The Changing Economics of Medical Technology (1991) / Chapter Skim
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5. The Impact of Public Policy on Medical Device Innovation: A Case of Polyintervention
5. The Impact of Public Policy on Medical Device Innovation: A Case of Polyintervention
Pages 69-88
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From page 69... ...
The rationale for each drug and the appropriateness of each dose can be checked, as well as the presence of unwanted side effects or unanticipated and potentially dangerous interactions. Polyintervention in the arena of medical devices requires similar scrutiny.
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From page 70... ...
Although this paper discusses devices only, the framework for policy analysis could be used to evaluate drugs and procedures as well. THE ASSESSMENT: PUBLIC POLICIES AND MEDICAL DEVICE INNOVATION The Limits of the Traditional Models of Innovation The medical device industry is subject to many of the same economic forces that affect all highly innovative industries.
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From page 71... ...
The Pivotal Role of Public Policy Public policies such as federal regulation, product liability statutes, reimbursement rules, and government funding for basic research have had a significant impact on the production and diffusion of new medical devices.
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SUSAN BARTLETT FOOTE FDA Product Liability Certificate of Need Hill-Burton Medicare Medicaid Technology Assessment Outcomes Research Figure 5.2 notes some of the many federal and state institutions and activi ties that can affect innovation in the medical device industry. This chapter emphasizes federal regulation and reimbursement, two of the most important policies that affect medical device producers.
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From page 73... ...
The firms within the device industry vary greatly. Some are single-product firms or have a small product line, such as IOPTEX Research, an innovative intraocular lens firm.
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By focusing on these trends in the policy environment, we can begin to see the collective effects on the industry. This global view helps identify the potential for conflict or duplication and leads the way to rational policy reform.
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As federal spending accounted for an ever-increasing share of health expenditures, the acquisition of capital-intensive medical devices soared. This was especially true in the hospital sector, which was insulated from price in its decision making because payment policies allowed for capital cost pass-through to the federal government.
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From page 76... ...
FDA's implementation of the complex device law has been controversial. FDA has subjected only a tiny fraction of the thousands of medical devices to pre-marketing approval; the vast majority of devices have entered the marketplace virtually unregulated.
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There is no doubt that efforts to control spending are here to stay. The question is how those efforts will affect the market for medical devices.
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Two case studies illustrate the interactions between innovators and the policy environment. Case Study: Lithotripsy The introduction of extracorporeal shock wave lithotripsy (ESWL)
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From page 79... ...
Entrepreneurs have put together joint ventures with physicians and hospitals that ensure a broad patient base, lower the unit cost of treatment, and amortize the cost of the device. Some freestanding centers have developed symbiotic relationships with providers of other forms of kidney stone treatment so that comprehensive services and alternative treatments to lithotripsy are all available in one center.
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From page 80... ...
FDA's decision delays reimbursement from third-party payers, including Medicare, which will rarely pay for unapproved technologies, further burdening the innovators. Nor does FDA approval necessarily guarantee Medicare coverage of the procedure.
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Indeed, the availability of Medicare payment guaranteed a large, stable market for lens removal and IOL implantation. The average cataract patient is 68 years old, so Medicare is virtually the only payer for cataract surgery.
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TREATMENT OPTIONS: IMPROVING THE PUBLIC POLICY ENVIRONMENT The public wants innovations that improve the quality of medical care. Many government policies have promoted innovation, including Medicare payments and federal support for biomedical research.
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Recent efforts by the FDA to speed up the regulatory process, particularly for drugs for life-threatening conditions such as AIDs and cancer, should be applauded. Similarly, tightening controls on medical devices must never be allowed to create a "device lag." Congress should consider this possibility and make appropriate legislative accommodations, including adequate resources for timely device evaluation.
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From page 84... ...
The ultimate goal would be to preserve or improve the pursuit of safe medical devices while eliminating overlapping, inconsistent, and irrational attributes of both systems. Similarly, one can evaluate more rational coordination of policies in box 4 for example, linking technology assessment mechanisms to HCFA's cost controls.
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From page 85... ...
Following controversies about unnecessary implantation of pacemakers and serious safety violations by some pacemaker companies, the FDA and HCFA proposed a joint rule to establish a registry. Physicians and providers requesting or receiving Medicare payment for implantation or removal of a pacemaker must provide product safety and performance information to the pacemaker registry database.
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From page 86... ...
Coexistence, conflict, cooperation: public policies toward medical devices. Journal of Health Politics, Policy and Law 1986;11:501-523.
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From page 87... ...
Medical Devices: The FDA's Implementation of the Medical Device Reporting Regulation. Washington, D.C.: U.S.
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From page 88... ...
34. Biomedical Business International, May 16, 1989;12:69-72.
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