Observation Deck: Keeping your head about medical innovation

Who’s for innovation in medical technology? Everyone – until we consider how much it costs. We’ve written about technology assessment many times, most recently, in our December 2010 issue. It’s a challenge facing American physicians, payers, providers and patients. And in many ways, contracting executives are right in the middle of it.

A recent report by PwC (formerly Price Waterhouse Coopers) says that the United States continues to lead the world in its capacity to produce the latest in medical technology innovation, but emerging markets, led by China, India and Brazil, are catching up. The market power of those emerging powers is shifting innovation resources and activity overseas. While the United States is expected to maintain its leadership for the foreseeable future, even a narrowing of the gap has implications for U.S. jobs, exports and Americans’ access to advances in medical technology, says PwC.

By no means is PwC the only one looking at the issue. The National Venture Capital Association – an association of companies that invest in innovation in all industries – recently formed, with a handful of other organizations, the Medical Innovation and Competitiveness Coalition, whose purpose is to preserve and advance the United States’ medical innovation system.

“Our perspective is that innovation is the answer to a lot of issues facing the U.S. healthcare system,” says Kelly Slone, director of NVCA’s medical industry group. “But we feel that in the context of healthcare reform, and in listening to the health reform debate, no one is paying attention to some of the provisions that were passed and the impact they could have on innovation.”

Slone applauds the Patient Protection and Affordable Care Act of 2010 (the healthcare reform law) for creating the Patient-Centered Outcomes Research Institute, or PCORI, to carry out research projects designed to provide evidence on how disease and other health conditions can most effectively be prevented, diagnosed, treated, monitored and managed. “The goal is really positive,” says Slone. “Gathering more data to understand the best way to treat [patients] is a good thing for our healthcare system.”

But innovation could suffer in the process, she warns. That’s because many medical technologies, when first introduced, suffer from shortcomings, which are usually corrected in following generations. “That’s how innovation flows,” she says. “But you can cut innovation off at the knees if there’s no one watching out for it.”

Not surprisingly, the Food and Drug Administration is facing challenges of its own. On the one hand, patient advocates and others complain that the current 510(k) process – in which medical devices are cleared for marketing based on the fact that they are similar to devices already on the market – is too lenient. They argue that the FDA is allowing devices onto the market without closely examining their safety and efficacy. On the other hand, the medical device industry argues that the FDA is too slow in granting marketing clearance to new medical devices, and that manufacturers, providers and patients are suffering the consequences.

Yes, there’s a swirl of activity. And it’s not likely to slow down, not with rising costs, healthcare reform and value-based purchasing in the air. But, as somebody once said, the trick is to keep your head while those about you are losing theirs. For contracting executives, that means staying open to innovation and helping your clinicians and administrators make sound, reasoned decisions about it.

Mark Thill About Mark Thill

Mark Thill is the Editor of The Journal of Healthcare Contracting and has been reporting on healthcare supply chain issues since 1985. He is a graduate of Dominican University in River Forest, Ill., and he received a master's degree in journalism from Northwestern University in Evanston, Ill.

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