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The Artificial Heart: Prototypes, Policies, and Patients 9 Roles of Government and Industry in Medical Technology Research, Development, and Use FROM ITS OUTSET IN 1964, the artificial heart program has differed from most of the extramural research supported by the National Institutes of Health (NIH). It has involved a three-way partnership of government, academic researchers, and for-profit developers and manufacturers; it is more clearly applied R&D than basic research; it relies on the contract mechanism to support its major R&D projects, not the grant or cooperative agreement; and it is interdisciplinary as distinct from discipline-oriented research. As a consequence of these features, the artificial heart program has generated a number of questions. The most general of these include the following: (1) What is the proper role of the federal government in the support of applied R&D? (2) How consistent are the program 's purposes with the mission of NIH and the National Heart, Lung, and Blood Institute (NHLBI)? (3) What is the proper role of the federal government in enabling the use of new technologies? Although these aspects of the artificial heart program have received little external attention over the years, the committee has examined them because they are relevant to the program's future as well as to government-sponsored biomedical research in general. The major portion of this chapter addresses the above questions. It also reviews the most appropriate organizational approaches to interdisciplinary R&D and to industry-university relations, the optimal manner in which to accomplish the type of interdisciplinary collaborative research that the artificial heart program represents, and the possible adverse effect of industry support of academic R&D on open communication among mechanical circulatory support system (MCSS) researchers.
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The Artificial Heart: Prototypes, Policies, and Patients ROLE OF THE FEDERAL GOVERNMENT IN THE DEVELOPMENT OF MEDICAL TECHNOLOGY The federal government plays several different roles in the development and use of medical technology such as the artificial heart. It sponsors research and development related to the technology; it regulates the investigational use of medical technology (drugs, biologicals, and medical devices) with human subjects and allows only those products that have been evaluated as safe and effective to be introduced to the commercial market; and it makes coverage and reimbursement decisions for Medicare. This section examines the first of these roles. Rationale for Federal Support of Research and Development Although the support of private-sector research and development by the federal government has deep historical roots, only since the end of World War II has this support become a major government function. The immediate postwar rationale was provided by the successful application of science and technology to military purposes. Consequently, national security R&D, the development of nuclear energy for power generation, exploration of outer space, and the support of medical and basic scientific research dominated federal spending in the first two postwar decades. As the scale of federal R&D grew and as its purposes embraced domestic policy concerns, a relatively clear conceptual rationale emerged for the respective roles of the public and private sectors in the support of R&D, which has implications for MCSS development. Theoretical Considerations Economic theory provides the clearest expression of the rationale for federal support of R&D, predicated on the theory of market failure. Basically, this theory holds that in a perfectly competitive economy the private sector will systematically underinvest in research. The reasons to expect this underinvestment, as Arrow (1962) stated them, are that research is risky; unlike other resources, research is not consumed by use but generates increasing returns from use; and access to information (the result of research) can be restricted only to a limited extent. These features hold most clearly at the basic end of the research continuum and are less and less relevant as activity moves closer to application. Market failure illustrates one aspect of the problem of externalities. Where the production of a good generates external benefits (social rates of return greater than private rates of return) to those who do not pay for it, private firms will underinvest in its production relative to a socially optimal
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The Artificial Heart: Prototypes, Policies, and Patients level. Where the production of a good like steel generates external costs, such as air pollution for third parties who do not consume steel, private firms will produce above the socially optimal level. With research and other examples of the first case, the economic value of the external benefits cannot be incorporated by producers in the price of the good; consequently, those benefits are available to “free-rider” third parties. In the second case, the costs of production are not fully reflected in the price of the good but are passed on to third parties in the form of nuisance, environmental degradation, and adverse health consequences. The theoretical argument regarding market failure and externalities leads to an argument for public investment in research because of its “public goods” nature. A public good is defined as one whose social rate of return exceeds the rate of return that could be realized by private firms producing the good. For example, the results of research benefit many parties across a wide range of applications, in unpredictable ways, over extended periods of time, even though such results may have no known relation to application at the time they are generated. Practical Implications Practically speaking, the above argument leads to three conclusions. First, a justifiable and active role for the federal government is clearest in the support of the basic research stage of the innovation process. Here, from the above discussion, we expect the private sector to underinvest and the burden of financial support to be borne by the federal government. However, no method exists for determining the optimal level of such research that the federal government should support, that being determined by the political process rather than by methods such as cost-benefit analysis (Williams et al., 1976). Second, the least justifiable role for the federal government in the support of R&D is at those stages nearest to application. Here, usually, products are divisible and benefits from them can be restricted by the producer to those who purchase them, uncertainty is relatively low, and consequently private firms are able to capture a return on their investment. Moreover, private-sector understanding of how to combine knowledge of the market with technical knowledge is highest (and public-sector understanding of the same is lowest). Third, between these two identifiable polarities lies an intermediate or gray zone in which judgments about the roles of the public and private sectors with respect to particular R&D programs or projects are a matter of dispute. The conceptual rationale discussed above provides little clear guidance to policymakers and other interested parties, who usually include the government, academic institutions and researchers, and private firms. Parti-
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The Artificial Heart: Prototypes, Policies, and Patients sans of public-sector investment will advance a public goods argument (based on the private sector's unwillingness to support public-benefit R&D); defenders of a leading role for the private sector will argue that investment in the application of R&D is best left to the private sector. Under the circumstances, the definition of the public interest must be left to the political process. Controversies in this area typically focus on issues such as the federal policies and procedures designed to ensure public accountability, or on the probable social benefits (health outcomes in the case of biomedical programs or projects). They may also involve, as discussed in a later section of this chapter, “industrial policy” or international-trade considerations. Status of the Artificial Heart Program The foregoing discussion is relevant to NHLBI's role in MCSS research in academe and private industry because, despite almost 30 years of NHLBI support, questions persist about the appropriateness of that support. The mission statements of NHLBI and NIH provide little guidance on the types of research to support (e.g., basic or applied research). Neither do they clarify the appropriate purposes of R&D efforts, or the management tools for either targeted programs to develop a product or nontargeted activities to develop new knowledge. The NHLBI mission and thus its authority for conducting R&D programs is broad in scope, namely “to provide leadership for a national research program in diseases of the heart, blood vessels, blood, lungs, and in the uses of blood and the management of blood resources” (NIH, 1988, p. 51). In carrying out its mission, NHLBI supports research, investigations, clinical trials, and demonstration and education projects. For example, NHLBI 's Devices and Technology Branch, which includes the artificial heart program, “plans, conducts, and directs a program of development and assessment of devices, instruments, and other technology applied to the problems of cardiovascular disease . . .” (NHLBI, 1990). Although the mission statements are broad, and thus offer no clear guidance about the appropriate roles of the federal government and the private sector in the case of the artificial heart program, it is possible to identify several issues about which controversy may occur. Management and Accountability As described in Appendix B, NHLBI's artificial heart program began with a program office formally established in July 1964. Then as now, the program's targeted, contract-based nature was unusual in biomedical research, having been modeled after Department of Defense, National Aero-
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The Artificial Heart: Prototypes, Policies, and Patients nautics and Space Administration, and other federal R&D components engaged in the procurement of technologically complex systems. The establishment of this targeted circulatory support program within the National Heart Institute was consistent with President Johnson 's declaration in 1965 that he wanted “the secrets of the laboratory” unlocked and applied at the bedside in order to stem the tide of human illness (Omenn, 1984). It was manifested as well in the Artificial Kidney/Chronic Uremia program of the National Institute of Arthritis and Metabolic Diseases, as well as in several prominent programs of the National Cancer Institute (Rettig, 1977). The controversy over management methods also involves resource allocation. That is, the use of grants or contracts has clear implications for the kind of research supported and those likely to perform such research. In addition, the private sector is often concerned about the way that the contract mechanism, as administered by NIH, affects the innovation process. Social (Health) Benefits The intermediate-zone criterion that perhaps is most directly relevant to decisions about the artificial heart program is the likely social benefit of research in terms of its impact on health outcomes of the U.S. population. Unquestionably, the prevailing opinion in medicine, which is shared by Congress and the general public, is that medical research is the key to clinical progress. However, no generally acceptable criteria exist to judge the effectiveness of NIH research in terms of its contributions to national health status. The same factors that lead private firms to underinvest in basic scientific research make the calculation of the social benefits of such research problematic. The methods for turning scientific achievements into socially relevant products and services are rarely clear, and the time frame within which economic and social relevance is to be demonstrated is highly debatable (Moskowitz et al., 1981; Omenn, 1984; Finneran, 1986; NAS, 1989). Appropriate management of this technology transfer task has been identified by one observer as “NIH's most significant problem” (Lane, 1981, p. 14). For the country, therefore, Congress closely monitors each NIH institute 's attempts to balance its allocation of research funds between the development of new knowledge and its application (Shodell, 1990). In summary, historical analysis of the application of economic theory leads to no conclusive answer about the propriety of continuing federal support, through the artificial heart program, for MCSS development. This committee, along with NHLBI decision makers each time they face funding issues, must balance the benefits and risks.
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The Artificial Heart: Prototypes, Policies, and Patients Industrial-Policy Considerations With programs such as the artificial heart, the lack of clear criteria defining public and private roles typically evokes justifications for federal involvement in terms of industrial policy—policies regarding taxes, patents, antitrust controls, and particularly international trade—that are designed to improve the economic strength of the United States in competitive world markets. A major policy issue involves how the federal government can best stimulate innovation, applications, and commercial development of biomedical technology and, more specifically, which technologies (NAS, 1989; NRC, 1990). The relevance of industrial policy arguments for any specific R&D program can be determined only through the political process, by evaluating competing views about the appropriateness of federal government involvement in the particular aspect of the country's industrial life. The Small Business Innovation Research (SBIR) program is one example of federal support of applied research in the private sector that is motivated by industrial-policy considerations. Through the SBIR program, federal agencies having large extramural research programs allocate at least 1.25 percent of their annual R&D expenditures to peer-reviewed applications from for-profit firms. The program imposes limits on the length and amount of awards, unlike venture capital investments. These limits can discourage firms from confronting the uncertainties of innovation, which can be costly in both time and dollars. Nevertheless, the SBIR program has responded to the medical device industry's interest and to specific needs related to the artificial heart. As of August 1990, eight of NHLBI's SBIR awards, with a total annual value of $888,000, were under the artificial heart program (NHLBI, 1990). The SBIR program, ultimately, is based on judgments about the relative importance of small entrepreneurial firms in the innovation process and their contribution to the entire economy. The entrepreneurial role of small businesses is one argument raised in these discussions. Roberts (1988) observes that, in the medical field, young small firms provide a supportive environment for creativity but rarely have the infrastructure or financial resources needed to support and sustain innovation through the steps necessary to obtain financial return to the company. He concludes that “being technologically innovative may well be a curse rather than a benefit” (Roberts, 1988, p. 45) and believes that the situation justifies government funding for product development as well as market applications research.1 1 Another federal effort to stimulate technological development for international-trade reasons is the Critical Technologies Institute in the White House Office of Science and Technology Policy. This new institute's principal task is to identify technologies “deemed especially important for international competitiveness and national security” and to provide guidance for public investment in these technologies (Hamilton, 1990).
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The Artificial Heart: Prototypes, Policies, and Patients The United States currently is considered a world leader in health technology; the positive impact of that status on the economy is not to be taken lightly (NAS, 1989). Concern exists, however, about the ability of the United States to maintain this leadership, given the competitive nature of the international health care market and the recent experience of countries such as Japan—but not yet in the health care field—in doing a better job of production and marketing (commercialization) than U.S. industries (Bylinsky, 1990; Derian, 1990; Murray and Lehner, 1990). The ability to increase U.S. economic competitiveness is perceived by many to be closely aligned to how effectively government stimulates industry in the transfer of technology to the marketplace (IOM, 1990) and to what extent the U.S. market emphasizes high-quality design and low cost in health technology (NAE/IOM, 1988). International-trade considerations thus sometimes constitute a policy justification for particular R&D programs. Advances being made in countries such as Germany, Italy, and Japan in MCSS development are of particular relevance. The committee noted two concerns in relation to these foreign efforts: Will the United States be able to exploit the commercial opportunities provided by its research investment in the artificial heart program? Is the current U.S. lead in developing the artificial heart likely to shift to other countries because of possible future underinvesting in bioengineering research in this country (Maxwell, 1991)? Although no hard figures are available on either the projected cost of ventricular assist devices (VADs) and total artificial hearts (TAHs) or their annual sales volumes, estimates of market size can be made from the projections discussed elsewhere. Assuming that U.S. manufacturers capture all of the domestic market for both types of devices and that, as of 2010, 25,000 VADs and 10,000 TAHs are sold annually at prices (in 1991 dollars) of $50,000 and $100,000, respectively, the total domestic market would be $2.25 billion. Assuming, again as of 2010, these same prices and total foreign sales of 5,000 VADs and 2,000 TAHs, the United States would gain $225 million in its balance of payments if it captured 50 percent of the foreign market as well as retained all of the domestic market. In contrast, if there are no U.S. manufacturers in 2010 and all MCSSs used in this country are imported, the net change in the annual balance of payments or balance of trade would be $2.5 billion. This would constitute a substantial impact, in relation to a current trade balance that typically is about $100 billion (negative) overall. It can be argued, however, that international
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The Artificial Heart: Prototypes, Policies, and Patients trade considerations should be secondary to the balancing of benefits and risks to patients from the technology under scrutiny, or to other overriding considerations that may affect the basic decision about whether the R&D investment is in the public interest. Conclusions On theoretical economic grounds, the artificial heart program falls between extremes at which a federal government role is clearly appropriate or clearly inappropriate. Thus the determination of the federal role in supporting R&D related to this technology must be addressed and resolved through the political process. The practical considerations that need to be assessed in arriving at a policy determination include NHLBI's role and mission, the resource implications (especially opportunity costs), health benefits, management and accountability issues, and industrial policy issues. Actions of Congress, NHLBI, and the National Heart, Lung, and Blood Advisory Council indicate that, historically, these bodies have implicitly considered the artificial heart program to be in the public interest, although with reservations. The relatively low level of funding for the artificial heart program, within the context of both total dollars ($15.8 million in the 1989-1990 fiscal year) and proportion (about 1 percent) of the total NHLBI budget, is evidence, however, of the extent to which other competing R&D efforts are considered to have equal or greater public merit. A lack of clarity about the appropriateness of the roles of government and industry in MCSS research also may be a contributing factor in the relatively modest level of support that NHLBI has provided. From an immediate-term perspective, the committee concludes that industry, for the most part, should provide the majority of financial support needed to perfect and market temporary-use VADs as well as the costs associated with clinical trials of these devices; industry has clearly moved in this direction. However, public support for the upcoming clinical trial of the Novacor long-term VAD and other time-limited efforts to develop long-term VADs should continue; see Chapter 10 for additional conclusions and recommendations concerning VADs. Public funds are also needed to carry TAH development at least through an interim period, perhaps leading eventually to marketable products, and to stimulate new approaches to MCSS development. Neither industry support nor venture capital is currently available for development of long-term MCSSs in the United States for various reasons noted in this chapter.2 NHLBI should also continue to support scien- 2 In contrast, in foreign countries and particularly in Japan, private R&D financing sources are satisfied to recover their investments over much longer periods of time than are acceptable to U.S. firms and their financing sources.
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The Artificial Heart: Prototypes, Policies, and Patients tifically meritorious R&D involving alternative power sources and MCSS components such as valves, batteries, and biomaterials, although the committee has not reviewed this aspect of the artificial heart program in depth. The committee does not believe that international-trade considerations should play a primary role in decisions such as these, because NHLBI 's mission is not to address the nation's balance-of-trade deficit. While the potential exists for this R &D to yield substantial international-trade benefits, the committee believes that potential benefits to patients should be the primary justification for NHLBI to continue to support MCSS development. ROLE OF GOVERNMENT IN THE USE OF MEDICAL TECHNOLOGY One analyst of the impact of public policies on medical device innovation has coined the term polyintervention to describe the policy environment created by numerous government actions (Foote, 1991). Foote states that although similarities exist in the innovation processes for drugs, devices, and procedures, they each have distinct public policy environments, and the device environment is perceived as being the most complex. This section examines this environment into which MCSSs will be introduced. Almost two decades ago, Lewis Thomas (1972) pointed out that, although economics plays a critical role in the United States in most aspects of technology, the nation has paid little attention to the economics of health care technology. The financing structure for health care, heavily reliant on third-party payers, has resulted in disengagement of the patient from the economics of health care. Medical devices, for example, are rarely purchased directly by consumers; physicians and hospitals are the major decision makers regarding the purchasing or adoption of a particular medical technology and, until recently, their economic incentives were protechnology. The current emphasis on health care technology assessment, accompanied by almost nationwide private and public cost-containment efforts in health care, indicates a major policy trend relating to the economics of health care. The financial and regulatory climates in which developers of VADs and TAHs will seek marketing approvals from the Food and Drug Administration (FDA) and third-party coverage and payment decisions are stringent. Uncertainties related to the regulation of new technologies through FDA, or by the Medicare program and other third-party payers, are one of the most important factors in the private sector's reluctance to support MCSS research. The length of time required for payback of the typical R&D investment is another factor, and it is related to the first because of the time required to obtain those regulatory approvals. Hence, potential problems with the various regulatory mechanisms must be examined.
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The Artificial Heart: Prototypes, Policies, and Patients Food and Drug Administration Because MCSSs are life-support devices, FDA considers them in Class III, the most strictly regulated group of devices. Investigators or sponsors must receive an investigational device exemption (IDE) from FDA before undertaking MCSS clinical trials. Upon completion of the clinical trials, sponsors also must obtain premarket approval (PMA) from FDA prior to general marketing. In the area of obstacles and problems with obtaining IDEs and PMAs, particularly relevant to MCSSs is the gap between the level of information (qualitatively and quantitatively) desired by FDA before making decisions on requests for IDEs and PMAs and the level perceived to be realistic by researchers in the MCSS field. Problems that are peculiar to MCSSs may potentially arise in two areas. First, bench and animal testing of these devices does not fully simulate use in humans. Neither blood nor some devices' bioprosthetic (animal tissue) valves can be used in long-term bench testing, and mechanical valves undergo stresses that differ, also, between use in animals and in humans. Further, different device configurations are needed, particularly in testing TAHs, because of anatomical differences between the animals that are used and humans. Second, the number of implants that is typical in NHLBI-supported clinical trials of these devices (20, for instance, in the forthcoming Novacor VAD trial) is unlikely to produce reliability-testing results with the high confidence level that FDA wants. In developing the protocol for the Novacor trial, FDA personnel are meeting with the investigators and NHLBI representatives in the hope of avoiding such problems. The results of these joint efforts will not be known until late 1991 at the earliest. Medicare and Other Third-Party Payers The success of marketing endeavors depends greatly on third-party payment policies, including decisions about coverage policies and payment rates. Long-term MCSSs present new challenges to the payment policies of Medicare, state Medicaid programs, and private insurers. This technology will undergo close scrutiny because of its relatively poor cost-effectiveness and because it will be among the most costly ever developed, on a per-patient basis. Medicare, in particular, can be expected to scrutinize it closely, because many potential candidates for both TAHs and VADs will be Medicare beneficiaries; the Medicare program is likely to be required to pay for more MCSSs than any other third-party payer, if it decides to cover broad MCSS applications. Perspectives vary about the impact of third-party payment decisions on industry's willingness to invest resources in manufacturing, marketing, and
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The Artificial Heart: Prototypes, Policies, and Patients distributing new technologies. Some analysts believe that historically the health care coverage and reimbursement policies in the United States have been a major positive incentive for progress such as that already made in developing MCSSs; these incentives have enough momentum to overcome barriers. Supporters of this view maintain that the United States is a pro-health technology society exerting influence on the delivery of health care worldwide (Foote, 1991). Particularly since the implementation of the Medicare prospective payment system, others consider that the payment policies of the U.S. health care system have become a major barrier, specifically to industry support for MCSSs. Issues raised by those with this view include (1) the reluctance of insurers to consider trade-offs in costs that reflect all aspects of care, not just the services covered by the insurer, when assessing a new technology's cost-effectiveness; (2) the likelihood that Medicare will, as in previous instances, assign MCSSs to an existing diagnosis-related group (DRG) with a payment rate that inadequately covers the cost of the device and its implantation; and (3) the inability of some hospitals to absorb the unrecovered costs in MCSS cases because of an overall climate of austerity that provides little financial flexibility. As an example of problems currently being encountered, the most costly implanted device now in routine use is the automatic implantable cardioverter defibrillator (AICD), for which a hospital's purchase price is about $20,000 including the necessary leads. The Prospective Payment Assessment Commission recommended the establishment of a temporary, device-specific DRG for AICDs that would have allowed adequate payments. The Health Care Financing Administration (HCFA) refused to follow the recommendation, instead assigning AICD implantations to two existing DRGs with rates that do not fully cover the cost of the device and its implantation. A study by the Medical Technology and Practice Patterns Institute (MTPPI, 1989) found that, as a result, hospitals providing AICDs to Medicare patients in 1987 lost a total of $3.8 million on those cases. The average direct costs of $31,829 (not including any allocated indirect costs) were substantially greater than the DRG payment rates of $20,522 and $26,112. Yet another example can be found in Medicare payment decisions about cochlear implants. The decision to include implantation of this costly device in a DRG with a rate substantially below the total cost led first to underdiffusion of the technology and subsequently to a loss of interest on the part of manufacturers in pursuing development of a second-generation device (Kane and Manoukian, 1989). In contrast, percutaneous transluminal coronary angioplasty was originally assigned by Medicare to a DRG with a payment rate substantially greater than the procedure's cost. This led to rapid diffusion of the technol-
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The Artificial Heart: Prototypes, Policies, and Patients ogy, along with other cardiovascular technologies such as coronary angiography that were seen by hospitals as similarly profitable. To consider a technology closely related to MCSS, the circumstances affecting the diffusion of heart transplantation differ somewhat but it provides another example of diffusion of a cardiovascular technology. Although heart transplantation has been documented to generate financial losses in at least some hospitals (MTPPI, 1988), hospitals may undertake transplantation services because of the marketing and other competitive advantages inherent in offering such high-technology services, even if costs are not fully recovered. Because MCSS implantation offers similar competition-related incentives, use of this technology may also grow even if losses are expected with some patients. Conclusions About Regulatory Constraints Clinicians and others concerned about the appropriate use of long-term MCSSs have a unique opportunity during the 1990s to develop clinical practice guidelines for the use of these devices. Researchers and the devices' developers can also be expected to undertake technology assessments (including cost-effectiveness analyses) that will incorporate forthcoming clinical-trial results and eliminate some of the uncertainty that confronted this committee's efforts. Such developments as these will be very useful to the Medicare program and other third-party payers, possibly making the regulatory hurdles to be overcome by newly approved VADs and TAHs somewhat less daunting than they would otherwise be. Because of the truly interdisciplinary nature of MCSSs, FDA, the Medicare program and the Office of Health Technology Assessment that advises it, and other third-party payers could put the same opportunity to even better use by developing new approaches to their upcoming reviews of MCSS-related applications. They could be involved both prospectively and collaboratively, along with NHLBI personnel, in an integrated, contemporaneous evaluation of each particular model of MCSS, contributing their knowledge to one another, instead of waiting for the separate, sequential reviews that traditionally occur. Such a collaborative, interdisciplinary review of regulatory decisions concerning MCSSs would be highly appropriate because of the characteristics of the technology itself, and would also serve as a model for future consideration of similar technologies. Restrictions on access to proprietary data (e.g., in a manufacturer's PMA application) might hinder such an effort, but the manufacturer's interest in early decisions by each of the agencies might lead to waivers of those restrictions in at least some instances. HCFA might even play a direct role in the decisions NHLBI must make in the 1990s about continuing to fund MCSS development, if NHLBI were
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The Artificial Heart: Prototypes, Policies, and Patients to consult it either formally or informally before making those decisions. HCFA's views on the likelihood that it would approve Medicare coverage, or the range of clinical indications it sees as acceptable, have the potential to be important influences on the future use of this technology. The question might best be presented to HCFA in the form of alternate scenarios that include details as to projected clinical effectiveness and cost. Finally, once a third-party payer has approved coverage of MCSS use for patients with particular clinical characteristics, a payment rate should be established that adequately compensates providers for the costs of implanting the device.3 In the committee's view, below-cost payment rates are not an acceptable means of limiting technology use. ENCOURAGING INTERDISCIPLINARY AND INDUSTRY-ACADEME COLLABORATION Several factors deter industry support for development of mechanical circulatory support devices, in the context of analyzing the current technological potential and costs of MCSS R&D. This section explores possible structures and mechanisms to overcome factors that deter collaborative, interdisciplinary MCSS research, whether by way of government support of industry, industry support of academic research, or collaboration among academic scientists, engineers, and physicians. As the committee understands the organizational processes of NHLBI and other institutes of NIH devoted to disease- or organ-specific research, those processes do not promote and may even hinder collaboration among physicians, engineers, and life scientists. Additionally, the composition of NIH study sections works against the success of collaborative proposals involving physical scientists or engineers, as virtually all members of these peer-review groups are either life scientists or physicians. Thomas (1988) suggests that government support for the development of new technologies and devices should be through interdisciplinary structures combining biochemical and biomedical engineering. He argues further that such efforts should be sensitive to the costs and benefits associated with the product's introduction. He cautions against using traditional funding of university laboratories for biomedical engineering research, particularly if the goal is procurement of a product needed by government. 3 Because of uncertainty about costs during early MCSS use, one possible payment mechanism would be an interim rate for the “learning curve ” period when only a few institutions are involved and a different rate or basis for payment when use becomes more widespread. Such an approach has been advocated for the early diffusion phase of technologies generally (Perry and Pillar, 1990).
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The Artificial Heart: Prototypes, Policies, and Patients The implications and breadth of the issues involved in the government-industry research interface are exemplified by Congress's enactment of the Omnibus Trade and Competitiveness Act of 1988, which includes a request that the National Academies of Sciences (NAS) and Engineering (NAE) and the Institute of Medicine (IOM) examine the effectiveness of existing programs in fostering R&D in civilian technology. A study panel housed in these organizations' Committee on Science, Engineering, and Public Policy is currently examining public-private R&D ventures, collaborative R&D efforts overseas, foreign government policies to promote technology development, and the role of federal agencies in technology transfer; a report is due in late 1991. Role of Biomedical Engineering Research Another aspect of the artificial heart program that is unusual, in its context at NHLBI, is one of its goals: The program was one of the first within NIH to adopt the goal of developing an industrial capacity in biomedical engineering (Maxwell et al., 1986). Because of the interrelatedness of many issues relating to research collaboration and to the field of biomedical engineering, an overview of biomedical engineering research may be useful.4 Biomedical engineering is an interdisciplinary field that joins numerous engineering fields with medicine and other life sciences. It involves the use of engineering science and technology to advance understanding of life sciences as well as the development of devices and systems for prevention, diagnosis, monitoring, treatment, and rehabilitation of medical problems (Gelijns, 1990). Another closely related term is biomedical technology, which encompasses all disciplines, not only those involving the engineering sciences (Moskowitz et al., 1981). Biomedical engineering has made important contributions to advances in biomedical measurement, analysis, and instrumentation. Examples are the use of engineering mechanics to measure myocardial contractility and the use of signal analysis to understand better how the inner ear processes auditory signals. Such research contributes not only to cardiac physiology, neuroscience, and other health sciences, but also to the development of improved health technologies. Although there is no widely accepted taxonomy of biomedical engineering, some of the major clusters of interest have been in cardiovascular devices, biosensors and signal processing, hospital facilities, medical informatics, medical imaging, neurologic and sen- 4 This section is based, in part, on material prepared by Clifford S. Goodman, former director of the IOM Council on Health Care Technology, and Karl Yordy, director of the Division of Health Care Services, IOM.
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The Artificial Heart: Prototypes, Policies, and Patients sory technologies, patient monitoring (e.g., in anesthesiology), and rehabilitation. Compared with other, longer-standing disciplines, biomedical engineering has less clearly defined educational programs, professional certification criteria, roles in academic and health care delivery organizations, and dedicated funding sources. It is, perhaps, at approximately the same point as was the field of computer science some 15 years ago, before it became a clearly defined discipline with separate departments in universities. Support for biomedical engineering research currently comes from NIH, the National Science Foundation (NSF), other government agencies, industry, and private foundations. Biomedical engineering has a focus at NSF following a 1989 program reorganization, although the funding available for new projects is not great. Currently, this NSF division has three R&D programs: biochemical engineering, biotechnology, and biomedical engineering; the last-named has a total annual budget of about $3.5 million (Katonah, 1990). The Department of Veterans Affairs, the Department of Energy, the Department of Defense, the Department of Education, and the National Institute of Standards and Technology of the Department of Commerce also support and conduct certain efforts related to biomedical engineering. Several major U.S. corporations have substantial programs in biomedical engineering research. However, most medical device companies are one- or few-product enterprises whose activity in biomedical engineering is directed exclusively to development or refinement of particular products. Even among the larger companies, support for biomedical engineering research may be limited to short-term, product-directed efforts rather than to more basic research and development that could lead to advances over the longer term in such technologies as implantable devices and components, biosensors, biocompatible synthetic materials, and vascular grafts. Foundation support for biomedical engineering research is quite limited. Several barriers to the satisfactory development of this field have been identified by studies conducted by the National Research Council (NRC, 1987; NRC, 1990). They include inadequate coordination among supporting agencies, the need for appropriately trained researchers, and inadequate financial support. The concern about lack of adequate funding mechanisms may be derived in part from the respective missions of key federal agencies such as NIH and NSF; their diverse missions impede interdisciplinary collaborative extramural research (NRC, 1990). U.S. public policy has tended to support biomedical technology innovation through the academic environment. Some analysts see such policies as resulting in a less-than-adequate cadre of biomedical engineers in the commercial or industrial setting (Goodman, 1981; Roberts, 1988; Murray and Lehner, 1990), and this in turn slows the production and marketing phases of technology.
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The Artificial Heart: Prototypes, Policies, and Patients Current Collaborative Structures Although no existing model of management structure within NIH adequately addresses broad concerns about collaborative extramural research in a comprehensive manner, some current examples elsewhere in government have potential as models. One structural example that may be useful is NSF's collaborative efforts with state governments, industry, and venture capital firms for developing interdisciplinary coalitions sharing common science, technology, and economic goals. Another example is NSF's Engineering Research Centers program, which is designed to foster interdisciplinary collaboration of academic and industry researchers in specific areas (see Office of Technology Assessment, 1990). One engineering research center, at Duke University, is in the biomedical engineering field. Examples of industry-academe collaboration—not involving government support—include the Monsanto Corporation's relationships with Harvard University and Washington University. Although controversial at the time, these relationships broke new ground in industry-university collaboration, launched Monsanto into the modern biotechnology era, and have since been emulated by Exxon and others. The joint industry collaborations in the computer, semiconductor, and manufacturing technology fields (e.g., MCC, SEMATECH) offer another model, particularly considering that NSF and the Department of Defense are major financial supporters of many of these activities. A recently implemented example of joint government-industry support for innovative R&D is the new Advanced Technology Program (ATP) of the National Institute of Standards and Technology (U.S. Department of Commerce, 1990). This program announced 11 awards in March 1991 for private-sector basic research in computer hardware and software, electronics, and similar advanced technology fields (U.S. Department of Commerce, 1991). Costs are to be shared approximately equally between the government and industry; the initial 11 federal awards total $9 million in their first year. Additionally, a number of state governments support technology R&D through various structures (Osborne, 1989). NHLBI and other NIH components have established detailed policies and procedures governing cooperative relationships with all types of private-sector organizations (NHLBI, 1985). These NHLBI guidelines specifically allow joint federal-private support of both intramural research and extramural R&D conducted by industry. An arrangement by which NHLBI provides only partial support for an industry project, such as the ATP program just described, is not precluded by these guidelines. It would, however, be required to comply with the customary review process through an ad hoc peer-review group (NHLBI, 1985). Any proposal for jointly supported NHLBI-industry activity thus
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The Artificial Heart: Prototypes, Policies, and Patients would, except for basic research, very likely encounter the same type of peer-review disfavor as would a straightforward academic proposal for such research. Furthermore, the guidelines are not clear about when competition must be sought through a publicized request for proposals (RFP), in lieu of a sole-source contract. Absent either an RFP or congressional sanction to omit that step, it seems unlikely that NHLBI could enter into an agreement for jointly funded industry research involving a substantial federal commitment without offering other firms the same opportunity. Additionally, accomplishing such a joint activity on an open, competitive basis would seem to introduce a degree of complexity that would likely make the activity very difficult, if not impossible. Cooperative agreements between NHLBI and industry are another possible mechanism to be considered. Conclusions About Collaborative Research Federal support of contractual, targeted R&D by industry may be seen to be more appropriate as a research mechanism when the government is perceived to be the major purchaser or user of the end product than when, as with MCSSs, it is not directly a purchaser. The committee seconds the conclusion reached by an earlier IOM committee (IOM, 1990) about the need for constructive policies to integrate the efforts of government and private-sector sponsors of biomedical research. It is not clear to the committee whether the relatively slow pace of the artificial heart program's achievements since 1964 can be attributed to the constraints imposed by its placement in an organizational structure oriented to basic research, to the limited funding it has received, to other unidentified factors, or to all of these. If similar efforts are to be mounted in biomedical research, further study of the program in these particular respects is warranted. The committee suggests that the artificial heart program, as well as similar efforts that may be undertaken in the future, may be more successful in stimulating interdisciplinary collaborative research, cost-sharing with industry, and other innovative R&D-sponsorship mechanisms if NHLBI specifically addresses ways in which such flexibility of approaches can be best achieved. Integration within overall NHLBI processes is necessary, but a better “fit” will aid the artificial heart program in achieving its goals. This may well be true of other NIH programs involving interdisciplinary R&D, but the committee's scope has precluded its reviewing others. In particular, the committee is concerned that the typical makeup of study sections, oriented as their members are to basic research, may be a less-than-ideal means of peer review for technology development applications involving biomedical engineering and other disciplines outside the life sciences. In order for adequate peer review of proposals concerning
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The Artificial Heart: Prototypes, Policies, and Patients MCSSs and other complex technologies to occur, biomedical engineers and others with specialized technological knowledge must play an important role. If a review group's priority scoring process is dominated by basic researchers with a lack of expertise in fields involved with the particular proposal, the value of the peer-review process suffers. NHLBI might also consider sponsoring a formal collaborative arrangement that encompasses both public- and private-sector interests in biomedical engineering, in order to achieve maximum advantage from the artificial heart program's available funds. Organizations such as SEMATECH may be useful models (Congressional Budget Office, 1990). Lessons can perhaps also be learned—a topic beyond the scope of this study—from the experience of NSF and other government agencies that have successfully sponsored collaborative research involving both industry and academe. Experimenting with allowing the artificial heart program greater operational flexibility might be useful to NHLBI, NIH, and the Department of Health and Human Services as a model for similar efforts in the future. While considering means for improving interdisciplinary collaboration in artificial heart R&D, appropriate mechanisms could also be sought for partially achieving desired goals, such as general oversight and encouragement of this type of cooperative effort. Two options might be considered: (1) establishing a subcommittee for health sciences of the Federal Coordinating Council for Science, Engineering, and Technology (FCCSET) in the Office of Science and Technology Policy, or (2) creating a forum such as the NAS/NAE/IOM Government-University-Industry Research Roundtable; both were recently recommended by the IOM Committee on Policies for Allocating Health Sciences Research Funds (IOM, 1990). At a level more directly relevant to the MCSS, the committee endorses the recommendation made by the Bioengineering Research Panel of the National Research Council (NRC, 1987) that an interagency entity be given responsibility for coordinating biomedical engineering research. This entity also might be a subcommittee of the FCCSET, thereby providing the opportunity for interdepartmental participation and linkage to industry. EFFECT OF INDUSTRY SUPPORT ON COMMUNICATION AMONG RESEARCHERS The subject of communication and cooperation among MCSS researchers was discussed in the 1989 IOM planning committee report and included in NHLBI's charge for this study. According to the experts who appeared at the committee's public meeting and workshop, however, this is not a major issue or problem. All U.S. researchers in the field, as well as a number of overseas ones, meet regularly twice each year, once at the annual confer-
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The Artificial Heart: Prototypes, Policies, and Patients ence of the American Society of Artificial Internal Organs and again at the Conference on Cardiovascular Science and Technology held each year in Louisville, Kentucky. Nevertheless, the possible “chilling” effect on communication from increased private-sector involvement is a concern to the committee and one that warrants open discussion by those directly involved. Three points need to be considered: The committee heard that, as academic researchers become involved with firms interested in marketing the results of their research, industry representatives express concern about the extent to which the academicians discuss their R&D activities with colleagues in the field. At the December 1990 annual conference of MCSS developers in Louisville, prominent researchers expressed strong concern about the serious decrease in collegial information exchange, after several early-stage researchers refused to describe their achievements or to answer questions, at the behest of those funding them, because patent applications had not yet been submitted. A study in the biotechnology field (Blumenthal et al., 1986) found that 25 percent of industrially supported university faculty reported that they had conducted research that belonged to the sponsor and could not be published without prior consent; 40 percent of the same group said their collaboration resulted in unreasonable delays in publishing. Industry involvement in academic research may raise legal issues such as property rights in patentable disclosures that result from the sponsored research. The committee recognizes, however, that increased industry involvement with academic MCSS researchers is likely as these devices approach approved status and, indeed, encourages such involvement. Concern remains about the possible deleterious effect of these relationships on the traditional collegial communication among researchers that has been so valuable in the MCSS arena. The committee suggests that the MCSS research community discuss this specific issue at a forthcoming professional conference and urges that industry representatives and academic MCSS developers, alike, avoid arrangements that impede collegial communications. Further, universities should develop and implement policies consistent with this concern. Additional specifics are discussed in a recent IOM report that studied potential conflicts of interest in the activities of patient outcome research teams that receive both government and industry support (IOM, 1991). Conclusions On the topic of communication and cooperation among researchers, the committee concludes that current mechanisms are generally adequate.
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The Artificial Heart: Prototypes, Policies, and Patients Nevertheless, those involved will need to take concrete steps to ensure that the growing industry involvement in academic MCSS research does not adversely affect collegial communication among researchers. SUMMARY AND CONCLUSIONS The three-way partnership among NHLBI, academic researchers, and industry that has long been a prominent feature of the artificial heart program is unusual in biomedical R&D. As discussed further in Chapter 10, NHLBI's continuing support of applied research, development work, and clinical trials in this field is warranted by the potential benefits to patients that this R&D appears likely to yield, given the committee's conclusion that private-sector support for these activities will not be forthcoming at least until the first long-term VAD has been approved for general use. Moreover, policy changes by NHLBI could provide greater flexibility in the funding approaches and mechanisms used in this continuing R&D support, which in turn may prove to be useful to government support of other types of collaborative biomedical research involving academe, industry, or both. Specific conclusions discussed at the end of each section of this chapter are summarized in Chapter 10, in conjunction with the committee's recommendations on these topics. REFERENCES Arrow, K. J. 1962. Economic welfare and the allocation of resources for invention. In: R. Nelson, ed. The Rate and Direction of Inventive Activity: Economic and Social Factors. Princeton, N.J.: Princeton University Press, pp. 609-625. Blumenthal, D., M. Gluck, K. S. Louis, M. A. Stoto, and D. Wise. 1986. University-industry research relationships in biotechnology: Implications for the university. Science 232:1361-1366. Bylinsky G. 1990. Turning R&D into real products. Fortune (July 2) pp. 72-77. Congressional Budget Office. 1990. Using R&D Consortia for Commercial Innovation: SEMATECH, X-ray Lithography, and High-Resolution Systems. Washington, D.C.: Congressional Budget Office. Derian, J. C. 1990. America's Struggle for Leadership in Technology. Cambridge, Mass.: MIT Press. Finneran, K. 1986. The Federal Role in Research and Development, Report of a Workshop. Washington, D.C.: National Academy Press. Foote, S. B. 1991. The impact of public policy on medical device innovation: A case of polyintervention. In: Institute of Medicine. Medical Innovation at the Crossroads. Vol. II. Public Policy and the Economics of Medical Innovation. A. C. Gelijns and E. A. Halm, eds. Washington, D.C.: National Academy Press, pp. 69-88. Gelijns, A. C. 1990. Comparing the development of drugs, devices, and clinical procedures . In: Institute of Medicine. Medical Innovation at the Crossroads.
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Representative terms from entire chapter: