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Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
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10

The Business Environment

Highlights

  • Interest in non-invasive neurostimulation devices is high among both clinicians and industry. However, growth of the industry is hampered by a number of factors, including low awareness of the technology among the broader practitioner base, and a limited understanding of the mechanism of effect of these technologies, a lack of funding from federal grant sources, and sometimes unclear regulatory pathways to approval. (Demitrack, Maiques, Pande, and others)
  • Despite excitement in the field, investors have shied away from medical device companies because of unproven business models for some technologies, lack of regulatory predictability, challenges of obtaining reimbursement, and the long development time frame for investors to see a return on their investment. (Jaffe)

NOTE: The points in this list were made by the individual speakers identified above; they are not intended to reflect a consensus among workshop participants.

INDUSTRY PERSPECTIVES

Given that current treatment options for psychiatric illnesses such as depression are suboptimal, increased recognition that the underlying mechanisms of disease involve neural networks is needed, according to several participants. Particularly given the demonstrated responsiveness of these networks to electrical stimulation, along with a changing reimbursement landscape, there is considerable interest in industry to develop new neuromodulation devices, according to Mark Demitrack.

Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
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Clinical interest is also high, he said. In the United States, Demitrack noted that more than 600 NeuroStar TMS devices are currently in use in a variety of clinical, academic, and hospital-based settings. About 80 percent of these devices are used by non-academic, office-based practitioners who see TMS as a welcome addition to the standard armamentarium of treatment options for depression when initial pharmacotherapy options do not provide benefit. As one of the only non-invasive and non-systemic treatment options, TMS therapy has been well received by patients. Acceptance of TMS as a proven safe and effective antidepressant treatment has also been established in large, independent meta-analysis of existing research, such as the recent analysis conducted by AHRQ (Gaynes et al., 2011). A reflection of its emerging acceptance as a treatment option is the incorporation of TMS therapy as recommended treatment consideration when initial pharmacotherapy has failed in various international practice guidelines (see, for example, the American Psychiatric Association, the World Federation of Societies for Biological Psychiatry, and the Royal Australia and New Zealand College of Psychiatrists).

Interest in other neurostimulatory devices is also high, said Ana Maiques, noting that Neuroelectrics currently sells its tDCS/EEG device in 35 countries. EEG provides a powerful tool to dynamically study brain activity, while tDCS delivers stimulation through multiple electrodes in order to target precise areas of the brain (Ruffini et al., 2014). The promise of this approach, said Maiques, is that EEG measures could be used to adapt the transcranial current stimulation (tCS) parameters (either tACS or tDCS) to better target certain cortical circuits (Fröhlich, 2014; Fröhlich and Schmidt, 2013). Other assessment tools, such as accelerometry or electromyography (EMG), may also be integrated into future iterations of the device.

While TMS and, to a lesser extent, tDCS have demonstrated relatively strong uptake in the market, other approaches such as LFMS remain relatively unknown, said Atul Pande. As mentioned in Chapter 3, LFMS emerged from the clinical observation that patients with bipolar depression reported feeling better after a single 20-minute echo-planar magnetic resonance spectroscopic imaging (EP-MRSI) procedure MRI spectroscopy scan (Rohan et al., 2004). A venture fund in Boston created Tal Medical around this observation.

Uptake in the market has also been limited by the fact that neuromodulation is a new paradigm, according to Jeffrey Nye. He said that while the pharmaceutical industry has a fairly streamlined understanding

Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
×

of the expectations for sponsoring companies to bring a product to the market, that is, the investments and studies that are needed to achieve regulatory and payer approval, these expectations are less clear for the neuromodulatory device market. He added that while several participants cited the great potential of drug-device synergies, particularly for combination therapy, it will be necessary to figure out the best business model, build operational synergies (sales, etc.), and manage the complexities of regulatory clearance.

A VENTURE CAPITALIST’S PERSPECTIVE

Innovation in the area of non-invasive neurostimulation requires a strong business case and investment from both public and private sources, what Ross Jaffe calls the innovation ecosystem. Jaffe founded and directs Versant Ventures, a large health care-focused venture capitalist firm based in California that has raised about $1.9 billion over the past 15 years to invest in early stage companies (PR Newswire, 2014b). Neuromodulation is a particularly exciting area, said Jaffe, as our increased understanding of the electrobiochemical nature of the brain has provided insight into new ways to attack chronic disease. Electricity has been used to modulate end-organ function not only in the brain but in other parts of the body as well (e.g., pacemakers, implantable cardioverter defibrillator [ICD]), and is now being applied at the molecular level to affect human physiology, providing new device opportunities in what have traditionally been pharmacological space.

Medical devices provide the opportunity to improve the quality of care and reduce costs, said Jaffe, and excitement about medical device innovation is high. However, success in medical innovation requires building a sustainable business around the technology that can develop and deliver the device at a profit; that requires a clear understanding of the market as well as the regulatory, reimbursement, and clinical paths. Intellectual property and patent issues are also important. Hank Greely commented that, unlike drugs and biologicals, there is no regulatory exclusivity for devices, making it even harder to attract investment.

Despite excitement in the field, Jaffe said there has been a less than 70 percent drop in the amount of funding for early-stage medical device companies since the peak in 2008 (Norris, 2013); although, there has been an increase in funding for devices that monitor chronic illnesses and a person’s overall health (Laird Wireless Connectivity Blog, 2015; RnR

Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
×

Market Research, 2015). The reason is the significant capital requirements and the long development time frame required for investors to see a return on their investment, which Jaffe blamed primarily on issues of regulation and reimbursement. The FDA has taken steps to encourage innovation over the past few years, he said, while reimbursement has gotten much worse. Investors now see a much clearer and more attractive path to generating financial returns in the biotech industry than in the medical device industry. On the device side, investors are shifting toward investing in later-stage companies, after FDA approval, in order to lower their risk and improve their rates of return.

From a business point of view, Jaffe said the ability to distribute a product directly to patients can be attractive, particularly if the technology is disposable and needs to be replaced on a regular basis. In addition, as opposed to invasive neuromodulation, non-invasive approaches can be less expensive to start up and human clinical data can often be obtained with relatively little expense. Devices in the consumer space also face fewer barriers in terms of regulation.

Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
×
Page 71
Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
×
Page 72
Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
×
Page 73
Suggested Citation:"10 The Business Environment." National Academies of Sciences, Engineering, and Medicine. 2015. Non-Invasive Neuromodulation of the Central Nervous System: Opportunities and Challenges: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/21767.
×
Page 74
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Based on advances in biotechnology and neuroscience, non-invasive neuromodulation devices are poised to gain clinical importance in the coming years and to be of increasing interest to patients, clinicians,health systems, payers, and industry. Evidence suggests that both therapeutic and non-therapeutic applications of non-invasive neuromodulation will continue to expand in coming years, particularly for indications where treatments are currently insufficient, such as drug-resistant depression.

Given the growing interest in non-invasive neuromodulation technologies, the Institute of Medicine's Forum on Neuroscience and Nervous System Disorders convened a workshop, inviting a range of stakeholders - including developers of devices and new technologies, researchers, clinicians, ethicists, regulators, and payers - to explore the opportunities, challenges, and ethical questions surrounding the development, regulation, and reimbursement of these devices for the treatment of nervous system disorders as well as for non-therapeutic uses, including cognitive and functional enhancement. This report highlights the presentation and discussion of the workshop.

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