Placing a Price on Medical Device Innovation: The Example of Total Knee Arthroplasty

BACKGROUND: Total knee arthroplasty (TKA) is common, effective, and cost-effective. Innovative implants promising reduced long-term failure at increased cost are under continual development. We sought to define the implant cost and performance thresholds under which innovative TKA implants are cost-effective. METHODS: We performed a cost-effectiveness analysis using a validated, published computer simulation model of knee osteoarthritis. Model inputs were derived using published literature, Medicare claims, and National Health and Nutrition Examination Survey data. We compared projected TKA implant survival, quality-adjusted life expectancy (QALE), lifetime costs, and cost-effectiveness (incremental cost-effectiveness ratios or ICERs) of standard versus innovative TKA implants. We assumed innovative implants offered 5–70% decreased long-term TKA failure rates at costs 20–400% increased above standard implants. We examined the impact of patient age, comorbidity, and potential increases in short-term failure on innovative implant cost-effectiveness. RESULTS: Implants offering ≥50% decrease in long-term TKA failure at ≤50% increased cost offered ICERs <$100,000 regardless of age or baseline comorbidity. An implant offering a 20% decrease in long-term failure at 50% increased cost provided ICERs <$150,000 per QALY gained only among healthy 50–59-year-olds. Increasing short-term failure, consistent with recent device failures, reduced cost-effectiveness across all groups. Increasing the baseline likelihood of long-term TKA failure among younger, healthier and more active individuals further enhanced innovative implant cost-effectiveness among younger patients. CONCLUSIONS: Innovative implants must decrease actual TKA failure, not just radiographic wear, by 50–55% or more over standard implants to be broadly cost-effective. Comorbidity and remaining life span significantly affect innovative implant cost-effectiveness and should be considered in the development, approval and implementation of novel technologies, particularly in orthopedics. Model-based evaluations such as this offer valuable, unique insights for evaluating technological innovation in medical devices.