The econonmics of ASV

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Resmed S9 AutoSet..................................Resmed Adapt SV

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Just some idle musings.

1. Other than the cute plastic housing a slightly different software algorithm, is there any real difference between, say, an $853+ S9 AutoSet and a $7000+Adapt SV ?

2. What were the approximate developmental costs for ResMed and Respironics to develop their ASV algorithms?
a) Under $500,000 dollars
b) Under $1,000,000 dollars
c) Under $3,000,000 dollars
d) Under $6,000,000 dollars
e) Over $6,000,000 dollars

3. What were the approximate manufacturing and marketing costs for ResMed and Respironics to introduce and market their ASVs in the marketplace?
a) Under $500,000 dollars
b) Under $1,000,000 dollars
c) Under $3,000,000 dollars
d) Under $6,000,000 dollars
e) Over $6,000,000 dollars

4. Why is this priced as a high-tier niche product?

5. What is the current gross sales, and net income for the ASV "department" of each company?

6. If ASV's flexibility and responsiveness can be show to be "useful" to the "average" end-user, and thus, a large demand created, will the high-tier cost remain the same?

7. Or, five years from now, will we find them selling on CPAP.com for around $1000?

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The following related statements made nearly five years ago by a particularly wise and helpful man, -SWS, still stand, in my opinion, as some of the most insightful comments I've ever read on this sort of subject:

by -SWS on Tue Mar 20, 2007 1:24 pm wrote:I personally expect Resmed's ASV machine to very nicely handle certain problems in physiology. But I personally don't expect (and never have expected) the PAV [Proportional Assist Ventilation] functionality of that machine to suit everybody. And I do suspect that adaptive-servo's rotational precision (not to be confused with ASV's PAV) will eventually find its way to more xPAP therapy platforms, when production volume for highly precise adaptive-servo motors goes up and relative cost goes way down. I personally think that BiLevel machines, and particularly auto-adjusting BiLevel machines, will stand to gain some functional benefits from greater rotational precision. However, with PAV machines, that rotational precision offered by adaptive-servo motor design is virtually indispensable. I say that not only because of the avoidance of ventilatory overshoot itself, but also because I personally suspect that a "physiologically defensive" pressure sensitivity just may exist in some patients (related to pressure slope, amplitude, and phase-lag itself). Right now adaptive-servo motor production is comparatively expensive, and understandably targeted for the PAV type machines where that rotational precision is essential.

Yet technical design objectives coupled with medical theory are but one untested ball of wax. Achieving those objectives in the real world are another thing entirely. So in theory Resmed wants to algorithmically drive that adaptive servo motor so that it mirrors patient respiration---as two well-synchronized figure skaters might perfectly mirror each other's moves. To suspect that always or even usually happens in the real world, without at least some form of empirical validation, would be merely unfounded expectations in my own opinion.

Then, of course, there's that medical theory that Resmed's ASV can correct all central apneas. Doug, much earlier in this thread you already expressed that you didn't believe that was even possible. And much earlier in this thread, when I related a clinically-conveyed ASV anecdote about "too much residual disease" I personally came to believe that Resmed's marketing claims about this machine were intentionally or unintentionally confusing/inaccurate. So when you get to the point of believing that Resmed's ASV is not suitable for everyone, then you must start rhetorically questioning and analyzing whether that platform is suitable for anyone who achieves less than desirable results. However, in my opinion we should always question efficacy achieved by any apnea therapy or xPAP platform---not just ASV.

I inserted the PAV definition above in brackets and italics, the only tampering I did with that work of art, as his posts invariably are.

I am curious to know if his views have changed in any significant way over the years on the matter, though.

viewtopic/t72583/viewtopic.php?f=1&t=11 ... 89#p157489

Rocklin, the ASV is priceless, though expensive, for those who need this kind of machine such as someone with cheyne-stokes respirations. No other machine is able to keep tidal volumn up to an acceptable level when this is the problem.

I agree my ASV is priceless when my patient triggered breaths go down to 5% but.... I wouldn't complain if the actual price came down to something reasonable.

Roc,
Try as I might..I'm still going to respond.

I recently read an article about the history of cpap. It was mentioned that essentially what you're paying for in the high end machines is the software algorithms. Hardware is essentially the same with a Remstar BiPap Plus and an auto servo ventilation advanced...the difference being in the software to drive the hardware.

There is always an increased cost in manufacturing with a product that has a small niche market. Think Ferraris vs Fords. So if everyone in the US needed an ASV, indeed they would be $299 in the WalMart electronics department.

Allow me to digress. We have all been outraged by a hospital billing $35 for two aspirin tablets. What's going on there is the hospital recouping expenses for which there is no obvious way to bill the customer. Heating and property tax for the hospital building...that sort of thing. Same thing for ASVs. ASV costs are high because few are sold, and for the most part they are insurance billed. And yes, there's profit involved...that's the core of our economic system.

If someone needs an ASV and can't afford one, there's the black market (Craigslist). I bought a Respironics BiPap auto servo ventilation advanced unit for $450 a few months ago (zero hours). They don't hold their price like a used Ferrari would. So there are options.
Cheers,
Jamis

teknomom wrote:I agree my ASV is priceless when my patient triggered breaths go down to 5% but.... I wouldn't complain if the actual price came down to something reasonable.

Unrelated to this thread...if your patient triggered breaths are at 5%, I would think that your BPM setting is too high (unless it's set on auto). Your machine is functioning as a ventilator.
J

jamiswolf wrote:

teknomom wrote:I agree my ASV is priceless when my patient triggered breaths go down to 5% but.... I wouldn't complain if the actual price came down to something reasonable.

Unrelated to this thread...if you're patient triggered breaths are at 5%, I would think that your BPM setting is too high (unless it's set on auto). Your machine is functioning as a ventilator.
J

It's on auto. I go to see the NP tomorrow (1st followup visit) and will have lots of questions. The PTB only hits 5% for short periods but is fairly low during wake/sleep transitions.

Technomom wrote: It's on auto. I go to see the NP tomorrow (1st followup visit) and will have lots of questions. The PTB only hits 5% for short periods but is fairly low during wake/sleep transitions.

I would ask if a lower manual setting might be better. I use a machine that also has a BPM rate (BiPap ST) and found that the usual settings of 2 bpm below normal rate was way to high. Do the math. BPM rates are calculated from beginning of one breath to the next. If your BPM is set at 10...that's 6 seconds a breath...then subtract the inspiration and exhalation time. That only leaves a couple of seconds before the machine breathes for you.

I set my BPM to 6 and get mostly 98% to 99% patient initiated breaths. Maybe it's just me, but I feel it's better to allow my body to initiate as many breaths as possible and only have the machine step in when absolutely necessary.
Jamis

rocklin wrote:...
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Resmed S9 AutoSet..................................Resmed Adapt SV ...

Okay, I'll play along. After all, you ask some basic ... fundamental questions about the free enterprise system.

rocklin wrote:...
Just some idle musings.

1. Other than the cute plastic housing a slightly different software algorithm, is there any real difference between, say, an $853+ S9 AutoSet and a $7000+Adapt SV ? ...

As you've seen there are some HUGE differences between the ASV unit and an AutoSet (CPAP unit).

• BiLevel instead of one pressure.
• Adaptive Servo-Ventilation instead of one set top pressure.

And that ventilation mode is CRITICAL for those of us, who need it. When I fall asleep, I *STOP* breathing. Oh, I eventually resume once I am fully asleep. But I can (and do) stop breathing for a minute or two at a time. I would be dead by now, if I did not have my ASV unit. I had uncontrolled high blood pressure. It (and the Ibuprofen I took for the headaches) led to permanent kidney damage ... all because some ass of a doctor thought "Oh, Central Sleep Apnea is rare, so you can not have it?" I finally found a doctor who would test for it and found ... that I do have central sleep apnea. My blood pressure is now under control. But I have no doubt I would have died without it.

Just because you don't need it, does not mean that what others go through on a daily basis is not real. Trust me, you would find the experience unpleasant. Ive gone from just needing a CPAP to needing an ASV unit. I would give up everything to go back to just needing CPAP!

rocklin wrote:... 2. What were the approximate developmental costs for ResMed and Respironics to develop their ASV algorithms?
a) Under $500,000 dollars
b) Under $1,000,000 dollars
c) Under $3,000,000 dollars
d) Under $6,000,000 dollars
e) Over $6,000,000 dollars ...

I honestly don't know what the costs were. I suspect it took much more than what you would expect (including the overhead of the corporation ... which like it or not, the projects such as this must cover). There were numerous studies to find how to better treat central sleep apnea and then complex sleep apnea. Those studies require a LOT of man power to monitor, manage and produce the reports. Then the governmental approval process (in many nations) takes a HUGE amount of effort. I've worked in the computer industry side of this and you would be amazed at the amount of data required by governments to obtain the approval for a medical device. While it might seem excessive, it helps protect us from junk that would harm us more than help. These costs typically do mount into the millions of dollars.

rocklin wrote:... 3. What were the approximate manufacturing and marketing costs for ResMed and Respironics to introduce and market their ASVs in the marketplace?
a) Under $500,000 dollars
b) Under $1,000,000 dollars
c) Under $3,000,000 dollars
d) Under $6,000,000 dollars
e) Over $6,000,000 dollars ...

I suspect the marketing and manufacturing costs were much less than you would think. The marketing is very focused toward a small audience (the medical doctors and DMEs that deal with these devices). There are costs for them associated with learning about the technology and how to apply it. Some of that cost is the marketing effort (free seminars, etc). However, compared to many other industries, the market is quite small. So, these companies had less involved in the marketing than a new car launch, as an example.

rocklin wrote:... 4. Why is this priced as a high-tier niche product? ...

Ah, you are assuming this is a "high-tier" niche product. It is a niche product. Most people with sleep apnea find that their problems are solved with a CPAP unit. Some people need to use a BiLevel device to address their needs. A fewer still find they need an ASV (or other) unit to address their needs. In general, if a less complex method will address the problem, that should be used. CPAP is the least complex. If it solves the issue, then use it. If not, add the next level of complexity (BiLevel). Does it fully address the problem? No. Then add more complexity.

Unfortunately, as the size of the market shrinks (the number of people that need an ASV unit is much smaller than CPAP), the economies of scale decrease.

However, even with this, both Respironics and Resmed attempt to leverage the economies of scale for their other products. That is, the ASV units for both manufacturers are built on the same basic shape and design as their CPAP and BiLevel units. This reduces the manufacturing and design costs.

rocklin wrote:... 5. What is the current gross sales, and net income for the ASV "department" of each company? ...

I honestly don't know. However, I would estimate that 60 to 70 percent of the potential market (people with sleep disorders) have their needs met with a CPAP device. Another 20 to 25 percent find an BiLevel unit satisfies their need. The remaining 5 to 10 percent find that an ASV or AVAPS or other "niche" product helps meet their needs.

rocklin wrote:... 6. If ASV's flexibility and responsiveness can be show to be "useful" to the "average" end-user, and thus, a large demand created, will the high-tier cost remain the same? ...

Why did Ford win out over all the other early competitors in the car industry? Because they provided an inexpensive vehicle that met most peoples needs. It was not fancy. It did not do everything. Most people did not need it to do everything.

So, it is with xPAP devices. The larger the market, the more the costs of the device can be spread across market. So, a CPAP device is lower cost than an ASV unit ... simply because the market is large enough for CPAP to spread the cost. There is a smaller markup on CPAP devices.

You are right. If the ASV mode was right for everyone and we did away with CPAP and BiLevel devices it would cost less. But why add complexity to the therapy if it is not needed. And trust me, it takes a LOT to get used to ASV therapy (in comparison to CPAP). If it's not needed, don't build it into the device.

rocklin wrote:... 7. Or, five years from now, will we find them selling on CPAP.com for around $1000? ...

We probably will. That's the natural pressure that comes from increased competition. I bought a used device as a backup device. It cost a LOT less than the original device. It's not the System One device. But who cares? It does the job.

But one final question? Why do you care? If the device meets the need that its market requires, who cares? I know I sure don't. I would have paid for it myself if required. It was cheaper than the inevitable heart attack or stroke would have been for me.

Anyway, that's my two cents ...

rocklin wrote:.
4. Why is this priced as a high-tier niche product?

Please define what you mean by "high-tier niche product".

My understanding is that the ratio of ASV users to regular CPAP and BIPAP users is 1:500. Yet the cost is only 10-20 times as expensive. Considered that way, the cost is not too outrageous. If there were 500 times the demand? Sure, I bet they could come down in cost by a factor of 20.

Hi all.

I think some posters misunderstood me.

I don't doubt the value of ASV to those who use it.

But as jamiswolf pointed out: the hardware is essential the same.

rocklin wrote:. . . the hardware is essential the same. . . .

I am not a scientist, an engineer, or an expert of any sort on this stuff, but my understanding has always been that there are significant differences in the hardware too, such as in the nature of servo motors, the nature of the sensors needed, and the processing power needed to feed info to the algorithm in a timely fashion, because of what an ASV is designed to accomplish in real time.

Then again, maybe I have no idea what I'm talking about. If so, though, I have a feeling I'm not the only one.

rocklin wrote:
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Resmed S9 AutoSet..................................Resmed Adapt SV

The AutoSet on the left is the S9 generation. The prior-generation Adapt SV on the right was replaced by this newer S9-generation equivalent:
http://www.resmed.com/us/products/s9_vp ... clinicians


Jnk, my understanding is that Resmed started using the same servo motors on AutoSet when Easy Breathe was introduced. My opinion still stands that adaptive/auto servo ventilation will nicely solve certain types of SDB issues---central dysregulation and perhaps tolerance type issues in some cases. I understand Dr. Krakow is presently exploring ASV for SDB issues beyond central dysregulation. I think that's excellent and necessary work. However, I think we already know that ASV in its present form can never treat all SDB problems.

The question is whether ASV can consistently treat obstructive SDB better than CPAP, APAP, or traditional BiLevel. I think the jury's still out regarding epedemiology. Cancel that statement... The jury has yet to convene IMO....

-SWS wrote:

rocklin wrote:
____________
Resmed S9 AutoSet..................................Resmed Adapt SV

The AutoSet on the left is the S9 generation. The prior-generation Adapt SV on the right was replaced by this newer S9-generation equivalent:
http://www.resmed.com/us/products/s9_vp ... clinicians


Jnk, my understanding is that Resmed started using the same servo motors on AutoSet when Easy Breathe was introduced. My opinion still stands that adaptive/auto servo ventilation will nicely solve certain types of SDB issues---central dysregulation and perhaps tolerance type issues in some cases. I understand Dr. Krakow is presently exploring ASV for SDB issues beyond central dysregulation. I think that's excellent and necessary work. However, I think we already know that ASV in its present form can never treat all SDB problems.

The question is whether ASV can consistently treat obstructive SDB better than CPAP, APAP, or traditional BiLevel. I think the jury's still out regarding epedemiology. Cancel that statement... The jury has yet to convene IMO....

THANKS, -SWS!

Very helpful and interesting, as always, and very much appreciated.

Any thoughts on the marketplace-economics question, or no?