Interview with Jim Miller President of COCHLEAR AMERICAS

AO/Beck: Hi Jim. Thanks for your time today. Before we get to issues involving cochlear implants and Cochlear Americas, if you don't mind, would you please tell me about your education and professional background?

Miller: Sure. My undergraduate degree was in chemistry at the University of Denver back in 1977. I worked for Johnson & Johnson for a number of years and then I went back and enrolled in an executive MBA program at DU. After that, I was transferred to San Diego where I continued my MBA at the University of San Diego but the main reason I moved to San Diego was to take the position of Vice President of Sales and Marketing for IMED.

AO/Beck: How long were you with IMED?

Miller: I was with IMED for six years. After that, I was recruited to be the Senior Vice-President of sales and marketing for a biomedical company. We were using relatively high-tech biosensors for critical care blood gas and electrolyte testing at the bedside. I was their Senior Vice-President for 5 ½ years.

AO/Beck: And then after that you took the helm at Cochlear?

Miller: Right. I came to Cochlear three years ago.

AO/Beck: What was it that got you involved with cochlear implants?

Miller: I was very intrigued by the unique technology that Cochlear has developed and the impact it can make on the quality of life for someone with a hearing loss. Also, this is a very interesting field in terms of market size and the growth potential in front of us.

AO/Beck: What has been the largest challenge you've faced as President of Cochlear America's?

Miller: Well the challenge that we're still facing is removing the barriers, which prevent us from providing this technology to the large number of people that could benefit from a cochlear implant. We have a relatively low market penetration in both the children and adult segment of the industry.

AO/Beck: My impression is there's about a half million people in the USA that are eligible for a cochlear implant in terms of their type and degree of hearing loss. Is that about right?

Miller: That's correct.

AO/Beck: And I guess across the world there could be 2 to 3 million people who might be potential cochlear implant candidates?

Miller: Yes, those numbers are consistent with our estimates. Worldwide, there are about 70,000 people who have been implanted, and we recently announced that Cochlear has implanted our 50,000th Nucleus recipient.

AO/Beck: Why is it that more people aren't getting cochlear implants?

Miller: That's an excellent question. There are two primary barriers that need to be addressed. One is the awareness of excellent outcomes that can be achieved through a cochlear implant. There are many people that still think cochlear implants are basic, crude devices delivering only temporal and loudness cues. Of course, the reality is quite the opposite. The second issue has to do with funding and reimbursement. Medicaid funding is very low and in some cases non-existent for cochlear implants in a number of states. In addition there are restrictions in terms of Medicare funding. Even though Medicare has recently increased their reimbursement, effective January 1, 2004, it still doesn't cover the basic cost of the device, so we're going in the right direction, but we're not there yet.

AO/Beck: The cost is not trivial, but then again, it's also a matter of perspective. A cochlear implant costs about the same as the average new car, and although that is a lot of money in terms of cash, it seems like a bargain!

Miller: I agree. There have been studies, such as the Project Hope study and work by Dr. John Niparko at Johns Hopkins regarding quality of life issues, and these are important considerations when we look at costs. You have to look at the overall cost and benefit for society too, and not just the up front cost for the device itself. In other words, many thousands of people with cochlear implants live productive lives, and they contribute a great deal to society. There's more at stake here than just a dollar-by-dollar cost analysis. Cochlear implants positively impact the quality of life of the patient, and those that interact with that individual receive benefit too, as does society! If one were to try to estimate the cost in dollars for professional services, prosthetics and all hearing healthcare costs for the average deaf person, across their lifetime, the estimated cost is about $900,000.

AO/Beck: All good points, thank you! Please tell me about the Graeme Clark Cochlear Scholarship Fund?

Miller: We recently initiated the Graeme Clark Cochlear Scholarship Fund. It started a year ago. Each year we'll provide three, four-year scholarship awards to cochlear implant recipients from North and South America. These are students with cochlear implants that are going to get their college education. We established this scholarship fund to recognize the fantastic results these kids are receiving academically, while using their Nucleus cochlear implants. The families come to Walt Disney World for the awards, and it really is a fabulous event. In fact, at Epcot there's a cochlear exhibit in the Innoventions Area which highlights cochlear implants.

AO/Beck: And if you don't mind, can you review some of your new products?

Miller: Sure. We have a new product called Streamlined Programming. It allows the audiologist to streamline the whole fitting process to achieve optimal results in the shortest period of time. For follow-up fittings, if you follow the protocols we've established, you can reduce programming time down to a total of 20-30 minutes, which is our goal. Then sometime in the near future, we'd like to progress from the Streamlined Fitting to more of an automated process. When we get to that point, an implant recipient could come in, sit down and, if it's a competent adult or a teenager, in 15-20 minutes through interaction with a program, they could automatically get to their first map. We have a number of projects in the works, that are promising and within the next 12 months we'll be able to have some of them in broad scale clinical trials, here in the United States.

AO/Beck: How has the introduction of the behind-the-ear (BTE) devices impacted the marketplace? What percentage of new devices are behind-the-ear?

Miller: The ESPrit 3G is the BTE unit, and it has been extremely successful for us, and most of our Nucleus implant systems now go out with the ESPrit 3G processor. We fit most of our systems with two processors at the time of sale. Generally, for children, we send a body worn processor and an ear level processor. For most adults, our systems ship with two ESPrit 3G's. BTE technology for cochlear implants is quickly advancing. For instance, our ESPrit 3G has several unique features like a built-in telecoil to use with hearing-aid compatible phones, a Whisper Setting to boost soft sounds and just recently we have introduced an FM adaptor that allows the recipient to take advantage of wireless FM technologies.

AO/Beck: What timeline do you envision for completely implantable cochlear implants?

Miller: That's a good question. The technology has progressed significantly and we've overcome all of the significant technical hurdles. For example, when you implant that device, the rechargeable battery needs to last for at least 20 years. Obviously that's a significant technical challenge, but we feel we've overcome that. The other challenge is the implantable microphone. We have some unique technology there. So we're currently bringing all the elements of the system together and we think within the next 2 to 3 years we'll be implanting humans with totally implantable devices that we can study and then, make revisions, modifications, and enhancements.

AO/Beck: And lastly, can you address the issue of backwards compatibility ?

Miller: We have 50,000 implant recipients, and with that comes a great responsibility. Our company's platform is that we make new technology compatible with previous generation devices. So, in accordance with that, we are just in the process of releasing the ESPrit 3G for Nucleus 22 users. So it will be backwards compatible for previous users, as well as new users, to bring ear level BTE technology to all the Nucleus 22 users. In addition, we are committed to improving outcomes with every patient over their lifetime. With the introduction of the ESPrit 3G, Nucleus 22 recipients will now have access to all of the new features I previously mentioned. That means it is easy for them to access new benefits without additional surgery.

AO/Beck: Thanks so much for you time this morning. I appreciate your thoughts and the updates you've provided us.

Miller: Thank you too Doug. It's been fun for me and I appreciate the opportunity to tell your readers a little about our products and technology.

Click here to visit the Cochlear Americas website.