Chris Newmarker

March 19, 2015

7 Min Read
5 Important Medtech Trends You Should Know About

People aren't waiting for the medical device industry to solve problems, and there's something about Obamacare that many people don't understand.

Chris Newmarker

Robert Downey Jr. 3-D printed bionic arm

Actor Robert Downey Jr. of Iron Man fame presenting a 3-D printed bionic arm to an elementary school student who needed it. The arm was created by a team at University of Central Florida students--an example of how the Maker Movement is affecting medtech. (Image courtesy of Limbitless Solutions)

Sometimes at Qmed/MPMN, it is possible to step back and see some major trends related to what we're writing. Here are five from the past month that are especially worth noting:

1. Call it DIY healthcare, medtech makers, whatever... Innovation is happening outside of traditional medical device corporations.

There's the story of Pamela Scott, who required surgery to remove a benign tumor from her brain. She and her husband decided to take matters into their own hands--and a 3-D printer. A marriage and family therapist from Morro Bay, CA, Scott began researching meningiomas like the one that had grown from her brain's protective covering into the bone near her optic nerve, causing severe headaches.

Her husband, Michael Balzer, meanwhile used his passion for 3-D printing to make a model of Scott's head and tumor for physicians to examine, according to a reportin the couple's hometown paper, New Times. The model helped them find surgeons willing to perform a less invasive surgery. (Read the full Qmed story here.)

Scott and Balzer's story is one of many out there when it comes to "regular" people taking medtech into their own hands. 

We've noticed an uptick in garage-made medical devices recently. In addition, the so-called Maker Movement is beginning to focus more on healthcare applications.

There are plenty of other stories out there. Check out a recent roundup from Qmed: 10 Ways Makers Are Remaking Healthcare

We're also interested in getting input from readers about what we should call this trend.

2. Medical device companies are still innovative, though, in a way.

In fact, a recent Qmed survey of its readers found 18 percent designating Edwards Lifesciences (Irvine, Calif.) as most innovative. Edwards already had a reputation of being an innovator in the heart valve business, but now is known best for its Sapien TAVR valve, which was the first percutaneous heart valve to hit the U.S. market. One reader calls the Sapien "a revolutionary product."

Curiously enough, the genesis of the Sapien percutaneous heart valve technology came not from Edwards but from an Israeli startup known as Percutaneous Valve Technologies (PVT). Edwards acquired that firm and refined its technology. Is Edwards "innovative" because it knew what it needed to buy?

It is a pretty common story in the medical device industry: Small, young companies take the risk and engage in innovation, with the prospect of a pay day when a big company comes along and buys them up. (And it is worth noting that after Edwards acquired the valve technology, it advanced its design, eventually organizing clinical trials to test it. They ultimately got it on the market.)

There are always exceptions to the rule, though. One of the most significant recently involved Medtronic and the development of its tiny, leadless Micra pacemaker. Medtronic officials described it to Qmed as a major in-house undertaking that pulled in people from all over its cardiovascular business.

Read more: 10 Most Innovative Med Device Companies

Innovation is likely to take a new turn because...

3. There's something about Obamacare people don't talk about a lot.

There is plenty of media attention out there when it comes to the King v. Burwell challenge to the Affordable Care Act that is now before the U.S. Supreme Court, and how a ruling in favor of the plaintiffs could invalidate subsidies for health plans bought over insurance exchanges, throwing the market into turmoil. Previous sources of controversy included the mandate that people have health insurance or pay a fine when they file their federal income taxes.

What is discussed much less is the huge shift in the way Medicare is paying for its plan members' healthcare under Obamacare. Perhaps that's because new payment setups such as Affordable Care Organizations are difficult to explain. 

The change going on, though, is actually a really big deal because Medicare covers 15% of the U.S. population and pays for nearly half of hospital costs. Where Medicare goes, private insurers, large corporations and everyone else will follow.

And where is Medicare going? In a nutshell, the U.S. government through Medicare is incentivizing health providers to be more concerned about how efficiently and effectively they manage patient populations--versus the former fee-for-service model's focus in which they counted how many devices, procedures, and services they are able to sell. (Read a full Qmed story on the subject here.)

Presently, about a fifth of Medicare payments are already going toward alternative payment methods such as ACOs or bundled payment arrangements. The new U.S. Department of Health and Human Services goal is to raise the percentage to 30% by next year and 50% by 2018. On top of that, HHS wants 85% of all traditional Medicare payments tied to quality or value by 2016--90% by 2018.

Health trackers including wearables will likely be more in demand, while medical devices in general will have to demonstrate that they are helping the overall healthcare system save money. Telehealth will likely be more in demand, too.

Competition is already becoming fierce among medical device companies when it comes to being able to offer a full cafeteria of products and services (e.g. Medtronic isn't just a pacemaker manufacturers; it's a chronic heart disease management company now.)

And that leads to the next big trend...

4. More huge M&A deals

Medtronic's $48 billion acquisition of Covidien is Exhibit A. But the big M&A deals continue. More price-conscious health providers are driving the trend, as is the need to compete more in foreign markets.

One company seeking to bulk up on its offerings is Dublin, Ohio-based Cardinal Health, which has made a $2 billion for Johnson & Johnson's Cordis business. Cardinal Health executives see opportunities to better deliver interventional cardiology and endovascular devices to health providers.

Or then there's the recently closed $12 billion merger between Becton, Dickinson and Co. and CareFusion. BD (Franklin Lakes, N.J.) makes medical supplies, devices, laboratory equipment, and diagnostic products. Its product lineup includes disposable needles, syringes and intravenous catheters. Flagship product lines at San Diego-based CareFusion include patient identification systems, the Pyxis automated dispensing device, the Alaris IV device, ventilators, skin prep products, infection surveillance systems, and surgical instruments. The two companies have a pretty complementary set of offerings.

5. Scary medical device problems continue.

Such stories unfortunately seem part and parcel for the industry. Here are some of the recent ones that came across Qmed's radar:

  • FDA recently designated as Class I a massive GE Healthcare recall related to the erroneous disabling of an MRI system's magnet rundown unit, eliminating a method to quickly shut the system down in an emergency situation. The recall took place after employees at Tata Memorial Hospital in India reportedly remained stuck to an MRI machine for four hours. Read the full Qmed story here.

  • In the aftermath of the deadly superbug cases at UCLA's Ronald Reagan Medical Center, FDA has issued a new guidance document for reprocessing reusable medical devices. The FDA's move comes amid revelations that Olympus, whose duodenoscopes have been implicated in the spread of the drug-resistant bacterial strain carbapenem-resistant Enterobacteriaceae(CRE), had been selling one of its latest models without FDA 501(k) clearance related to modifications. Read the full Qmed story here.

Refresh your medical device industry knowledge at BIOMEDevice Boston, May 6-7, 2015.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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