Innovation and Evolution of Medical Devices: the Case of Surgical Robots
Jonia Alshiek
S. Abbās Shobeiri
Introduction
Innovating even the most straightforward device requires time, energy, patience, and much money. Innovation in the medical device industry does not require inventing something completely new. It may involve applying the already available idea or product in a new setting or a unique “innovative” manner from an entrepreneurship perspective. In such an environment, (1) quick release of new medical devices and services backed with (2) scientific support of key opinion leaders, followed by (3) robust clinical education of practitioners in the field, with (4) clear communication of problems and flaws to the designers while (5) building and protecting brand equity and value, forms the five pillars of successful medical device launch.
Innovation is influenced by the patients, the care providers, the doctors, the payers, the policymaking groups, and the manufacturers or suppliers who can all affect real-world health care decision-making. Once a device is ready to be released to the market, the company has to tackle the country-specific regulatory requirements, which are in place to protect patient safety and guarantee the local markets’ efficiency. The regulatory process creates a fundamental bottleneck in time and cost for any medical device or biomaterial-based therapy.1 Forces behind device innovation, the methods of disruptive innovations, the patenting process, marketing, and economic considerations, along with regulatory considerations, is the focus of this chapter.
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FACTORS THAT DETERMINE SUCCESS OR FAILURE OF MEDICAL DEVICES
Wieringa et al. state that “innovation in medical technology is a critical chain of events, ideally leading to an improved situation for patient and staff as well as a profit for the supplier of the innovation. Many innovative ideas are not successful in practice.”2 The failure of an idea to become a medical device may frequently be because of the lack of one of the following elements3:
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Medical devices can form a “converging technology” that crosses borders between already established medical devices. Converging technologies may combine medical devices, pharmaceutical products, or human tissues. The medical products may be from the same or different categories.4 Such convergent technologies may be both more acceptable to the users and more
adaptable to a marketplace niche. Such technologies are generally not viewed as breakthrough technologies. Bringing separate technology silos with different processes together to create a convergent product requires communication.5 After a device manufacturer bridges the divide between an idea and a certified product, the clinical introduction stage will prove if and how the projected innovation becomes widespread use in a harsh clinical environment.
adaptable to a marketplace niche. Such technologies are generally not viewed as breakthrough technologies. Bringing separate technology silos with different processes together to create a convergent product requires communication.5 After a device manufacturer bridges the divide between an idea and a certified product, the clinical introduction stage will prove if and how the projected innovation becomes widespread use in a harsh clinical environment.
THE FORCES BEHIND DISRUPTIVE DEVICE INNOVATION
Disruptive innovations are socially relevant. Disruptive innovations are market-driven because of (1) increasing demand for health care services, (2) increasing demand for higher efficiency, (3) increasing empowerment of the patient, and (4) increase in the effect of market forces.6
Companies with mature and productive market positions may benefit from improvements of existing products rather than genuinely new disruptive innovations that disturb their markets, challenge their recognized status, and at times, render their hard-earned production facilities without utility.3 Frequently “market-driven” research will find industry-funded “curiosity-driven” innovation riskier. This mindset of maintaining a company’s dominance in specific categories and not paying attention to the alternatives leaves the door open to the competition seeking the blue ocean for their products.7 Alternatively, companies with market dominance may purchase and buy out emerging technologies to maintain the status quo. A blend of curiosity-driven and market-driven inventions creates a balanced portfolio for a company.8 Medical innovation flourishes in clinical (doctors and nurses) watersheds and academic (scientists, engineers, and human factors experts) confluences. Curiosity-driven, high-risk products are often developed with support from government grants or angel investors who are willing to sustain high risk. Angel investors are wealthy private investors focused on financing small business ventures in exchange for equity. Unlike a venture capital firm that uses an investment fund, angels use their own net worth.
INNOVATIONS THAT DISRUPT THE MARKET
Christensen et al.13 argue that disruptive innovations are generally more straightforward products than all the customers’ need. The disruptive innovations are generally more straightforward, more convenient, and less costly offerings initially designed to appeal to the market’s low end. Figure 54.1 illustrates this dynamic.13 The top blue arrow depicts the speed of sustaining technologic innovations. The enhancements an industry creates as it introduces new and more progressive products to serve the more sophisticated customers at the high end of the market. The shaded area is the degree of improvement the market can absorb over a specified period.9 Because the sustaining innovations nearly consistently outperform even the most demanding customers’ dimensions, and because the existing market leaders want to meet and exceed the demands of the most demanding customers, there is a window of opportunity to introduce lower or higher performance products. Suppose one views the performance of a physician as a time-dependent product. In that case, it generally takes 13 years of higher education for a surgeon to be board eligible or, in other words, have minimum performance criteria. A surgeon with 20 years of experience generally outperforms a younger colleague. The exception to this is when a new surgeon boosts their performance with the latest technology.
 FIGURE 54.1 The progress of disruptive innovation. |
Similarly, prominent health care institutions such as medical schools, general hospitals, specialist physician groups, and research organizations have overdelivered on the level of care required to keep the vast majority of patients healthy. But at the same time, the industry creates demands in the areas previously untapped. Although our medical education system has churned out specialists and subspecialists with extraordinary capabilities to attend to the new markets such as erectile dysfunction in men, in the third-world countries, the patients are afflicted with emergencies and relatively
specific disorders such as diabetes and hypertension, whose diagnoses and treatments most often do not require physician expertise. In the United States, the number of patients asking for new advanced surgical treatments, coupled with low reimbursement to the primary care physicians, has left the door open for midlevel providers such as nurse practitioners and physician assistants to serve the primary care markets, whereas the primary care physicians have been fleeing these markets in search of more profitable business models.9 Similarly, the medical device industry could profit if a larger population of less-skilled people performed in a convenient, economical way that previously were only performed by costly specialists in centralized and inconvenient locations.9 The industry actively searches for the blue ocean opportunities to create solutions from the least to most complex solutions addressed by selfcare and telemedicine to highly specialized care offered only at major hospital settings. (Blue Ocean Strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.) By simplifying the procedures such that they can be done in the office setting more conveniently and cost-effectively, the physicians can provide new innovative, disruptive technologies (Figs. 54.2 and 54.3).13 The industry focuses on creating procedures that are easily done as simple outpatient procedures with cheaper devices and equipment. An example of this is introducing small vaginal robots such as Hominis® by Memic Innovative Surgery (Or Yehuda, Israel) which uses a transvaginal route to efficiently and economically perform a hysterectomy.
specific disorders such as diabetes and hypertension, whose diagnoses and treatments most often do not require physician expertise. In the United States, the number of patients asking for new advanced surgical treatments, coupled with low reimbursement to the primary care physicians, has left the door open for midlevel providers such as nurse practitioners and physician assistants to serve the primary care markets, whereas the primary care physicians have been fleeing these markets in search of more profitable business models.9 Similarly, the medical device industry could profit if a larger population of less-skilled people performed in a convenient, economical way that previously were only performed by costly specialists in centralized and inconvenient locations.9 The industry actively searches for the blue ocean opportunities to create solutions from the least to most complex solutions addressed by selfcare and telemedicine to highly specialized care offered only at major hospital settings. (Blue Ocean Strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.) By simplifying the procedures such that they can be done in the office setting more conveniently and cost-effectively, the physicians can provide new innovative, disruptive technologies (Figs. 54.2 and 54.3).13 The industry focuses on creating procedures that are easily done as simple outpatient procedures with cheaper devices and equipment. An example of this is introducing small vaginal robots such as Hominis® by Memic Innovative Surgery (Or Yehuda, Israel) which uses a transvaginal route to efficiently and economically perform a hysterectomy.
 FIGURE 54.2 The graph delineates how in each industry the market can be segmented among various health care providers with different skill sets. |
 FIGURE 54.3 By providing simple to use solutions, the medical device industry strives to enable lower skilled health care providers to accomplish more complex tasks. |
THE PATENTING PROCESS
In principle, the patent owner has the right to exclusively prevent or stop others from commercially exploiting the patented invention. Patent protection dictates that the invention cannot be commercially made, distributed, imported, used, or sold by others without the patent owner’s consent. The patent process generally occurs early on at the concept and design stage.10 Patents are territorial rights. The exclusive rights are applicable only in the region or the country in which a patent has been granted and filed, following the law of that region or country.11 Medical patents, are defined broadly to include patents that relate to pharmaceuticals; methods of making and using them; medical treatment regimens; surgical procedures; medical devices; health care information technology for hospital and health care management systems (including software for managing hospital bed utilization,
care distribution, medical staff allocation, and cost containment), and combinations of these (Fig. 54.4).12 In the United States, the main categories of patents are (medical) utility patents (machines, processes/methods, and manufactured objects), design patents (ornamentation), and plant patents (under the Plant Variety Protection Act, not to be confused with a plant utility patent).12
care distribution, medical staff allocation, and cost containment), and combinations of these (Fig. 54.4).12 In the United States, the main categories of patents are (medical) utility patents (machines, processes/methods, and manufactured objects), design patents (ornamentation), and plant patents (under the Plant Variety Protection Act, not to be confused with a plant utility patent).12
 FIGURE 54.4 FDA medical device regulatory approval process. IDE, investigational device exemption; PMA, premarket approval. (From U.S. Food and Drug Administration.) |
A 510(k) is a premarket submission made to U.S. Food and Drug Administration (FDA) to demonstrate that the device to be marketed is as safe and effective, that is, substantially equivalent, to a legally marketed device, which cannot be one that is in violation of the Federal Food, Drug, and Cosmetic Act. The 510(k) allows manufacturers to apply for marketing clearance without any studies in humans of the device in question. All that needs to be done is to say that the product is substantially equivalent, the predicate, to a product previously cleared by the FDA. The 510(K) process does not necessarily address safety and efficacy of the product. For example, the currently marked polypropylene slings were cleared for marketing by using as a predicate a sling (ProteGen) that was significantly different in design and had many problems, prompting its recall from the market.
The FDA, upon approval of a new drug application, provides medical product applicants, perhaps the most essential element needed to bring the product to the public. The FDA is responsible for assuring that a new drug or new product is safe and effective. The FDA-approval process requires compliance with rigorous testing programs (clinical trials) and compliance with a lengthy administrative approval process and is often very costly. The FDA-approval process frequently runs concurrently with the patent application procurement process before the United States Patent and Trademark Office (USPTO). Because of lengthy time frame involved in obtaining FDA approval, the period during which a patented device may be commercialized under the effective patent term may be shortened. To correct the delay, the patent term restoration provision was created. This provision grants patent term extensions for patents on human drug products, medical devices, food and color additives, and processes for making or using such products. This provision serves to restore a part of the patent term to the patentee for the period over which the patentee could not sell or market a product while awaiting FDA approval. The Hatch-Waxman Act also provides a “safe harbor” provision for patentees.1 It serves to shield a party from a charge of patent infringement for making, using, and offering to sell another’s patented product/process.12
The first step toward obtaining a patent is to file a patent application with the USPTO. With the implementation of the America Invents Act (AIA), the first inventor to file a patent application has priority over another person who gets a patent application filed after that initial date, but who nonetheless may assert he or she was the first to “invent” the technology covered in the patent application. With this change in the law (before AIA, the race to get a patent application on file was not paramount to establishing the right of priority), the potential patentee needs to expedite the filing of his or her patent application on the earliest date possible.
THE ECONOMIC PERSPECTIVE
The hospitals continuously look for ways to trim medical expenditure. The number one expense for hospitals is labor, followed by supply chain management. What has been done traditionally by specialists, if simplified, can be done by generalists, and what was done by physicians in general, if simplified, can now be done by the nurses and so on. Yet, this constant downmarketing has not decreased the United States gross domestic product expenditure on health care. The savings from such equipment and personnel innovations do not necessarily translate to better care for the patients. It has resulted in more top-heavy hospital management, healthier
instrument manufacturer stocks, and flat physician salaries, but it has not resulted in less health care spending.
instrument manufacturer stocks, and flat physician salaries, but it has not resulted in less health care spending.
 FIGURE 54.5 Cash flow “valley of death” diagram. The cash flow “valley of death” as a function of development stage (time) with typical funding sources at various stages (Adapted from Bridging the Valley of Death: Transitioning from Public to Private Sector, Lynne M. Murphy and Phillip Edwards, 2003). NIH, National Institutes of Health; RAID, Rapid Access to Interventional Development; SBIR, Small Business Innovation Research; RAPID, Rapid Access to Preventive Intervention Development; STTR, Small Business Technology Transfer. (From Steinmetz KL, Spack EG. The basics of preclinical drug development for neurodegenerative disease indications. BMC Neurol 2009;9[Suppl 1]:S2.) |
 FIGURE 54.6 Classification of medical devices and the design control process for device design. A: Classification of medical devices is based on the degree of risk to the patient. Greater risk necessitates a greater degree of regulatory control for device market approval. B: The design control model is suggested by the FDA for medical device development. (Adapted from U.S. Food and Drug Administration. Design control guidance for medical device manufacturers. Silver Spring: FDA Center for Devices and Radiological Health, 1997.) |
The Valley of Death for Medical Device Development
Between the stages of the research and development process in which the industry predominantly invests (commercialization of reliably profitable products) and the government predominantly invests (fundamental research), lies the technology’s “valley of death” (Fig. 54.5). That is the gap where private investment markets fail to finance the research needed to support the so-called “platform” technologies. This investment failure occurs because generic technologies are either expensive or risky or both for the industry to independently develop the product. Ironically, it is these platform technologies that jumpstart new devices and products and, in many cases, entire new market categories.13,14 Before becoming commercially available in the market, a medical device must first achieve standards and comply with regulations designated by its class. Class, I, II, or III device classification is based on the device’s risk and the level of control needed to ensure efficacy and safety (Fig. 54.6).1 Low-risk devices are designated class I and are subjected to general controls only. Conversely, most
implants are considered high-risk class III and are subject to the most complete and stringent standards. They are granted a preliminary investigational device exemption to use the device in an FDA-regulated clinical trial to assemble the required safety and efficacy data needed to justify safe introduction to markets.1
implants are considered high-risk class III and are subject to the most complete and stringent standards. They are granted a preliminary investigational device exemption to use the device in an FDA-regulated clinical trial to assemble the required safety and efficacy data needed to justify safe introduction to markets.1
A problem for the developers may be that although the academic demands require publication of one’s findings, in reality, this will leave the idea for others to develop. It is essential to differentiate a marketable idea from academic work and obtain a patent as soon as possible. An alternative is to obtain a patent in one country first, to get 1-year protection because the first-to-invent system has been substituted with the first-to-file-a patent system since 2013. The first-to-file-a patent system allows the inventor to further evaluate the idea and see if it is worth obtaining the next level of patent protection afforded at the international level.1
Medical Device Good Manufacturing Practice
FDA was first to mandate medical device quality system requirements to ensure the safety and effectiveness of medical devices. The FDA issued a ruling, prescribing current good manufacturing practice requirements for medical devices that required establishing a documentation and record-keeping method to investigate quality problems and patient injuries associated with medical devices. The government and industry use this quality assurance system to ensure that medical devices are manufactured to comply with the already established specifications and a continuous improvement strategy.
Postmarket surveillance programs instituted by medical device companies are vital to capturing unforeseen hazards and proper device performance. When a medical device fails expectations and regulations once in widespread use, a worldwide recall might cost a manufacturer at least 50 million dollars, not counting future income loss. The direct litigation costs are formidable, and indirect litigation costs such as loss of reputation and market share loss can drive the products out of the market. In calculating a medical device’s profitability, the manufacturers often include the cost of future litigation as a cost of doing business. Because the more prominent manufacturers generally choose to avoid the development of newer products with the high regulatory or liability risks, this leaves the market open for small- and medium-sized enterprises (SMEs) that not only navigate the innovation process and regulatory processes (e.g., 510[k], premarket approval, combination product) toward market approval but also if the innovation fails, it will be easier for an SME to dissolve. The customer and the continually changing regulatory environment represent both innovation challenges and opportunities for small- and medium-sized medical device companies because the larger companies are more resistant to exposing themselves to risk.1 Conversely, a small company can conveniently go bankrupt if the litigation burden is too severe, conversely, companies with a large and diverse portfolio can weathered the burden of litigations better. Many larger companies are not interested in purchasing a proof of concept. Small- and medium-sized companies use alternative funding concepts, technology transfer, and licensing methods to move scientific medical device innovation through an increasingly challenging and uncertain regulatory environment. The larger companies subsequently take over the successful SME product launchers as their competitive threat becomes evident. Therefore, a market derive is the incentive for a successful SME to be bought up for many folds the initial investment to either be dismantled or incorporated into a larger company’s product line. Of all the ideas in all the world, in all the countries, in all the companies, only a tiny fraction become products, and only 1 in 10 of those medical devices launched will succeed, and very few will be a best seller.
The innovative landscape in medical devices is mostly made of SMEs. In Europe, for example, 95% of the 25,000 medical technology companies are SMEs that employ less than 50 people (small- and micro-sized companies).15 The early-stage innovations, which are primarily financed at an SME level, focus on a single product with high liability risk.16 In this environment, the quality aspects are at a low standard combined with high manufacturing optimization. The cost of goods sold is high, which makes the initial SME devices expensive. When there is a successful disruptive technology/product, the large companies may adopt the innovation to make products through an already established reliable and cost-effective manufacturing methods. These devices and products may be additionally upgraded by the acquired technology by developing line extensions and second-generation incremental inventions.1
In the United States, a significant hurdle to a device approval is presented during the clinical trials. The trials are performed at a high cost, and as such, upfront laboratory testing and preclinical evaluation reduce the risk of failure. Mimicking the disease process in the laboratory setting better predicts the device’s behavior in real life. The device can fail in a clinical trial. Still, a poorly designed clinical trial can fail the device due to poorly defined clinically relevant outcomes and/or quantifiable evaluation, unclear intermediate end points, and vague criteria for patient inclusion into the study.1
Reimbursement Challenge
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