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Regulation Will Paralyze Innovation, Says Cook Medical’s Kem Hawkins

In a Q&A with MD+DI, Hawkins gives his take on how stringent regulation will eventually halt disruptive technology development and being fearless.

For the past several months, Kem Hawkins has been quoted in the press mainly for his strong opposition to the device tax. However, as president of the largest privately held medical device company in the world, Hawkins is passionate about arguably much more important issues—how regulation is paralyzing innovation and putting patients first.

During a sit-down discussion with MD+DI at Cook Medical’s headquarters in Bloomington, IN, Hawkins also stressed the importance of giving back to the community and how the legacy of company founder Bill Cook lives on.
Kem Hawkins, president of Cook Medical

MD+DI: What are the biggest global challenges that the medical device industry is facing?

Hawkins: What we see globally are well-intentioned elected officials starting from the premise of dollars as opposed to patients. I’m not suggesting that dollars don’t enter into it—I’m not that naive. But if you have an imagination and say we want to build a system, do we start the system by saying, what if we want to take care of every patient in our country? What if we want to try to prevent the disease? For those who have disease, what if we want to make sure they have the opportunity to any and all care? That is something that everybody can agree to and then begin to put in place things to make it happen—and have some fairness about how we do it.
It starts with one: It takes one person in Congress to step up and lead. It takes one President to lead. It takes just one person that has a strong enough idea and the tenacity, just like [Rep. Erik] Paulsen in this bill [to repeal the medical device tax]. He didn’t have a chance when this started. It takes one person. You have to be a little bit of an evangelist. Stop and think—isn’t it common sense that we start with a patient and not with a dollar?

MD+DI: What is standing in the way of innovation?

Hawkins: Every time something goes wrong, we can’t say we’re going to regulate our way out of it so that it never happens again. Then you’re punishing everyone who has done the right thing. What we’ve done as a society is not be able to measure risk and benefit. All we want to do is say ‘no one can die’. People are going be sick, with a lot of comorbidities that don’t make it through. Physicians are going to make mistakes. You’re going to have devices that were put [on the market] that were never designed to meet the stresses that they’re going to be put under in these one or two individual cases.
As a society, we have a lot to come to grips with, but regulation eventually will paralyze [the industry]. It will eventually totally lock up the system to where no one can get anything through.
[With] every new technology we bring to market in the world, the last country for them to get used on patients is the United States."

MD+DI: Do you think FDA is the biggest obstacle to innovation?

 Hawkins: I think it is a huge obstacle to innovation.
[With] every new technology we bring to market in the world, the last country for them to get used on patients is the United States. Some of these are life-saving technologies. Take a look at Edwards [Lifesciences] and their heart valve. They had it available in every place in the world, and we had people dying [here]. Then they bring it into the United States and restrict it so much that people are still dying.
There’s risk-benefit. In this case, it’s a beautiful product, because people who have heart valve problems have other comorbidities—they are really sick and usually very old. Being able to go in through a port and repair this less invasively is a huge breakthrough. And what do we do? We wait three years after the rest of the world has it.
In the protection of our people, we are protecting a few, and hundreds of thousands are dying.

MD+DI: What are you seeing as far as recruiting and retaining talent in the medical device industry?

 Hawkins: It’s a tough question. I think it has to be better: There’s no doubt. There are a lot of smart people in this world that sometimes don’t get a chance, and Ivy Tech [Community College of Indiana] gives them that leg up, just like universities give a leg up. A lot of the people we need to hire are those out of high school, and they need to come with skills—they need to be able to read; they have to pass the dexterity test; they need to be able to interpret what they read correctly; they have to have the skills to work together on a team; they have to make sure they can relate to people in a way that creates a positive atmosphere.
 Cook Medical's headquarters in Bloomington, IN is where the company's Zenith AAA endovascular graft is manufactured.
When you work for a medical device company, there’s no magic to preparation. You want to have a diverse population that comes with all sorts of ideas, thoughts, and backgrounds. People that are able to become more and overachieve—become more than what they thought they could be, by being placed in an environment that is nurturing and limitless in what is expected. Talent is out there. The opportunity to take full measure of that talent is what’s important. We work with Ivy Tech and universities all over the country. But I also think it’s very short sighted if we don’t talk about making sure that our high schools are graduating people that are employable.
Most of the companies in the device arena are global companies. You would think that the American people would want American companies to be successful. In other words, do you want a company from X country to sell products here and make a profit on it, or would you prefer the American company reaps the benefit of the plant? In order to be a global company, you’re going to have people [employed in the native country]—if we’re in Japan, they have to be Japanese. If they’re working in regulatory, they have to speak Japanese, they need to be Japanese; they need to understand their culture and system.
In manufacturing, we have a choice of where we want to put it. We have to think about quality issues and a lot of [other] issues. We don’t have manufacturing in China by choice. We have manufacturing in Australia, Denmark, and Ireland—by choice. That doesn’t mean we won’t have it someplace else at some point. What it does mean is that we have to take care of quality, and we have to be in countries where we can exchange the technology quickly and easily, and where it’s going to be protected by law—whether it’s patented or we take it as a secret.

MD+DI: Is Cook Medical not manufacturing in China due to IP concerns and the divided regulatory environment?

Hawkins: I think any time you’re in China, you’re worried about IP and having your technology disappearing and suddenly emerging as a competitor. Until we start getting some of these things worked out—and China is working on it—we’re not going to be able to go there.  
I think any time you’re in China, you’re worried about IP and having your technology disappearing and suddenly emerging as a competitor."
Of our devices that are worldwide, 80% are manufactured in the United States. I can tell you that if we don’t have, in Europe, for example, a place in that time zone for doctors to talk with engineers and fabricate products, we can’t be a global company. Yet if we hire someone over there, someone will say that we took a job out of the United States. That is absolutely ludicrous, because that is promoted—whether you’re Republican or Democrat. You want American companies hiring non-Americans around the world, but you want to able to see that growth and profit repatriated so it can be brought to bear in the United States.
Our own policies drive us out of our own country. And then with regulation—we have countries that are saying to us, we will not allow you to submit for a regulatory approval if you do not have approval in country of origin. That means in the United States, if we’re behind, we can’t sell [the product] in those countries if we don’t have approval here. So the next four big products that are going to be launched worldwide are going to be made in Ireland. And we’re going to hire hundreds of Irish people.
We’ve got to be able to take care of patients with disease, and because of the country of origin [requirement] we’re being pushed out of our own country because of our regulatory ineptness. And our tax structure is the highest in the world—we pay 35% here plus 8% for Indiana state tax. In Ireland, I pay 12%.

MD+DI: Where are the strongest areas of innovation in the medical device industry?

Hawkins: This is the good part. In my 31 years, I would’ve never imagined where we would be today in terms of opportunity for new technology. There has never been a better time. I have no reason to believe that the technology that we can bring to bear for disease will be greater in 5, 10, and 15 years. Whether or not we do it is another thing, but it’s there.
We take a look at cell technology and the various types of stem cells or stem-type cells and what we’re able to do. I think it’s going to be years before you see that brought to bear in the United States. At Cook, we have a pivotal study going on in Canada for urinary incontinence [women]. It starts off with a sneeze or cough, and then it gets worse until you’re in Depends. The doctor takes a biopsy of your muscle and puts it on ice, and ships it to our facility in Pittsburgh. They will extract all of the cells except for the muscle-like stem cells and then we’ll grow those to tens of millions—about 200 million. Then we’ll put those on ice and send it back to the doctor. The doctor will put those in a needle, which is injected directly into the urinary sphincter. [The new cells the produce a new sphincter. Cook Medical is starting a similar study involving babies who are fecally incontinent.]
Is this exciting? I don’t think it gets much better than this.
You also have biologics. We’re into biologics with the SiS Biodesign materials. In wound care—right now people, especially diabetics, with severe ulcers end up losing a toe, a foot, [then it] goes to the knee, and then to the hip. Once you have full amputation, you have about a year to live on average. Being able to cure these wounds and manage them with biologics and cell technology put together—it’s happening. We’re involved in it; other companies are involved in it. It is exciting.
When it comes to devices, we have over 400 projects at Cook around the world on new devices. There’s an explosion in ideas. What we have to do as a country and as a planet is get out of the way so these ideas can be brought to bear for patients.

MD+DI: The loss of Bill Cook last year was tremendous for Cook and the medical device industry. What is your mission in moving his vision forward?

Cook founder Bill Cook passed away last year. He is remembered not only for building a very successful medical device company, but also for giving back to his community. Image courtesy of Indiana University.

Hawkins: I am not a Bill Cook. There was no other Bill Cook.
All we can do is take the tenets of the company—the focus on the patient [and] doing the right thing for the right reasons all the time. This is what we believe, and this is what drives the company and the people in it. And in many ways, it was bigger than Bill.
Our obligation has not been to Bill Cook; our obligation is to the patient. There’s been a whole generation of people raised within the company to see this continue. None of us will be possibly able to provide the leadership that he did—but maybe all of us.
We’ve made a difference in our community and the communities that our company has been in. we have brought the downtown to life in Bloomington, IN. We went to Canton, IL, [Bill’s] hometown, and built a plant that will eventually hold 300 people.
We just are completing a new building for Teflon production that will hold maybe 50 people—in highly technical jobs. I just got a letter that we passed on to the Senate and House members from the mayor of Canton. Many years ago, International Harvester left there—I think they had 12,000 employees, and they pulled out. The town became a ghost town that was falling down. We not only put a plant in, we went downtown and bought several buildings. We refurbished it. Other people have now purchased. The downtown is coming to life again. New money is coming in and for the first time in many years, it doesn’t sound like much, but they have 15 new home building permits in an area that has been devastated.
These are the things that American companies can do. These are the things that we have a responsibility to do. This is how we share in the profits of trying to take care of patients.
The structure of our company can change. We can use new technologies and change in almost every way. But the very tenets of this organization are what have to be protected.

MD+DI: What is your final message in what Cook is doing for the future?

Hawkins: Many times when you’re running a company, you get a little caught up in doing the same things. When you’re charged with leading a company, you can never get comfortable.
We cannot get complacent; we can’t believe anything is too complicated or that we can’t continue to expand and take on areas that are interesting and bring our technologies to bear. So often we are constrained by fear, when we need to have boldness. You can’t keep looking in the rearview mirror, you have to keep moving.
Bill always had a statement—“Use history as a guide to future action.” Don’t let it constrain you, use it as a guide, learn from it; but don’t become history.
Maria Fontanazza is managing editor at UBM Canon. Follow her on Twitter:@MariaFontanazza.
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