Last year was a boom time in the multibillion-dollar market for implantable medical devices that use electricity to treat chronic pain, and no wonder — public concern over the opioid abuse epidemic was piquing strong interest in nonaddictive long-term therapies for pain relief.

So what happened? Opioid concerns haven’t waned in 2019, but sales of surgically implantable “neuromodulation” devices have. 

The four biggest makers of devices that deliver electric stimulation to the spinal cord to interfere with pain signals have seen quarterly sales growth in that market stall or even decline this year. Executives at large manufacturers with big local operations like Medtronic, Abbott Laboratories, and Boston Scientific, as well as smaller companies around the country focusing solely on neuromodulation, have offered many theories for the stall, from a lack of new product launches to reluctance from insurers.

“I’m kind of like a little embarrassed [that] industry, our competitors and ourselves, don’t have a more specific answer as to what is driving in the short term,” said future Medtronic CEO Geoff Martha, who spoke to stock analysts in an Aug. 20 earnings call. “I think this is a very innovation-sensitive market and we had a lot of innovation coming out in a pretty condensed period of time from us and our competitors. And now it’s come down a little bit.”

A spinal-cord stimulator (SCS) is a long-term implant that includes a rechargeable battery inside a “pulse generator” that looks similar to an older-model pacemaker, plus a thin insulated wire called a lead that delivers mild electric current to locations near or on the spinal cord. No one has definitively proved the biological mechanism of action, but neurostimulators like SCS devices are generally thought to change the way the brain processes pain signals by interfering or blocking the signals as they travel up the spinal cord.

Medtronic, run from offices in Fridley, is the industry pioneer and remains a dominant player, with its neuromodulation devices for pain comprising more than $1.2 billion in sales in the fiscal year that ended last April. Chicago’s Abbott Labs leapt into the field in 2017 by acquiring Minnesota devicemaker St. Jude Medical, whose neuromodulation portfolio accounted for more than $850 million in revenue last year. Boston Scientific, with major operations in the Twin Cities, sold more than $775 million neurostimulation devices.

In the most recent quarter, Medtronic reported its first sales decline in nearly two years, down 7%, while Abbott has had three consecutive quarters of declines. Boston Scientific reported just 1% growth last quarter.

All of those sales figures include other neuromodulation devices beyond just spinal-cord stimulators for chronic pain, making the market fairly “opaque,” in the words of Nevro CEO Keith Grossman.

Nevro is a California-based company that exclusively makes neuromodulation devices, and sold more than $375 million worth of them last year. Grossman, who has overseen acquisitions of two past med-tech companies where he was CEO, took over the reins at Nevro in March with a pledge to “advance the company into its next phase of growth.”

Another smaller neuromodulation company called Nuvectra, based in Texas, announced last month that it is hiring Piper Jaffray as a financial adviser as it explores strategic alternatives to enhance shareholder value, including outright sale of the company.

Despite declining sales growth, no one in the industry believes that demand for the devices is declining among the people who could get them to treat conditions like chronic severe back pain and diabetic neuropathy. If anything, the market remains “under penetrated,” they insist.

BMO Capital Markets surveyed physicians who implant the devices earlier this year, and came away with a positive view of the neuromodulation market, giving an outperform rating to Abbott, Boston, Medtronic and California’s Nevro.

The 25 doctors in BMO’s neuromodulation survey said they expect their implant volumes to grow next year.

“This survey indicates … the U.S. SCS market is still quite healthy with underlying volume trends steadily increasing,” BMO analyst Joanne Wuensch wrote in a note to investors. “Physicians generally have good patient outcomes with their SCS devices.”

That was in contrast to an unflattering portrait published last November by the Associated Press, in conjunction with the International Consortium of Investigative Journalists. The report said the fast-growing product niche accounted for more than 80,000 “medical device injury reports” filed with the U.S. Food and Drug Administration since 2008 — the third-highest total of any medical device category.

“The stimulators ... are more dangerous than many patients know,” the AP reported in a Nov. 26 article.

The North American Neuromodulation Society (NANS), an industry trade group based in Chicago, said last year in a letter that the AP article provided “a mischaracterized account” of the therapy by overlooking positive results and omitting medical details from the negative accounts highlighted in the article.

The NANS letter, signed by President Dr. B. Todd Sitzman, said that about 60,000 spinal-cord stimulators were implanted in the U.S. in 2016, and one-third of those patients would go on to experience a complication, most of which would be minor.

Rates of early complications like infection and hematoma are comparable to other implantable medical devices, and make up the large majority of issues, he wrote. Longer-term complications, like having device components move or fracture under the skin or problems with the battery, were rare. Severe problems like paralysis happen less than 1% of the time.

Dr. James V. Anderson, a pain-management doctor with Fairview Health, said he hasn’t seen any decline in patient interest in the therapy. If anything, the slumping sales figures for spinal-cord stimulators seemed to contradict his personal experience.

“I’m surprised that sales would fall off. In our clinic, it has slightly picked up, as we’re trying to get people off narcotics,” Anderson said.

A spokeswoman with Boston Scientific noted that the company has been hearing from doctors that insurers are taking longer to authorize implants of neurostimulators. She added that a lack of new device launches or fresh clinical data could be contributing to a slowdown, which the company sees as temporary.

“Given that more than 100 million Americans suffer from chronic pain and it is the number one cause of disability in adults in the U.S., it is important that those suffering from chronic pain have access to a range of treatment options that are clinically indicated to improve outcomes,” spokeswoman Rochelle Silsbee wrote in an e-mail.

Both Medtronic and Nevro noted that purchasing practices by health care providers influenced recent results. A Medtronic spokeswoman noted that, when sales of SCS devices were growing, hospitals and clinics built up a surplus of products in their stockrooms and “the slowdown of the market has left some customers with product still on shelf and implants occurring more slowly.”

Nevro’s Grossman told investors earlier this year that sales figures were affected by the recent decision to end some bulk-discount programs for large-volume buyers. The company is also retooling its sales strategy, by changing compensation and putting more emphasis on getting patients to use the temporary “trial” stimulators that can drive demand for long-term implants.

“To me, this is a really large market. Probably most of the patients are still untreated or certainly undertreated,” Grossman said. “The fundamentals usually kind of carry the day, and I suspect they will here.”