However, the industry is experiencing several issues that could damage its growth and destabilize it, as discussed by Stephen Ubl and David Nexon in a Health Affairs blog post. They discussed and offered suggestions for the regulatory approval processes, payment and coverage policies and tax policies.
1. Investment and revenue growth in the medical technology industry have fallen, indicated a stagnating market for the past several years. Venture investment in medical technology decreased by 42 percent between 2007 and 2013, and first-time seed funding for medical technology startups fell by approximately 75 percent during the same time, according to the report. Revenue growth has shown little progress, showing signs of reduced development.
2. Clinical trials and premier product introduction now mostly occur outside the U.S., with U.S. patients waiting three to five years before products are introduced. Mr. Ubl and Mr. Nexon attributed the delay in bringing products to market to higher costs and longer timelines required to conduct a clinical trial in the U.S., FDA regulatory review inconsistencies and uncertainty about coverage and payment.
3. Public and private insurance companies cover fewer new medical devices and diagnostic methods than they once did. A study from Tufts University, a college in Medford, Mass., found a therapy considered for Medicare coverage is 20 times less likely to be covered today than a decade ago. More young medical technology companies are forced to consider whether the device or therapy will be covered by insurance rather than how effective it is, according to the blog post.
4. Providers have few incentives to adopt new technology because they raise short-term costs, which is penalized by ACOs, bundling and other provider risk-sharing programs, according to the blog post. “The solution is not to move back from appropriate incentives to provide high-value care or to suggest that products that do not offer therapeutic benefits should be covered, but rather to implement the public policy changes necessary to assure that the new emphasis on cost does not result in the unintended and unwanted consequence of undermining development and adoption of new and better treatments,” Mr. Nexon and Mr. Ubl wrote.
5. U.S. competition has declined because of increased pressure from other countries, decreased innovation and pressure from the tax system. This may detract from the U.S.’ ability to compete with other countries to be the top of the medical technology industry.
