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Outsourcing Outlook on Machining

Outsourcing machining services to capable, qualified contract manufacturers can offer a variety of advantages. Chuck Platt, general manager, Orchid Orthopedic Solutions (Holt, MI) discusses the ins and outs of contract machining services for orthopedic device manufacturers.

MPMN: What areas of expertise, equipment, and capabilities should orthopedic device manufacturers look for in a contract machining partner?

Platt: When selecting a contract machining partner, medical device manufacturers should examine the vendor's ability (core Chuck Plattcompetence alignment) to competitively produce a quality product within certain promised lead times. Next, they should ask for evidence of an established measurement system (scorecard) of overall business performance. With that comes a clear commitment from the manufacturing partner to relentlessly pursue improvement in their business. Also, OEMs should pay specific attention to the partner's quality system and its ability to consistently produce a very high level of quality product. Identify the strength and level of expertise of the team that will be supporting your business needs as well. Lastly, it is necessary to determine your comfort level with the partnering company. Information sharing must stem from a path of trust, which will lead to the highest level of success for the relationship.

MPMN: What new machining challenges have advances in orthopedic implant materials and design presented and how have suppliers such as your company had to adapt?

Platt: Orchid has experienced a greater increase of new types of materials coming from the orthopedics industry, but our machinability is similar to existing materials in which we have already achieved a high level of success. Thus, the transition to working with these new materials has not been a major challenge for us. However, the changes in the design features have increased at a much faster rate in both complexity and tolerances. To ensure that products are produced to the new feature specs, Orchid has optimized the use of our production equipment, added better inspection equipment, and automated the inspection process, where necessary, to meet these new requirements. In parallel, many of our operators and inspectors have completed advanced specialized training programs. We continually train our operators to enhance their skill level to stay current and ahead of new design challenges.  

MPMN: What are the most common mistakes medical device OEMs make when designing a product in relation to machining?

Platt: The most common mistakes OEMs make when designing a product are a culmination of a few things. Often, issues arise from the combination of stacking tolerances in components that result in interference at the assembly, releasing drawings before they are fully vetted, and adding features that may not be required for the functionally of the part that may add undue cost to the project.

Pulse Systems CNC machiningCNC machining of small parts
A specialist in precision laser-machining of tubular metal components for medical devices, including endovascular stents, Pulse Systems offers CNC machining as part of its contract manufacturing services for the fabrication of small custom device components. The company is equipped to perform CNC milling, turning, boring, and drilling to produce very small features on parts machined from a range of biocompatible materials. In addition to machining solid materials such as stainless steel, nitinol, and titanium supplied in bars up to 0.787 in. in diameter, the equipment can handle tubular or cannulated starting materials in sizes as small as 0.032 in. OD. The company can deliver turnkey machining and subassembly services compliant with ISO 13485 and ISO 9001 quality systems. Capabilities include laser welding, electropolishing, nitinol shape-setting, microblasting, and cleanroom assembly.
Pulse Systems
CONCORD, CA

Laser micromachining services
Using a high-resolution laser process capable of machining extremely small features with high levels of precision anGateway Laser micromachiningd accuracy, Gateway Laser Services provides medical device manufacturers with laser micromachining services. The company employs excimer and YAG laser technologies to perform laser ablation with single-micron precision. Capabilities include ultraviolet machining, a cold process that leaves a clean edge without heat-affected zones and thus does not diminish the integrity of the material. Laser micromachining promises high levels of consistency and repeatability and very tight tolerances. The service provider can machine most metals and alloys, ceramics, nitinol, silicon, and such plastic materials as polyimides, polyurethanes, PEEK, nylon, PET, silicones, polypropylene, PEBA, PMMA, ABS, and others in thin-film form. Applications include implants, biomedical filters, tubes, orifices for gas flow, medical electronics, and catheters, among others.
Gateway Laser Services
MARYLAND HEIGHTS, MORepExact machining

Machining of precision medical components
The manufacturer's representative RepExact LLC sources custom precision medical device components made by such domestic and European principals as Tectri S.A. of Switzerland, which offers turning, milling, gun-drilling, tapping, and thread whirling. The Swiss company is available through the representative to produce medical components for implantation and instrumentation, precision micromotor components, and difficult-to-machine parts from titanium, stainless steel, and other materials. Tolerances can be held to a few microns, and components are delivered fully machined and burr free from the machine with surface finishes as good as 8 µin. Ra. A recently added seven-axis machining center is entirely computer numerically controlled and allows the company to accommodate parts with highly complex geometries.
RepExact LLC
GASTONIA, NC

Plastic and metal component machiningPlastic & Metal Center
A contract manufacturer serving the medical device industry machines device components from metal and plastic materials. The company also offers tooling and fixtures, assembly jigs, and special machines. In addition, the company can mark components by means of laser engraving and via pad-printing with medical-grade inks. Among the common materials it processes are titanium and stainless steel, polycarbonates, PEEK, and other high-temperature engineered plastics. The vendor's operations are certified to ISO 9001:2008 standards.
Plastic & Metal Center Inc.
LAGUNA HILLS, CA

Surgical and orthopedic component machining
Orchid Orthopedic Solutions is a contract manufacturer of small, ultraprecision orthopedic devices and implants, surgical instruments, and accessories. The company is equipped to perform Swiss-style and conventional turning and milling, grinding, EDMOrchid Orthopedic machining, and special processes such as color-coding; welding, cutting, and etching with lasers; diamond coating; gun-drilling; and microdeburring. Capabilities also include material selection, prototyping, performance enhancement, and design for manufacturing, along with custom sterile and nonsterile packaging and labeling and inventory stocking.
Orchid Orthopedic Solutions
HOLT, MI
 

Spotlight on Biomaterials

Secant biomedical textilesBiomedical textiles
Biomedical textiles supplied by Secant Medical feature complex fabric geometries and distinct fiber architectures that can enable biomedical device engineers to enhance their implantable device designs. Constructed from advanced polymeric, metallic, and resorbable biomaterials, these textiles offer design versatility with the right balance of fiber biomaterials, textile forming technologies, and unique fabric geometries to create a high-performing, minimally invasive device, according to the company. The properties of implantable textiles are engineered into products that require controlled porosity, expansion, compaction, radial and tensile strength, flexibility, absorbability, or shape-memory characteristics. Applications for these textile structures include endovascular stent grafts, endovascular aneurysm repair, suture devices, knotless fixation devices, soft-tissue anchors, hernia mesh, graft containment, fracture fixation, annulus repair, and tissue in-growth or regeneration for long-term implantation or resorption by the body.
Secant Medical
PERKASIE, PA

AorTech siliconesBiomedical silicones
The Elast-Eon carbonate silicone (ECSil) family of biomedical polymers, which offer the biological stability of the Elast-Eon polymers on which they are based, have been formulated by Aortech Polymers & Medical Devices to exhibit good physical properties across the range of five grades. Available in durometers of 70, 75, and 90 Shore A and 60 and 70 Shore D, these materials present a diversity of mechanical properties to cover a variety of medical applications. They are rated from 60 to 175 kN/m for tear strength, from 25 to 40 MPa for tensile strength, and from 8 to 450 MPa for modulus of elasticity. The softest grade offers an elongation at break of 750%, whereas the hardest has an elongation capacity of 300%. Supplied in pellet form, these silicone biomaterials have application in cardiac pacing leads, orthopedics, spinal disks, and other medical devices requiring high levels of mechanical performance.
AorTech Polymers & Medical Devices
Rogers, MNInvibio polymer

Implantable polymer composite
Endolign composite from Invibio is an implantable polymer engineered to deliver strength and performance in high-load applications. The radiolucent, nonmetallic biomaterial is capable of replacing cobalt-chromium alloys, titanium alloys, and stainless steel in many applications that traditionally have employed these or other metals. It features good fatigue behavior, biocompatibility, and biostability and is supported by FDA drug and device master files. An inherently pure and inert composite made up of continuous carbon fibers in a PEEK-polymer matrix, the material is offered as an option for providing structural support or sustained or cyclic load-bearing capability in applications involving implantation or blood, bone, or tissue contact exceeding 30 days. Applications include such devices as translaminar fixation pins, spinal-fusion cages, bone fracture plates and screws, and intermedullary nails and screws.
Invibio Inc.
WEST CONSHOHOCKEN, PA

Memry NitinolNitinol alloys and superalloys
A specialist in nitinol alloys and superalloys, Memry offers nitinol in semifinished tube, wire, sheet, and strip for interventional cardiology and radiology, surgical, orthopedic, urologic, and other applications. Nitinol is compatible with the human body and is able to accommodate large strains; it is suitable for both implantable and single-use medical devices. The manufacturer can supply drawn tubing, including small hypotubes, in a variety of finishes and sizes. Its flexible and kink-resistant superelastic nitinol wire supports complex component designs featuring intricate geometries. Sheet nitinol is also available for stamping, punching, and deep drawing while nitinol in strip form, which has all the properties and capabilities of wire, is supplied to dimensional and other specifications in cold-worked or fully superelastic states.
Memry
BETHEL, CT

AdvanSource polycarbonate urethanesPolycarbonate urethanes
ChronoFlex AR and ChronoFlex AR-LT self-sealing polycarbonate urethanes are custom-designed for molding, casting, and dip-coating medical device applications. AdvanSource Biomaterials synthesizes these biocompatible materials fully in liquid to give them good strength and elongation properties while maintaining the inherent polycarbonate distinction of long-term durability and resistance to environmental stress cracking. The inherent low-tack property of the liquid polymers allows for pulsatile flow in situ. They may be electrospun or used in water emulsion processes. Offered in a range of configurations of viscosity and concentration and in antimicrobial forms, the materials are suited for applications requiring high flexural endurance, such as artificial heart valves and vascular grafts, and for use in fabricating blood-contacting surfaces, such as coatings.
AdvanSource Biomaterials
WILMINGTON, MANitinol Devices & Components high-purity nitinol

High-purity nitinol
An extra-low-interstitial (ELI) version of its implantable SE508 nitinol alloy, SE508ELI, is available from Nitinol Devices & Components Inc. for use in safety-critical medical device components. Owing to specially formulated raw materials and to melting techniques that minimize the formation of impurities through optimized solidification thermodynamics, this bulk nitinol alloy contains only very few and very small inclusions. It exhibits the same strength, ductility, transformation temperatures, superelasticity, formability, biocompatibility, and corrosion resistance as conventional nitinol, according to the company. In addition, it is virtually carbon free, precluding the presence of hard titanium carbide inclusions, and oxygen levels are nominally 60 ppm. The alloy can be supplied in the form of finished components or as raw material in the stock shapes of tube, wire, sheet, and strip.
Nitinol Devices & Components Inc.
FREMONT, CA

Biomedical Structures textileNonwoven biomedical textile
A new version of the Biofelt absorbable scaffold for implantable devices used in orthopedic, cardiology, general surgery, and other in vivo applications is available from Biomedical Structures LLC, a specialist in the design, development, and manufacture of advanced biomedical textiles. The 3-D nonwoven, fibrous-matrix structure of the scaffold provides a platform that, with its large surface area and void volume, enables natural tissue in-growth in surgical applications. Produced from polyglycolic acid, poly-L lactic acid, and copolymers such as copolylactic acid-glycolic acid, the textile can serve as a bioabsorbable component of medical devices or surgical systems. It is custom-engineered to suit individual device requirements and offered with various densities and thicknesses. The scaffold material can be produced in flat sheets, disks, tubes, and other geometric shapes, with an absorption profile ranging from less than 30 days to one year.

Biomedical Structures LLC
WARWICK, RI
 

Reinventing Health Monitoring: Peter Diamandis, MD on the New Nokia Sensing X CHALLENGE

Reinventing Health Monitoring: Peter Diamandis, MD on the New Nokia Sensing X CHALLENGE

There is a good case to be made for the potential of improved patient monitoring to improve outcomes. FCC chairman Julius Genachowski recently spoke to that point at a press conference, explaining that a monitored patient has a 48% chance of surviving a cardiac arrest while the survival rate for unmonitored patients was 6% chance. 

The award joins the Qualcomm Tricorder X PRIZE and the Archon Genomics X PRIZE as the third active life sciences competition from the X PRIZE Foundation.  

To learn more about the competition, MD+DI editor at large Brian Buntz spoke with Peter Diamandis, MD, chairman and CEO of the X PRIZE Foundation. Diamandis explains that the rate of progress in medicine is growing exponentially, and there is no way that we can keep up with that by preserving the status quo. This issue is important in the training of physicians as well. Not only does it take a long time to train doctors, but, as Diamandis explains in his book, Abundance, much of what is learned is eventually irrelevant. It is a common refrain heard in medical school: “five years after graduation, half of what one learns will probably be wrong—but no one know which half.” 

In this interview, Diamandis talks about this issue and a number of other topics related to how he envisions the future of healthcare.

MD+DI: How do you envision the future of health sensors and sensing technologies?

“In the future, you will have the data and the data analysis to become the CEO of your own health.”

Peter Diamandis, MD: Today, my car, my airplane, my computer knows more about its health status than I do, which is insane. The future is one in which the fundamental health parameters of my body are constantly being monitored 24/7 as well as the air I breathe, the food I eat, the environment I walk through. There are no more excuses for not knowing about something. You have the data and the data analysis to become the CEO of your own health. In the future, you know the instant things start to go off kilter and you have the ability to intervene early. Those sensors and mechanisms for sensing are integrated into platforms like the Qualcomm tricorder and, ultimately, empower the individual because, today, healthcare is at best a few bytes of information that you get once a year when your doctor gives you their analysis.

MD+DI: How do expect this competition to lead to cost savings in healthcare? 

Peter DiamandisDiamandis: Today, if you are at home sick at 2:00 a.m. in the morning, you basically have one option: go the emergency room. That’s insane. We are living in a society that has an overtaxed, overbloated, bureaucratic healthcare system that is taking up 15% of the U.S. GDP—$2 trillion. We also don’t have enough doctors to handle our needs. It is projected by 2020 that we will be short 91,000 doctors in the United States. And there is no way we can possibly educate that many physicians. And then, on top of that, even if we could, a human doctor just can’t cut it in today’s technological world. At best, a doctor is a gateway to subspecialists or technology tests. Ultimately, what we are talking about here by offloading an already overburdened system where someone who is at home who has the common cold doesn’t enter the medical system in the first place. You make the medical system more efficient by taking away inappropriate use of it. 

The second thing, of course, is that the majority of our healthcare dollars are spent chasing the [proverbial] horse down after it has left the barn. Meaning, helping to ameliorate a medical condition after it has massively progressed instead of preventing it in the first place or handling it in its early days. Shifting the curve for healthcare to preventative or early-stage amelioration is critical.

The third part of this is actually environmental monitoring that prevents you from being in harm’s way. This can help you understand what you are eating, drinking, and breathing. Understanding the environment that you are in is part of the equation here. 

Symantec has new antivirus software that would effectively assess a computer’s vulnerability. It would be able to look at which websites that computer cruised to, what software was on it, and be able to say which websites kept you safest and which had the highest degree of “risky business,” so to speak. It would also anonymize that data. So that is fascinating. What can’t that happen with us as well? 

MD+DI: To what extent do you foresee technology filling the roles traditionally played by doctors?

I think that the roles of doctors are going to change significantly over time.

Diamandis: I think that the roles of doctors are going to change significantly over time. I can’t tell you the answer how or where. There are those people who are going to want to stick to their GP and that is fine. Just like there are people who don’t like to use a cell phone or e-mail. You don’t have to use technology; it just may be a detriment to your long-term health and survival not to.

I think that, in the short term, human intuition remains a very powerful tool. But I think that ultimately, technology will displace even that. Having enough data and enough analysis will allow us to do much better job.

And of course, having human physicians hold your hand and help you understand the implications of things may be a better solution for some things than talking to a disembodied computer. But the information you ultimately get might be the same. 

MD+DIWill those in the competition work with the FDA and the FCC to address regulatory issues?

Nokia Sensing X ChallengeDiamandis: Now you are getting to the interesting thing. One of the biggest challenges we face in this industry is regulation. True breakthroughs require taking tremendous risk. It is very difficult for government regulations to allow for these kinds of risky breakthroughs. I talk about the fact that it may well be that some of the top technologies that can transform the healthcare industry will debut first in the developing world way before they do here. Because there is not the same regulatory hurdles that these companies have to follow. How a slow and cautious regulatory infrastructure accommodates exponentially accelerating technology base is an X PRIZE in itself. 

MD+DI: What can you tell me about the criteria will be used to judge the winner?

Diamandis: We are going to be holding this competition over the course of three years. There will be a panel of judges and a general public component. We haven’t announced the details around this yet but our goal is to attract the hundreds or thousands of entrepreneurs and teams out there who have new approaches for sensing technologies that help our health. It is going to be the traditional lab-on-a-chip technologies, it may be RNA and DNA analysis of pathogens. But it will also be areas in our environment and biophysics.

How a slow and cautious regulatory infrastructure accommodates exponentially accelerating technology base is an X PRIZE in itself.

We are really broadening the “net” of the data we are collecting that influences and affects your health. Our goal is not only to award winners the cash but to give them global recognition such that it helps accelerate their company and their technology development. Of course, this is all a function of really creating the ecosystem that will give birth to the winning Qualcomm Tricorder X PRIZE teams. I expect that every year when we hold this Nokia X CHALLENGE competition, we are going to have a lot of these sensing teams that will also compete as members of the Qualcomm Tricorder X PRIZE team. They may form their own teams or merge together to form teams. We are really trying to accelerate the future of how these technologies get recognized, utilized, standardized, and accepted.

Brian Buntz is the editor-at-large at UBM Canon's medical group. Follow him on Twitter at @brian_buntz

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The Winners' Circle: 2012 Medical Design Excellence Awards

Launched to recognize groundbreaking innovations in medical technology, the Medical Design Excellence Awards (MDEA) program unveiled this year's gold, silver, and bronze winners at a ceremony held in conjunction with the MD&M East trade show. Also, for the first time, the MDEA program honored one winning company with the title of "best in show." Flip through the following gallery to see which innovative medical device designs earned top honors. And for additional information and coverage of the 2012 MDEAs, visit mddionline.com/mdea2012.

Launched to recognize groundbreaking innovations in medical technology, the Medical Design Excellence Awards (MDEA) program unveiled this year's gold, silver, and bronze winners at a ceremony held in conjunction with the MD&M East trade show. Also, for the first time, the MDEA program honored one winning company with the title of "best in show." Flip through the following gallery to see which innovative medical device designs earned top honors. And for additional information and coverage of the 2012 MDEAs, visit mddionline.com/mdea2012.

Medical Device Industry Lacking in Sustainability Goals, Report Says

Medical equipment manufacturers are making strides in terms of sustainability initiatives, but continue to miss significant opportunities, according to a report released last month by Green Research, a corporate sustainability research and advisory firm. The report, which analyzes corporate environmental sustainability goals within the medical equipment and supplies industry, focused on the sector's top companies, including Baxter International, BD, Boston Scientific, Covidien, Medtronic, Smith & Nephew, St. Jude Medical, Stryker, Thermo Fisher Scientific, and Zimmer Holdings.

Stryker and BD are lauded in the report for their commitment to creating businesses that "reclaim, reprocess, recycle, or remanufacture used medical products, helping hospitals reduce their own waste burden and creating new revenue stream in the process," according to a press release issued by Green Research. However, the report states that only four of the top 10 medical equipment manufacturers examined have publicly announced environmental sustainability goals. "While these companies' sustainability, citizenship, or social responsibility programs are generally concerned not only with environmental issues but also social, ethical and other issues as well, when it comes to setting and disclosing specific, time-bound, quantitative goals, they tend to limit themselves to environmental goals. In the environmental dimension as well as the social dimensions, companies in this industry could go further in setting and declaring specific goals for themselves," the report recommends.

In addition, the report notes that 87% of sustainability goals established by medical equipment companies are internal and do not take its supply chain, customer use, or product end of life into account. Setting goals for the supply chain, in particular, was cited as a missed opportunity.



 
 

The Layoff List: Medtech Job Cuts Run Deep

Medtronic's announcement this week regarding 1000 anticipated worldwide job cuts is the latest in a long list of layoffs that have left medtech professionals feeling bruised and battered. Whether the down economy, potential dreaded device tax, shift of jobs overseas, restructuring, or other factors are to blame for these staff reductions, the trend is sadly showing no signs of slowing down just yet. And as jobs continue to be jeopardized, MPMN takes a look back at several of the most high-profile layoff announcements that have rocked the medical device industry in the past 18 months.

Medtronic: As mentioned, even medical device industry giant Medtronic has not been immune to the turbulent economic environment. While the company's latest announcement of approximately 1000 layoffs, which includes the 220 layoffs in the company's cardiac rhythm disease management division that were announced earlier this month, represents another significant blow to the industry, its most dramatic decision arguably occurred in February 2011 when it revealed plans to eliminate up to 2000 jobs across the globe and various divisions. Some of the casualties of the decision included 268 jobs in the Twin Cities two months later, followed by 82 layoffs in the Memphis arm of the spinal and biologics business, among others.

Boston Scientific: Hot on the heels of Medtronic's sweeping layoffs last year, Boston Scientific confirmed that many of its workers would face a similar fate. Rumors turned into reality as Boston Sci axed positions in its Minnesota-based cardiology, rhythm, and vascular business. Employees were dealt another bad hand in July, however, when the company disclosed that it would eliminate up to 1400 jobs worldwide during the next 2.5 years. The layoff news likely left an especially sour taste in the mouths of many domestic employees as it immediately followed the company's announcement of intentions to invest $150 million and hire 1000 employees in China; it was attributed to efforts to achieve annual savings between $225 and $275 million.

Stryker: Among the most buzzed-about layoff announcements in recent memory was undoubtedly that issued by Stryker in November 2011. The orthopedics powerhouse left the medical device industry reeling from the news that it planned to reduce approximately 5% of its global workforce in an effort to cut operating costs. The kicker: It cited the impending medical device excise tax as a primary motivator for the drastic move. "The targeted reductions and other restructuring activities are being initiated to provide efficiencies and realign resources in advance of the new medical device excise tax scheduled to begin in 2013, as well as to allow for continued investment in strategic areas and drive growth despite the ongoing challenging economic environment and market slowdown in elective procedures," according to a press release issued by the company. This declaration thrust Stryker into the center of the controversial debate over the medical device tax as critics latched onto the motive as a symbol of the mass job loss and devastation potentially caused by implementation of the tax.

Abbott Laboratories: Despite rising profits, Abbott Laboratories announced this past January that it would cut 700 jobs in the United States and Puerto Rico. Coming a year after 1900 pink slips were issued in the company's pharma business, the reductions primarily affected employees in the hospital, laboratory diagnostic, and stent manufacturing businesses. While the layoffs were generally chalked up to restructuring and the discontinuation of some of its 'mature products,' losses in the stent division reportedly stemmed from sharp declines in sales of the Promus stent, which Abbott manufactures and Boston Scientific markets. Abbott expects the downward decline to continue as the agreement between the two manufacturers expires later this year. The company has remarked that several-hundred additional jobs may be eliminated by the end of the year.

Johnson & Johnson: Once a trailblazer in the stent market, Johnson & Johnson's Cordis stumbled in the face of mounting competition and a flat market over time. Faced with such challenges, J&J opted to restructure the division last June. As part of this strategy, J&J announced that it would cease manufacture of drug-eluting stents by the end of the year, close two factories, and trim up to 1000 jobs. "There's no question that our market share has declined in the last several years as competitors have joined the market," Seth Fischer, worldwide chairman of Cordis told The New York Times last year. "We felt that we could turn our attention toward other potential areas that would enhance cardiovascular health for patients."

In addition to these particularly prominent layoffs, a host of other companies, including Zimmer, CR Bard, and Wright Medical, among others, pared down their work forces during the past 18 months as well. And there could certainly be more layoffs on the horizon. Cost-cutting measures will likely continue in coming months, and industry speculation even points to a potential uptick if the medical device tax is not repealed. The bottom line is that it's tough out there for medical device professionals right now. On the upside, however, there are a number of companies that are seeking to cut costs without reducing work forces. And some companies--even the big guys--are hiring for various positions. So, it's not all bleak news.

For information on medical device industry jobs, head to Qmed's new job board, and for additional information on the potential impact of the medical device tax, head on over to our special Medtech Issues in the 2012 Election Year microsite on our sister site, MD+DI. --Shana Leonard

 

Patent Reform Is Coming: Is Your Medtech Company Ready?

Patent Reform Is Coming: Is Your Medtech Company Ready?

 The America Invents Act introduces a number of significant changes to the current patent system, including switching to a “first-inventor-to-file” system, introducing post-grant patent review, allowing third-party prior art submissions, and addressing deficiencies in U.S. Patent and Trademark Office (USPTO) funding and operations. In January and February 2012, the USPTO issued 10 notices of proposed rulemaking with details on how the USPTO plans to implement the sweeping changes of the America Invents Act. The USPTO is currently accepting public comments from stakeholders, and in July 2012, the USPTO plans to issue final rules, which will be effective soon after issuance.

In addition to the changes introduced by the America Invents Act, a number of important patent cases are pending before the United States Supreme Court and the Court of Appeals for the Federal Circuit which will further impact the patent landscape.

To thrive in this changing patent landscape, medtech companies must adopt dynamic patent strategies to develop strategic patent portfolios that include both offensive and defensive patents that maximize value while minimizing competition. To achieve a strategic patent portfolio, medtech companies should file patent applications early and often, and to monitor competitors’ patenting activities in the USPTO to prevent issuance of blocking patents. This article discusses key changes introduced by the America Invents Act, and provides recommendations for building a strategic patent portfolio amid patent reform.

Image from Flickr user opensourceway

Change to “First-Inventor-To-File”

In a major departure from the current system, the America Invents Act replaces the “first-to-invent” system with a “first-inventor-to-file” system, a change that will impact medtech companies’ invention disclosure and patent application filing practices. The switch to the “first-inventor-to-file” system takes effect on March 16, 2013, eighteen months after the enactment of the bill. Under the new standard, a patent will be granted to inventors who first filed a patent application with the USPTO, whereas the current patent system grants patents to the first inventor, regardless of which inventor filed a patent application first.

In accordance with the change to the “first-inventor-to-file” standard, the patent reform law also broadened the scope of prior art to include information available to the public as of the effective filing date of the claimed invention, without regard to the actual date of the invention. Due to this change, Applicants will no longer be able to disqualify prior art available at the time of filing of the application by showing that the actual date of invention is different than the application filing date and is earlier than the date of the prior art.

This emphasis on a faster filing timeline benefits medtech companies because of the rapidly evolving and short life spans of much of the medtech industry’s technology and products. 

“First-inventor-to-file” introduces several benefits to the patent system and, in turn, to medtech companies as well. First, it harmonizes the U.S. patent system with the patent systems of most other countries that also utilize a “first-inventor-to-file” rule. This synchronization simplifies the patent process and reduces confusion over foreign filing practices. Second, a “first-inventor-to-file” system provides clear standards for dispute resolution regarding questions of inventorship. Third, the new system encourages inventors and companies to file their patent applications quickly rather than rely on the ability to antedate prior art available less than twelve months before the effective filing date of the application based on the actual date of the invention. This emphasis on a faster filing timeline benefits medtech companies because of the rapidly evolving and short life spans of much of the medtech industry’s technology and products.

Despite these benefits, the “first-inventor-to-file” system carries several drawbacks, particularly to small and early-stage medtech companies. The most visible result of the new system is the need to race to the patent office to stake priority claims before competitors, a result that favors large, well-established companies with resources to file patent applications quickly and often. The pressure that the “first-inventor-to-file” system places on inventors to quickly file applications may potentially result in weaker, less-detailed applications that may be filed before the technology is fully understood. To counter this, medtech companies should file applications that not only cover their core technology but also future improvements and alternative embodiments. This will prevent competitors from obtaining design around patents. Another prudent practice for medtech companies is to file multiple provisional applications as their technology evolves and combine them into a single non-provisional application at the one year anniversary from the filing date of the first provisional application, which should secure the earliest possible priority date for all subject matter in the non-provisional application.

Introduction of Post Grant Opposition

Another fundamental change of the America Invents Act is the creation of a nine-month post-grant opposition review period. This post-grant review provision is effective as of September 16, 2012, one year from enactment of the bill, but applies only to “first-inventor-to-file” applications that will be filed beginning eighteen months after enactment.

The post-grant review process allows companies to challenge patents on any grounds of invalidity during a nine-month window from the issue date of a patent, with an aim of shifting the patent challenging arena from the courts to the USPTO.

The post-grant review process allows companies to challenge patents on any grounds of invalidity during a nine-month window from the issue date of a patent, with an aim of shifting the patent challenging arena from the courts to the USPTO. On February 10, 2012, the USPTO published a set of proposed rules to implement the post-grant opposition process. The USPTO suggested a filing fee for a post-grant opposition petition of $35,800 to review up to 20 claims to $89,500 to review 51 to 60 claims, and an additional $35,800 to review additional groups of 10 claims. With attorney fees in addition to the USPTO fees, post-grant review will not be cheap.

The proposed fee structure for initiating post-grant opposition heavily favors large medtech companies with a sufficient patent budget to monitor competitor’s patents and conduct post-grant oppositions. Large companies may also use post-grant opposition as a business tool to prevent smaller competitors from entering the market. On the other hand, smaller medtech companies with patents that survive the nine-month window will become a more attractive target for investors due to the added strength of their patent portfolios.

Though post-grant opposition aims to resolve patent disputes through the USPTO instead of through court litigation, a decrease in litigation may not occur to the extent expected because final post-grant review decisions are appealable to the Court of Appeals for the Federal Circuit, which is the court that hears all appeals arising under patent laws throughout the United States. However, if the goal of post-grant opposition is successful, the medtech industry may benefit from a reduction in costly and time-consuming patent litigation. Ongoing post-grant review can also help ensure that high-quality patents deserving of patent rights are issued.

Changes to Third Party Participation in Patent Process

The America Invents Act also expands the opportunity for third parties to submit prior art for consideration during patent prosecution. Effective September 16, 2012, one year from the enactment of the bill, this provision will retroactively apply to still-pending patent applications. On January 5, 2012, the USPTO proposed a new 37 CFR §1.290 for third parties to submit prior art in the patent applications of others. Current patent rules provide a very limited opportunity for third parties to submit relevant prior art. The proposed rules of January 5, 2012 expand that opportunity by broadening when and what information can be submitted to the USPTO by third parties. The proposed third-party submission provisions require that references be submitted to the patent examiner along with statements of relevance of the references, which is currently not permitted, to potentially make the submissions more effective and easier for the USPTO Patent Examiner to consider third-party submissions.

Submissions may be kept confidential, and must be made prior to the mailing of a Notice of Allowance, a first Office Action rejecting a claim, or six months from the date of publication, whichever comes first.

Third-party prior art submission is useful because it will assist USPTO Patent Examiners in determining which patent applications are worthy of grant. As with post-grant opposition review, the intended result is higher-quality patents that are less likely to be challenged further down the patent pipeline. While larger companies with more resources to engage in this process and monitor competitors’ pending patent applications will find greater use of this provision, smaller medtech companies can also take advantage of this change to directly affect the quality of medtech industry patents.

Implementation of Prioritized Examination

Immediately after the enactment of the America Invents Act, the USPTO reinstated its Track One initiative for prioritized examination. The Track One initiative was previously put on hold due to USPTO budgetary constraints. Under the Track One initiative, the USPTO will strive to provide a “final disposition” within twelve months of prioritized status being granted to a patent application. The fees to request a prioritized examination are $4,800, or $2,400 for a small entity, and $130 for processing the request in addition to a regular filing fee for a utility patent application. In addition to the increase in filing fees, the faster pace of examination means that the costs associated with prosecution of the patent application will be incurred over a much shorter period of time. Nevertheless, medtech companies looking to quickly build or expand their existing patent portfolios should consider taking advantage of the prioritized examination program. By having an issued patent sooner, emerging medtech companies can attract investors at an earlier stage and sue third parties developing competing products for patent infringement.

Decreasing Pending Application Backlog

A number of modifications to the USPTO’s funding and operations under the America Invents Act are designed to allow the USPTO to make the most of patent reform. One major benefit is that the USPTO will have the authorization to set its own fees, a mandate that previously fell to Congress. In line with this new provision, the USPTO instituted a fifteen percent surcharge on all fees on September 26, 2011, ten days after the Act was signed into law. As discussed above, the USPTO also reinstated its Track One prioritized examination where the USPTO charges higher filing fees. Most importantly, the Act creates a USPTO Reserve Fund, which will receive all fees collected over the amount appropriated each year. The amounts contained in the USPTO Reserve Fund will only be available for use by the USPTO and may not be appropriated by Congress.

Though Congressional fee diversion has not been entirely curtailed, these funding provisions nevertheless allocate more control to the USPTO over its own budget. With a more promising financial outlook, the USPTO is poised to take strides in reducing its examination backlog of almost 700,000 patent applications. Moreover, though budgetary constraints previously forced the USPTO to shelve its proposed satellite office in Detroit, the Act calls for the creation of the Detroit office and additional satellite offices within 3 years of the enactment of the bill, which should further aid in reducing the backlog of pending applications.

Medtech companies eager to bring cutting-edge products to commercialization will thus appreciate a faster prosecution timeline made possible by the America Invents Act’s reforms.

Courts Chime In

Over the past five years, the Supreme Court has been active in issuing major opinions that affect patent prosecution strategy. The Supreme Court’s 2007 decision in KSR International Co. v. Teleflex invoked a narrow interpretation of the obviousness test, and, as a result, medtech companies should elaborate on unexpected results and technical difficulties to avoid obviousness rejections.

Since 2010, both the Supreme Court and the Court of Appeals for the Federal Circuit, have addressed what constitutes patentable subject matter, including the patentability of method claims for personalized medicine and diagnostics. On March 20, 2012, the Supreme Court issued its long-awaited decision regarding medical diagnostic patent claims in Mayo Collaborative Services v. Prometheus Laboratories, Inc. In a unanimous decision, the Supreme Court invalidated two patents covering the optimization of the therapeutic efficacy of a drug regimen as claiming patent-ineligible subject matter. In doing so, the Supreme Court reversed the decision of the Court of Appeals for the Federal Circuit which twice upheld the patentability of the diagnostic method patent claims. The Prometheus Supreme Court decision held that all claims of the two patents are invalid as directed to unpatentable “laws of nature.” The Prometheus Supreme Court decision is causing the greatest uncertainty in the diagnostics, genomics, and personalized medicine fields, where some of the world’s largest medtech companies are developing diagnostic tests and treatments targeting the unique genetic makeup of a patient. 

Less than one week after the March 20 Prometheus decision, the Supreme Court addressed another much-watched patent case regarding the patentability of isolated DNA of human genes in Association for Molecular Pathology v. Myriad Genetics. On March 26, 2012, Supreme Court granted certiorari, vacated a July 2011 Federal Circuit decision upholding the patentability of isolated DNA patent claims, and remanded the Myriad case back to the Federal Circuit for further consideration in light of Mayo v. Prometheus. The Federal Circuit will hear oral arguments in the Myriad case on July 20, 2012, and some experts believe the patent claims will be found invalid, while others believe the patent claims will be upheld.

On August 31, 2011 in Classen Immunotherapies Inc. v. Biogen Idec, the Court of Appeals for the Federal Circuit held that an immunizing method is patentable subject matter because the method involved a physical step of immunization in addition to purely mental steps. Recent and upcoming Supreme Court and Federal Circuit rulings indicate a willingness of the courts to address perceived problems in the patent system, but also introduce new standards and uncertainties. To build and maintain a strong patent portfolio, medtech companies will need to pursue patent strategies that account for these major court decisions.

Conclusion

Regardless of size, medtech companies must remain vigilant as USPTO initiatives and court decisions continue to reshape the U.S. patent system.

Patent reform presents widespread changes to current patent laws, from altering basic filing procedures in a new “first-inventor-to-file” system to addressing issues in USPTO funding and operations. These changes introduce new challenges and opportunities for medtech companies. Many provisions of the America Invents Act favor larger, well-established companies with the capability of filing many applications quickly under “first-inventor-to-file” and monitoring and reacting to competitors’ patents and patent applications through post-grant opposition review and third-party prior art submission. On the other hand, as a result of a more streamlined patenting process aspiring to produce higher-quality patents under faster timeframes, smaller medtech companies may be able to develop their patent portfolios faster and end up with stronger, more strategic patent portfolios. 

Regardless of size, medtech companies must remain vigilant as USPTO initiatives and court decisions continue to reshape the U.S. patent system. Medtech companies should work closely with their patent counsel to carefully navigate the new patent system and maximize their competitive edge in the industry.

David J. Dykeman is co-chair of the Intellectual Property Department in the Boston office of the international law firm Greenberg Traurig LLP. A registered patent attorney with more than fifteen years of experience in patents, intellectual property, and licensing, Dykeman’s practice focuses on securing strategic worldwide intellectual property protection and related business strategy for high-tech clients, with particular expertise in life sciences, medical devices, biotechnology and healthcare. David can be reached at (617) 310-6009 or [email protected].

Roman Fayerberg is a registered patent attorney in the Boston office of the international law firm of Greenberg Traurig LLP. Fayerberg’s practice focuses on preparation and prosecution of patent applications and counseling clients on patent issues relating to medical devices, biomaterials, and nanotechnology. Fayerberg’s patent practice builds on seven years of experience he gained as a research and development engineer at C.R. Bard and Boston Scientific Corp. Roman can be reached at (617) 310-5206 or [email protected].

Women in Medtech: Amy Klobuchar, Fighting for the Medical Device Industry on Capitol Hill

Amy Klobuchar (D-MN) has been a staunch supporter of the medical device industry since she was elected to the U.S. Senate in 2006. Last year she joined with Scott Brown (R-MA) to form the bipartisan Senate Medical Technology Caucus to raise awareness about issues faced by the industry. She has also sponsored legislation to streamline FDA; introduced the Innovate America Act, which calls for R&D tax credits for companies; and is fighting to reduce the medical device tax.

MD+DI: How did you first become involved in the medtech industry?

Klobuchar
: Minnesota is a national leader in medical device innovation with companies small and large creating good jobs and life-saving products. I have worked with our business leaders to help foster an environment that promotes innovation, research and patient safety while ensuring regulations aren’t stopping a new breakthrough from being developed.

MD+DI: What do you think are the most important challenges the industry will face over the next five years?

Klobuchar: I have heard from medical device companies all across Minnesota that they need a more consistent and transparent process at the Food and Drug Administration (FDA), increased communication, and a clear pathway through the approval process. That’s why I have introduced bipartisan legislation that would help boost medical innovation by reducing regulatory burdens that unnecessarily delay beneficial new medical products from reaching patients. The bill would help streamline the FDA’s regulation of medical devices to continue to spur innovation and help get new, life-saving products to the market quicker without compromising consumer safety. Provisions from this bill are included in the Food and Drug Administration Safety and Innovation Act which will reauthorize the medical device user fee program as well as improve regulatory processes at the FDA. Without a consistent and transparent process, companies may begin to move jobs and investment dollars overseas.

We also need to even the playing field for businesses to compete in the global economy. That’s why I fought hard to cut the proposed medical device tax in half, and will continue to support efforts to reduce this fee.

MD+DI: How can we encourage more women to get involved in the medtech industry?

Klobuchar: 
Education is one of the best investments we can make in our nation’s long-term success—it not only benefits students by giving them a stepping stone to opportunity, it also benefits our country by creating a skilled workforce and a competitive economy. Encouraging young women to participate in the science, technology, engineering and mathematics (STEM) fields will help women get the high-tech skills needed to pursue successful careers in the medtech industry.

Jamie Hartford is the associate editor of MD+DI. Follow her on Twitter @readMED.
 

Affordable Care Act Is Good for Business, Says California Council

A study published yesterday by the Bay Area Council Economic Institute in San Francisco, CA, concludes that the Affordable Care Act will be a boon for California’s economy . . . if the Supreme Court does not strike down the legislation. It will create almost 100,000 new jobs across California and boost economic output by $4.4 billion, according to the Economic Impact of the Affordable Care Act on California report, which was published on May 21, 2012. Southern California will reap the biggest job gains, with almost 58,000 new jobs.

The report posits that an overall rise in economic activity, driven by increased spending on healthcare and medical services, will lift other parts of the economy and stimulate employment. Net economic activity would increase by $3 billion in Southern California, again the greatest beneficiary in the state.

The figures take into account the dampening effect that provisions such as the employer mandate is expected to have on hiring and economic activity; however, the study maintains that the employer mandate is a "crucial tool" for the overall expansion of healthcare coverage, which is a net job creator in the state.

Moreover, expanding healthcare coverage will result in a healthier workforce and prevent workers from being sidelined because of health problems, says the study. Broader coverage also will reduce a disincentive among workers to seek other employment opportunities because they are worried about changing health insurance.

The device tax, which has been the subject of fierce debate within the medtech industry, only makes a cameo appearance in the study. “The tax on medical devices has the potential to influence the market," note the study authors. “As it is a 2.3% tax on sales of taxable medical devices, and not a lump sum, it will likely affect prices. However, given that the market for these devices is quite inelastic, this increase in prices is likely to be passed on to consumers through higher prices for insurance.”

The study is careful to note that "the ultimate impact of health care reform—both in terms of its true economic implications and whether it achieves its substantive policy goals—depends heavily on implementation, which will require close partnership between the federal government, the states, and the private, charitable, and non-profit sectors."

Read the full press release on Qmed.

Norbert Sparrow

Comments Sought on Child Safety in Imaging Device Design

FDA is seeking comment on a proposal that would encourage manufacturers to consider children’s safety in the design of new x-ray imaging devices. In a draft guidance, the agency recommends that manufacturers design new x-ray imaging devices with protocols and instructions addressing use on pediatric patients. The draft also proposes that manufacturers who don’t adequately demonstrate that their new x-ray imaging devices are safe and effective in pediatric patients should include a label on the device cautioning against use in pediatric populations.

An agency news release says that FDA is collaborating with the Alliance for Radiation Safety in Pediatric Imaging (ARSPI) and manufacturers, through the Medical Imaging and Technology Alliance (MITA), to develop pediatric imaging radiation safety training materials. It also says the agency has launched a pediatric x-ray imaging website with information on the benefits and risks of imaging using ionizing radiation, recommendations for parents and health care providers to help reduce unnecessary radiation exposure, and information for manufacturers of X-ray imaging devices.

The guidance, website, and ongoing collaborations with ARSPI and MITA are part of FDA’s Initiative to Reduce Unnecessary Radiation Exposure from Medical Imaging, launched on February 10, the release says.

The cancer risk per unit dose of ionizing radiation is generally higher for younger patients than adults, FDA says, and younger patients have a longer lifetime for the effects of radiation exposure to manifest. Also, the use of x-ray equipment settings designed for adults can result in a larger radiation dose than necessary to produce a useful image for a smaller pediatric patient.

A July 16 FDA workshop will bring together industry, x-ray imaging equipment users (physicians, radiologic technologists, and physicists), and patient advocates to discuss the draft guidance.