Innovation Threatened?

There’s something to be said for the “if at first you don’t succeed, try, try again “philosophy. Indeed, we learn a lot from failure. In the medical device space, however, that can be a troublesome mantra. After all, risk—in the context of medical technology—can be a scary, dirty and expensive (or worse, life-threatening) word. I guess it depends upon the type of risk being discussed. Manufacturing risk due to quality or design issues? Clinical risk? Or maybe financial risk? They’reall intertwined.

Financially, for example, it would be easier to take a risky leap when markets are strong, you’ve got a little money in the bank and investors are knocking at your door. Yeah, that’s a no-brainer. Taking a risk on new product development becomes much easier under those circumstances (though one could argue that it might not be true risk). But what about when markets are flat (or in a slow recovery), cash flow is tight, regulatory burdens are increasing and few are willing to fund the next big thing? Sounds familiar. That’s a good recipe for risk aversion. So what happens to innovation in that scenario? That’s yet another question many in the medical device industry have been asking of late.

Industry insiders have been speculating that a host of factors are leading to the perfect storm for medtech mediocrity in the United States—a bitter notion for a domestic industry that leads the world in life science. During a session at the recent AdvaMed 2010 medtech conference in Washington, D.C., a panel of medical device thought-leaders, along with the audience, explored the question: Is the golden age of innovation behind or ahead of us?

Stephen Oesterle, M.D., senior vice president of medicine and technology for Medtronic Inc. said, “I travel about 250,000 miles a year looking at new technology, and I can tell you that innovation is alive and well.” Oesterle acknowledged that while the path to bring unique or improved medical devices to market in the United States is fraught with more obstacles than it has been in the past, it may be helpful to take more of a global perspective before calling medtech innovation’s time of death.“We live in a global economy. There are interesting opportunities in emerging markets—opportunity with local products in local markets,” he added.

Josh Makower, M.D., a serial entrepreneur, who currently serves as chairman and CEO of Mountain View, Calif.-basedExploraMed Development LLC (a venture-backed medical technology incubation company), countered: “It’s a tough time right now for small startup innovators—exceptionally difficult. There’s opportunity in the future, certainly, but we may have to change direction. The last two years have been the worst ever.”

Strong words. Makower explained a number of factors that are taking a toll on innovation—at least here in the United States. Economic conditions have made it difficult to access capital. Uncertainties surrounding device review reform at the U.S. Food and Drug Administration (FDA), as well as sluggish review times and inconsistent practices, have had a chilling effect on companies’ willingness to submit new devices for clearance. “The goalposts keep moving” at FDA, according to Makower. The looming device tax will unfairly ping small companies with lower (or no) sales. And a “questionably designed” comparative effectiveness program for device reimbursement leaves companies unclear as to how they will get paid for their technology.

Following a press briefing after the panel presentations, Makower told me that it’s not his intention to be “the voice of gloom and doom,” but he fears that if things don’t change, particularly at the FDA, U.S. leadership in this field could be lost. “Global markets are great and where many companies are turning because of what’s going on here. But what about patients here at home?” he asked. “We’ve got the talent and technology here, and we need to do what we can to keep it. Safe and effective products are always the priority, but we can do that and encourage innovation at the same time.”

It’s a changing playing field; there’s no doubt about that. And the recent midterm elections could change the game even more—perhaps in favor of the device industry. As usual, only time will tell. But, increasingly, manufacturing partners and contract service providers will have to “up” their value proposition and help ensure their clients’ technology is innovative enough to pass muster as device manufacturers navigate these uncertain times.

As we enter 2011, innovation will be a key theme in the pages of Orthopedic Design & Technology—how companies stay innovative and work with the partners best suited to help them with that goal.In turn, our goal is to find innovative ways to bring that information to you. Very best wishes for the coming year and thanks—as always—for reading.

Christopher Delporte

Group Editor