Austin, do you believe FDA acted inappropriately in the 23andMe case?

David Lim, Ph.D. RAC, CQA What is generally considered to be in the best interest of a company is to try to penetrate into any market where there are less burdensome requirements. Of course, exceptions apply. The regulatory requirements for medical devices between EU and US are different. For the 23andMe case, the FDA was trying to enforce the US requirements.

The double edged sword of regulation. I choose to love it.

Burrell (Bo) Clawson But if a manufacturer has a really good product, you want to go where the money is.

Since a lot of these great products will generate over one billion dollars/year, it pays to get FDA clearance in the US first. Then when you want to go for sales in other countries, the process to get clearance in those venues is much easier and sometimes just a perfunctory approval based on the US FDA approval.

Ned Robins I must say that the problem of over-regulation has been bothering me too Austin. In fact, it was the central point in my recent presentation at PM DAY (Bulgaria), and it is a danger in the EC as well as in the US.

I do not know enough about your products to unconditionally wish you well, but I certainly sympathise with your position, and, as long as your products are ethical and do not add to our "Big-Brother Society" I hope you succeed.

Robert Christensen Are you kidding?

After bringing forth my 40 year old, pre-amendment, predicate, one of a kind TMJ implants which were then 40 years in commercial use and then later put through a horrible PMA, then a 510k and some millions of dollars of testing and studies, you must be kidding.

I was also the first to innovate the individual dental implants in this country, had two bioengineering University labs named after me, what a ridiculous approval process this was for a device which basically never hurt a soul, helped tens of thousands get through their degenerative joint disease with total relief.

My, it was a waste of time to go though a very corrupted approval process with people at CDRH/FDA who didn't know anything about the disease or the way to correct it. They brought forth panels of people who had zero knowledge of what we were even presenting.

Then after I had fought my way through the approval of my devices, they four years later issued a bogus MDR issue and then fined me some $630,000 when I wouldn't agree with their distorted views on what it means to be a device that either kills someone or is the cause of serious irreparable harm. The Denver District top investigator who brought that forward later wanted me to pay him under the table. I liked him too, but he was corrupting the process. He wasn't alone in corrupting the process. But I have written about that before. Somehow, folks this process should be there to help the innovator and clinicians bring forth excellent products in timely, inexpensive ways, but also in a cooperative fashion. It truly could be fun, if it weren't for the power grab by some very ill informed investigators and lead personnel. But few others have the guts to say what I have just said. Merry Christmas.

Let's put people in charge and on Panels who know something about the way to treat such a problem and are not paid by the FDA in various conflicts of interest ways. It truly was a joke. A very sad joke, indeed. As I have said before, read my book, FDA You Were WRONG! It isn't getting more regulations, it's getting more wisdom..

Ned Robins Robert - I just love your entries and your honest and open speach.

Darrell Hartwick Regulations of all sorts are driving up costs, discouraging risk-taking, and sending jobs overseas. We are good enough to survive this nonsense--for a while. But why not improve conditions for patients, investors, and people who want to work by using some common sense?

I agree that it is much more cumbersome and costly to get a 510k through the FDA. I have been in medical lasers for almost 20 years and can attest to the difficulty now compared to even a few years ago.

I remember when submitting a 510k was free, and you actually talked to the FDA to educate them. Recently, a submittal required a discussion with an FDA team that was an extremely unpleasant experience to describe it kindly.

Last year, there was a lecture titled, "What we don't have and why we don't have it" at the American Academy of Ophthalmology. The FDA was invited and agreed to present at this, however, did not show up. The subject was regarding ophthalmic medical device technologies like femtosecond cleared overseas that are claimed to be superior to what we have in the US. This lecture suggested that will never have them in the US because regulations have made it cost prohibitive and therefore a losing business decision.

The FDA regulatory requirements combined with the reduction of Section 179 (until last week) from $500k to $25k, Med Dev tax of 2.8%, and expense to implement the Sunshine Act have made it more difficult to thrive in the medical laser industry. Hopefully, it will become easier in the future or innovation of medical devices in the US will cease.

Darrell Hartwick Marcia, at least the Device Tax will likely go away with recent changes in the Senate. Many Democrats would've voted to repeal years ago--even those from Democratic states like Massachusetts--if Harry Reid had allowed a vote on this matter.

William Thoma One would hope that the British and EU systems would also block the use of a product that has the fundamental issues that 23 and Me failed to address with the FDA.

I am seeing less and less sympathy for them at Med Tech gatherings I attend in the San Francisco Bay Area as people actually understand what the FDA wants them to address. Remember that the FDA was formed in response to abuses, learn the history, it doesn't repeat itself, but it rhymes.

James Werner I don't think the medical device industry is over regulated. The issues I do see is how the regulations are enforced. I see differences in enforcement actions between the FDA districts and even between compliance officers. The probably root cause is education and control form the Center.

I agree with James Werner, especially when Class I and Class II devices are concerned. When I researched whether to launch in the EU or US first, there really wasn't much difference in time to market. I chose the US first because the ability to pay and/or reimbursement in the US is better.

David Lim, Ph.D. RAC, CQA To compare the requirements applicable to the device types between jurisdictions (US, EU, Asian Countries, etc.), it should be analyzed on a case by case, to be accurate. For some device types, it is less burdensome to obtain CE marks than 510(k)s. For some other devices, it is less burdensome to obtain 510(k)s than CE marks. However, it is generally known that obtaining 510(k)s or PMAs are much harder than CE marks. Unless we compare apples to apples, we may be barking up the wrong tree.

Austin Walters Thanks for the tremendous education. I'll be reaching out to a few of you for more in-depth information. A few thoughts more:

I think the appropriateness of FDA ruling can be evaluated on both micro and macro levels. Within the micro legal framework David mentions, 23andMe seems to have failed compliance in the US per Thomas's comment. But this isn't the end of their story: Of course they'll come back to the US mkt at some point, but in the meantime, they're operating in the UK full steam ahead. And because 23andMe's technology is a market-creating innovation (see: http://www.foreignaffairs.com/articles/142495/bryan-c-mezue-clayton-m-christensen-and-derek-van-bever/the-power-of-market-creation), the UK will get a leg up on realizing this economic growth. The US will fall behind as 23andMe moves more of their operations abroad. So in this sense, I think the FDA's rulings against 23andMe may be inappropriate on a macro level. We need to allow nascent US innovations the breathing space required to grow into something properly regulate-able. Otherwise, we get nothing other than the satisfaction of wielding rules.

Imagine if 23andMe were to skip developed markets altogether, and travel the long hockey-stick handle of early-stage business model / technology experimentation in markets like India / China that are less regulated. They could run clinical trials with an eye toward fulfilling the US FDA's reqs, but do so at a MUCH lower cost, with more ample patient data. Once they've nailed a scalable model, they could transfer their model internationally. This is an emerging idea we're exploring with a number of technologies on our research blog at www.globalhealth.care .

Comparing to Chinese FDA the US FDA is much easier. Life is relative. The innovation is being chased away by a system that just can't afford paying for new gadgets or even life savings drugs.

thomas blank The supression of innovation in the US relative to other markets has several fathers. High regulatory and clinical costs combine with a risk averse investment climate and harsh medical device tax on start ups to make innovation more attractive in other countries that are more supportive of research and development. Large companies are better able to tolerate that climate, but they frequently do not foster the right kind of environment to drive cutting edge innovation. So I expect to see growth in innovation overseas outpace that in the US in the future. The FDA is not the only driver.

Marie Rajkovacz I agree with James Werner. There is further evidence to support the belief that the medical device and pharma industries overseas (certain countries for certain without much quality emphasis) raise safety concerns. Read article on FDA web site, "Imported Drugs Raise Safety Concerns." Those companies whom do not care about any quality system create a black market and adulterated product. You know that the FDA places some imports into hold storage at ports in the US. There are on going quality issues with certain countries. How many companies pull those out of storage? The FDA is definitely understaffed.

Dennis King Not sure I agree that US medical devices are over regulated. The philosophy of FDA is to protect the public. In places like the EU, the philosophy is to get the product on the market quickly and let the market determine its value to customers. Two different approaches.

As far as clinical trials for these products, I would ask the following question "Are clinical trials really that expensive?" For a small device company with a $1M a month burn rate who goes back and forth with the FDA trying to prevent running a trial for 12 months, they have just burned $12M trying to prevent a trial that might cost $6M for a product that might make $250M for them once it is on the market. Does this make any sense?

Robert Christensen In my dealing with EU and FDA I always found the EU was much more likely to appreciate you as the innovator surgeon and knew exactly what and why you were doing such and such after a short discussion.

They always honored your position and sense of avknowledge. The FDA personnel were always misrusting and more . demeaning. As though we were attempting to pull something over on them to put something over on them. It always required snother test to prove what others had proven and revordrf before. Like with their Panels there were always agendas and lack of commonsense.
Always tewuiting dome foolish test to.proving that cobalt was a metal....or just whatever. Lack of trust or commonsense.

Marie Rajkovacz Dennis and Robert point out the stark differences between stateside and overseas. There is also quite a contrast between a small and large company. In my opinion, much more is expected from a Fortune 500 company which may be why Robert states mistrust of over regulation. On the flip side of the coin, it is very expensive for a small co. to do certain things as Dennis states. Some things may not be compliant with regulations.

Robert Christensen true Maria.

The dental implants I developed have lasted some 50 plus years in the same patients as have many of my Tmj implants, so to be be sure I produced some excellent implants for some difficult surgical problems. In the TMJ case the lack of expertise of the investigators and their desire to gain NIH grants was so conflicting it was fouling up their wisdom, and they insisted on being correct. They were foolish.

Ian Newington Here's the problem - we want it safe, we want to bring benefit to patients and we need to make it pay. In an ideal world, regulation would be more nuanced and be risk-based and bring in non-conflicted expert opinion on a case-by-case basis. But who's going to pay? As a result, we get much more of a 'one size fits all'.

Perhaps if risk was better understood by the "patient in the consulting room" the tendency to rush to lawsuits might change? Probably wishful thinking for US culture.

David Lim, Ph.D. RAC, CQA Bob, your points are well taken.

Burrell (Bo) Clawson Big companies have multiple options. They can develop anywhere the talent is, do clinical trials and market entry in any country that let's them proceed fast and then bring the product to the other larger markets later if that makes sense.

Startups are constrained by both manpower and cash. Once they set their plans in action, they can rarely change to a different foreign market venue for approval and early sales. In addition, the distribution and payment schemes in foreign countries are also quite different than in the US.

It is easy to say the FDA regulation is too complex, costly or time consuming, but the detailed approval process does weed out badly thought out or poor performing products in most cases.

I can see a need for the FDA to possibly consider better ways to help startups proceed through the process faster with better early FDA advice. It is the FDA delay after delay that can consume a startup's funds.

I'ld like to see a way to have a startup prepare its plan and then work very early with the FDA. A conference call with the FDA very early on could identify if FDA would have show stoppers or extremely detailed requirements on an area or two from an upfront conference call with competent FDA reviewers.

Efficiencies are needed. I could see it dropping a year or two off the approval process for some products.

Robert Christensen Thank you David,

On Christmas Day I blacked out, tripped down stairs and fell on my face so was in bed at hospital with subdural hematoma, getting there my friend. Happy New year to all.

Bob

Austin Walters Ian, an insight that emerged for me recently came from contemplating the cost-benefit exchange of various stents available on the international market, which I explored in a recent post (http://www.globalhealth.care/2014/12/100-stents-from-india-in-offing.html ).

To me, it seems a way around this would be much greater price-benefit transparency vis-a-vis the patients, with a full and candid discussion about risks. And then letting the patient decide: Patient-centered medicine. Obviously this approach would require new and more dynamic payment models, but maybe innovative companies like this one could start? https://www.hioscar.com/

David Lim, Ph.D. RAC, CQA From my perspectives (based on real cases, serious research, all aspects of business issues, etc.), what is most critical is to develop a holistic regulatory plan/strategy as early as possible. That is what I really emphasize through my webinars/seminars. There is a company who has been working on a product for over 20 yrs. When I review their case, device performance and testings, etc. my conclusion was that the company has to start over (re-design) because of no possibility of obtaining a PMA approval. Of course, the company disagreed. But within a year or so, the company's technology was sold to another company, who is then going to re-develop for the next five (5) years. The CEO and many senior management members were gone! When I say what is going to happen, why would/couldn't they be more serious, but rather choose to go defunct, technically speaking? My seminar is scheduled here at http://globalcomplianceseminar.com/event/live-seminar-developing-implementing-global-regulatory-plan-strategy/

I love this group. Thank you for making it valuable for commenters and lurkers alike.

David Lim, Ph.D. RAC, CQA Yes, I provided consulting while developing their regulatory plan/strategy. I often offer few hours of consulting over developing a regulatory plan/strategy unless my clients want me to develop it on behalf of them. Thanks.

Austin Walters Good stuff, David. Have you ever assisted in designing a ground-level regulatory strategy for an Indian medtech firm seeking entrance into the U.S. healthcare market? This is a project I'm working on now associated with my research at www.globalhealth.care

Robert Christensen I'm just the old guy in the group. Thank you all, Joe, for putting up with me. It has been fun. This falling and blasting my face and getting a subdural hematoma has not been fun, but surely an experience. You just can't last fever. It has been a fun trip, however. Go get them guys.

David Lim, Ph.D. RAC, CQA Bob, by tomorrow, please stop thinking as just the old guy but think and live so as an healthy man! Thanks, Joe and all others for putting up with me, too!

Robert Christensen Thanks David and Joe, too. Bob

Jonathan Wacks Let's cut to the chase-a young firm with limited resources wants to sell a diagnostic product without substantiating any claim that it actually works. Novel. Shocking. If I have learned anything during my thirty years of experience designing and validating new products is that any idiot (or genius) can quickly develop a product. Proving that something actually works down to the part-per-million (PPM) defect level is where companies really spit blood. Whether we fly into turbulence in a 787, drive a car on an icy road, or bring our kids to the local Emergency Room, it's all based upon lots and lots of companies killing themselves to get their products down to the PPM level. No offence, but try out these "innovative" products on someone else's kid...

Robert Christensen How about wise regulation.? In our case it was not wisdom...just control, conflicts and definitely corruption.

Jonathan Wacks Given the disparity in pricing for drugs and devices in the US compared to the ROW, the US economy is still subsidizing the global healthcare industry. While getting product approval for "innovative" products is one thing, getting a good price for that product is a very different kettle of fish (in other words, it's real dumb to ignore the US). Lastly, whenever I ask patients, doctors, or CEO's, "What drugs or devices can you get in Europe or Asia that you can't get in the US because of the FDA?", the list, well, there is no list...

Burrell (Bo) Clawson Jonathan is right in how the US (& EU) sales alone subsidize the rest of the world's drug costs, and much of medical device costs.

Most of the nearly 1 billion people in the US & EU don't see this real world situation, where the other 6 billion people don't pay any significant "cost of development" of drugs and medical devices.

So our question is still, "Is the U.S. Chasing Away Innovation, with Over-regulation?" The answer is yes.

The inherent conflict between certainty of efficacy versus safety will continue and the early adopters-users of drugs and devices will pay the full price of developing a drug or medical device.

Robert Christensen Amen! Bo

Jonathan Wacks The reality is that there is no "Moore's Law" in the healthcare industry, where product power grows exponentially while prices stay the same. The 20th century bore witness to rapid advances in medical device and pharma development, but the pace of development is rapidly hitting a plateau, be in the US, Asia, or EU. The reason is that the major impediment to developing the next generation of cures for cancer, nerve damage, metabolic disease, etc. is due to the state of incomplete science (the "easy" stuff has been solved, and this has ZERO to do with FDA). I would contend that the 21st century innovation will happen at major clusters of engineers, scientists, and medical institutions. Boston baked beans anyone?

Robert Christensen Yeah..me!

David Lim, Ph.D. RAC, CQA I perceive that "key (marketing) ingredients," which will dominate innovative products moving forward, will be largely based on 1). safety; 2). clinical utility; 3). convenience for use; 4). speed; 5). durability/reliability/integrity; 6). price/cost, etc. As for risk/benefit assessment, it will be based on the "TOTALITY" approaches. The ones who will disruptively succeed in the market are those who are not trying to grab only low hanging fruits, but those who are targeting high hanging fruits including niche market/products. Whether it is unfortunate or whether it is rightly done or not, we tend to chase low hanging fruits as we all have common interest and the target when it comes down to business. When and if we are chasing low-hanging fruits, our discussion about "innovation" or "disruptive technology" or "over-regulations" may rather constitute "gobbledygook" as no real brain may be needed for such pursuits. What do you think?

Austin Walters At issue is providing patients in the U.S. the same breadth of choice enabled by the price / quality transparency and range of products in other high value markets. Take the automotive market: There are certain minimal regulatory standards for safety, emissions, etc., but beyond these floors is a wide range of features and levels of quality resulting in prices ranging from $15,000 to hundreds of thousands of dollars for a new car. Certainly expensive BMWs will have more advanced braking systems than the lowest quality models of Nissan, but there are MANY consumers who don't choose to pay the premium for the marginal benefit.

Are healthcare providers selling McLaren F1s as if they were Toyotas? I think much of the innovation in U.S. healthcare in the coming years will be disruptive innovation, resulting in a wider range of value propositions available to patients.

David Lim, Ph.D. RAC, CQA Austin, as for issues on points, one of the best approaches is to exactly compare between apples and apples. For example, if I take 100 class III devices approved in the US and those in the EU, based on my study, devices are available in the EU 3-5 years before the same devices are available in the US. But for other types of devices class I and class II, our views need to be updated. As for your last statement, that is what the industry seems to be (in fact, we are forced to be in a way as we have no options other than that) moving toward with various reasons.

Jonathan Wacks I have noted time and time again the drive by device mfg's to market product complexity and "advanced" features to simply drive up the product price. The number of marginal features designed into infusion pumps, pacemakers, software devices, etc. actually sets up the product for unnecessary complexity, validation nightmares, and the inevitable field issues. When CMS and insurance companies reimbursed on a "cost plus" basis, device manufacturers drove up the price. That gig is dead. Innovation in healthcare now has a new driver: Cost.

David Lim, Ph.D. RAC, CQA Manufactures shouldn't use additional features to drive up the price. Jonathan's word "Cost" should be interpreted as "cost" while meeting applicable regulatory requirements without compromise for safety and effectiveness of the device performance.

Mike Helmus I believe it's time to find the balance between safety and innovation. Not only is it impractical, but a safety only oriented society would be stifling and be an excuse for a limitation of freedoms. On the other hand it requires Medtech to be meticulous and use state-of-the-art methodologies to ensure appropriate safety and efficacy.

Burrell (Bo) Clawson Jonathan Wacks noted the famous problem of "feature creep."

Engineers say "we can do it and make our XYZ product unique." That's true, but it could be the downfall of the product.

A sharp entrepreneurial company may say, "Half the features in the XYZ product are fluff and we actually only need 2 basic featues." "We cut cost, size & complexity and can increase our margins even with a simpler more focused product."

Every coin has 2 sides.

Robert Christensen Absolutely. That is what I have been saying. STOPPING INNOVATION-STOPS AMERICA

When you place stupid, repetitive tests on devices and ideas, which are nothing more than covering some bureaucrats butt, you are hampering innovation. Let's welcome the true true innovators in engineering and medicine and get rid of those wo have little new thought....just the me too group seeking NIH grants and seeking to stop those who are true leaders. My book, FDA You Were WRONG! It certainly shows the attack on people with innovative thought. Not just some obstructors which I was meeting. Some were outright crooks and should have been kicked out...except that is their culture just my thought..

Jonathan Wacks Interesting case study. There has been a ton of innovation money thrown at "gene chips", "lab-on-a-chip", "rapid microbiology" "Point-of-Care diagnostics", etc. (Disclaimer: I co-founded a diagnostic company). So far, Plain Jane, "Chem XX panels", ran on big box analyzers still dominate the market, and my guess is that they will continue to do so in the distant future. Reality check: No one needs, and no one is willing to pay the premium for "instant" lab results. ICU's and ED's get "Stat" service from the lab, and the "delay" has no impact on patient outcomes. The vast majority of tests ordered by docs involve routine clinical chemistry panels, performed by automated test equipment using cheap reagents. Geneticists are pretty surgical when they suspect a genetics issue, and rarely need "hundreds of test results". Hospitalists round their units several times a day, and simply aren't screaming for instantaneous lab results. Docs don't need a more accurate PSA or CA-125 marker (a 2.5 or 2.6 PSA result is clinically irrelevant). Q: You want to beat up the FDA because they're demanding real data for each test that is marketed? What's really impeding innovation in this industry?

Burrell (Bo) Clawson Jonathan, my prediction is we will see immunoassay test kits which look for molecular abnormalities indicating the start of a medical condition before damage and chronic conditions get established.

Some of those may be FDA cleared for home use at some point.

Recently one research group noted analyzing the breath of a person to detect the level of acetone in exhaled breath as an early indicator of diabetes.

I expect we will see far more of these diagnostics as people start to see the real cost of their yearly healthcare bills.

Even with the best detection, faults in DNA replication in cells is still going to cause a lot of medical conditions, so we're never going to stop all major medical conditions.

Jonathan Wacks Bo, there is no question that as new science is transformed into practicable technology, we'll certainly see innovation in terms of early detection of genetic mutations or medical conditions. Whether it's faster, cheaper, better (or more convenient) will be worth watching.

Again, genome-based science is wickedly complex, and really expensive to figure out. Consider "simple" questions we have today, such as recommending an annual mammography, a BRCA, or even a PSA test. There is still significant controversy whether the significant costs of early detection really affect patient outcomes. If the science can't agree if the costs justify mom's mammography, what on G-d's green earth will a patient or doctor do with a "23 and Me" report?

David Lim, Ph.D. RAC, CQA I think Bo made good points as briefly discussed at http://globalcomplianceseminar.com/dna-damage-may-lead-to-cancer-diabetes-hypertension-cardiovascular-and-lung-disease-and-ad/

I envision that there will be more companion diagnostics, enforcing the spirit of "personalized medicine."

Austin Walters I brought up the IVD example b/c I think it's one of the HC markets most ripe for disruption. There's nothing set in stone about the current extremely expensive and slow process for running lab tests on vials of blood (especially when you factor in the commonality of ordering follow-up tests). I recently wrote about Theranos' potential to disrupt this market: http://www.globalhealth.care/2014/10/theranos-worlds-best-healthcare-company.html . They currently have ops in 30 Walgreens in Arizona, and assuming that goes well, they'll roll out to all 8,000 across the USA, which I believe they're credibly poised to do. If they do, it will be so much faster & cheaper (see cost comparisons in the article) to perform required IVD tests.

Something like rHEALTH that can produce medical grade data at PoC will disrupt the market even further as patients will no longer need to go even to Walgreens. They'll perform all tests and follow-up tests at PoC, and the software will provide digestible results very quickly. I don't see how Quest and LabCorp will survive.

David Lim, Ph.D. RAC, CQA Austin, do you work for Theranos?

Austin Walters I do not! While I believe they've done an extraordinary job building a model healthcare company, I'm starting to believe that techs like rHEALTH may quickly disrupt them. Their slow movement has benefits, but it may be too slow in the age of the smartphone.

BTW, I just discovered that hospitals are charging patients egregious amounts for routine IVD testing. Page 26 of Brill's "Bitter Pill" outlines one scenario where a cancer patient was charged ~$4,000 / day during inpatient treatment, FOR TESTS ALONE: http://www.uta.edu/faculty/story/2311/Misc/2013,2,26,MedicalCostsDemandAndGreed.pdf . I don't think the number of tests will decrease, so the delivery models need to reduce cost dramatically. And they will.

Austin Walters Great example of this happening right now is the rHEALTH device, which ostensibly runs 100s of test on a single drop of blood. This is not gimmick; it's a NASA-developed technology that should soon be commercialized: https://technology.grc.nasa.gov/SS-rHealth.shtm .

It's a great example b/c it should cost worlds less than LabCorp's / Quest's IVD tests, and even Theranos' offerings.

Jonathan Wacks I guess we'll see....

Burrell (Bo) Clawson "$5 for aspirin … it is mostly SOP" And it is because of what?

Experienced nurses & PAs get $2+ per minute. Doctors $3+/minute.

You don't just "get an aspirin" if you are in the hospital, unlike the 1960s.

You get drugs authorized by the doctor, signed off by who gave it, checked off on the patient records to be sure he can have the aspirin without interfering with his other medications or problems (say anticoagulants or an existing stomach ulcer or GI bleed.)

All of this has to be properly documented completely or you can't bill for it and failure to document could also lead to medical malpractice claims if a problem arises.

As simple as an aspirin is, the FDA regulations, Joint Commission, Risk Management dept. and IT systems all feed into the cost of delivering anything to a patient.

Innovators actually have produced products to streamline the systems to speed up and lower the cost of delivering drugs and devices to patients while keeping all the records straight.

Pyxis Automated Dispensing Cabinets (one of several companies) are used in most hospitals to take info on patient and caregiver from barcodes and request/dispense the needed item from a drawer after the information is entered, so the hospital and patient records are automatically kept up to date along with warnings about certain drugs, etc. when the order is made.

Jonathan Wacks Don't forget that our private insurance essentially subsidizes patients that can't pay the hospital (essentially a tax). Do also remember that these are published "rack rates", not the negotiated insurance rate or Medicare rates. My kidney stone "rack rate" was $25K for the ER and Hospital stay. BCBS paid $7K. Let's avoid these "VC Elevator Pitch" figures...

Burrell (Bo) Clawson Hospital's Costs? Anyone hazard a guess as to the breakdown between labor & drugs/devices?

By memory, I remember:

A. 80% of a hospital's budget is wages
B. 5% of a hospital's budget is disposable medical devices

The cost of an aspirin is most certainly not a significant part of the cost of dispensing it.

All of this is partly why hospitals are moving people out of a hospital quickly when they are no longer in critical condition in the ICU, so they can go to a lower overhead environment of a care/recovery facility.

It is also possibly true that there are fewer HAI (hospital acquired infections) in care facilities.

Burrell (Bo) Clawson The thread started with 'chasing away innovation with over-regulation.'

The cost in a hospital is mostly expensive labor and the labor overhead. A lot of the labor can be said to be from regulation via FDA, CDC, Joint Commission, etc.

Therefore, on the innovation side, if you are going to design a new medical device or system or drug, it is likely to have a better chance of being successful if it lowers the time required for the hospital staff to use it &/or the patient gets well faster.

Darrell Hartwick This is about the FDA and pharmaceuticals, but it seems relevant to the device debate:

http://thehill.com/blogs/congress-blog/healthcare/228803-fda-2014-approvals-the-message-behind-the-numbers

Burrell (Bo) Clawson Darrell, I can see that orphan drugs (like for Hepatitis C which affects about 1% of the population) which are often very high priced, with very limited numbers of potential patients.

Orphan drugs & their economics would be the exception to my look at more broadly based devices and drugs for routine healthcare use that will have to lower costs to make them acceptable for broad use.

Orphan drugs at very expensive cost to patients/insurers are still based upon justifiable cost, however. If a person has a life ending condition and the option exists for a $100,000 drug treatment, it is worth $100,000 to most people to cure someone and keep them as a productive member of society.

Is any drug or device not subject to economic justification in the long run?

James Werner Good input from everyone - great discussion

Burrell (Bo) Clawson David, I see the CLIA waiver for physician office use to detect Influenza A & B as a good step forward in speeding up diagnosis with minimal risks of misdiagnosis to any patient.

The existing situation is hundreds of thousands who get the flue and then taking days to get lab results back. Alere's new test machine gives results in less than half an hour.

Given the lives lost to the flu each year, it seems like such a machine makes sense for a doctor's office to be able to diagnose more quickly particularly for those with compromised health. I don't know about the economics of the test & test machine, but expect it would be competitive with the existing central lab tests.

David Lim, Ph.D. RAC, CQA Bo, feeling or views are mutual!

David Lim, Ph.D. RAC, CQA It is the first DNA test for the indications.

David Lim, Ph.D. RAC, CQA Bo and Austin, what do you think of this IVD? http://passfda.com/alere-i-influenza-a-and-b-clia-waived/

Robert J Bard, JD, CQE, RAC Austin,

The US has its problems but I believe the US is still the best place to develop new products. If you look at India, the government has no concern for IP and India is not compensating any company when it decides your prices are too high. The EU is on the verge of killing the medical device industry with new over regulated laws and directives. There is zero transparency in the EU and add the layers of member states and EU Commissions and Parliament laws...they are making it almost impossible to know where things are going. Good or bad, the EU Parliament is on the path to kill the medical device CE marking with already implemented and planned changes.

During the '90s, I was out there promoting EU first for all medicals but today, the ran away costs are a killer. There are regions that are less expensive than the US but in the end can you sell your drug or device in those countries?

Bob

Robert Christensen Interesting, Bob Bard.
Bob

David Lim, Ph.D. RAC, CQA Bob seems to use the term "kill." I wonder how EU commission would interpret Bob's views on the EU system being newly introduced.

Austin Walters I have a few comments to add:

1. I just wrote a semi-review of Steven Brill's excellent investigation on healthcare costs: http://www.globalhealth.care/2015/01/20-facts-about-healthcare-costs-in-us.html . One of the facts I did not include, but which is relevant to Bo's comment above is that outpatient care actually accounts for 2/3 of the annual overspend (about $500 billion). Outpatient care, with operating profits of between 15 - 35% is extraordinarily profitable for hospitals.

1. I take a much less top-down view of how to reduce healthcare costs than Brill, though I think top-down, and bottom-up changes are both required. I agree with Bo that certain technologies that realize delivery efficiencies are helping, and I would add that 'expanding the scope of practice' for patients and less-expensive personnel like nurses will be a big part of the savings. The kinds of technologies on my blog and Topol's new book The Patient Will See You Now are great examples.

1. David, I like the Alere device very much! It reminds me of the RDTs that are very widespread in emerging markets where the 'unfinished agenda' to tackle infectious diseases is still a large part of their health burden. An interesting company providing low cost RDTs in India is: http://www.tulipgroup.com/Html_New/group_productrange.htm .

4. Robert, I agree the U.S. can be the best place to develop new medtech products, depending on the product in question. I just worry that over-regulation may be narrowing the scope of products it makes sense to develop in the U.S., just as it apparently has in Europe. India has liabilities as you point out, but the benefits can outweigh the risks. Topol even has this interesting line in his new book: "Much of the progress in medical smartphone use is occurring in the developing world, which not only starts at a lower tier of technological capability, but also is without the hindrance of perverse reimbursement incentives." . . . and a perverse regulatory environment? At any rate, there are plenty of indigenous medtech products succeeding fabulously in India, and which might succeed even more fabulously once they leap the pond into the U.S.: http://www.globalhealth.care/p/running-list-of.html

Anthony Piotrkowski, RAC, CQA I do think that the amount of regulation in the US often makes it more attractive for companies to launch elsewhere and come here when they start making some money. Unfortunately, as mentioned before, this tends to make those nations a beta site for underdeveloped products.

My personal feeling is that the trend now is that the rest of the world is getting more regulatory hurdles (consider Brazil today vs. 5 years ago) while in the US the FDA has been making strides to streamline the processes (pre-sub process, review deadlines...).

Also keep in mind that there are ways to get involved with the US regulatory process to help educate regulators and influence the clearance/approval process. I encourage everyone who has expressed frustration to join a standards board or Advamed or talk to their congressman...