January 2012

Whither medical innovation? Mixed bag for U.S. innovators. It's true that U.S. medical innovation has been dealt some setbacks recently. But while the news is glum, there is cause for hope, says Kelly Slone, vice president, federal life science policy and political advocacy, National Venture Capital Association, and director of NVCA's Medical Industry Group. Innovation scorecard for 2011. How did medical innovators fare in 2011? Not so well. This fall, for example, Scale Venture Partners announced it would cease healthcare investing permanently. The company's decision followed by one week a decision by Morgenthaler and Advanced Technology Ventures, long-time, established funds, to spin out their healthcare investment practices; and by one month a decision by Prospect Ventures to forego raising a fourth healthcare fund and return committed capital to limited partners. >> Join IMDA Now and Read More. Prove it! Consultant Winifred Hayes is convinced of one thing. Whether Obama gets re-elected or not, or whether the Supreme Court strikes down key provisions of the healthcare reform act or not, one thing won't change: Providers will continue to strive for quality-based, evidence-based healthcare. And that means they'll continue to demand evidence from their suppliers about the efficacy and value of the medical devices and equipment they sell. >> Join IMDA Now and Read More.

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Mixed bag for U.S. innovators Good news, bad news from FDA and policymakers

It's true that U.S. medical innovation has been dealt some setbacks recently. (See related article below.) But while the news is glum, there is cause for hope, says Kelly Slone, vice president, federal life science policy and political advocacy, National Venture Capital Association, and director of NVCA's Medical Industry Group, or MedIC.

For one thing, Food and Drug Administration officials are at least talking about the importance of preserving innovation, she says.

Last year, MedIC called for the Department of Health and Human Services to 1) devise a more expeditious process for approving novel diagnostics, devices and therapeutics; 2) improve the quality, predictability and staffing of the FDA's Center for Devices and Radiological Health, 3) speed the implementation of FDA initiatives to enable timely review of guidance documents and applications; and 4) increase the use of non-government, outside experts to facilitate and strength the FDA review and approval process.

"These are not the kind of issues you can turn around in a year," says Slone, speaking with IMDA Update. "But we believe things are different from last year. Now, the FDA is talking about how they can improve the approval process for medical innovation. They're acknowledging that medical innovation is important and a focus for the agency. Before, we weren't hearing anything about innovation or FDA's impact on it."

One sign of change was the FDA's release in October of its "blueprint for innovation," says Slone. Titled "Driving Biomedical Innovation: Initiatives for Improving Products for Patients," the blueprint addressed concerns about the sustainability of the medical product development pipeline. It focused on implementing the following actions:

• Improving consistency and clarity in the medical device review process.

• Training the next generation of innovators.

• Streamlining and reforming FDA regulations.

• Rebuilding FDA's small business outreach services.

• Building the infrastructure to drive and support personalized medicine.

• Creating a rapid drug development pathway for important targeted therapies.

• Harnessing the potential of data mining and information sharing while protecting patient privacy.

Obstacles

Despite the good news, some serious obstacles remain for medical innovators. In August, for example, the Institute of Medicine recommended that the FDA scrap its 510(k) clearance program for medical devices.

The 510(k) clearance process was created to provide an expedient way to evaluate moderate-risk Class II devices, the IOM committee pointed out. Unlike the premarket-approval (PMA) process for high-risk Class III devices, 510(k) clearance generally relies on "substantial equivalence," that is a determination that new devices are sufficiently similar to comparable products that have been previously cleared or were on the market prior to 1975, when the 510(k) process was put in place. However, relying on "substantial equivalence" cannot assure that devices reaching the market are safe and effective, the IOM concluded, because the majority of the devices used as the basis for comparison were never reviewed for safety or effectiveness. What's more, the IOM found substantial weaknesses in current postmarket oversight of devices.

FDA's resources would be better invested in developing a new framework that uses both premarket clearance and improved postmarket surveillance of device performance to provide reasonable assurance of the safety and effectiveness of Class II devices throughout the duration of their use, the committee said.

If there's any good news to come from the IOM's report, it is that few people paid serious attention to it, says Slone. Not even the FDA supported it. "We believe that preserving the 510(k) process is critical to innovation," she says.

IMDA announcement Be a hero Let your manufacturer partners know that the 2012 IMDA Conference should be the venue for their annual distributor sales meeting. At the 2011 meeting in San Antonio, several vendors took advantage of the fact that their key distributors were already gathered in one place to hold their sales meetings. It's convenient, easy and economical. IMDA Executive Director Katie Keel is reserving rooms for such meetings immediately before and after the Conference, which will be held in Nashville, Tenn., April 29-May 1. Let your manufacturers know now about this opportunity. Ask them to give Katie Keel a call at (866) 463-2937 for more details. Or better yet, if you've got a manufacturer who might benefit, let Katie know; she'll take it from there.

MedIC is supportive of the recently announced pilot program by FDA and the Centers for Medicare & Medicaid Services to concurrently review a handful of medical devices each year. Presumably, concurrent review would lead to better coordination of premarket approval by the FDA and national coverage decisions by CMS. "We believe that any new ideas are worth trying," says Slone.

But MedIC continues to have reservations about the Patient-Centered Outcomes Research Institute, or PCORI, which was established by Congress through last year's healthcare reform law. An independent, non-profit organization, PCORI is charged with providing evidence on how disease and other health conditions can most effectively be prevented, diagnosed, treated, monitored and managed.

Last year, when speaking with IMDA Update, Slone said even though PCORI's goal was positive, it could in reality halt or slow down innovation, because many medical technologies, when first introduced, suffer from shortcomings, which are often corrected in following generations.

One year hasn't caused her to change her mind. "Our opinion is still the same," she says. "It's definitely something we need to really keep watch over." That said, PCORI -- or at least the concept of providing evidence on the effectiveness, benefits and harms of different treatment options for different patients -- is here to stay. "It's something that will be long-term."

Investment dollars limited

"The story right now is, investment in healthcare isn't going into medical devices and biotechnology," says Slone. More and more of those dollars are flowing into healthcare services and information technology...and out of the United States. "The industry is shrinking," she says. Venture capital funds are drying up. "We think that's a concerning trend that people need to understand, because venture capital fuels medical innovation."

Medical device innovators will continue to pursue the European market because the regulatory environment and reimbursement are more favorable there, she says.

But it's not just the federal government's actions (or inaction) that are slowing down innovation in the United States. In a cost-conscious market, providers themselves are putting up a red light to innovation. "If it's all about cost, that's not a healthy environment to grow medical device innovation," says Slone.

Providers need to understand that medical device innovation is an incremental process, she adds. "A lot of medical devices don't work well at first. If you're...not calculating that in, that will be negative for medical devices. But if providers have an understanding of how the medical device innovation process flows, if they can see the long-term outcomes of medical devices, then that's a different story."

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IMDA Update Published by IMDA 5204 Fairmount Ave., Downers Grove, IL 60515 Phone:  (630) 655-9280 (866) IMDA-YES (866-463-2937) Fax: (630) 493-0798 Website:  www.imda.org E-mail:  imda@imda.org   Staff Katie Keel: Executive Director Judy Keel: Executive Vice President Patti Perillo:  Senior Administrator Mary Moran:  Chief Financial Officer Mark Thill, Editor & Communications Director (224) 735-3297 Laura Thill, Associate Editor (224) 735-3296 Mitchell Kramer, Legal Counsel (800) 451-7466 George Ayd, Jr., Insurance Administrator (703) 652-1309               2011-2012 Directors President Anthony Marmo, Martab Medical (201) 512-1100, ext 225 President-Elect Hal Freehling, Jr., O.E. Meyer Company (419) 609-1633 Secretary/Treasurer Don Reiter, SRC Medical (818) 717-8807 x19 Chairman of the Board Dave Campbell, PhD, Vital/Med Systems Corporation (303) 660-0888 Directors-at-Large Tom Birmingham, Bay State Anesthesia, Inc. (978) 682-6321 George Howe, Mercury Medical (727) 573-4907 Bill Schultz, IPV Medical, LLC (760) 212-2769 Don Sizemore, D&D Medical, Inc. (615) 859-2337 Past-President Kevin Trout, Grandview Medical Resources, Inc. (412) 914-0950 Manufacturer Representative to Board Tim Beevers, Beevers Manufacturing & Supply (503) 472-9055 The ideas presented in this newsletter may or may not be applicable to your particular situation.  Always consult your tax advisor, attorney or CPA before putting them into effect.