Accolades, marketing deals for RTI safety needle : a 'vindication' of faith in VanishPoint technology

Health Industry Today, Nov, 1999

In the wake of the safety needle legislation that is sweeping the country, and an uphill tack against the difficult winds of the device marketplace, it would appear that Retractable Technologies, Inc.'s ship may have finally come in. The Little Elm, Texas-based manufacturer of safety syringes recently received ECRI's "preferred" rating for its VanishPoint syringe, the only such device to be awarded the highest rating by Health Devices, ECRI's monthly journal.

In its October report, ECRI said "We rate the Retractable Technologies' VanishPoint syringe highly because it offers excellent protection against needle sticks and is easy to use. It features pre-removal activation of the safety mechanism, which protects the user from the injection needle as it is withdrawn from the patient." ECRI also credited the cost-effectiveness of the device, admittedly more expensive than conventional, non-retractable syringes. "We consider the relatively high cost to be justified by the level of protection offered in comparison to the other available alternatives," said ECRI in its ratings of four new needlestick-prevention devices (NPDs) and 13 previously evaluated models. The accolades came in the wake of Retractable's signing of a GPO contract with HSCA, the revelation that Premier has put the product under contract and that Novation is doing a site evaluation in anticipation of what Retractable Technologies hopes will be yet another sales deal. For the company that has struggled hard to earn its place in the sun, the recent good fortune has been a long time coming but is especially welcome. "This is something of a vindication for us," says Lillian E. Salerno, executive vice president of the firm. Swimming upstream Company CEO and COO Thomas J. Shaw formed the company in 1994 following his realization that accidental needlesticks within the medical community were responsible for the transmittal of AIDS and other maladies. A mechanical and civil engineer, Shaw determined that in a perfect world the perfect syringe would function like a standard syringe, except that the needle would retract automatically immediately after use. With no accessible needle, Shaw reasoned, the danger of reuse or accidental needlestick would be eliminated. After a year of developing preliminary design concepts, Shaw was awarded a grant from the National Institute of Drug Abuse, and following several phases of development the product became a reality. Shaw formed the company, along with business partner Salerno, and adopted the business philosophy that the spread of infectious disease through sharing of contaminated needles and accidental needlesticks could and should be stopped. The company wasn't alone. As reported in the August, 1999, issue of Health Industry Today, the market for safety needles received a massive shot in the arm with the adoption or drafting of safety needle legislation in 30 states mandating the use of the devices. The groundswell of sentiment demanding protection for health care workers, first adopted in California and enacted July 1, 1999, is expected to encompass every state in the union in the future. Cal/OSHA, the state agency responsible for the passage of the legislation, cited "Emerging technologies for needleless sytems, and needles and other sharps devices with engineered sharps injury protection (e.s.i.p.)" as one of the major reasons for introducing the initiative. The RTI system is widely regarded as being a prime mover. Aimed at eliminating needlestick injuries, that now exceed 800,000 reported cases annually, the new safe needle laws typically require hospitals and other health care facilities to purchase the safest available syringes and blood collection devices. Under that kind of benign umbrella, it is no wonder that industry giants like Becton Dickinson (now known as BD), Franklin Lakes, N.J., scrambled to bring the devices to market. The implications were staggering. Industry reports estimate the sharps market at six billion, 600 million units annually in the U.S. alone and worldwide at 12-13 billion. That same report says those safety products comprised 7% of the market in 1997, 10% in 1998, and estimates the safety syringe market at 30% in 1999. Total conversion is expected by 2002. The report also anticipates that the market will drive prices sharply downward. For conventional syringes, the price in 1997 was approximately 11 cents apiece. By 2001, the price will be 9 cents and the market will be mature and shrinking. But for safety needles, the 1997 per unit cost of 30 cents is expected to be halved, or 15 cents, in 2001. BD is said to control upwards of 80% of the world market for safety syringes, Other big players, like Johnson & Johnson, New Brunswick, N.J., and Terumo of Japan, hold substantial percentages. But for every big participant in the safety needle arena there are a dozen smaller players, like Retractable Technologies, looking to gain a foothold. And there appeared to be forces extant that kept that from happening. Dealing with the big guys In May of 1998, Shaw appeared on a national broadcast of NBC Nightly News, claiming that the ability of a small manufacturer with a niche product was limited by the processes that determine hospital purchasing. Shaw contended that because of long-term contracts signed by GPOs with the large companies that sell needles and syringes, health care workers were being denied the use of safer products. He placed the blame on the GPOs that have contracts with 80% of all U.S. hospitals. "We can't get hospitals to talk to our sales reps," he said at the time. "No one can discuss needles. It's wrong, it's unfair, and it's illegal." Shaw's was hardly a voice in the wilderness. For years, small manufacturers have claimed that the playing field is not level. GPOs, some say, have made it more difficult for small companies to get their products into the marketplace. For their part, GPOs often question the ability of a small manufacturer to meet the volume and servicing demands placed on a smaller company when it receives a big order. Boosters claim that GPOs have saved hospitals about 5% of spending on commodity products and over 25% for high-tech equipment. But critics argue that by removing purchasing decisions from clinicians and discouraging product innovation, quality and safety may be jeopardized and medical professionals and patients are being put at risk. Pushing the market envelope RTI was forced, with a production rate in mid-1998 of two syringes per second, to concentrate its sales efforts on public hospitals like the Veteran Affairs system through its Federal Supply Schedule contract. At the time, the company said it had the capacity to meet heightened demand if the company was able to sell its products to a large GPO base. Now, it appears, that promise is a reality. RTI's Shaw says that the recent ECRI findings are a major boost for automated needle technology and represent an important step to worldwide conversion to effective, safe and non-reusable needle devices, a philosophy the company helped pioneer. He added that, "Retractable Technologies is now poised to capture a large segment of the world's syringe sales."