strengthen the repair area. In joining the transected nerve endings directly, the surgeon must decide how much tension to place on the nerve which may be shortened by the gap length amount. Stress on the nerve from tension must be assessed not only in a neutral anatomical position (no flexion or extension) but also for range of motion in the region of the body during flexion and extension. Stress on a repaired nerve can also result from surrounding tissue edema and vascular supply compromises – thus the direct suturing together of the damaged transected nerve ends is not without risk of poor outcome.

“Small Gap” and “Large Gap” Repairs – For transected nerve injuries where the surgeon feels it would be risky to directly join the nerve-endings together with suture; there are various techniques and device options. A hollow tube or connector device may be placed as a simple conduit to grossly align the nerve endings in an attempt to allow for peripheral nerve re-generation without the stress of pulling the nerve endings together. It is generally accepted that the hollow tube method has limitations in terms of gap length, with the longer gap lengths having less efficacious outcomes when repaired by connector or hollow tube devices. For gap lengths beyond acceptable hollow tube lengths, the surgeon may elect to harvest nerve from elsewhere in the body and place it in the gap – this is called an autograft. As a nerve tissue specific material, autograft provides well suited scaffolding for nerve re-generation. This technique is currently used for the longer gap repairs and is well received by the injured tissue area as it is the patient’s own tissue (autologous), thus minimizing inflammation and scaring to the area while providing a re-generative optimal conduit. For large diameter nerve repairs, the surgeon may bundle smaller diameter nerve grafts together creating a larger conduit for the re-generation process to take place. But, the price of autograft is steep as the harvested nerve site is now rendered permanently damaged creating new life-long morbidity where there was none. At best, this is a trade-off of morbidities if, and only if, the autograft works. If the repaired site isn’t able to re-generate then the patient is left with two injuries, one from the initial injury and the other iatrogenic (treatment induced) as a result of the autograft. Newer technologies strive to address the significant drawbacks of autologous tissue harvest as an alternative option.

Emerging and Disruptive Technologies – Newer technologies, such as processed nerve allograft, offer the scaffolding of human nerve tissue without creating additional morbidity caused by harvesting nerve elsewhere on the patient. Further, processed nerve allograft eliminates the need for anti-rejection medications required with whole allograft. Processed nerve allograft is an emerging technology that has begun to expand the list of tenable options in peripheral nerve repair and as such is a disruptive technology. Nerve repairs that were once considered off-limits due to the complexity or severity of the injury may be back on the table for discussion. Nerve repairs however sometime get the lowest priority because tissue viability is first and foremost on the surgeon’s mind. Vascular repair, organ integrity and bone repair are taken care of immediately and nerve repairs are more often than not handled later on or last if at all. This is in part because of the dilemma associated with some of the peripheral nerve repair options, e.g. autograft leading to other morbidity.

Evolving Market – Emerging disruptive technologies, like processed nerve allografts, may be re-shaping and expanding the market potential for peripheral nerve repairs. In an evolving market with newer disruptive technologies, the question of market size is of keen interest. The market size for peripheral nerve injury repair and protection devices is therefore best evaluated in the context of an evolving market adopting newer technologies that bring opportunities for greater outcomes and patient satisfaction. This is even more so the case when the newer technologies can be cost neutral to the current standard of care options as healthcare cannot easily tolerate technologies that increase cost.

Market Size Estimation Challenges – The greatest challenge in a market estimate lies in the fact that data sources vary in terms of direct access to market space information. Thoughtful use and application of data sources are necessary to construct accurate market estimates. The adoption curve to newer nerve repair technologies can best be understood by assessing their receptiveness with industry experts and end-users.

Nerve Repair Surgeons’ Survey – To gain a perspective on the adoption of technologies in peripheral nerve repair, an independent market research firm produced an on-line survey asking nerve repair surgeons for their opinions on current nerve repair techniques and devices as well as their future utilization of the currently available options. The analysis for the construction of the market model weighted each surgeon’s responses to questions based on their per year number of peripheral nerve cases – annual caseload. Since the goal is to estimate the market size, using an annual caseload weighting system speaks directly to a procedure volume based model for characteristics and norms. Also, most often surgical specialty groups have members that sub-specialized in certain procedures and as such they are the leaders of the group – the ones we want to focus most on in understanding decision processes. The survey revealed among many things, that surgeons whose practice incorporated the use of nerve autografts were also most receptive to increasing their use of newer products such as processed nerve allografts. Furthermore, the 25 surveyed nerve injury surgeons (with a combined annual PNI repair caseload of 2,824 cases) strongly supported the incorporation of allograft procedures into their future practice. The surgeons also conveyed that in repairing a transected nerve, gap segment length is most important in their decision on which technique or device to utilize in the repair.

Claims Codes and Admissions Rates as Data Sources for Number of Procedures – For annual nerve repair and nerve protection procedure estimates, DRG codes and Emergency Department (ED) extremity trauma data were analyzed and showed that the number of potential peripheral nerve injury procedures was between 455,173 to 662,551 per year with an average number of 558,862. This assessment was focused only on extremity peripheral nerve trauma and did not include other evolving market opportunities such as breast reconstruction, carpal and tarsal tunnel repair, facial/oral nerve injuries, and torso nerve repairs – all part of the evolving peripheral nerve market but not utilized to estimate the market size in this analysis.

Validation Check with CPT Claims Codes – CPT codes from 2009 were also examined and found to substantiate the lower bound estimates of DRG coded nerve procedures and ED trauma admissions needing nerve repair surgery annual number of cases estimates. It is reasonable that CPT claims for nerve procedures would be low or underestimate the true number of annual procedures due to how reporting is typically handled. Some CPT codes are neglected in reporting and sampling routines for complex medical cases with multiple simultaneous procedures taking place such as in trauma surgery. CPT codes in sampling routines (such as the data for this model) are reported by a hierarchy of reimbursement rates with the top five highest reimbursable procedures getting listed and subsequent codes being left out of the sample listing.

A Three Tiered Level of Transected Gap-Length for Pricing and Revenue Considerations – By examining the distribution of transected gap lengths defined by peripheral nerve repair surgeons in relation to their decision making process for repair approach, a three tiered gap-length pricing model was developed: No/Short Gap, Small Gap and Long Gap.
Methodology

Market Model Results – Applying a case-mix formula based on transected extremity nerve injuries within the three tiered gap-length level categories to the estimated number of applicable procedures per year, the U.S. market size was found to be $1.32 to $1.93 billion dollars with a mean of $1.68 billion dollars per year. (See Figure 2.)

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Methodology

Incorporating Known and Evolving Aspects into the Market Model – The purpose of this paper is to determine the current size of the peripheral nerve injury repair device market for transected nerves. New technologies for peripheral nerve repair and nerve protection have been developed and are being introduced to and adopted by the industry. Like most evolving markets, early adopters have led the way by embracing new and disruptive technologies as well as allowing for fundamental changes in their approach to transected PNI repairs with the goal of improved patient outcomes and improved patient satisfaction. The determination of market size in an evolving market requires building on the market’s known aspects with information about the adoption and incorporation of process changing philosophies that convey confidence about its conclusions.

Annual Number of Procedures Estimates – The market size estimate was predicated on per year procedure numbers of well-known diagnostic/billing claim systems (CPT and DRG codes) as well as U.S. emergency department admission statistics (ED trauma). Combining these data resources, then allows for the construction of a market size estimate model that utilizes statistical distributions to substantiate its results and conclusions. To guard against over dependence of any one source or claims code within a source, analysis was first employed to define the variability (or error) associated with each data source’s distribution using statistical bootstrapping sampling method procedures. 95% confidence intervals were constructed along with means for each data source. The final procedures per year value used in the market model was determined by a weighted (on number of annual procedures) average of the DRG and ED-trauma admissions needing surgery estimates.

The Use of CPT Codes – CPT codes were sampled and analyzed to establish a minimum current baseline level of known and reported nerve repair procedures for the purpose of validating the use of DRG and ED trauma admissions distributions in our market size model. CPT codes expectantly will underestimate the market, as explained in the overview section, and as such are not applied directly as a parameter in the final market size estimate model. (See Figure 3.)

apnrm-figure3

Adoption Rate Considerations – We recognize that surgeons are a product of their training and experience and so current practices don’t assess receptivity or future embracement or adoption rates of newer technologies. Assessing and utilizing receptiveness to adoption of newer technologies is an important component in understanding the potential market size in a rapidly evolving industry such as this one. The on-line nerve repair surgeon survey was used to define current receptivity and adoption trends for use in the market estimate model.

Applying a Pricing Model to Number of Procedures – A pricing model was constructed based on the cost of techniques and average sale prices (ASP) of devices or supplies used in transected PNI repairs. This cost data was then applied to a three tiered gap-length level system. The within gap- length tier average cost per procedure was calculated by apportioning utilization of techniques and devices statistics as reported by the nerve repair surgeons’ survey responses.

Gap-Length Tier Levels – The overall strategy in defining an average price per procedure by gap length levels is to base the market model on clinical decision factors that drive the selection of repair technique and device selection. The dollar value of technique and device options can then be applied to the distribution of PNI repairs in a manner that best reflects the surgeon’s decision making process.

 

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