Contributors: Karen Gierszewski

Physicians in the US are increasingly worried that innovation in the US has taken a bad turn. This has stemmed partly from two topics we’ve discussed before: the purportedly strict FDA approval process and the fact that many new devices released in the US have been brought under fire—most notably, metal-on-metal hip implants.

Now, at the recent Transcatheter Cardiovascular Therapeutics conference, this topic has been raised again. Most notably, companies have brought up the fact that it’s tough to make a business case for developing improved drug-eluting stents (DES). This is because the current-generation stents are already very good and feature low rates of complications, meaning that trials to show the conclusive superiority of new stents would have to be extremely large and therefore expensive. In fact, one panellist argued that the development cost could range from half a billion to a billion dollars, and it would therefore be challenging to recognize any returns. For patients, this unfortunately means that the rate of adverse events may never reach lower levels than what it is now. For the market, this means that it is unlikely to be expanded by the release of new premium-priced technologies.

Is innovation in the US really in such bad shape though? One article in the Economist indicated that innovation in the US is still way ahead of other countries, such as Germany; the US received a score of about 7 in terms of medical technology innovation while Germany and the UK scored just above 5, representing the second-highest scores. The article also emphasized that the regulatory process in the US is still much better than say China’s or Japan’s. Nonetheless, the US did show a slowdown in innovation from 2005, while China, Brazil, and India all showed notable improvements. Consequently, while the situation in the US may not be as bad as the industry is painting it, action will certainly need to be taken to keep the US at the head of the pack.

Contributors: Karen Gierszewski

Product development in the medtech space is always ongoing, with lots of interesting new devices being released each year. But are all new products really worth it? Recent research says no.

For example, one study examining the use of innovative knee implants found that these devices are not cost-effective in elderly patients, who may not actually live long enough to benefit from the incremental gains they would get from using an innovative new device over a basic one. Similarly, metal-on-metal implants represent another new technology in the reconstructive joint implant field, and numerous problems have been brought up relating to these devices, as we’ve already discussed.

On a similar front, research has been done on the necessity of preventative screening—new advancements in medicine have allowed more effective and earlier screening for various diseases and conditions. But how helpful is it, really? In October 2011, the US Preventative Services Task Force recommended that men should no longer undergo annual tests to screen for prostate cancer. This review stated that while undergoing the test will, in fact, detect cancer, many men with prostate cancer will never be bothered by it. If men are, however, told that they have cancer, they are likely to undergo aggressive and invasive treatments and may suffer from consequences such as impotence or urinary incontinence their entire lives. Consequently, it may simply be better for these men to never know that they have cancer at all. MRG anticipates that this study may have a slight negative effect on markets such as brachytherapy seeds, which are used to treat prostate cancer.

Similarly, another study suggested that mammograms screening for breast cancer should be scaled back. Again, the argument was that some cancers end up being treated unnecessarily, which causes undue pain and suffering to the patient. While it is not anticipated that this will have a strong effect on screening volumes, this may reduce the wear and tear on mammography systems to some extent, thereby reducing demand for replacement systems.

These studies may have been prompted by the fact that health care spending in the US is enormously high—one study found that the US spends nearly $8,000 per person on health care. The country with the second-largest spending per capita is Norway, with approximately $5,300 per person. By contrast, Germany, the European powerhouse, spends only $4,200 on health care per person. It would be hard to argue, however, that health care is twice as good in the US as it is in Germany.

If these sorts of studies continue to be done in the US, it is likely that more devices will find themselves on the hot seat. That being said, manufacturers need to really focus on developing technological improvements that will actually provide a strong cost-benefit advantage.

Contributors: Karen Gierszewski and Sara Scharf

Medtech companies across the US are understandably upset because of the looming medical device tax that was signed into law in 2010 as part of the Affordable Care Act. Under this act, companies will be required to pay a 2.3% tax on their total revenues starting in 2013. Many industry leaders have spoken out against the tax, saying that it will stifle innovation—this tax could be particularly detrimental to smaller companies looking to bring new innovations to the US. Furthermore, the tax does not take into account whether or not a company is profitable. As a result, associations such as the Medical Device Manufacturers Association (MDMA) argue that this tax could weaken the US’ position as a global leader in medical device innovation—a fear that has already been brought up due to claims that the approval process in the US is already very strict, lengthy, and expensive.

This tax will force manufacturers to face two unappealing choices: absorb the cost themselves or pass it along to already cash-strapped facilities. In an industry faced with an increasing number of group purchasing organizations and fears of a second recession, neither option is particularly attractive.

On the flip side, policymakers argue that the tax will support procedure volumes because the money from the tax would go directly to funding health care. For example, parts of the Affordable Care Act already in effect have extended basic health care insurance to tens of millions of Americans who were not previously covered (more details on the Affordable Care Act that can be found here ). This in turn will boost demand for procedures and the relevant devices.

Nonetheless, medtech companies remain focused on the downside of the tax and the MDMA has said that it will continue to lobby to eliminate it, although no headway on this front had been made as of October 2011. It is worth noting, however, that the tax has already been reduced from 2.6% to 2.3% in an attempt to appease manufacturers.