Policy and Medicine

Translational Research Innovation The Way Forward

A recent Forbes article from David Shaywitz, MD/PhD, discussed a highly interactive translational research innovation symposium at Duke University put together by Dr. David Epstein at the Duke Eye Center and Chancellor Victor Dzau.  The program featured both University faculty and invited external speakers.  Shaywitz described the symposium based on four key themes.

Theme 1: Driving science into application remains difficult but desirable 

Shaywitz noted that many participants were eager to push science into the clinic, from PhD chemists and biologists to internists and surgeons (and, of course, ophthalmologists).  A vigorous entrepreneurial spirit was apparent, a determination to do something outside the usual academic practice.  To achieve this goal, he identified three necessary basics: culture, coordination, and capital. 

 

He noted that culture really matters – and academic leaders can play a vital role by either passionately encouraging and supporting entrepreneurship (Susan Desmond-Hellmann and Tom Byers stand out in my mind here), or offering only tepid lip service.  Arguably the most valuable aspect of culture are the presence of positive examples, faculty members and students who’ve actually done this – developed a product, started a company, pushed an innovation into the clinic and changed medical practice. This also suggests an opportunity to initiate a virtuous cycle – once you have a nucleus of entrepreneurs, a critical mass, the excitement can spread virally. 

Shaywitz noted that coordination is important because forming a company or developing a technology for licensing, tends to be complex, and (in the case of start-ups) typically involves far more work than the participants had originally anticipated.  It’s also clear that while there may not be a formula for innovation, there are discrete structural activities that can be done in an environment to support, nurture, guide and sustain innovation, as several faculty members from Duke’s Fuqua School of Business emphasized.  

Some learning is inevitably didactic (learning the rules of road), but most is experiential, and a crucial element seems to involve learning how to work as team, to transform the germ of an idea into something concrete.  The best learning, clearly, is real world experience; seeing and solving the real-world challenges experienced as you try to transform an idea into an actual (often commercial) product or service likely represents the most useful training of all. 

Finally, he noted that capital plays a vitally important role in driving innovation, and the availability of capital can be transformative – just as the lack of same can be a problem.  

Theme 2: Think differently 

Shaywitz noted several examples from this meeting, which suggested that there are actually approaches to deliberately think about problems in slightly different ways.  Dean Nancy Andrews, for example, presented interesting social science data highlighting the value of diversity in innovation; it turns out that heterogeneous teams tend to solve difficult problems more effectively and apparently more creatively than teams with less diversity.  This ties in nicely with the suggestion that breakthroughs tend to occur at the intersection of disciplines.  

Keynote speaker and legendary MIT bioengineer Robert Langer emphasized the value of multi-discipline collaboration as well; such interactions have been a defining characteristic of his career, and also the foundation, beginning with his decision to pursue his post-doc not in a chemical engineering division, but rather in the lab of a pediatric surgeon, the late Judah Folkman. 

The emphasis on unexpected ideas tied in very well with a second point Dean Andrews also made, about the unique value of students on entrepreneurial teams; not only do they tend to be energetic, of course, but they are also relatively naïve, and can ask the fundamental, vital questions overlooked by those with more experience.  

The idea of thinking differently was a key message for Shaywitz’s talk and a significant theme of the talk given by Geoff Duyk, a physician-scientist by training, and currently managing director of TPG’s in-house biotech VC fund; not surprisingly, Duyk is a big believer in the concept of intellectual “cross-training.”  

Both Duyk and Shaywitz highlighted the need to look beyond the traditional model of early stage innovation (pathway -> target -> drug), and consider other types of innovation that could improve health – including innovation in devices, services, processes, and care delivery.  Of particular interest, Duyk highlighted the unique healthcare needs and opportunities associated with countries in Central and South America, as well as Asia, providing an often underappreciated global perspective, and an important reminder of the value of thinking outside the border as well as the box. 

Theme three: Pharmascolds still have academics running scared. 

Despite enjoying the discussion of innovation, Shaywitz was “struck” by the fear that university researchers and clinicians had from the attacks on physician-industry collaboration led by the pharmascolds.  An anxiety that took many forms.  Junior faculty were concerned that working with industry in any way might jeopardize their relationship with the National Institutes of Health (NIH), and introduce a prohibitive array of complications and requirements into their already busy lives.  

Many people emphasized the need to be completely transparent and open; there was unanimous agreement here.  The problem, rather, was the seemingly excessive and gratuitously onerous requirements associated with this transparency, a level of micromanagement (one might argue nanomanagement) that was perceived at times to be absurdly heavy-handed, and more likely to inhibit university/industry collaboration than enhance it. 

There was also a strong sense that partnering with industry is still viewed in many academic circles as collaborating with the enemy, a relationship that threatens to stigmatize the researcher – a disgraceful phenomenon.  In Shaywitz’s view: we should be celebrating, not castigating, the researchers who seek to drive their science into practice, not just into papers and prestige. 

Several senior faculty members strongly believed that the media had their crosshairs fixed squarely on academics who work with industry, and any academic leader who tried forcefully to defend or support these relationships was likely to be taken down.  Shaywitz noted that a number of academic leaders at a range of institutions have highlighted the perceived ferocity of the pharmascold attacks,  as well as the courage of the rare academic leaders – such as Desmond-Hellmann – willing to stand up and forcefully make the case that driving science into application (a) is core to a research university’s public mission, and (b) can be powerfully facilitated through well-structured collaborations with industry.  (See here as well.) 

Theme four: Role of the champion and the opportunity to make a difference 

Shaywitz said that the two highlights of the symposium were the first talk of the day by Langer, and the last talk of the day, by Y.T. Chen.  Each seminar highlighted the tremendous impact of an impassioned innovator. 

Langer’s talk discussed the arc of his career, including the initial challenges he faced as he struggled to get a new technology patented.  He also highlighted the excitement and many challenges of developing new products and forming new companies, the success of which depends not only on brilliant and uncommonly creative individuals but also “exceptional persistence, and a lot of gritty work.” 

Chen’s talk, to close the symposium, “offered a poignant and modestly-presented reminder of why translation is so essential.” Chen, a physician-scientist (pediatric geneticist), developed the first treatment for Pompe Disease after being motivated by the searing experience of a patient’s memorial service.  Following the development of a enzymatic replacement strategy by Chen – and its subsequent development and commercialization by industry (Synpac, later Genzyme, now Sanofi) – many children with this disease have a significantly improved chance of living a much better – in some cases, relatively normal – life, especially if treatment is initiated very early. 

This example caused Shaywitz to think about this “model of innovation, this narrative of the intrepid, determined physician-scientist successfully shepherding a discovery from the lab into the clinic.”  He said, “It’s a compelling vision – it’s what I had in mind when I decided to pursue an MD/PhD, and I know it’s what many of my colleagues were thinking as well.”  

However, he noted his concern that this model is now the exception, not the rule.  He noted that more often, progress may involve a number of discrete, and often disjointed advances, that over time are integrated into a more complete picture, and ultimately give rise to novel therapies.  Ultimately, Shaywitz hoped that we can “continue to highlight the accomplishments of clinical champions like Y. T. Chen, like Judah Folkman, like Peter Pronovost (incidentally a nice example of a champion pursuing systems innovation)” because these individuals “offer an inspirational reminder of the power of what can be achieved with a focused mind, a committed heart, and little bit of luck.”

 

Interventional Cardiologist Sees Negative Trend in Innovation: Despite Decreases in CVD Mortality

A recent article from TCTmd noted that, “the field of Interventional Cardiology has seen negative trends in innovation – defined as novelty that creates value - despite decreases in CV-related mortality over the last 40 years.” 

Citing to a recent Scientific Symposia session at the Transcatheter Cardiovascular Therapeutics (TCT) conference, Martin B. Leon, MD, and Elazer R. Edelman, MD, PhD, debated the issue and discussed whether this trend should be deemed a “crisis.”  Both Drs. Leon and Edelman have extensive experience conducting research and consulting with numerous pharmaceutical and medical device companies. 

Need for Innovation 

Dr. Leon, who is director of the Center for Interventional Vascular Therapy at New York-Presbyterian Hospital/Columbia University Medical Center in New York City, argued that several factors, deemed “forces of change,” have led to current troubling trends in medical innovation. 

“When we think of innovation, it’s not an iconic genius; progress and technology results less from that individual genius and much more from a collective effort and social, political and economic forces that come together to create an ecosystem, which fosters innovation,” Leon said.  “Unless you have these things working in concert – social, political and economic forces – creating an ecosystem, then innovation goes wrong.” 

As an article from CardiovascularBusiness noted, “Compared with 2005, the U.S. medical technology market’s startup valuation has dropped 55 percent, healthcare funding has decreased 52 percent, venture capital investment has declined 25 percent and private equity funds have plummeted 65 percent.”  Currently, Leon said, many “forces of change” have directly affected the interventional cardiology specialty.  The several forces of change include:

• Interventional coronary procedures are “flat” and won’t demonstrate important growth in the next decade.
• Everywhere, the interventional marketplace is becoming remarkably cost and price sensitive.
• The U.S. has surrendered its position as the global revenue leader in interventional therapeutics.
• The regulatory climate for device approval has intensified and the gap between the U.S. and Europe has widened.
• The cost burden of investing in iterative “sustaining” medical technologies has skyrocketed.
• An increase in the media’s effect on medicine;
• Health care reform; and
• The U.S. contribution to world patents is steadily declining, due in part to new and rapidly evolving conflict of interest regulations, “restricting physician participation in industry-sponsored research, education and other entrepreneurial activities.”

Dr. Leon noted that several unintended consequences on innovation have already occurred, including: 

• physician integration;
• reimbursement pressure, especially for procedures; and
• a changing interventional milieu which may restrict access for patients in the future.”

Dr. Leon also pointed out “that it took months for an approval to occur between 2003 to 2007, compared  with 2010, jumping from three to five months for 510(k) devices and 15 to 30 months for pre-market approvals (PMAs)—representing a 100 percent increase for PMAs.”

Also, the current cost to clear and approve a medical device in the U.S. is $31 million on average to bring a 510(k) product from concept through clearance, with $24 million spent on FDA-dependent/related aspects.  “Likewise, it costs $94 million on average to bring a PMA product from concept through approval, with $75 million spent on FDA-dependent/related aspects. Leon said that these figures do not include reimbursement approval and sales or marketing costs.”

He pointed to countries “such as Israel and India, as being friendlier to medical innovation, and therefore, those markets are growing.  For instance, in Israel, government subsidies and encouragement foster technology transfer from universities and government agencies, especially military. Also, in Israel, physicians, scientists and engineers are not discouraged from working with industry, Leon said.”

To reinvigorate medical innovation, the U.S. is in “desperate need of governmental and regulatory reform” and “we need positive case examples to show that it still can be achieved in the U.S.  Leon suggested

• Accept the fact that the innovation ecosystem in the U.S. has changed forever, and therefore adapt and evolve, embracing a more strategic approach based on hard-earned lessons.
• The physician scientist community must reorganize, emphasizing multidisciplinary (non-territorial) activities, better communication, and increased society leadership. “Sometimes, the enemy is us,” he added.
• Innovation will be a global phenomenon, including: idea creation, intellectual property, device development, clinical research, regulatory approvals, commercial revenue and financial investment.
• the need for government and regulatory reform, among others

“Most other nations still lack crucial elements of the innovation ecosystem, such as cultures of entrepreneurialism and commercialization, coherent reimbursement systems, IP protection, trained management or a comprehensive network of reliable suppliers and distributors,” Leon concluded

Problem in Innovation? 

Edelman, director of the Harvard-MIT Biomedical Engineering Center, Boston, argued against the “crisis,” citing barriers to development as the problem. 

“In the last 2 years we’ve changed the way we operate in the clinic. We’ve provided new technologies, new materials and convergent technologies; we are fundamentally dramatically different, and all of this is by virtue of the extraordinary pace of innovation in and outside of the United States,” he said during his discussion. 

According to Edelman, development barriers – not a crisis of innovation – are the culprits. The barrier to implementation is engineering, the barrier to envisioning is conceptual science and the barrier to profit is entrepreneurship, he explained. 

To remedy these issues, Edelman argued the need for an “era of cultural change” at several levels, including regulatory agency-industry interchange.  “Industry is going to have to provide more information, and the FDA is going to have to use that information for purposes other than regulatory approval,” he said. 

Additionally, academia needs to shift its behavior, Edelman said.  “It has to advance the discipline and extend the use of its models but it has to acknowledge that sometimes development transcends discovery,” he said.   Edelman asserted that industry will need to: 

• collaborate better and share more
• educate, not just publish; and
• realize that sometimes you don’t promise the world, you just have to fess up to the limitations of academia and go back and say there is a responsibility – even in the ivory tower – in improving peoples’ lives.” 

He also asserted that 

• constituency agencies should define public policy need, prioritize areas of concern and help standardize techniques;
• funding agencies should help foster discipline and encourage collaboration; and
• lastly, the public should accept and appreciate risk.

 “Innovation is not dead, in fact, I’d say it’s flourishing,” he said. “Engineering is flourishing; entrepreneurship is a problem, but none of these things are elements unto their own.”

Howard Dean and the Certainty Index for Medical Innovation

 

Howard Dean, Physician, 2008 presidential candidate, former Vermont governor and chair of the Democratic National Committee (DNC), gave comments about health care reform to a group of senior pharmaceutical company executives, hosted by the Gerson Lehrman Group (GLG) in New York.

Dean, who is now of counsel to the law firm McKenna Long & Aldridge, dismissed Obama ‘s position that the 2010 reform would “bend” the cost curve. Why?

According to Dean, the reason that Obamacare does not bend the cost curve is because “little has been done to change the economic incentive of providers to charge by procedure rather than on the basis of a full episode of care. Fee-for-service remains the payment bedrock of the US system.” Until it changes, Dean acknowledged that costs will continue to rise.

Consequently, Dean reiterated his view that Obamacare will accelerate a transition away from the current employer-based approach to financing health care, creating a negative incentive for small business to continue providing health benefits to workers.”

He predicted that, “once the state insurance exchanges are up and running, small businesses will opt to pay the penalty for not providing coverage and simply give workers a bonus or subsidy of a few hundred dollars to help them purchase insurance under the individual mandate.” Conversely, the largest employers are likely to keep to the status quo as they prefer to control their exposure to insurance costs.

As a result, Dean pointed out that “like so much of the reform package, the outcome is a mixed bag: there will be less diversity, flexibility and choice in the system as the government role increases, but US industry will be more competitive in global markets due to having to shoulder less of the burden of covering workers for essential health care services.”

Dean also offered his support for the 12-year period of data exclusivity agreed to by the Obama Administration, PhRMA and BIO to advance the registration of follow-on biologics. Dean predicted that despite some backtracking from congressional Democrats to push the protection period down to seven years, the pledge will be kept – at 12 years.

He also noted his support for “tort reform, the centerpiece of which should be allowance for arbitration panels as an alternative to the constitutional right of victims to trial.” 

Further, Dean “pushed for actions to raise the “certainty index” for investors in big pharma and biotech.” This includes mediating more directly between the FDA and Congress, the agency’s most hostile stakeholder.

Dean noted that, “pressures from Congress against the FDA have created an overly politicized decision-making chain on the licensing of new therapies, to the detriment of the industry’s long-term future in the US.”

The former Vermont Governor also suggested that industry focus squarely on educating around the following issues:

• That medicines actually save money, when assessed in comparison to most other health interventions;
• Explaining how the average price tag of financing a clinical trial has doubled over the past five years;
• Drug companies, not academia or the NIH, do the heavy lifting in bringing new treatments to market;
• That manufacturing the next generation of large biologics is complex, risky and expensive; and
• Why tax incentives in the US emphasize less productive short-term objectives rather than the long-term payout responsive to biotech’s development cycle of more than a decade.

He asserted that, education should begin with Congress, which is “increasingly anti-science and ignorant about what is needed to seed drug innovation.”

In response to a question about comparative effectiveness or evidence based medicine, Dean noted that “formal cost-effectiveness evaluation in deciding who gets a new drug is unlikely to find a receptive audience in the U.S.”  Additionally, Dean asserted that, “action to force suppliers to bear some or all of the risk in meeting the cost of a new treatment is a drag on innovation.”

Ultimately, Dean’s comments show that even members within Obama’s own party are skeptical of some of the positions and policies adopted in the Affordable Care Act (or health care reform).  While many of the major issues facing this monumental legislation are likely to be decided in the Supreme Court next year (i.e. the individual mandate), a number of other major pieces of the legislation are also facing significant obstacles, such as Accountable Care Organizations (ACOs).  In addition, Congress must address the SGR growth rate.

Faced with these problems, additional issues at FDA, such as drug and device approvals, make achieving some of the goals of health care reform difficult to imagine and more difficult to achieve.  If the principles and issues Dean outlined above are carefully taught to members of Congress and explained to the public, there may still be a chance to save some of the reasonable measures within the legislation.  However, whether agencies and Congress can work together during a heated debate and strict party separations is unlikely.  

Accordingly, as Dean predicted, much of the provisions in the Affordable Care Act will depend upon whether Obama is reelected, which will depend mainly on whether he can reduce unemployment and improve the economy.

The Importance of Surgical Device Development CME and the Ties That Bind Us Together

 
The movement to make physician-industry payments more transparent gained momentum over the past several years, with states like Massachusetts and Vermont passing versions of the Sunshine Act in 2008 and 2009, respectively.  As one article recently noted, after these state laws passed, “there were running jokes in the exhibition halls of surgical society meetings around the country” about the fact that surgeons from “these states were barred from drinking the free cans of Diet Coke that device companies might hand out at their booth seemed ludicrous.”

However, the jokes started to fade when the Physician Payment Sunshine Act was adopted in the Affordable Care Act (ACA) in March 2010. This provision requires physicians to disclose any gift worth more than $10.  It also provided for the creation of a national, publicly accessible database that would list physicians’ names, addresses and the nature and value of all gifts received from industry.

While we certainly applaud any efforts to make physician-payments more transparent, so that the public can fully understand the value such relationships provide in creating new treatments, enhancing patient care, and improving patient outcomes, some members of the healthcare industry are concerned about the negative impact the Sunshine Act will have on them.  In particular, the database will have a far-reaching affect on surgeons.

Although many surgeons agree that bias can be present from such payments, they argue that medical devices are vastly different from pharmaceutical products.  In addition, at the 12th World Congress of Endoscopic Surgery last year, experts voiced concerns rippling through the surgical community that “losing or denying industry support might hurt graduate and continuing medical education (CME), the leadership of specialty surgical societies, and the development of minimally invasive surgery as a whole.”

Minimally Invasive Surgery Is Unique

National surgical meetings like those hosted by the Society of American Gastrointestinal and Endoscopic Surgeons (SAGES) are among the best places to look at conflict of interest in surgery. “Without industry support, these meetings likely would not exist.”  In fact, Gerald Fried, MD, the Steinberg-Bernstein Chair of Minimally Invasive Surgery and Innovation at McGill University Health Centre, in Montreal, noted that industry funding “really impacts the whole running of SAGES or [the Canadian Association of General Surgeons] or any specialty society.”

The article however, used old data about funding of CME programs from industry.  Commercial support of CME has been significantly reduced over the past several years, and now makes up less than half of all CME funding. Specifically, since 2007, commercial support has declined $355 million or 29.3%.  Moreover, the total percent of commercial support as part of the overall CME budget dropped from 47.5% (2007) to 39.0% in 2009. Fewer companies are funding CME programs as well.

Nevertheless, Dr. Fried was right in asking: “Can you imagine if we took all that money and it was not available for CME activities?”  The small groups of critics who call for an end to commercial support of CME generally have no answer to this question.  Some assert that physicians could pay more for CME.  Others suggest that government (which never funds CME) could cover the costs.  Another idea is for hospitals and institutions to begin offering more courses.  All of these ideas are unrealistic and do not address the significant resources, staff, and regulatory/legal issues that CME providers deal with on a day-to-day basis.  

 

But those of us who have seen the beneficial impact of commercially supported CME programs—such as improvement in use of NIH guidelines for Hypertension or improved use of evidence based practices in COPD—know that removing commercial funding of CME, like Dr. Fried noted, “would have a huge impact,” on physician training and patient outcomes.

 

Michael Holzman, MD, associate professor of surgery and medical director of the Minimally Invasive Surgery Center at Vanderbilt University Medical Center, in Nashville, Tenn., agreed.  “Without [industry], I don’t know what we could do for CME. It would become very expensive.”

As the article explained, “much of the research presented at meetings is made possible only through industry support. Most academic investigators, or at least their departments, receive funding from one or several device companies. Some investigators even admit they owe their entire academic careers to research funded by industry.”

Larry Whelan, MD, chief of colon and rectal surgery at St. Luke’s-Roosevelt Hospital in New York City, estimates that the “minimally invasive surgical literature would literally be several orders of magnitude smaller” without the industry research support that has been provided over the past two decades. This support has included educational grants to hospitals and researchers as well as money given to societies for distribution to grant winners.

Dr. Whelan asserted that, “the government will never have the means to support this kind of work, and that the vast majority of this research would simply not get funded by the [National Cancer Institute] or [National Institutes of Health].”  As a result, Dr. Whelan recognized that, “without device companies pushing device research and development, everyday surgical instruments would be several generations behind, and this is particularly true for minimally invasive surgery.”

In fact, Dr. Whelan noted that he could not “think of another field in general surgery in which the growth has been so closely tied to industry.” He further noted that, “there is so much that goes on with this interaction, it’s hard to imagine the academic landscape without these relationships in place.”

Effects of Conflicts of Interest

Consequently, Dr. Fried noted that, “the world of CME is greatly benefitted by the resources that industry gives for research and education.” However, he mentioned that some evidence shows physicians can be biased as a result of these interactions.  He did not however discuss three studies from last year, which produced substantial data that demonstrate a lack of commercial bias in industry-sponsored CME (Cleveland Clinic; Medscape, and UCSF).

Moreover, the article unfortunately tried to make a connection between the alleged “gifts” that surgeons receive, and the influence they may have on physicians prescribing habits or clinical decisions.  This line of reasoning is extremely problematic for two reasons.  First, it neglects to mention the recently adopted AdvaMed Code of Ethics, which puts in place strict prohibitions against any gifts whatsoever.  Second, the article’s use of the Wazana study is flawed because the study explicitly stated that of the publications reviewed “…no studies used patient outcome measures.” In other words, there is no evidence that gifts (when they were given) harmed patients.

Managing Perception

The article noted that physicians need to be concerned about the perception of bias [and] have to manage that perception as well. In this section, the authors did mention the AdvaMed Code of Ethics, implemented in 2009, which touched on nearly every interaction between industry and surgeons.  Consequently, one of the consequences from the “perception of bias” was that a group of device companies in February announced they would be pulling funding on more than 200 minimally invasive surgery fellowships around the country, which represented as much as one-fourth of the surgical fellowship training force.

To address the significant shortage in surgical fellows this created, a group of academic surgeons scrambled to put together the nonprofit Foundation for Surgical Fellowships to provide a buffer layer between industry and the fellowships they funded.  Bruce Schirmer, MD, who is vice chairman of surgery at the University of Virginia in Charlottesville and was involved in setting up the foundation, called it “insurance against a conflict-of-interest disaster.” The foundation adds a layer of bureaucracy and cost, but will keep minimally invasive surgery fellowships from being targeted by critics.

Surgical societies have responded as well by adopting policies recommended by the Institute of Medicine, which state that society presidents and officers be completely free from conflicts of interest, beginning at least two years before they take office. 

Discussion

The problem with increased conflict-of-interest concerns is that they will have a chilling effect throughout the entire surgical community, “from cutting resident courses and symposia to stricter guidelines that reduce the number of clinical and animal studies.”  It will also create an atmosphere where both industry and physicians may become reluctant to work together as closely as they did in the past, leading to less discovery and innovation in medical devices, which will only harm patients.

As Dr. Whelan concisely pointed out, “industry is afraid, and is trying to make sure it’s protected in terms of liability. Physicians are reluctant to agree to industry-sponsored studies or support if that involvement can be misconstrued.”  This clearly leads to less being done.

To address these issues, the article recommends that surgeons first be transparent and not accept anything from industry that doesn’t contribute to patient care.  Next, they recommend that physicians understand the principles behind the American Medical Association’s Code of Medical Ethics as well as any other guidelines at the level of their institution.  Having understood the principles, surgeons should assess their projects, publications, and business relationships from a conflict-of-interest perspective.

The main areas that may be looked at are ownership or director-level roles in biomedical companies or medical facilities, the level of industry-sponsored research and any consultantships and legal work performed.

Conclusion

In the end, the authors note that the much larger issue is how surgeons as a group should respond.  Many surgeons feel the first step is differentiating surgery from drug development.  Others believe part of the process is educating and talking to patients to show them why the work surgeons do with industry is important and why surgeons are proud of the work they’ve done with industry.

If this is not done, surgeons and device companies run the risk for being lumped together with other industries, where any interaction between surgeons and companies is seen as negative.  Ultimately, they noted that surgeons must act now because Congress is trying to act for them.

America Invents Act

 
Recently, the Senate Judiciary Committee unanimously approved the “America Invents Act” (S. 23), a bill that would overhaul the U.S. patent system by changing it from a first-to-invent to a first-to-file system. The legislation would also give courts more influence in determining patent dispute damages. 

After its passage in Committee, the bill was passed by the Senate on March 8 in a 95-5 vote. This kind of legislation has been considered for several years and has reached the full Senate three times since 2008. According to an analysis by the law firm White & Case, LLP, the bill contains many important provisions affecting the patent process in the United States:

·         Patent System Moves From First-to-Invent System to First-to-File System. The bill would harmonize the US patent system with the rest of the world by switching from a first-to-invent system to a first-to-file system.

 

·         PTO Given Fee-Setting Authority. The bill would allow the PTO to set patent and trademark fees without Congress's prior approval.

 

·         End to Fee Diversion. The bill ends diversion of fees collected by the PTO into the general fund. A USPTO Revolving Fund will enable those fees to be used by the PTO for future expenditures.

 

·         Third Parties May Submit Prior Art During Patent Examination. The bill would allow third parties to submit prior art for consideration during patent examination.

 

·         Post-Grant Review During First Nine Months After Issue. Post-grant review could be requested on any grounds in the first nine months after a patent issues. The PTO Director would have sole authority to authorize or deny post-grant review.

 

·         Supplemental Examination Process Provided for Patent Owners to Submit Prior Art and Prevent Its Use in an Inequitable Conduct Defense. The bill creates a new procedure called "supplemental examination," which allows the patent owner to make pre-litigation submissions to the PTO of prior art not disclosed during examination. Such submissions could not then be used to support an inequitable conduct defense.

 

·         Ban on Tax Strategy Patents. Strategies for reducing, avoiding or deferring tax liability are not eligible for patents.

In the bill’s favor, the patent office is self-financing, and the legislation would not add to the budget deficit. Consequently, David J. Kappos, the director of the patent office and under secretary of commerce for intellectual property, asserted that the America Invents Act “would be an enormous improvement.”

 

Mr. Kappos noted that, “the current, first-to-invent system does no more than grant an inventor “a lottery ticket,” with the right to defend in court whether he was the first to come up with an idea.” Instead, Mr. Kappos recognized that a first-to-file system “adds transparency and objectivity” in the form of a clear line of priority — that is, who arrived first at the patent office.

 

In addition, Gary F. Locke, the Secretary of Commerce, which oversees the patent office, told the New York Times that it is “unacceptable and scandalous” that the patent office has a backlog of more than 700,000 unexamined applications. This means that it takes “two years for an inventor to get an initial ruling on one, and a final patent usually takes another year.” Secretary Locke noted that the patent office’s “computer systems are out of date and Congress has made a practice of siphoning off the office’s revenue for other uses.”

 

As the Times noted, the legislation would allow the patent office to set its own fees and make several changes, including charging companies that desire a decision within a year of filing to pay extra to move to the front of the line. Mr. Kappos said he also “wanted to cut fees for independent inventors and small businesses by at least half. Applicants currently pay about $4,000 for a patent.”

 

Additionally, the Times article explained that “Mr. Kappos disputes the notion that a first-to-file system puts small companies, which might need more time and money to develop a patentable idea, at a disadvantage.” Mr. Kappos “said that the office already offers a $110 provisional application that secures a place in line and gives the applicant time to develop an idea before submitting a full application.”

 

Discussion

 

Consequently, large corporations such as General Electric, Cateprillar, and IBM,

support the bill because the “proposed changes would also help to keep patent disputes out of the court system, which inevitably adds millions of dollars to the cost of maintaining patent protection.”

 

In addition, the Biotechnology Industry Organization (BIO) commended the Senate for its overwhelming passage of the America Invents Act by a vote of 95-5. BIO noted that, “once enacted into law, it will strengthen and improve our nation’s patent system, spurring innovation and job creation.”

 

BIO noted in its press release how “patents are often the main assets of small biotech companies, and they rely on this intellectual property to attract investors to fund the lengthy and expensive research and development process necessary to bring breakthrough new therapies and other biotech products to patients and consumers.”

 

 However, “opponents of the bill maintain that the current system is better structured to “give the little guy an advantage.” Some believe that changing to a first-to-file system, “could cause big companies to overwhelm the patent office with claims on every imaginable innovation, slowing the process further and crowding out small inventors.”

 

Conclusion

The next step in the process is for the House Judiciary Committee to take up the bill, which is led by Chairman Lamar Smith (R-TX). As for now, the Committee does not have anything scheduled, so it is uncertain when the legislation will be considered.

America’s Lost Innovation May Mean Lost Lives

 
The road to discovering a life-saving treatment or medicine is long and filled with obstacles. “For those with life-threatening diseases or painful chronic conditions, time is not on their side. When promising treatments languish waiting for approval in a bog of bureaucracy, the cost must be reckoned in lost lives and diminished quality of life.”

“That’s why it’s so alarming that only 21 new drugs gained FDA approval last year.”

As a recent article noted, this “was a significant decrease from the previous two years, when there were 25 approvals in 2009 and 24 in 2008.”

The article, written by Robert Goldberg, co-founder and vice president of the Center for Medicine in the Public Interest in New York, also recognized that “not only are approvals down, so are applications for approval.” He predicted that this will mean “even further declines in annual approvals down the road.”

But what is so perplexing about the decline in drug approvals is that “science is more cutting edge today and grants for new research — in areas from pediatrics to Alzheimer’s — are at all-time highs.” So then, “how is it possible that approvals and applications are both dropping?”

Goldberg noted that one reason is that “the FDA’s review process, in the view of many in the medical and biopharmaceutical communities, has become increasingly turgid.” For example, he noted how “the FDA now frequently calls for extra clinical trials, requiring detailed safety plans that necessitate additional doctor and patient education, and an extended review period.”

He also noted that, “of the 21 drugs approved in 2010, there were 21 drug makers to take credit. Not a single company earned more than one approval. From Pfizer to Bristol-Myers Squibb to Eli Lilly to Merck — all of which were shut-out for approvals in 2010 — the FDA was an equal opportunity rejecter.”

Unfortunately, Goldberg also noted that the small amount of approvals also takes place in the “development of tools that tailor treatments to our individual needs are drowning in a sea of endless confusion.” He asserted that “tests and medical efforts that can help detect and prevent disease, and eliminate useless or even harmful care are being held up in the name of patient safety.”

Consequently, Goldberg recognized that “government policy writ large has now begun to stifle innovation in pharmaceuticals.” For example, he pointed out how “Obama’s health care plan levies tens of billions in taxes on new medical products through 2019.”

In addition, he acknowledged how “comparative effectiveness studies, required even after FDA approval as a condition for being added to benefits, will delay progress, too.” Even worse, he noted, is that “FDA regulators are beginning to consider the comparative effectiveness of products and as a result are raising the bar for approval.”

Ultimately, Goldberg asserted that “innovation is the result, not of a top-down decision, but by learning from actually using an invention,” and “taking products off the market therefore undermines medical progress in many cases.” Accordingly, Goldberg noted that, “innovation is in a very precarious position” because of the “the FDA’s slow-to-act review process and the Obama health care plan’s disproportionate taxation of pharmaceutical firms.”

The reality is, “most medical innovations come from start-ups with limited capital,” and by FDA and the Obama administration making it harder for these small business, the government is doing the opposite of advancing science and medicine. This regulatory uncertainty has left many asking, “whether developers can bring enough new drugs to market at the pace needed to remain financially viable.”

This is problematic because as Goldberg points, out, “China, India and Singapore are inviting America’s innovators to set up shop overseas.”

Therefore, Goldberg asserted that, “as the world’s leader — by far — in scientific research investment, the United States must change course and must do so immediately” because “not only are we losing innovation, we are losing lives as well.”

HHS Secretary Sebelius: Improving Healthcare through Medical Innovation

 
Innovation in medicine and medical technology has led to tremendous achievements in American’s quality of life and health care. Over the past century, the life expectancy went from just over forty-seven years to nearly seventy-eight in 2006. “Diseases that had once been a death sentence were eradicated or cured. Conditions that had once been disabling were now manageable.”

As Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS) recently pointed out, “Many of these gains were made possible by the great leaps in biomedical science, from the discovery of insulin to the identification of effective therapies for HIV.” What she forgot to mention is that the pharmaceutical and medical device industry have overwhelmingly been responsible for this progress and improvements.

Consequently, in a recent article in the Journal of Health Affairs, Secretary Sebelius noted that America now has the chance to improve healthcare and medicine with even “bigger opportunities.” She pointed to “new treatments, such as cell-based therapies, which introduce new cells into body tissues to treat diseases such as diabetes, show great promise.” In addition, Secretary Sebelius championed “unlocking the human genome” as a way to “facilitate personalized treatments for diseases such as cancer, based on each person’s unique DNA.”

However, she recognized that gains from these breakthroughs “are not guaranteed.” Instead, she acknowledged that new “treatments and cures for cancer, Alzheimer’s disease, and HIV/AIDS will be made only if there is a robust pipeline that carries promising ideas forward from the microscope to the medicine chest.”

The only way to accomplish this robust pipeline according to the Secretary, “is with a new level of coordination among all of the partners in the research process.”

From Research To Final Product

Part of the problem why America is facing a challenge with discovering new drugs is that the “road from the research lab to an approved and marketable drug is a long one, and today there are many detours and obstacles along the way.” As Secretary Sebelius acknowledges, “despite billions of dollars invested every year in research and development, just twenty-one new drugs made it to market in 2008.”

She noted however that the Obama administration supports innovation and the potential of biomedical research, evidenced by the American Recovery and Reinvestment Act of 2009, which invested an additional $10.4 billion over two years in the National Institutes of Health (NIH), with the vast majority of those funds going directly to scientific research.

Despite this investment, Secretary Sebelius acknowledged that “more is needed than writing bigger checks” to enhance the drug pipeline.  She asserted that “resources must be invested so they will have the largest impact possible and will deliver greater numbers of cutting-edge drugs, therapies, and medical devices more quickly to the patients who need them the most.”

Stronger Public-Private Partnerships

To accomplish this kind of impact, Secretary Sebelius noted that the government has begun to “broaden its role from funding discovery to building innovative networks of all of the stakeholders in the development process.” Members of the networks include “foundations, such as the Bill & Melinda Gates Foundation, which are deploying funds to generate treatments and cures for diseases that disproportionately affect people in the world’s poorest countries; and patient advocacy groups, which can help collect patient blood, tissue, and other samples for basic research and connect their members with clinical trials.”

One such network is the Biomarkers Consortium, a public-private partnership that includes scientists from the National Cancer Institute, the Food and Drug Administration (FDA), major pharmaceutical companies, and nearly twenty major cancer research centers across the country. The consortium is now working on a clinical trial to improve the odds of survival for women with high-risk, fast-growing breast cancers.

Another example of partnership is the NIH Therapeutics for Rare and Neglected Diseases program, which links small companies or academic labs doing basic research on diseases such as sickle-cell disease and hookworm, with government researchers who can use high throughput screening and medicinal chemistry to move these discoveries closer to clinical trials.

The Cures Acceleration Network, which was enacted in the Affordable Care Act of 2010, is another example of private-public partnership.  It gives the NIH director the flexibility to fund a variety of innovative projects from the public, private, nonprofit, and academic sectors, with the goal of advancing research in areas where success is not a given but the payoff could be very high.

The Secretary also discussed how HHS will be forging stronger partnerships inside government, such as the NIH and FDA working together on translational efforts and developing standards for safety and effectiveness. However, the Secretary did not mention industry’s role in this partnership. It is crucial that industry has a seat at the table in discussing solutions and ideas for increasing the pipeline as well.

She also discussed a recommendation that NIH create a new center devoted to translational science that would generate new approaches for building bridges to link basic discovery research with the development of new therapeutics and clinical care. NIH is currently gathering input from the public and a broad range of stakeholders, and if all goes as planned, the new center will be established by October 1, 2011.

Conclusion

As Secretary Sebelius acknowledged, “some of the roadblocks that have held back the development of new medicines can be eliminated” by projects and partnerships with industry. Specifically, she recognized that “Public-private partnerships are needed to build new paradigms for drug development, not just when it’s time to manufacture and market a product, but from the beginning of the development process.”

Moving forward, policymakers must continue to include industry in regulatory discussions so that America can continue to develop a new generation of cures and treatments that could dramatically improve the lives of Americans and people around the world. By having “a broader conversation among stakeholders in government, academe, industry, and nonprofits about how everyone can do better,” America can fill its pipeline once again and create new jobs, revenue and medicine that will improve our health care system.  

PWC Medical Technology Innovation Scorecard: US Falling Behind in the Race for Global Leadership

 

Over the past 50 years, the United States has provided an ideal innovation ecosystem that has fostered significant advances in medical technology. US-based companies dominate the roughly $350 billion global device industry, with 32 of the 46 medical technology companies with more than $1 billion in annual revenue based in the US. In addition, the US accounts for approximately 40% of the world market for medical devices and instruments.

While the US has remained a world leader in medical technology innovation, a report released this week found that the US medical technology industry to global dominance may be slipping. The report entitled “Medical Technology Innovation Scorecard: The Race for Global Leadership,” predicts that China, India and Brazil will experience the strongest gains in developing next-generation lifesaving products, as capital, jobs and research gravitate toward these growing markets.

The study, which was published by PwC, formerly PricewaterhouseCoopers, explored the changing nature of healthcare innovation and noted that the “way we assess value in medical technology is changing radically.” For example, the report indicated that “companies today are recognizing that the old dynamic of the physician being the arbiter of value is giving way to a new one: Government and private insurers and “self-pay” consumers increasingly determine what sells and at what price.” These entities refuse to pay for incremental innovations that add bells and whistles but do not significantly improve health or reduce cost. As a result, the faster, better, smaller, cheaper advances “portend the future of medical technology.”

Consequently, the report shows that the gap between innovation leaders and emerging economies is rapidly narrowing and today’s innovation leaders will find their position slipping during the next decade. The report indicated three trends:

-       The innovation ecosystem for medical device technology, long centered in the U.S., is moving offshore. Increasingly, medical technology innovators are going outside the US to seek clinical data, new-product registration, and first revenue.

-       US Consumers are not always the first to benefit from advances in medical technology and may eventually be last in line. Innovators already are going first to market in Europe, and by 2020, likely will move into emerging countries next before entering the U.S.

-       The nature of innovation is changing, as developing nations become the leading markets for smaller, faster, more affordable devices that enable delivery of care anywhere and help bend the healthcare cost curve downward.

Methodology

The Innovation Scorecard looked at nine countries—Brazil, China, France, Germany, India, Israel, Japan, United Kingdom, and the United States—over the past five years to gain a historical perspective. In addition, the scorecard made projections into the future to present the outlook for 2020.

To assess the capacity of these countries regarding their strong medical technology market potential to adapt to the changing nature of innovation, PwC used 86 metrics to calculate the current score and 56 metrics for the historical score. These metrics range from objective to subjective and help to identify trends in medical technology innovation. Additionally, the Scorecard identified five pillars that have supported medical technology innovation for the past several decades.

Powerful financial incentives: The US spent more per capita on healthcare than the other eight Scorecard countries. High levels of reimbursement for medical procedures and generous coverage fueled physician’s adoption of new innovations. Despite the US score for this pillar improving from 2005-2010, PwC predicts a downward direction for the US market size for market access and adoption of innovation.

The Chinese medical device market is predicted to expand about 15% annually during the next five years and India’s, about 23%. Business Monitor International (BMI) estimates that China’s medical device sales will reach $42.8 billion by 2019; and India’s, $10.7 billion. This shift in growth could draw the focus of multinational device manufacturers away from the US and toward emerging markets. Domestic manufacturers in emerging markets may be content with the potential for growth within their own borders and might not seek regulatory approval in the US and other developed countries. Citizens from China and India will benefit from domestically produced technology before people in the US.

PwC predicts that the US health care system will suffer the “innovator’s dilemma.” That is, the US has been so successful in medical technology innovation that it has created a legacy that the current system will continue to seek to defend, support, and protect. The powerful financial incentives that form the cornerstone of the US system will present a barrier to adopting faster, smaller, cheaper, and better technologies that would represent radical, disruptive innovations.

Such innovations are emerging more quickly in China, India, and Brazil. These developing nations are in many ways, starting without the “innovation handicap” of a comfortable level of performance and payment. A scarcity of financial resources is driving them to experiment with more efficient technologies, processes, distribution strategies, and business models.

Government pressure from the US to lower healthcare costs could eventually help offset the innovation handicap, forcing developed nations to turn to innovative technology to achieve better results at lower costs. The Affordable Care Act (ACA) calls for reduced annual payment updates for most Medicare services, substantial cuts to managed care plan payments, and the creation of the Independent Payment Advisory Board (IPAB). These are small steps in what will be a prolonged and complex effort by Western nations to reign in healthcare costs.

Leading resources for innovation: The US established itself as a world leader in academic medical centers. Annual National Institutes of Health (NIH) grant funding exceeding $25 billion per year supported the advancement of medicine. Despite the US having a high level of R&D spending, strong labor productivity, and high-quality academic medical centers (AMCs), and a high average of patent applications per pcapita, the Scorecard data indicate that the US score will decline in the future as other countries improve their educational and research facilities and become more productive in patient applications.

While the US invests more in R&D than any other country in terms of dollar amount, in terms of percentage of GDP, the US investment in R&D is declining, which PwC predicts will lower its score in this pillar. Moreover, as the quality of non-US educational and research institutions improves, R&D funding outside the US increases, and other developing nations’ innovative output matches that of the developed countries, the US will face increasing competition for innovative talent, resources, and output. China’s innovative output will grow at a much faster rate than the US.

Supportive regulatory system: The FDA has been a global leader in setting standards and guidelines for the safety and efficacy of medical technologies. Other countries would often wait to see FDA’s position before acting upon medical technology applications, and often model their own regulatory approach to FDA’s. US success in medical technology during recent decades stems partially from the global leadership of FDA.

FDA’s standards and guidelines have instilled confidence in the industry’s products worldwide. However, FDA has faced growing responsibilities along with heightened public demand for drug and device safety over the past decade. PwC surveyed 50 life science companies (19 making medical devices or diagnostic products), and found that respondents experience frequent problems in gaining product approvals, even to the point of FDA changing its position during the application review process. 40% of survey participants agreed that FDA denied some product approvals primarily because of inadequate review resources.

New market entrants are going to Europe for approval in half the time it takes to obtain FDA approval, but the same devices eventually gain approval in both markets. Companies said it takes twice as long in the US to approve the same technology as it does in Europe and Israel (6 months vs. 3 months). Companies said US regulatory approval most uncertain of all countries.

PwC expects that US innovation will decrease primarily because European countries will continue to provide more supportive regulatory processes that encourage innovation yet ensure safety and effectiveness on a timely basis. They predicted that France, Germany, and the UK will rank higher than the US. The report also noted that citizens of countries with more efficient and less uncertain, capricious, and  complex regulatory approval processes will gain earlier access to innovative medical technology, and providers in those countries will benefit from more experience using devices. Countries with long, complex, arbitrary, nontransparent, costly approval pathways will discourage entrepreneurs and investors, causing them to launch new products elsewhere.

Several industry executives surveyed by PwC said that medical technology innovators are going outside the US to seek clinical data, new product registration, and first revenue because of a challenging US regulatory environment. When you have excessive delays, you have to come up with more money just to allow the enterprise to survive. This increases the cost of innovation and makes it more difficult for small companies to survive to the end of the approval process.

Demanding and price-insensitive patients: Americans seemed to have a higher demand for healthcare services as measured by their frequency of doctor visits. During the past 50 years, the proportion of healthcare costs paid by US patients has declined from 47% to 12%.

Companies surveyed expect that obtaining reimbursement in the US will become much more difficult in the future, while it will become easier to obtain reimbursement for technologies in China, India, and Brazil. Additionally, employers as well as government and private payers in the US will push more financial risks to healthcare consumers and providers. They will hold providers more accountable for health outcomes, penalizing them for poor quality and high cost. These actions will tend to drive reimbursement for medical technology lower. By 2020, PwC predicts that process innovation based on novel use of information technology to achieve better outcomes at lower cost will make China, India, and Brazil stand out as innovators.

Supportive investment community: Medical technologies ranked as the second- or third- largest category among venture capital and angel investors. US venture capital funding averaged approximately $2.5 billion annually during the last decade, enabling commercialization of innovations from academia and elsewhere.

However, US venture capital investment has dropped since 2007, and the developing nations are spending nearly as large a proportion of their GDP on venture investing as the US. Governments of India and China are aggressively promoting venture funding and providing capital to early-stage firms within their borders. Because most innovation in medical technology occurs in start-ups and is later acquired by larger companies, multinational medical technology companies will increasingly look to these emerging markets for acquisitions to fill their product pipelines.

US medical technology firms will not hesitate to invest where growth is most promising. Global venture capital firms increasingly will see developing nations as more attractive. They will see the US market as less attractive because of the difficult regulatory environment, uncertain payment structure, and relatively weak rate of growth in R&D and resources for innovation. Venture capital will seek out countries where the growth opportunity is stronger and the approval process is less costly in time and money.

Despite its current scores, the Innovation Scorecard showed that while the U.S. will hold its lead, the country will continue to lose ground during the next decade. The report also projects declines for Japan, Israel, France, UK, and Germany. On the other hand, China, India, and Brazil will experience the strongest gains during the next 10 years. Specifically, China, which has shown the strongest improvement in innovative capacity during the past five years, is expected to continue to outpace other countries and reach near parity with developed nations of Europe by 2020.

PwC believes that the Innovation Scorecard could help industry work with regulatory and political leaders in making decisions and setting policies that will determine medical technology leadership. More informed decisions could enable further advances within the new value-based paradigm in medicine.

Five New Pillars of Innovation

Although the U.S. currently demonstrates the strongest capacity for innovation in the medical technology market, to develop the type of medical technology ecosystem required for 2020, PwC asserts that countries and companies will have to adapt to five new pillars of innovation.

System-oriented and value-based incentives: Fiscal and financial needs compelling payers to press providers for greater value, exemplified by value-based reimbursement models. Focus shifting from silo-based to integrated healthcare systems. If companies can demonstrate the efficacy of new technologies in developing markets, they can present them to US and European regulators and payers as proven alternatives.

Global networks of academic medical centers: Academic leadership that helped enable innovative research in the West is migrating to Asia and South America. Some US schools have responded by creating partnerships abroad.

Competing regulatory systems: Medical technology companies will continue to move into markets where they can obtain regulatory approval more quickly, generate revenues faster, and engage patients and providers in the cycle of innovation to advance their products and services. The FDA will come under greater pressure to improve and streamline how they review new products. Regulators in some developing nations, such as China, are reluctant to grant regulatory approval unless a company already has it in its home country. This gives US companies additional reason to operate in Europe because they can obtain approval there faster, opening the door to Asia.

Individualized solutions and price-sensitive customers: Providers who become more responsible for health outcomes, will look to companies worldwide for technology solutions that offer more integrated, holistic, cost-effective devices combined with wellness and disease management services. Companies must rethink their business models to align with personalized medicine and wireless technology.

Global financial networks: As investment opportunities shift offshore, more US-based venture capitalists will open local offices overseas, partner with counterparts outside the country, seek co-investment opportunities, and identify target investee companies abroad. Countries abroad are adopting national innovation strategies. These efforts show increasing willingness on the part of policymakers, regulators, and companies in the historic and emerging technology powers to adapt to create the kinds of reform, efficiencies and partnerships needed to maintain their position in innovation.

Discussion

The Innovation Scorecard shows clearly that the developed nations are slipping in their capacity and capability for innovation, while the emerging markets are rapidly gaining ground. Accordingly, the report asserts that long-term US dominance in medical technology innovation is no longer assured.

The supportive ecosystem that fostered the US dominance now creates inherent limits to change, encourages an incremental and less radical path to innovation, and discourages innovations that could transform healthcare’s cost structure and deliver greater value. Radical innovations that have a greater chance to bend the cost curve are more likely to emerge from developing countries such as China, India, and Brazil.

Companies are already tailoring new products to the specific needs of developing countries, making use of digital technology to extend care to large populations with little income or access to hospitals and physicians. Brazil, China and India most likely will move far ahead of the US and Europe in digital healthcare delivery because this type of technology addresses their acute access shortages in cost-effective and valuable new ways.

In the next decade, the report predicts that China, India, and Brazil will experience the strongest gains in developing next-generation lifesaving products, as capital, jobs and research gravitate toward these growing markets. "The key finding is that the U.S. is declining when compared with other countries across the globe," said Tracy Lefteroff, a Global Managing Partner of PwC's venture capital practice. "And we're in real jeopardy of losing our lead." Even a slight erosion in U.S. leadership status can siphon off good-paying med-tech jobs, Lefteroff added.

Conclusion

Each medical technology job generates an additional 1.5 jobs; each medical technology payroll dollar generates an additional $0.90 in earnings; and each dollar of medical technology industry earnings generates an additional $0.90 in earnings elsewhere in the economy. Those countries that can adapt quickly to the changing drivers of healthcare innovation and channel tensions into creative output will reap the greatest benefits from medical technology.

In the end, “people will have to decide whether they are willing to accept yesterday’s therapies rather than taking a risk on new technologies.” Americans “will have to find a way to embrace the fact that innovation always comes with some risk,” otherwise, the US will lose its dominance in medical technology and device innovation. Would you rather have open-heart surgery with the devices from 50 years ago or today?

Council for American Medical Innovation Survey: 2/3rds of Americans Believe Medical Innovation will Lower Healthcare Costs

 
The Council for American Medical Innovation (CAMI) is a partnership aimed at urging Congress to adopt a national policy agenda on medical innovation. Formed by leaders from research, medicine, academia, education, labor, business, health care and policy, CAMI supports:

• A renewed focus on improving science, technology, engineering and math (STEM) education.
• Policies that help America attract and retain the world’s best and brightest minds.
• Policies that encourage collaborative private sector and public sector biopharmaceutical Research & Development.
• Policies that incentivize private sector Research & Development risk-taking.
• Policies that cultivate dynamic research parks around the country.

A poll commissioned by CAMI and conducted from January 6-10, 2011, was released at a conference today entitled, “Medical Innovation at the Crossroads: Choosing the Path Ahead.” The poll showed that “Americans overwhelmingly believe that failure on the part of U.S. policymakers to invest more in medical innovation today will have a “significant long-term impact” on quality of life, employment and economic growth.

The purpose of the conference was to examine the most effective federal policy strategies supporting U.S. medical innovation as a cornerstone for job creation, economic recovery and health security to all Americans, and more importantly, to keep U.S. leadership in medical innovation.

Survey

The survey, which was conducted by Greenberg Quinlan Rosner Research in conjunction with Public Opinion Strategies for the Council for American Medical Innovation, was based on a national omnibus telephone survey of 1,009 adults ages 18 and over. Among the key survey findings:

Two-Thirds of Americans Believe Medical Innovation will Lower Health Care Costs: Sixty-six percent believe investing in medical innovation and research in the United States to help prevent and cure diseases will ultimately lower overall health care costs.

More Than Half Favor Increased Investment: Fifty-eight percent of Americans believe the federal government should spend more on medical innovation and research in order to address health problems such as cancer, Alzheimer’s and heart disease.

Jobs and Cures Top of Mind: Forty-eight percent list jobs and economic growth as top reasons why it is important for the U.S. to be the global leader in medical innovation and research. Equally, 48 percent list the development of new treatments and cures as top reasons.

Nearly Three-Fourths Cite Consequences of Inaction: Seventy-two percent believe there will be a significant long-term impact on quality of life, employment and economic growth if the U.S. fails to spend more on medical innovation and research.

R&D Tax Credit, Federal Regulatory Reforms and Public-Private Partnerships Receive Strong Support: Seventy-four percent are in favor of establishing incentives and reforms to the tax code to attract investment in medical innovation and research in the United States;

78 percent support providing government reforms to bring new innovations to market faster and at lower costs, without compromising quality;

81 percent support developing public-private partnerships between government, industry and universities to maximize resources and expertise in medical innovation and research in the United States; and

79 percent support creating economic and other incentives to promote exports of United States-based medical technology and innovation.

In response to the findings from this survey, pollsters Stan Greenberg and Bill McInturff noted that it was “unusual to see an issue that has the potential to unite Democrats, Republicans and Independents.” As a result, they acknowledged the “opportunity for consensus across party lines” when it comes to medical innovation, especially with the significant benefits it offers to our economy and overall health and well being.

CAMI President Debra Lappin applaued the results from the survey and recognized CAMI’s role in helping to lay “the groundwork for this important dialogue that will benefit every American, regardless of where they live or work.” She stated that “CAMI looks forward to continuing to partner with policymakers and leaders in the private sector to turn this dialogue into meaningful action.” The survey results were also discussed at the conference yesterday, which included speakers such as:

• Aneesh Chopra, U.S. Chief Technology Officer, Assistant to the President and Associate Director for Technology, Office of Science & Technology Policy;
• Dr. Fareed Zakaria, host of CNN’s Fareed Zakaria GPS, Editor at Large of TIME, Washington Post columnist and New York Times bestselling author;
• Dick Gephardt, Fmr. U.S. House Majority Leader and Co-Chair of CAMI;
• Mike Leavitt, Fmr. Utah Governor, Secretary of Health and Human Services and Co-Chair of CAMI;
• PhRMA CEO John Castellani;
• Chris Coburn, Executive Director, Cleveland Clinic Innovations;
• ITIF President Robert Atkinson and many others.

Additionally, CAMI released a new Web video that highlights the impact that medical innovation has had on Americans’ way of life, as well as the significant promise that exists if public and private sector leaders work together to make it a national priority going forward.

Discussion

With almost half of Americans in the survey citing jobs and economic growth as top reasons why it is important for the U.S. to be the global leader in medical innovation and research, Congress and federal agencies must carefully consider ways to implement health care reform that will lead to more jobs and strong economic growth. 

Moreover, with 81 percent of Americans supporting the development of public-private partnerships between government, industry and universities to maximize resources and expertise in medical innovation and research in the United States, policymakers and institutions must revisit policies and considerations that aim to hinder or make such collaborations difficult.

Additionally, with 66 percent of Americans believing that investing in medical innovation and research in the United States to help prevent and cure diseases will ultimately lower overall health care costs, it is clear that industry must be afforded a manageable regulatory framework that will lead to safe and effective medical products that reach patients in a timely manner.

Moving forward, Congress, agencies, institutions, and academic medical centers should seriously consider the data reported in this survey. Criticisms about industry-physician collaboration generally assert that such relationships should be prohibited because they are not in the public’s best interest. However, the data from the CAMI survey reveal that such concerns are misplaced, since Americans are overwhelmingly supportive of public-private partnerships with industry. As a result, entities should be encouraging such collaboration because this will lead to disease prevention and cures, economic growth and jobs, all of which Americans desire.

The American Surgeon: In Defense of Industry-Physician Relationships

 
As the number of restrictions on physicians working with industry continue to grow, and the places where policies prohibit physicians from collaborating with industry expand, close examination of the reasons supporting these policies is necessary.

The current trend of academic medical centers (AMCs), professional organizations, and States that have begun adopting policies that restrict permissible interactions and activities between industry and physicians dawned shortly after a set of recommendations proposed by Brennan and colleagues in 2006. Examples of the proposed policies placed restrictions on faculty, residents, students, and staff, which prohibited gifts, samples, and several other activities.

One of the main reasons AMCs began to adopt these policies was an attempt to avoid financial conflicts of interest that compromise core values of altruism and fiduciary relationships. In their view, profit motives and financial gains unavoidably introduce bias in medical decision-making and violate public trust. However, there is number of reasons why the adoption of such policies by AMCs is problematic.

Accordingly, a recent editorial by Don K. Nakayama, M.D., M.B.A. Chairman of Department of Surgery at Mercer University School of Medicine, In Defense of Industry-Physician Relationships in the American Surgeon, identified the misperceptions and myths that have led some AMCs and organizations to adopt such restrictive policies on industry interactions.  In his editorial, Dr. Nakayama comes to the “defense of industry-physician relationships” by examining the economic, ethical, and legal foundations for conflict of interest restrictions between physicians and pharmaceutical and medical device industries (“industry”).

One of the first problems with restrictive policies between physicians and industry that Dr. Nakayama identifies is that although some of the regulations themselves grew from alleged and some real conflicts of interest (COI) involving both drug and device trials,  “scientific misconduct, fraud, and dishonesty are noteworthy because of their rarity.” In other words, people overreacted by installing restrictive policies for events that are extremely rare. The problem with this approach was that the policymakers did not consider the other consequences created by such policies that could and are in fact now chilling the collaboration between physicians and industry.

Considering “the vast majority of industry sponsored research results in beneficial drugs and devices of immense benefit,” the potential impact restrictive policies could have on research, development, discovery, education, and patients should have been the first consideration when making restrictions on interactions with industry.

While some restrictions such as payment disclosure is reasonable, making “a total purge of all financial conflicts of interest has become the touchstone of medical professionalism.” This approach is unnecessary. As Dr. Nakayama points out, there needs to be more discussion about “an appropriate middle ground that acknowledges the rights of industry, physicians, residents, medical students, patients, and the public to the benefits that reasonable interactions between industry and physicians may provide.”

By ignoring the rights of these groups, “those who propose restricted industry-physician-patient relationships are thus in conflict with those who recognize a beneficial relationship.” This creates a debate on a number of issues, between those who see industry interactions as a violation of their sense of professionalism versus those who “see restrictions as an affront to their right to determine how they will practice medicine and their own definitions of the ethical practice of medicine.”

Medical Economics

Proponents of COI regulations frequently assert that doctors should have a selfless or altruistic concern for the welfare of their patients absent a financial motive. As Dr. Nakayama recognizes, this approach completely ignores the economic system the US pharmaceutical and device industries operate under, which recognizes that every level of professional interaction between industry and doctors “are necessary as aspects in a robust capitalist economy.”

In a capitalist system, products are developed to generate profits. In the drug and device industry, the process of developing a product is costly, long, and risky. A single drug requires $800 million and 7-12 years or more to come to market, a good chunk of the 18-year duration of patent protection. Only 8 percent of drugs developed become approved drugs. The only way drug and device companies can generate profits is by allocating their resources to either acquire or develop innovative drugs or devices based upon market demand. Society, through government, has recognized that “such innovation is socially desirable and is worth granting industry patent protection on new drugs and devices.”  

To ensure that innovative drugs and devices are effective and safe for the public, government regulations and requirements are complex and rigorous. In fact, even after a product is approved, post-market surveillance is necessary to detect problems that may arise after drug introduction, for which the company remains liable. Consequently, it is precisely because of this balance between high risk, high regulation products that companies “depend on the market for feedback on how to refine their product so that it better fits what doctors and patients need.”

It is also because of this long process of drug development and satisfying regulatory requirements, which limits the period of monopoly pricing power over its product, that companies must allocate resources to bring an approved product to the market through ethically and professionally acceptable marketing and advertising practices. Critics who point to the growing costs of health care claim that profits of the pharmaceutical and medical device sectors are excessive, that the money spent on marketing increases health care costs, and does not primarily serve patient interests.

However, as Dr. Nakayama asserted, “marketing and advertising are not contrary to high quality evidence-based care. They are an integral part of getting any product into the market.” Moreover, those who criticize drug and device companies for advertising easily forget about the numerous hospitals and AMCs who use billboards, commercials, and ads to accomplish the same goals: bring their services to the market.

In addition, by “starting with an unknown drug or device, a company has to overcome established practices of surgeons and physicians.” If the company hopes to recoup any costs for making the product, they have to devote resources to marketing to increase sales and profits, which can be extremely difficult to do when physicians are unfamiliar with their product. Dr. Nakayama gave a perfect example of this: surgeons adopting surgical staples. He explained how this was such a “radical departure of surgical technique, but because of the marketing, advertising, and reinventing the surgery through education, demonstrations and product samples, surgical staples eventually transformed surgery to depend on industry and its surgeon collaborators.

Profit Motive in Industry

The next argument that critics of industry-physician interactions make is that “any benefit that comes to physicians through industry contact is suspect.” They see profit motives and market incentives in medicine as negative challenges to medical professionalism. However, as Dr. Nakayama acknowledges, “the goals of physicians and industry are remarkably congruent and complimentary.”

Both want effective medications and devices that benefit patients. Physicians want them, industry wants to supply them. Doctors want to learn new treatment modalities; industry wants to educate doctors in those techniques and products. Both parties want effective treatments that maximize benefit, minimize harm to the patients, and minimize legal risks. Doctors want to run profitable practices, companies want to run profitable businesses.

The first major area where physicians and surgeons in practice collaborate with industry is in clinical research and trials. Industry depends upon physician researchers with busy clinical practices to test drugs and device and report results. The physicians expose patients to experimental drugs and procedures in the belief that patients will benefit from participation. Neither industry nor physicians want harm to come to study participants but, human testing is risky. That is why such research is strictly regulated and overseen. As such, because physician collaborators are necessary parts of product research and development, they deserve and receive appropriate compensation from industry.

The next area is the vastly larger venue of marketing and sales of drugs and devices after clinical research studies have shown efficacy and safety. Physicians in practice and their patients are the market. Companies need their representatives to interact with medical providers using professional and ethical practices to get their products to doctors and in patient’s hands because of the short period of patent protection to recoup close to $1 billion in product development and testing.   In the end this is a win win scenario as patients benefit from quicker implementation of new and improved therapies. While past practices were occasionally egregious and excessive (i.e. gifts), current industry guidelines prohibit those practices, and help to maintain the highest level of educational activities and contact with industry.

What critics must realize is that the only time industry can have with clinicians’ in busy practices are mealtimes and conferences. However, critics maintain that such contacts “still are tainted by a sense of obligation among physicians to provide a service in return and thus create unprofessional behavior, a sense of entitlement, and demean the profession.” These critics ignore the fact that when industry talks with clinicians about effective novel therapies that have demonstrated safety and efficacy, if a hospital adds it to their formulary or physician adopts it, “the public benefits.”

It is also important for critics to acknowledge the fact that “physicians have the training and sense of professionalism to want the best for their patients and protect them from harm. They have independent sources of information through journals, practice-based learning activities, and professional organizations to confirm or refute industry claims.

As a result, physicians in practice have their professional integrity and the safety of their patients in mind, and are able to filter the message they get in industry marketing.

The Underpinnings of Medical Professionalism

Another concept that underlies prohibitions of COI is that a physician has a fiduciary relationship with the patient. As Dr. Nakayama explained, fiduciary means “someone who acts for and on the behalf of another in circumstances that give rise to a relationship of trust and confidence. One in a fiduciary relationship acts at all times to the benefit of the other, and does not put his or her interests before those of the beneficiary, and thus cannot have a COI with the interests of the beneficiary.” However, Dr. Nakayama argues that a physician-patient relationship does not establish a fiduciary relationship because they are not available to their patients at all times, and the standard of care which doctors adhere are not defined by the maximal benefit to the patient but reasonable standards of the professional practice.

Doctors adhere to professional standards and codes of ethics that they themselves determine as a right of self-government the public has given physicians. The public is able to “retain an interest in professional behavior by physicians through state boards of medicine and a legal system that protects patients from malpractice through the tort law system.” Those groups that want to restrict physicians contact with industry are essentially taking away the rights of doctors to make their own standards and making interactions with industry crimes enforceable by law.

Consequently, instead of using altruism or fiduciary, Dr. Nakayama recommends the business concept of excellent service. He explained that the “tenants of excellent service are putting interest of customers first, integrity to the company’s mission and values, and honesty and ethical business practices. They are directly translatable into medical terms that describe altruism and professional behavior exactly: putting patients’ interest first, scientific clinical integrity and absence of bias in medical decision-making.”

Force of Law

Critics also ignore that physician-industry relationships are protected by the First Amendment of the U.S. Constitution, which guarantees freedom of speech, including the right to market and advertise medical products and drugs. As Dr. Nakayama explained, “it also guarantees freedom of assembly, the right of physicians to meet with industry reps over reasonably priced meals and conferences and to have mutually beneficial contractual relationships with industry to develop new drugs and products. The Copyright and Patent Clause of the First Amendment protects the rights of companies to enjoy monopolistic profits that come to their discoveries under patent protection.”

Dr. Nakayama also acknowledged the fact that industry and professional organizations have themselves developed codes of ethics that guide their interactions. These codes preserve the relationships that are a necessary part of the introduction of necessary drugs to clinical practice, and also minimize and prohibit unethical contacts and activities. Since “part of professionalism is the responsibility to abide by an agreed upon code of ethics without having to resort to the blunt force of law,” there is no need for further restrictions.  

Conclusion

In the end, “across-the-board conflicts of interest restrictions risk the unparalleled advances in medical technology that we enjoy today.” The clear problem with such policies is that they prohibit what are overwhelmingly “productive relationships between industry and physicians that provide novel drugs and devices of immense benefit to society.” Moreover, these policies ignore the fact that “physician researchers and inventors are responsible for an overwhelming array of drugs and staggering list of devices that depend upon industry for product development, production, and marketing.”

The reality is, “industry goals are congruent with those of physicians: patient welfare, safety, and running a profitable business.” Moreover, industry has transformed completely the practice of medicine and surgery. “Its success is measured in the increase in longevity of nearly 10 years from 1950 to the present (68.2 to 77.9 years) and years of productive life. The numbers of employed workers over 65 years have doubled from 1977 to 2007.”

As a result, “humankind owes an overwhelming array of live saving medications and surgical devices to the unique American industry-physician partnership.” Since so many benefits come from relationships between industry and physician, “it is difficult to imagine another system that could create the volume of innovation developed and adopted in the US.” Therefore, if the US continues to restrict industry-physician relationships, Dr. Nakayama asserted that “all of us will suffer.” That is why “preservation of industry-physician relationships is vital to maintain medical innovation and progress.”