Beyond Technology Innovation: Future Market Forces and Trends
The number and variety of technology-based forces that are impacting medical markets now and that will create, overturn, redefine or otherwise have significant effects on patient care and, by extension, medical market success are simply staggering. There is a dissolution of “traditional” boundaries between devices, drugs and diagnostics, with devices that deliver drugs, devices that are augmented by drug coatings, therapeutic devices that monitor and report on their performance, and other hybrid drug/device/biotech products. The emergence of bioresorbable devices, nanotechnology-based devices manufactured and/or operating in unprecedented ways, the integration of devices with information technologies and other technology trends are similarly changing the definition and performance of medical devices.
Yet, while these forces can frequently be primary in their impact — occurring without significant influence by non-technology market forces — there are a litany of other market forces that may well dictate the extent of their market success.
Healthcare Costs. The ever-present spectre of rising healthcare costs is without question a critically important factor for consideration by medtech innovators. It exists directly in terms of the actual price that the manufacturer can hope to command for its technology in the marketplace and has many indirect influences in terms of the marketing message that can be conveyed about a product’s impact on healthcare cost and in terms of the potential of competitors’ products (and the cost message they might convey). The cost orientation of the marketplace is really such that new technology development must be focused on delivering the same level of healthcare more cost effectively or improving patient outcomes without a long term net increase in cost. With the advent of the 2008 presidential elections and the waning public support for the Iraq war, healthcare reform addressing not only healthcare costs but also coverage for the 40 million uninsured in the U.S. will become an increasing focus of discusison, and potentially result in market-changing legislation in the next 2-3 years.
Consumer-driven healthcare. Whether the advent of the internet as an information source available to consumers is a principal force or the emergence of a technology like laparoscopy in the early ’90s that encouraged patients to place demands for it from their physicians is the first, best example, but the fact is clear that at some point within the past 10-15 years, the patient has become an active voice in determining not only what type of healthcare he/she receives but also what choices are offered. There is no question that the physician remains the gatekeeper of healthcare, a point that is as true for the physician’s judgment about drugs as it is about medical devices. But the information age of consumer healthcare has clearly dawned, highlighted among other examples by AOL founder Steve Case’s formation of the consumer healthcare website RevolutionHealth.com.
Direct-to-consumer advertising. In response to the rise of the patient-as-vocal-consumer, device companies have begun to join pharmaceutical companies in marketing directly to the patient. This includes Medtronic marketing its implantable defibrillator and Zimmer Holdings marketing its “Gender Solutions Knee” to women. Again, the physician remains the gatekeeper and while third party payers also exist as a barrier (in a sense) between the patient and the physician with respect to healthcare choices, the pressure by patients will certainly increase as a result of manufacturers providing patients with marketing fodder.
Customized healthcare. The idea of healthcare being tailored to specific genders or to an individual patient, while it has always existed in some form, gained more attention with the advent of RFLP (restriction fragment length polymorphism) mapping and the subsequent genome mapping achievements, and has gained additional weight through other technologies. Pharmaceutical companies have long struggled to be able to determine the precise patient populations that are indicated or contraindicated for specific drugs, and have responded by developing sophisticated computer models to evaluate drug candidates, joined forces with biotech companies on the forefront of the development of “rational therapeutics” and pursued other initiatives to create optimum solutions for specific patient problems. So, too, are medical technology companies moving in this direction, seeking, for example, to determine which patients have vulnerable plaque making them susceptible to coronary events, to produce gender specific knee implants, to determine which patients may be at risk of late stage thrombosis from drug-eluting stents, and other examples. The ability to predetermine the success of medical care by matching a solution to a patient’s specific condition has enormous potential to simultaneously create effective medical products and avoid Vioxx-like complications that can threaten a company’s future. Technology will be the response to this demand, but is clear that market demand is growing for patient-specific solutions.
Aging Population. It is unlikely that there is any non-technology market driver (besides cost and its related effects) that is cited more often in healthcare than the aging of the U.S. population. As a force, it contributes dramatically to increased healthcare costs and as such commands a lot of attention. For manufacturers, it must fundamentally be viewed as an opportunity. The attention on the aging population demands that manufacturers pursue the development of products that meet older patients’ needs, are priced to be compatible with Medicare reimbursement and otherwise conform to some or all of the other forces noted here that have age-specific considerations (direct-to-consumer marketing, customized healthcare, etc.).
International markets. Few medical technology companies have their eyes focused solely even principally on the U.S. market. While the per capita spending on healthcare, the size of the patient population and the generally well traversed routes to market that exist in the U.S. are clear drivers for the success of medical products, the “OUS” consideration is too significant to not centrally factor directly into companies’ market plans. Among western economies, the European Union (increasingly acting more uniform), southeast Asia and the Pacific Rim are big growth markets with well established routes to introduction, particularly for products that have already been FDA approved (although this is certainly not a prerequisite). Among these well developed economies, there is little resistance to the introduction of products across borders. Then, of course, is the huge variable in the international equation: China. This behemoth nation of potential healthcare consumers, however eccentric in its marriage of socialism and free market economy, can be counted on for having huge future potential in healthcare markets simply based on numbers. With its 1.3 billion population over four times the U.S. population, even the slightest percentage change in healthcare product demand will be huge in absolute terms.
Aesthetics and other out-of-pocket medicine. A fundamental change in healthcare markets has been the development of advanced products — drug, device, biomaterial and others — focused on aesthetics, gender pre-selection in reproductive medicine, the potential to apply endometrial ablation to eliminate menses and other goals that are by their nature not based on therapeutics for disease, trauma or other medically necessary purpose. With the increasing sophistication of medical technologies in achieving specific ends combined with the affluence of western economies, it follows that medical technology companies have the incentive to develop products and services that are not focused on disease or trauma or that, in any event, will not be paid by third party payers. The number and types of applications of medical technology for non-medically necessary applications are, to be certain, not many at this time, but applications in plastic surgery have opened the door to the premise that such opportunities exist. It is of course important to emphasize that non-medically necessary technologies face markedly different economics to succeed in the marketplace and that the removal of reimbursement from the equation is no small challenge to overcome. Nonetheless, based on aesthetic plastic surgery as a model, the market can thrive without reimbursement.
Changes at FDA. One might argue that it is an understatement to talk about pending changes at the FDA as having potential impact on medical technology markets, since there is no question that the FDA’s actions are a virtual linchpin for medical products nor it likely to ever be the case that thare aren’t pending changes at the FDA. Most notably of recent, however, is the proposal by the FDA to increase by 31% the fees paid by medical device companies to defray the FDA’s costs of reviewing medical products for approval. This proposal comes as as part of the FDA’s recommendations to Congress for reauthorizing the Medical Device User Fee and Modernization Act. In principle, the industry appears to support the added fees, but how effectively the review process is managed will determine the industry’s ultimate judgment of the new fees. Separately, the Prescription Drug User-Fee program expires in September 2007 and while it is certain to be reauthorized, there are calls for it to be evaluated given a consideration by some that the relationship between the FDA and pharmaceutical companies is already too “cozy”. With the FDA seeking 31% higher medical device fees next year, device companies should expect similar scrutiny.
Post-market surveillance. The occurrence of late stage thrombosis in patients implanted with drug-eluting stents, the Guidant defibrillator recalls and other adverse drug and device events have contributed to the calls for increased post-market surveillance by the FDA. (The FDA recently introduced a website to be updated monthly on “post approval studies” that have been initiated since January 2005 (see http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPMA/pma_pas.cfm.)
Information technology. While information technologies are increasingly being integrated with medical devices — and as such are not discussed as part of the “non-technology” forces being discussed here — their role in facilitating the business of healthcare, in medical device, drug and diagnostic product prototype development, simulation and testing sytems and other uses, makes their growing sophistication and integration with the business of healthcare as roles with significance that should not be underestimated. The business of healthcare, from product development to data analysis in clinical trials to even tracking healthcare costs, is utterly dependent upon and is rapidly being driven by information technologies.
Of course, these non-technology forces, certainly the most significant of which is healthcare costs, can be the catalyst for the technologies that are developed. The medical product industry has frequently demonstrated its entrepreneurship and innovation in responding to market demands. These drivers, demands, forces and trends represent true opportunities for manufacturers and should be seen as such, instead of challenges or limitations to continued market development.
Tags: medtech
Post a Comment