With these strategic uncertainties in mind, I offer some prognostications that are likely to affect many, if not all, medtech businesses over the next few years starting in 2010. I offer them for your consideration in no particular order.
If you don't realize the emerging importance of controlling the cost of delivering care in the U.S., you haven't been listening. (I've been on the soapbox for many months on this topic.) If your products don't exert a measurable and tangible reduction in healthcare costs, their acceptance will suffer in comparison to others that do offer this benefit. There are several ways to make this happen, but a lower price is the least desirable approach.
A Revised 510(k) Process
Important changes appear to be in the works for this venerable and historically easier path to FDA marketing clearance. Its premise has always been tenuous, and the agency now appears ready to admit that fact. It is likely the process will become more difficult, time-consuming and expensive. Watch this closely, and consider accelerating commercialization of that new product to beat the changes.
U.S. Healthcare Reform
It appears to be at best a 50:50 shot that anything will be signed into law this year, but if it happens it won't have a great effect on the medtech industry - at least that's what most "experts" believe. The industry would enjoy the second-hand benefit of more insured patients being diagnosed and treated, but increased pricing pressure and industry give-back fees are likely to balance out that effect. The bottom line: Not much is likely to change for medtech suppliers overall.
Patient Information and Advertising
Medtech is likely to go the way of pharma in direct-to-consumer (DTC) advertising, especially via the Internet. Expected formal guidance documents from the FDA this year will break the logjam of uncertainty that currently restrains the industry. A new, lower-cost way to reach patients (and receive their feedback) will greatly expand. And, so-called "social media" will enter the fray with a vengeance.
Comparative effectiveness research is off to a rocky start, as it's hard to know who will be the arbiter, how it will be paid for, and how one can manage the inevitable denials of care. But I predict it will come to pass eventually. Better to be prepared for that day than not. And, really, does it not make sense that your product or procedure will be favored if you can prove its greater clinical effectiveness and better outcomes in comparison to alternatives?
The Sunshine Act
While not yet signed into federal law, I think it's coming. The proposed Physician Payments Sunshine Act of 2009 would require pharma and medtech companies to publicly disclose (1) payments or other consideration given to healthcare entities in excess of $100 annually and (2) physician ownership interests in manufacturers or GPOs. Compliance with such a law would be challenging and would certainly impact at least record-keeping if not behaviors.
In Vitro Diagnostics
The IVD industry has been on a roll lately, and that's likely to continue. It has become the darling of private equity and venture capital life science investors owing to easier regulatory pathways, the growing importance of accurate, timely diagnoses (which are far cheaper than ineffective or inappropriate treatments), and some terrific technical developments in molecular methods. This enthusiasm is somewhat tempered by the likelihood that FDA will begin to regulate the important market sector of laboratory-developed tests.
The news is not so good for this industry sector. A growth rate of only 3% is predicted this year, a far cry from the historical trend. Causes of this disappointing performance prediction are (1) large capital requirements, (2) reimbursement cuts by CMS, and (3) legislation against self-referrals. Time to pull in the horns for now despite this sector's proven impact on the quality of patient care.
Finally, a few market sectors are worthy of your attention. First there's neurology, which has long been clinically interesting and is now attracting new investments and development initiatives by the likes of Medtronic and St. Jude Medical. The neurology sector exhibits a strong pipeline of devices addressing major unmet needs, large patient populations, and favorable reimbursements.
Then there's therapeutic hypothermia, which consists of a variety of protocols and technologies for rapidly cooling a patient's core temperature after acute, life-threatening cardiovascular and neurologic events. Over 30 protocols are already in use by hospitals and many studies are underway for treatment of stroke, spinal cord injury, adult and pediatric cardiac arrest, traumatic brain injury, and hypoxic ischemic encephalopathy (perinatal asphyxia) in infants.