by Barbara Kram

Note: This report originally appeared in the June 2008 edition of DOTmed Business News. A list of registered users that provide sales & service can be found at the end.

There is good news and bad news about nuclear medicine. First the bad news: The Deficit Reduction Act, which reduced medical imaging reimbursements during the past 18 months, has taken a toll. But the good news is that the clinical value of nuclear medicine and the promise of high-tech molecular imaging outweigh what most observers feel is a temporary lull in an otherwise exciting and growing field.

Nuclear medicine has many dimensions. It is a medical specialty, a laboratory science and an applied science fusing physics and chemistry. Molecular imaging is just one end of the spectrum of nuclear medicine, which encompasses research as well as clinical applications.

"When we do a nuclear medicine scan, you design a probe [radiopharmaceutical agent] that will target a disease process, a physiological process, or a particular molecular target," explains Alexander (Sandy) J.McEwan,MD, President of the Society of Nuclear Medicine (SNM). "On the back of that you put a small
amount of radioactivity. Then you do the scan and measure what happens to the radioactivity when it gets into the body.




"If you can think of a diagnostic scan as a very small amount of radiation uniquely targeted to the disease process, or to the cancer to take a picture, then conceptually you can use the same strategy to deliver a very large amount of radiation to the cancer. So it's all part of the same spectrum," McEwan explains.

Dr. McEwan notes that the growth areas include oncology, neurology and cardiology, with potential expansion beyond those critical specialties.

As with most medical technologies, to get the full picture of nuclear medicine you must look at technological, regulatory, and clinical angles.

Technology angle

SPECT gamma cameras used in nuclear medicine represent the largest portion of the market for new and used equipment in this field, with 10,000 to 12,000 units in operation, followed distantly by new PET/CT and SPECT/CT systems. Stand alone PET is rarely sold now and the OEMs no longer produce new systems, although an installed base remains in service.

PET/CT is predominantly used in oncology - with cardiology and urology as two other growing applications. SPECT and SPECT/CT have high utilization in cardiology,with oncology and general imaging as additional diagnostic areas.

In terms of market trends, nuclear medicine technology has experienced a recent downturn by all accounts.

"Last year we experienced roughly a 28 percent decline in the overall [PET/CT] market. We also expect a further decline this year," observes Markus Lusser, Vice President, Global Sales & Marketing, Molecular Imaging Division, Siemens Medical Solutions. "This is definitely a result of the Deficit Reduction Act
and [reduced] reimbursement of PET/CT. But the [initial impact of] reimbursement is cleared now and we expect by the second half of this year a positive trend upwards."




"When you look at PET/CT, we see the [U.S.] market roughly in the $300 million range," estimates Henry Hummel, Global PET/CT General Manager, GE Healthcare. "What we felt in 2007 and 2008 was the post-DRAeffect. The entire market felt a pause for a period of time, where before DRA it was very healthy growth.... The good news is that procedures continue to grow, which is great because we really believe that PET/CT has a lot of benefit to patients in terms of giving them a better understanding of what treatments they might need."

The SPECT market is also essentially flat in unit sales but more promising in terms of capital investment dollars being earmarked for the technology, industry experts report.

"We see a strong trend toward higher-end diagnostic SPECT/CT-6 slice to 16 slices. And this is where I see a renaissance in the SPECT arena of higher utilization tied to the referring physicians and increased procedure growth," says Lusser.

The SPECT cardiac imaging market is likely to be driven by the prevalence of heart disease in an aging U.S. population. SPECT/CT is still somewhat new, but the OEMs such as Siemens are investing heavily in radiopharmaceutical research and development for applications specifically designed for SPECT/CT. To date, about one-third of new gamma cameras purchased are SPECT/CTs but it may be only a matter of time before this market gains wider acceptance.

"I see an explosion of the SPECT/CT market in the next three to five years if not sooner, driven largely by radiopharmaceutical companies doing research and development on new biomarkers and radiopharmaceutical tracers to target new approaches to disease detection in the SPECT/CTmodality," predicts Rex Lindsey, Director of Marketing and Sales, BC Technical, Inc., West Jordan, UT.

GE, which has more than 1,000 SPECT/CT installations worldwide, is focusing on scan speed and reduced radiation exposure as an important benefit of their SPECT/CT technology, as well as integrating prior studies with new CT studies. (Watch for the debut of their Volumetric Suite for the Infinia Hawkeye 4 Platinumat the SNMshow.) On the PET/CT side,GE's platform is pioneering motion-
free imaging to correct for patient breathing and heartbeat when tracking lesions and planning treatment.

Prices for new, dedicated SPECT gamma cameras start as low as $200,000. On the other end of the scale, a 16-slice SPECT/CT runs in the $1 million-plus range. An entry-level PET/CT can cost anywhere from about $1.2 million up to a top of-
the-line 64-slice CT hybrid at $3 million-plus. Note that the hybrid PET scanners typically incorporate CTs from an entry level 6 slices to high-end 64 slices. Since some facilities may use the full PET/CT functionality for only a handful of patients each day, the systems are also used as CT scanners, so CT performance is important. Refurbished gamma cameras (SPECT) are about half the cost of new.

Regulatory trends and business impact

Nationwide, many medical imaging centers have closed, but the fault may not lie entirely with Uncle Sam and the DRA.

"The Deficit Reduction Act has...started a culling process for those [imaging] centers who had overspent on technology, were over-financed, and both the lender and buyer expected the market to expand endlessly-sort of like the housing market," notes Wayne Webster, Owner, Proactics Consulting, Melrose, MA. "People were buying equipment they couldn't afford, financedby companies that knew they couldn't afford it....As soon as that market slowed they slid over the edge."

With the sales of new systems flat, the aftermarket is also affected. "The DRA has slowed things down considerably. I don't see as many systems coming out as I
used to...sales are slow. Nobody is buying anything new right now. They're not getting rid of even older systems," says Gary Midgen, Nuclear Medicine Product Specialist, Bay Shore Medical, Ronkonkoma, NY. "Acouple of years ago when we had a [stand alone] PET scanner, we had a piece of gold because nobody had them. Today nobody even wants them. We have to pay people to deinstall them. Now everybody wants PET/CT and those are not that abundant [in the aftermarket] because they're pretty new."

While new equipment sales are focused on the hybrid PET/CT technology, the installed base of stand-alone PET systems are often serviced by independent service providers.

"We are trying to offer a cost-effective alternative to Siemens PET and PET/CT parts, service and pre-owned equipment," says Joseph Sciarra, Vice President, Marquis Medical, Howell, NJ. "Even though all new sales are PET/CT, there are still a lot of customers nationwide that have the old stand-alone PET technology and that is where we excel with our parts inventory for Siemens. We have a number of systems and parts and we are still able to support a lot of the machines that Siemens doesn't. So even as PET goes away, you are still going to have people that keep PET for research and clinical [work]."

The industry is keen to understand when markets might recover. "The DRA has had a two-fold effect: One, it decreased the amount of money that freestanding imaging centers are spending on new equipment because the reimbursements aren't there to recoup their investments in the time frame they are used to," Lindsey says. "And two, as a consequence, because they are not purchasing new equipment, its appears that many groups are trying to extend the life of the current equipment that they have - trying to 'milk it' as much as they can before they are forced to upgrade or replace their existing equipment."

William Biddle, COO of BC Technical adds, "It used to be that facilities [had] the latest and greatest systems, but with DRA, not a lot of facilities do, so they market the capabilities they do have and meet with physicians' offices and outlying facilities to bring in business. The obvious priority is taking care of the patient, and uptime with the camera is paramount."

Mobile PET/CT is a popular configuration

Another way that healthcare providers are watching the bottom line is by using mobile units, often sharing this resource among multiple locations to bring PET/CT technology to patients.

"If you look at our Discovery platform, it is fully mobile compliant...so whether it's a fixed unit or goes into a mobile [trailer], it's the same system," says Patrick O'Day, GE Healthcare's Global Product Manager for PET/CT.
"We've designed the system to be robust to handle that type of environment. The
advantages for our mobile providers is that it gives the ability to provide service to places that may not have the procedure volume to justify a full purchase, but those patients have access to the care that they need."

The clincial angle and future prospects

In addition to the market for imaging equipment used in nuclear medicine, highly specialized technologies are required in the radiopharmacies that produce the isotopes, and in the "hot labs" in hospitals and imaging centers that handle the radioactive tracers. (See related story.)

"The market for straight nuclear medicine hot labs products is down because the PET market is down due to the DRA," confirms Gary Reich, President, Reich Consulting Services, Inc., Plantation, FL. The company builds hot labs that include shielding, casework, and calibration equipment for the safe handling of isotopes. He remains very positive about the future, however. "I am very optimistic because these diagnostic tests are very good. There are always going to be payment problems and challenges. But the fact is this technology is excellent. It helps take care of patients.And I see continued growth. There are always setbacks but long term it's a great industry."

Smaller OEMs also support the nuclear medicine lab markets. An example is Biodex Medical Systems Inc., Shirley, NY, makers of supplies and accessories, such as dose calibrators, thyroid uptake systems, and syringe shieldings. "Our products are driven by new developments, by what the big guys do," says Robert Ranieri, Vice President of Sales. "When PET came on the scene, we developed a whole new line of products to be used with PET isotopes. What really drives the PET business is the scanner sales. You don't need a hot lab unless you are buying a scanner. We have seen that marketplace kind of flat recently."

The promise of future applications and the potential of a "magic bullet" for cancer coming out of nuclear medicine is on the distant horizon and not a factor yet. "It takes a while. There are a lot of promising things out there but in order for it to affect us, it has to become a reality," Ranieri says of the therapeutic outlook.

Approvals of radiopharmaceuticals by government payors (Medicare) drive the market. Currently, the SNM is working with the FDA and National Cancer Institute on the next generation of radiopharmaceuticals. The human genome and super computing helps in the effort to target receptor sites to unleash the therapeutic potential of nuclear medicine in cancer treatment.

"The change in the future is that from a clinical perspective PET/CT is essential in diagnostic management of cancer. We expect that since clinical oncologists and other clinicians are seeing the results and changes in patient management, the increased utilization is just a matter of time. As the procedures grow, they will lead a recovery in the market," forecasts Siemens' Markus Lusser. The company's PET/MR development is also something to watch for in the future.

"PET/CT has become the standard of care. As we move beyond using the scan as a simple diagnostic tool and we're looking at a predictive assay, it may be that PET/MR is going to become more important," Dr. McEwan says.

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DOTmed Registered Nuclear Medicine Equipment Sales and Service Companies
Names in boldface are Premium Listings.

Domestic
Ted Huss, Medical Imaging Resources, CA
DOTmed Certified
Glenn Smith, Gamma Systems Services, CO
DOTmed Certified
Lawrence Smith, Numa, Inc., FL
David Denholtz, Integrity Medical Systems, Inc., FL
DOTmed Certified/100
Sergio Cabrera, TransPhoton Corporation, FL
Gary Reich, Reich Consulting Services, Inc., FL
Charles Gauthier, Imaging Services, IL
Paul Lilly, Mid-Atlantic Imaging Services, Inc., MD
Jeff Rogers, Medical Imaging Resources, Inc., MI
DOTmed 100
Tony Orlando, Complete Medical Services, MI
DOTmed Certified
Moldovan Teodor, Spitalul Municipal Reghin, MS
Christi Kukes, DMS Health Group, ND
Robert Manetta, Nationwide Imaging Services, Inc., NJ
DOTmed Certified/100
Joseph Sciarra, Marquis Medical, LLC, NJ
DOTmed Certified
Don Bogutski, Diagnostix Plus, Inc., NY
DOTmed Certified/100
Gary Midgen, Bay Shore Medical, NY
James Reiss, Biodex Medical Systems, Inc., NY
Peter Chen, Global Medical Equipment, PA
DOTmed Certified/100
Lee Kelly, American Allied Nuclear, TX
DOTmed Certified
Joseph Oliverio, Positron Corporation, TX
Rex Lindsey, BC Technical, Inc., UT

International
Rami Marom, ElsMed Ltd. & Relaxation, Inc., Israel
DOTmed Certified/100

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