Medtech Showcase: State of the Industry 2016

Jan 13, 2016 Tags: Medtech Deals

Understand your markets. Healthcare is converging, bringing together traditional therapeutics, precision medicine, combination products and companion diagnostics that require insightful approval and reimbursement policies. It also requires that entrepreneurs develop a keen understanding of what drives their potential markets, according to speakers at Medtech Showcase, held January 12 in San Francisco in concert with Biotech Showcase 2016.

“There is a challenge regarding internal coordination at the FDA, particularly around combination products,” said Andrew Fish, executive director, AdvaMedDx. It involves not only whether devices like drug-eluting stents and companion diagnostics will be approved as drugs, devices or combination products, but the implications for both pre- and post-market assessments. Although legislation was introduced in the US Senate in summer 2015 to streaming the approval process, the convergence expected in the coming decade will only exacerbate that challenge, he said.

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To streamline the challenges, “work closely with the FDA,” Patrick Daly, president and CEO at Cohera Medical, advised. Many rejections can be prevented by consulting with the FDA early in the development process, learning what it accepts as logical endpoints for your specific product and assembling the right data before filing. “It’s amazing how many companies come to the FDA unprepared.”

“Come with a thoughtful approach regarding strategies to prove a hypothesis,” Bill Murray, president, MDIC, reiterated. FDA leaders, including the nominated commissioner, want to see the new therapies advance, and realize the approval process for combination therapies doesn’t accommodate them. When disagreements inevitably occur, responding with logical, evidence-based data goes a long way towards resolving issues.

The drive to value begins before FDA submission, however. “The best way to find value is to make a real difference in the medical system,” Fish said. Rather than focusing on reimbursement, he recommended thinking about whether a product in development will affect physicians’ decision making and patient outcomes. “If you can’t determine that, rethink the product. It’s critical to approval, reimbursement and utilization, but that’s not where everyone’s head has always been. Decisions are based on ultimate clinical utility, so focus on demonstrating that.”

Also be aware that the concerns of stakeholders may vary considerably. When MDIC surveyed its consortium members in 2015, it found their biggest concern was reimbursement. “Nothing else was even close,” Murray said. So, when companies approach payers, they often tout their large potential markets. Payers say, off the record, that huge markets are frightening. They fear high demand will break the bank. A better approach, Murray said, focuses on a patient subset that can experience a significant improvement and that provides both clinical and economic benefits. That experience can then become a case study that demonstrates savings throughout the healthcare system, which then opens the door to larger markets.

An additional approach, Murray said, is to work with patient advocacy groups. “They are adept at gaining access to innovative therapies and can be very helpful in facilitating the adoption and reimbursement of promising technologies.”

Oftentimes, the value of a product is amplified by partnering. “There are a lot of apps, diagnostics, devices and other elements that work together, yet not all of the developers realize they’re out there,” moderator Vicki Anastasi, VP and global head, medical device and diagnostics research, ICON, told the audience.

For example, Murray said the Michael J. Fox Foundation is developing an app to monitor wrist tremors. By partnering with the Foundation, companies could use that data to monitor the efficacy of specific medications without investing in a large infrastructure. “The Foundation is motivated to find ways to identify which therapies are working,” Murray said.

Companion diagnostics developers and drug developers also are natural partners. In partnering situations, “think through your business model carefully,” Fish said. “Will you or your customers be reimbursed based upon your product alone, or based on the contributions of each of the partners?” The availability of companion diagnostics determines market access for many drugs. Without these diagnostics, many patient populations can’t be stratified sufficiently for many of these drugs to be approved. Diagnostic companies’ business models and partnering agreements should account for that, sharing a greater percentage of the profits than a single diagnostics model, Fish suggested. “Identify your business very early, even in the R&D process, to capture some of the overall value.”

A low upfront cost isn’t always necessary. There is a business case for developing products that cost more than the current standard of care but that reduce overall costs through better outcomes. “Our medical culture is changing. Millennials and Baby Boomers won’t tolerate inadequate care to save money,” Daly pointed out.

The key, Fish added, is to understand the tangled continuum of stakeholders. That includes not just payers, but also clinicians, healthcare systems, and patients. “They each prioritize different aspects of value, and those who pay aren’t necessarily those who see the value. So, understand those dynamics and how to quantify the clinical utility of your product. That’s the number one point to take from this,” Fish said.