As any successful medtech company knows, developing an innovative device is just the first step in improving patient care. Once that idea has come to fruition, regulatory approval begins, which is why medtech startups need an ally who can help walk them through the process and be their voice with the regulatory bodies who will ultimately grant approval and reimbursement, such as the FDA and the Centers for Medicare and Medicaid Services (CMS).
The MDMA (Medical Device Manufacturers Association), a national trade association based in Washington, DC, is that voice, providing educational and advocacy assistance to innovative and entrepreneurial medical technology companies. And for the past 17 years, Mark Leahey has been spearheading its efforts to help maintain a healthy American innovation ecosystem that can generate new technologies to help improve and save lives.
The Fogarty Institute has been working more closely with MDMA as we strengthen our policy program and recently had the pleasure of catching up with Mark to discuss the latest trends in our industry, progress made by the FDA and new and pending legislation that startups should pay attention to.
Q. What are the trends you are currently seeing in medtech?
When you look at the big picture and the ongoing clinical needs that exist given the aging population, more than ever we see a need and opportunity for medical devices to dramatically improve care and save lives. That’s why I think there is still so much energy for innovators to assess the unmet clinical needs and develop solutions.
In addition, a trend that has been accelerating is the cross-over, collaboration and partnerships between the medical technology and high-tech industries – one example that comes to mind is surgical instrumentation by Johnson & Johnson with artificial intelligence by Google. That convergence and ability to leverage each field’s expertise presents a very exciting opportunity for developing potential medical solutions.
With that said, there is also a tremendous amount of opportunity to meet existing needs using “traditional” medtech devices, such as implantables and others for treating cardiovascular, diabetes and neurological conditions, to name a few. We are very enthusiastic about the opportunities for medical technologies to address these challenges in the healthcare delivery system.
Lastly, we also see that as larger tech players with capital to invest wade into the healthcare market, they are realizing that it is better to allocate resources by investing in those companies already in the medtech space. Big tech is recognizing that they can’t go into it alone and will need to harness that institutional knowledge of the FDA and regulatory and reimbursement functions where medtech companies have already built expertise.
Q. What are some of the key takeaways from your most recent FDA Forum in Palo Alto?
The overarching takeaway is the great collaboration that exists between the FDA and innovators. This was evidenced by the fact that the director of the Office of Device Evaluation, Bill Maisel, and approximately a dozen of his senior leaders took the time to travel from Washington, DC, to the Bay Area. They spent two days immersed with the innovators engaged in a true dialogue, sharing what they are thinking, and in turn, hearing the perspective of innovators on existing policy and future plans. That dialogue is so constructive to advancing what is ultimately the common mission to accelerate patient access to safe and effective technology.
The big takeaway is the increase in collaboration to work together for the greater good of patient care in a path that is most efficient and effective.
With more than 160 attendees, there were a number of important areas of discussion. The FDA discussed the re-organization of the total product life cycle, which will allow the Center to marry the reviewers who have the expertise in medical technology premarket review with the professionals who work primarily in post-market issues. Historically the institutional knowledge of a product when it was reviewed was lost after a device was cleared/approved and then moved to a different FDA group. Having that collaborative approach will be helpful so that the knowledge is shared among everyone in the team.
Another area of upcoming guidance is where the FDA will be more clearly defining “acceptable uncertainty.” There is acknowledgement that there is risk associated with all products, drugs and devices, and the key is to define the acceptable risk in relation to the corresponding benefits. Greater clarity will be helpful.
The group also engaged in ongoing discussion about leveraging “real-world evidence” and shifting some of the requirements that were previously needed premarket to clear or approve a product. Again, there is a growing recognition that as long as the safety profile is there, patients should have access to the technology, on the condition that there will be additional data collection and monitoring in the post-market setting to ensure the product is working as intended.
Finally, the FDA announced that under the Abbreviated 510(k) program, startups can now pursue a voluntary, alternative 510(k) pathway to enable moderate-risk devices to more efficiently demonstrate safety and effectiveness.
These are all areas that indicate that the FDA is maintaining the “gold standard,” while being more efficient with the goal to be No. 1, ensuring U.S. patients have first-world access to U.S. technologies. These initiatives help drive towards that goal.
Q. Moving forward, what are some of the opportunities and challenges facing medtech?
Opportunities include a growing urgency for medtech companies to develop technologies that address the unmet clinical need to manage chronic disease, which is currently between 75 and 80 percent of the healthcare spend.
Yet challenges remain, especially for early-stage companies. While we have seen the venture dollars flow back into medtech, they continue to be primarily for later-stage rounds. If you are an early-stage company with disruptive technology, particularly if you are a first-time entrepreneur, getting that Series A financing remains extraordinarily difficult. We continue to work with the National Institutes of Health (NIH) and other organizations to see if there are alternative sources of funding, such as grants, that will allow early-stage capital to flow. That will hopefully allow these companies to advance and hit the milestones needed to make them more attractive candidates for early-stage investing from traditional VCs.
MDMA is also spending a significant amount of energy to put forward reforms that would narrow that gap between regulatory and reimbursement, including more transparency, consistency and accountability from both CMS and the private payers for the kind of evidence they need to see to support positive coverage determination. In looking at the choke points that are slowing true patient access and adoption, the reimbursement side of the house is definitely one where we are focusing. We are exploring administrative and legislative solutions and also engaging with private payers and others to move the ball forward to improve patient care.
Also, increasingly we are hearing that the consolidation that is taking place in hospitals, insurers and the medtech industry is putting additional pressure on small startups that have disruptive technologies, but without the broad portfolio needed to penetrate the market.
Q. Which legislation is impacting or may impact medtech startups, and how is MDMA helping?
On the legislative front, ensuring a strong and robust patent system in the U.S. is a vital issue MDMA has been addressing for the past decade. There has been an effort by “mega-tech,” such as software companies, to make it easier and cheaper to infringe on patents.
But they have a dramatically different business model than biotech, medtech, pharma or other manufacturing industries. Fortunately, MDMA has been working with universities, VCs, biotech, pharma and large manufacturing companies, among others, to educate members of Congress that these proposals were directed at abusive patent “trolls,” and there is a better, targeted solution to address the problem.
That education has helped, with the introduction of the “STRONGER Patents Act” on Capitol Hill, which protects the work of entrepreneurs, strengthens the medtech ecosystem and is a critical win for early-stage companies that need strong IP protection to move their startup forward and attract capital.
On the reimbursement side, there have been some legislative and administrative ideas that CMS is exploring to potentially offer provisional coverage earlier in the process for promising new medical technologies.
Finally, we will continue to fight for a full repeal of the medical device tax. The certainty that would accompany a full repeal would allow larger companies to deploy more capital over the long term to smaller companies seeking financing.
As far as the Institute, Dr. Fogarty has been a long-time friend and now with the addition of Andrew Cleeland and the leadership team, we look forward to building on our relationship to make sure that we are advancing policy in Washington that will accelerate innovators’ ability to bring products to market and treat patients. And if there are opportunities in which Capitol Hill needs to hear from innovators, MDMA will continue to share those messages, and make sure that early-stage entrepreneurs are having their voices heard.