Medtech prognosis: Going digital, under stress

"2010 will go down as one of the most angst-ridden years in health care . . . [but] medical electronics will be at the nexus of where health care is going in the next decade.”

With those opening comments at the recent EE Times Medical Electronics Summit, Charlie Whelan, a director of life science consulting at Frost & Sullivan, encapsulated the outlook for the health care sector.

The market is undergoing a historic transition to digital networked technology that will ultimately drive more care from the hospital to new kinds of consumer systems used in the home. But the sector is also under heavy challenges from increasingly complex global regulations and funding pressures.

An aging global population will make hospital-based health care unrealistic in the next 10 to 20 years, Ben Wilson, director of health care IT at Intel Corp., said during a summit talk. The company has pioneered home care for a decade, helping to establish the Continua Health Alliance, which has developed standards for remote-care systems now hitting the market.

“The really hot story in medical is the movement of technology out to the home,” Patrick O’Doherty, vice president of the health care segment at Analog Devices Inc., said in an interview at the DesignMed conference, part of the mammoth Medical Design & Manufacturing (MD&M) West event in Anaheim, Calif. “This has been a long-expected but never-arriving wave—until now,” O’Doherty added.

The angst on the way to this opportunity comes in part from the web of diverse global regulations and insurance reimbursement schemes that all medical products must negotiate. The latest twists come from the U.S. health care reform act of 2010, which includes a 2.3 percent excise tax on medical devices and aims to set a new cost-effectiveness standard for care.

Inside the FDA

In the United States, which represents about 40 percent of the medical device market, the Food and Drug Administration has stepped up enforcement actions, and the time-to-approval for medtech devices has lengthened.

One analyst called an August 2009 speech by incoming FDA commissioner Margaret Hamburg “the shot heard round the world” because in it Hamburg called for more “vigilant, strategic, quick and visible” enforcement actions.

“We are into a new era of enforcement,” said William Vitale, a Los Angeles area district manager for the FDA, speaking at MD&M West.

Delays in approving new medical device applications in the United States have prompted some companies to go first to Europe, which is widely viewed as having a more streamlined medical device approval process. U.S. approvals can be as much as two years slower than Europe’s CE Marking process, according to one report.

The FDA receives at least 4,000 applications a year for its corresponding 510(k) program, used by as many as 90 percent of medical devices in the United States, said Heather Rosecrans, vice president of regulatory affairs at the Medical Devices Manufacturers Association. Rosecrans, who oversaw the 510(k) program until retiring from the FDA in September, acknowledged that the number of “turndowns” of applications had increased dramatically over the past year, while the volume of conditional approvals had decreased.

Rosecrans conceded that continuing approval delays could hinder U.S. innovation in medical electronics.”It’s not a fast track, not a rubber stamp,” she said in characterizing the process in a talk at the EE Times summit.

Given the delays, medical device companies can spend $10 million to $15 million, and at least three years (and often up to five), to get a new product to market, said DesignMed keynoter Jon Knight, vice president of R&D in the imaging group at Boston Scientific.

Companies can spend up to $15 million and five years getting a device to market, says Boston Scientific's Jon Knight.

“The FDA has become unpredictable in its requirements and approval times, and a lot of us would like to see that addressed,” said Mark Wan, principal of Three Arch Partners, a firm that manages a billion-dollar venture capital fund dedicated mainly to medical devices.

In January, the FDA announced 25 changes it will make to the 510(k) program in 2011, with additional proposals on the way. Industry groups welcomed many of the changes but reserved judgment pending details about the planned modifications and decisions about controversial measures.

Seeing the shift to home care on the horizon, the FDA has approved at least three smartphone apps for health care, said John F. Murray Jr., an FDA software expert. The agency is drafting guidance documents on how it will handle mobile devices and electronic health records, he said.

The United States still represents the largest share of the global devices market due to favorable demographics, high consumption of technology, and very high relative global prices. Click on image to enlarge.