Medicare Delays Rules for Thoratec Device

Medicare delayed by a month a much-anticipated reimbursement decision on Thoratec Corp.’s HeartMate, an implantable pump for patients too old or sick for heart transplants.

The medical device company, based in Pleasanton, Calif., said it remained optimistic that the federal insurance program for the elderly would cover HeartMate, the first pump approved as an alternative to a heart transplant. A few private insurers, including Aetna Inc. and six Blue Cross and Blue Shield plans, cover the device. But Medicare coverage is seen as crucial because many heart failure patients are elderly.

HeartMate received a nonbinding endorsement from a Medicare review committee in March.

The potential market for the device is large. Analysts have estimated that 100,000 heart failure patients each year could benefit from HeartMate, a market worth $5 billion in the United States.

However, Medicare was expected to impose rules that would substantially shrink the potential market. Keay Nakae of Wedbush Morgan Securities in Los Angeles said he expects Medicare to pay $54,000 for the device and implant procedure, the same amount that Medicare reimburses for temporary heart pumps for patients awaiting transplants. He said the cost of HeartMate and the implant operation is higher, about $150,000.

Nakae said HeartMate was large and not suitable for small men and women, another factor that would limit sales. He expected the 2-pound device would be used in no more than 10,000 patients.

The company is working on smaller, less expensive devices, he said.

Thoratec received Food and Drug Administration approval to begin marketing HeartMate as an alternative to a heart transplant in November. Thoratec shares fell 40 cents to $15.85 on Nasdaq.