Risk & Innovation Small Companies in Six Industries: Background Papers Prepared for the NAE Risk and Innovation Study (1996) / Chapter Skim
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3 Implantable and Surgical Medical Devices
3 Implantable and Surgical Medical Devices
Pages 33-60
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From page 33... ...
The U.S. Department of Commerce ——~ ~ Cow —Cat a — ~ has grouped the medical device industry, according to Standard Industrial Classification (SIC)
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Firsk several highly publicized problems involving implantable medical devices, and the passage of He Safe Medical Devices Act of 1990, have prompted the U.S. Food and Drug Adm~nist~tion (FDA)
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population rose markedly. An increase in coverage related to these programs, coupled with the proliferation of generous benefit plans, fueled the demand for medical devices, art n turn, growth of Me device industry itself.
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and Japan were the most important foreign suppliers of medical devices to the American market in 1993. According to the International Trade Commission, the Japanese industry is primarily focused on electronic, x-ray, and optically based medical equipment, whereas Germany has a more diversified industry that is capable of manufacturing high-technology electronic and Gray apparatus, as well as highly specialized precision medical and mrg~cal instruments ~nten~ational Trade Commission, 1993~.
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From page 37... ...
SOME SALIENT CHARACTERISTICS OF MEDICAL DEVICE INNOVATION Perhaps the most familiar pattern of medical innovation is that usually associated why pharmaceuticals and, more recently, biotechnology agents. It is important to recognize that the model for if naovation in d ese sectors differs considerably from that of medical devices, especially in the pro~nfnibr of pharmaceuticals to basic biomedical research.
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From page 38... ...
In Me past, ongoing advances In these fields led to important opportunities for medical device development. CurrentHy, however, the medical device industry may be confronted with The drying up of part of its technology tease.
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There appear to be no major barriers to entry and, historically, "growth in medical devices has apparently occurred more by the addition ofnew companies then by the expansion ofold ones" (Office of Technology Assessment, 1984, p.
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From page 40... ...
Although medical schools may not be the dominant source of basic scientific and technological knowledge in medical device innovation (the "R" of R&D) , they do nevertheless play a major and multifaceted role in the development of new medical devices (the "D" of R&D)
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From page 41... ...
In addition to its role in prototype development, the academic medical profession, often in academic medical centers, is also indispensable in evaluating a devicets clinical potential during the premarketing development period. Feedback at this point may lead to important changes in the design of a medical device.
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From page 42... ...
In particular, we win address venture capital, public support for biomedical R&D, academic medical centers and clinician-users, regulatory policies, and health care finarl~g polices.
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From page 43... ...
Among the factors that appear to play a role in the reluctance of venture capitalists to provide seed capital are the ongoing changes in the FDA's policies toward medical devices and the major uncertainties surrounding He res~uch~ring of He U.S. heady care system.
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From page 44... ...
As a result, there is growing concern that He academic clinical ir~uc~re In the United States currently may be eroding. [DA Regulatory Policies The clinical testing of new medical devices which typically involves both device films and clinicians is subject to rotator policies.
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From page 45... ...
NIMH NICHD NIDA _ NIA NCRR NEI N IE H S NIDCD NIDR NCHBR N INA NLM NIDDK NINDS N IAID NCI NHLBI 1 1 ~ 1 0 200 400 600 800 S Millions ~GURE 5 National Idstitu~s of Health lY1994 budget, by 1dstitute. Source: N.A Vydelingum,, 1993.
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From page 46... ...
For these devices, the sponsor must demonstrate safety and efficacy before the FDA grants marketing approval. Approximately 10 percent of medical devices, including leR ventricular assist devices, DNA probes, and laser angioplasty devices, fall into class 3.
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From page 47... ...
FDA regulation of medical devices is currently undergoing significant change. The introduction of the Safe Medical Devices Act of 1990, for example, established new requirements for Dremarketina as wed as nostmarkedna studies.
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From page 48... ...
In addition, the recent implementation of a resource-based fee schedule for physician payment, which reduces compensation for sophisticated technology-based services' is likely to diminish Me financial incentives for the application of such services. The most dramatic changes affecting medical devices can be found In the recent rapid growth in managed care, such as health maintenance organizations (HMOs)
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From page 49... ...
medical device industry. R&D Inves~nnent The medical device industry responded to the incentives embedded In the postwar health care system by becoming hippy research intensive.
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E Cal s ~ In 0 C' !
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. This decrease redects the complicated safety and efficacy requirements that now surround new investigational devices, a more stringent regulatory climate, and the relative inexperience of many device manufacturers (80 percent of device developers have submitted ordy one IDE since 1980)
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From page 53... ...
s Received 5536 7022 5831 5770 6590 Approved 4432 4867 4748 4294 3776 Successfil1 80% 69% 81% 74% 57% Note: PMAs received in 1992 does not include 15 PMAs that had approval packages prepared but were awaiting clearance of good manufacturing practices insertions. Source: Food and Doug Administration, 1993.
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Jargon, 1993. 1 to20 ~ 5o~ 500 or larger 47°h ~ 100 to 500 19% 20 to 100 19% FIGURE 9 Percent of PMA applications by company she measured using number of employees.
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From page 56... ...
The growing importance of economic considerations In hospital purchasing and clinical adoption decisions is influencing technological change in the direction of explicitly developing cost-reducing technology. Less costly alternatives to widely practiced, expensive procedures—such as coronary artery bypass surgery, transure~ral prostatectomies, and cholecystectomies-have become preferred R&D targets for pharmaceutical manufacturers, who attempt to develop pharmacological alternatives, and device manurers, who are aiming to develop a variety of mininally invasive devices.
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From page 57... ...
It is a characteristic for which the venture capital industry, which can almost be called a uniquely American institutional innovation, has a large responsibility. The experience in the United States, and also in Japan and Europe' suggests Hat the medical device industry requires nurturing from a diverse infrastructure of hospitals, university medical centers, and, of course, a public sector that can provide the highly expensive, lon~term support for medical (including clinical)
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From page 58... ...
medical device industry appears also to have been due to its large, and deep, industrial base. A disdnc~ve feature of Be medical device industry, as we have argued, is Mat it draws upon, and exploits, technologies Cat have been developed In over sectors of We economy remote Mom medical care, including defense technology, computers Are ~ene~lv aver.
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From page 59... ...
1984. Federal Policies and the Medical Devices Industry.
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From page 60... ...
1978. Product designs which encourage or discourage related innovation by users: An analysis of innovation in automatic clinical chemistry analyzers.
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