Does “Leapfrog” Innovation Exist In The Medical Device Sector?

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NO, concludes a recent report by Qmed, adding that it’s increasingly defined by incremental improvements from medical device companies hampered by financial constraints as hospitals downsize operations and request device discounts.


“In the past, it was commonplace for device makers to charge substantially more money for new products that only had minor improvements over the previous-generation product. That isn’t the case anymore: many hospitals are now hesitant to invest in new devices that are not demonstrably better than established technologies.’

Limited government and insurance reimbursement, plus difficulty in obtaining startup venture capital, is also dampening the rise of revolutionary, novel medical products that could become game changers in the medical device sector.

Since this industry is so highly regulated, product development is expensive, with costs running into tens of millions of dollars for most 510(k) products.  Some projections indicate it could cost close to $100 million to adequately market new medical devices in the United States.

“Contrast this with filing for a patent, which requires that one demonstrate that a technology is “novel,” “nonobvious,” as well as “useful.” Clearing a device under the 510(k) pathway is substantially quicker and more straightforward than the PMA process, but it is still relatively expensive to do so. In 2014, it cost an average of roughly $31 million to market a medical device under the 510(k) program.

And litigation is a constant threat: Olympus, for example, recently settled for $646 million upon allegations related to its duodenoscopes, one of the largest anti-kickback payments ever made in the United States by a medical device maker.

Additionally, medical devices that show great promise at low price points, still need to demonstrate safety and effectiveness, in line with stringent compliance requirements.

“Device companies must defray those costs, and that often translates to a higher cost for the end device.”

Typically, leapfrog innovation in medicine is a hard financial and technical struggle best defined by this example: “Many companies are trying to measure blood pressure by shining a light on the skin and measuring the response. If they can pull that off, that’s great, but the burden of proof is on them to show that it works at least as well as currently available methods.”

The result is that are few companies showing a high degree of innovation in this field. There are, however, some exceptions: A new medical breakthrough in bubble CPAP therapy using low-cost materials found in developing countries has now become the default treatment in developed countries such as the U.S.

I also reported on my Patent Professor site recently the success of one of my clients in selling his medical device startup for over $100 million to an Irish medical giant. When he first came to see to see me about his laparoscopic patent he had just pennies in his pocket but was determined to succeed.  After several years of perseverance his idea paid off. This goes to show show that while bigger more established companies may struggle to innovate under the present climate, smaller entrepreneurs can find gaps and opportunities to launch new ideas. If you need advice, motivation or guidance on profit-making avenues for your idea, leave a message below.


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