The Race to Keep Arteries Clear--and Rivals at Bay

There are a lot of "ifs" when it comes to Johnson & Johnson's new drug-coated stent, called Cypher. The biggest question is timing: The stent could be a billion-dollar product this year if the Food & Drug Administration approves it in time to give J&J a head start against rivals. A stent is used to prop open arteries after angioplasty; the new device is coated with a drug that prevents those arteries from reclogging. The agency has held off giving its O.K. over a number of issues, including the shelf life of the stent. A short shelf life could hinder J&J's ability to meet initial market demand, since it wouldn't be able to sell all the stents it has manufactured already. The company says it has addressed all FDA concerns.

Even if the stent hits the market soon, as J&J has said, rivals won't be far behind. Boston Scientific Corp. is developing a stent coated with a different drug that it could launch by year's end. And if the two devices are equally effective, doctors may not favor J&J's version. That's because analysts say Boston Scientific's metal stent itself, as well as the system for inserting it into the body, is more flexible and easier to use.

Then there's the risk of a backlash against the cost of J&J's new stent. In 1994, when J&J introduced the first widely used one, the company irked cardiologists with the stent's steep price: $1,600. Nor had J&J gotten additional Medicare reimbursement for hospitals. To make matters worse, it took the company three years to develop a meaningful improvement on the original. The result is that J&J lost its dominance in a crucial market it helped to create. Robert W. Croce, company group chairman for Cordis, the unit developing the stent, says J&J has successfully lobbied for increased Medicare reimbursement in advance this time (good thing, since the stent might go for as much as $3,000) and plans to roll out a new and better version every 15 months.

But Brue Chandler, executive vice-president at St. Joseph's Health System in Atlanta, says he has already heard Cordis sales representatives mention the possibility of discounts on other company products to help offset the price of the stent. "I find that objectionable, because it doesn't go to the core issue of introducing a product at a [reasonable] price," says Chandler. He adds: "They've already begun alienating the purchasing market." J&J's Croce says the company will work with hospitals to deal with their concerns about the stent's cost. And it won't do so by offering selective discounts on other products. Still, if J&J isn't careful, history could repeat itself.

By Amy Barrett in New Brunswick, N.J.

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