Weak Sales, Regulator Warning, Mounting Injury Reports, Litigation Plague Intuitive Surgical

intuitive_sales_dropIntuitive Surgical, the developer of the da Vinci surgical robot system has dropped its stock price significantly in the face of stalled sales, a warning from federal regulators, and mounting injury reports and litigation.

In this year’s second quarter, Intuitive Surgical reported lower-than-expected earnings with revenues only growing by 8 percent, which was significantly lower than prior year earnings, which were seen in the high-teens, according to Trefis.

Cost benefit concerns and a warning letter from the U.S. Food and Drug Administration (FDA) have dealt a hit to the stock, due to, in part, according to Trefis, to United States hospitals lack of enthusiasm to purchase the system following a study conducted by Columbia University. The research revealed that the da Vinci cost-benefit ration for hysterectomies was not very favorable with the procedures costing $2,189 more than laparoscopic hysterectomies, with all else being equal. Since release of the report, according to Trefis, there has been a decline in da Vinci hysterectomies.

da Vinci sales dropped for the first time in the past three years. The situation is not expected to change any time soon and da Vinci management indicated that growth is expected to be seen in the 0-7 percent. Trevis reported that, based on these new developments and weak earnings, it has dropped its price estimate from $600 to $450.

As we’ve written, in the face of growing patient injuries, some hospitals are opting against using the technology, which is expensive—nearly $2 million. In fact, oncologist Dr. Ezekiel Emanuel, a former White House adviser, agreed with a 2012 op-ed piece published in The New York Times saying, “This is a pseudo-innovation … a technology that increases costs without improving patients’ health,” The Monterey Herald reported. According to Dr. Emanuel, a 2009 study revealed that although patients who underwent prostate surgery with the da Vinci experienced reduced hospital stays and less initial complications, such as blood loss, they experienced increased incontinence and erectile dysfunction later.

da Vinci training protocols have also come under fire. Dr. Jim Hu, chief of minimally invasive surgery at the UCLA Medical School, urology department, performed over 1,500 da Vinci surgeries and has conducted many studies of the da Vinci. Dr. Hu explained that it takes some 250-700 procedures for a surgeon to master the da Vinci, according to The Monterey Herald. Not all hospitals mandate that surgeons conduct this many training procedures—so-called “proctored” surgeries and Intuitive only provides surgeons with two days of training.

According to a report published in the Journal of Urology and discussed in The Wall Street Journal, a hospital would need to conduct about 520 da Vinci surgeries annually to ensure that robotic surgery costs remain consistent with non-da Vinci procedures. “Robotic surgery is clearly associated with higher costs, without any clear advantages,” said Dr. Jason Wright, a gynecologic surgeon and an author of a Columbia da Vinci study.

The U.S. Food and Drug Administration (FDA) recently criticized Intuitive Surgical saying that the device maker never reported the steps it took to protect patients from accidental electrical burns, according MedScape Medical News, citing a May 30 FDA inspection report. The report followed agency inspections conducted in April and May.

Personal injury lawsuits brought over the da Vinci allege that the system caused severe internal injuries such as burns, tears, and other complications. Some procedures have led to chronic pain, disability, or death. Lawsuits also blame Intuitive’s aggressive marketing tactics, which appear to be meant to urge hospitals to purchase the expensive robotic device, and allege that design flaws inherent in the da Vinci, as well as poor physician training on the device, have been tied to serious injuries. Some 89 deaths have been associated with the da Vinci robotic surgical systems since 2009.

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