In a February testimony before the U.S. House Energy and Commerce Subcommittee on Health, Ross Jaffe, MD, spoke to the “frustrating paradox” in the state of medical device innovation in 21st century America. “Our understanding of human physiology and disease grows almost daily,” he said. “With the aging of the population and increasing pressure for healthcare reform, new and better technologies are critical to reduce the costs and improve the quality of healthcare. The potential for innovation in medical technology has never been greater.”
Yet, in his role as a venture capitalist (VC) with Versant Ventures, he is “forced to turn down investing in too many promising medical innovations—technologies that you and I would want access to in order to help our loved ones if they needed them—because it is difficult to predict how long and how much capital it will take to get a particular innovation approved by the FDA and into patient care.”
Jaffe isn’t the only investor getting cold feet in this market. In 2007, 116 early-stage medical device companies raised approximately $720 million in initial venture capital, according to the MoneyTree report by PriceWaterhouseCoopers and the National Venture Capital Association (NCVA), based on data from Thomson Reuters. In 2011, by contrast, 55 companies raised $200 million. Since that time, early-stage device companies have seen more than a 60 percent decline in initial venture capital investment and more than a 70 percent decline in the amount of capital invested—with only 55 new companies raising just under $200 million in 2011.
“Capital investment is an integral part of the process to provide better, innovative care to American patients,” says Peter J. Fitzgerald, MD, PhD, co-director of the Center for Research in Cardiovascular Interventions at Stanford University School of Medicine in Stanford, Calif.
“Progress in [medical] technology usually results less from individual genius and more from collective effort and social, political and economic forces that come together to create an ecosystem which fosters innovation,” adds Martin B. Leon, MD, director of the Center for Interventional Vascular Therapy at Columbia University Medical Center/New York-Presbyterian Hospital in New York City.
Specific to interventional cardiology, investors may in part be responding to a declining in the number of cardiovascular intervention procedures in the U.S., coupled by an increase sensitivity to costs, which results in decreased prices for approved devices, explains Leon.
This lack of funding for medical device innovation may create a chasm between scientific discovery and the doctor’s office. In other words, if investors stop doling out funds to smaller companies, there may be a dearth of new technologies available to treat U.S. cardiac patients, and thus, the country may fall behind in providing the best possible care for an aging population.
Most experts agree alterations to the current regulatory process are the only way to halt this downward trend in investment.
Among all the impediments to progress in cardiovascular medical innovation, Leon says “the highest on the list would be the regulatory speed bumps and hurdles that delay approval and create a disincentive for industry to become involved either at early or even late stage.”
The FDA, unlike most regulatory agencies in the world, is under a congressional mandate to ensure approved drugs and devices demonstrate clinically significant efficacy, in addition to safety where the probable benefits outweigh the probable risks. To gain approval in the European Union, devices simply need to prove they are safe. “In Europe, devices do not need to demonstrate that they clinically help a patient,” says William H. Maisel, MD, MPH, chief scientist and deputy center director for science at the FDA’s Center for Devices and Radiological Health. The added requirement prolongs approval in the U.S.
For example, in late 2011, the U.S. became the 43rd country in the world to approve the Sapien heart valve (Edwards Lifesciences) for transcatheter aortic valve replacement procedures for inoperable patients with severe aortic stenosis, which Leon defined as “a very restricted indication.”
However, defenders of the FDA policy, such as editorialists in a recent New England Journal of Medicine perspective, noted that “differences in timing are related to the need in the U.S. to conduct clinical trials for high-risk devices.