The Butterfly Effect: when minute changes to our regulatory and payment systems impact the fragile medtech innovation ecosystem

  • Posted on 11.01.2018

The Butterfly Effect: when minute changes to our regulatory and payment systems impact the fragile medtech innovation ecosystem





Nadim Yared is President and Chief Executive Officer of CVRx and Chairman of the AdvaMed’s Board of Directors, our sister organisation in the United States.

He is a speaker at the MedTech Forum 2018 and his sessions include: CEO #NOFILTER and The MedTech Europe Code as a Business Enabler, both on Thursday 25th of January.

For more information go to the MTF website and follow #MTF2018 on Twitter.
The toss of a dice. An incoming tornado. The decline of investment in medtech. Each of these events could be considered a butterfly effect – the notion that small causes can have broad effects.

The medical device industry is undergoing tremendous tectonic shifts, where advances in technology are crossing new boundaries in the medical device space and widening horizons for patients.

Internally, our industry has been evolving in response to these advancements. R&D teams have become more digital, more connected, more in-tune with the trends of Silicon Valley. Internet companies are empowering patients with information that enables them to control their destiny more than ever before. Patient advocacy groups are getting stronger and more influential.

With this in mind, you might assume that our industry is growing healthy and that our innovation ecosystem is vibrant.

Well, maybe.

The number of U.S. patents in our field is at an all-time high. However, the translation of that innovation into products that are actually accessible to patients is bottlenecked. And the canaries in the mine here are the small medtech companies.

I have seen the number of new medical device companies being formed fall over the past decade. In fact, ten years ago there were four times as many new companies as there were last year. While the total funds allocated by venture firms have been reduced by half, the average investment required by a company from inception to exit has more than doubled.

And that, is our butterfly effect.

What is the root of it all? Well, there are a couple of butterflies in the room.

Many of today’s innovations require lengthier, costlier clinical trials to demonstrate safety and effectiveness. A few years ago, the leadership at FDA started addressing these challenges through guidance documents, and the US Congress helped by enacting the 21st Century Cures Act.

Unfortunately, while the US was busy trying to shorten the timeline from inception to market access, Europe has been heading in the wrong direction with the new, constricting European Medical Device Regulation (MDR).
And of course, patients cannot access these therapies unless there is a way to pay for them.

It is urgent that we act on multiple fronts. Here are my Top 5 things you can do to strengthen our innovation ecosystem:

1. True innovation can be technological or clinical; it can also be embedded in new payment plans or business models. We need to see more startups focusing on developing innovative business models to delivering healthcare.

2. Our industry needs to work with regulators and payers to develop clear transparent coverage decision processes that are predictable, quantifiable and fair.

3. We need to rethink how our technology is paid for. The current methods of using DRG, CPT and other coding mechanisms are clearly broken and not sustainable. A life-long device being paid for upfront, as part of a DRG, does not reflect its true economic or societal value.

4. Companies must initiate and participate in diverse partnerships.

5. Our industry needs to be more active on all advocacy fronts globally. Proportionally, the effort that we put into advocacy as compared to pharmaceutical companies, hospital associations, or insurers is poor.

So, what are you waiting for? Raise your voice, make yourself heard, and by all means, please continue doing what you have been doing best: creating and delivering innovative medical technologies that save lives.

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