The Midwest might not have as much funding activity as some parts of the West Coast or other established hotbeds for innovation, but potential med-tech entrepreneurs and would be investors would be foolish to overlook this region, according to a report from BioEnterprise.
The med-tech companies are consistently finding funding in the Midwest, and were even able to raise dollars during the tumultuous years following the economic meltdown. Since I began my tenure at Medical Device Daily in 2007, the region has produced strong numbers consistently.
The study points out that Midwest healthcare companies attracted $1.8 billion in new investments across 243 companies in 2014. The totals are the highest recorded in both dollars and number of companies funded since BioEnterprise began compiling the report in 2005, surpassing the banner 2007 by 46% and 2013 by 135%.
The Report was funded, in part, by philanthropic support from the Fund For Our Economic Future, the Cleveland Foundation and the Burton D. Morgan Foundation.
My conversation with BioEnterprise's president/CEO Aram Nerpouni, revealed that the area is growing and that it offers a diversified range of funding opportunities. While there is still some room to grow, it seems highly likely that the funding rounds will continue to grow.
[caption id="attachment_3839" align="alignleft" width="320"]If only policy came together this seamlessly ... or is it just as well?[/caption]
The federal government seems at times determined to make a blogger’s job easier, and recent events do little to dissuade one of that view.
Following are a couple of developments of interest to device makers, but we can’t be sure what’s real and what’s just more smoke and mirrors.
Is corporate tax reform kaput?
As we noted recently, Secretary of Commerce Penny Pritzker said in public that the administration wants revenue-neutral tax reform, but President Obama said little about taxes in the State of the Union address other than that he sees a need to boost taxes on the well-off in order to pay for free junior college and other things.
The President’s silence on the issue doesn’t mean corporate tax reform is DOA, but Pritzker was the first in this administration to say anything favorable toward revenue neutrality. Trust me when I say the GOP will not go for corporate tax reform that is revenue enhancing.
Nothing against Secretary Pritzker, but until I hear it from the horse’s mouth…
Taking the initiative or taking an initiative over?
One model of leadership is said to consist of finding a parade and jumping in front. At first glance, that seems to be the case with the President’s Personalized Medicine Initiative, which entirely ignores the fact that the House of Representatives has been working on just this for quite some time now in the guise of the 21st Century Cures initiative.
There’s another model of leadership that’s more or less prevalent in both the public and private sectors. It’s called, “take the credit for the work of others and pretend the idea was entirely yours.” I hear it’s great for morale and should go a long way toward easing tensions between 1600 Pennsylvania Ave. and Capitol Hill.
New questions of usability?
Just when you think you’ve heard it all, you read another FDA product development guidance. FDA’s draft guidance for “wellness devices,” states that the classification of such an offering may depend on whether the device presents “novel questions of usability.” That’s odd because the guidance seems to suggest at the outset that unless the intended use indicates a moderate degree of risk, these devices are presumed to be class I devices.
So how does a developer document that the wellness device does not present novel questions of usability? I don’t know. Human factors engineering? Studies of the article’s use in real-life settings?
I started my review of this draft guidance thinking it was a way to get some really basic mobile medical apps to market, but this question about novel questions suggests FDA is bound and determined to snare them all in its class II (or higher) regulatory tentacles. Shocking, no?
[caption id="attachment_3818" align="alignleft" width="227"]Will auld acquaintance be forgot? Not at all likely.[/caption]
It’s a new year with a host of new possibilities, not to mention a few hangovers from 2014. So what will 2015 bring to the world of med tech? Let’s find out.
Administration says “revenue-neutral”
Will Rogers is credited with having said, “the only difference between death and taxes is that death doesn't get worse every time Congress meets.” This year might prove the exception where corporate tax reform is concerned. I say that because Secretary of Commerce Penny Pritzker is now on record as saying the Obama administration is on board with revenue-neutral tax reform (See Pritzker’s remarks at 2:45). That doesn’t mean tax reform is going to happen this year, but it’s not a bad start.
Incidentally, this might also be a signal to the Business Round Table and the U.S. Chamber of Commerce to get their member ducks in a row unless they’re prepared to wait until 2017 to start this whole thing all over again, and it’s not a slam-dunk that the 115th Congress will be more amenable to tax reform than the current Congress.
FDA and LDT regs: good idea or no?
It’s all a question of whose ox is getting gored, but the two-day FDA meeting on the agency’s proposal to regulate lab-developed tests was actually pretty interesting. One of the speakers was Girish Putcha, director of lab science at Palmetto GBA, which handles a lot of requests for diagnostic coverage on behalf of the Centers for Medicare & Medicaid Services.
Putcha said among other things that the statute does no rule out the possibility that CMS can require that a test be checked for clinical validation and instrument and software validation, but he advised FDA avoid asking too much for design controls and other such features of the quality systems regulations.
The common expectation is that FDA regulation of clinical labs will drive some tests out of labs, which of course will dry up some revenues. I have a problem choking down this business of citing the latest FDA-approved BRCA test by Myriad as an example of an LDT as at all suggestive of the future for labs, though. I strongly suspect Myriad paid the tab for that effort, not the lab.
There’s a saying that if you want less of something, tax it. Same goes for regulations. It’ll be interesting to see what the clinical lab business looks like five years from now.
Fun with comparative ineffectiveness
It’s always amusing to watch those who are unfamiliar with the world of med tech attempt to impose their will on this continually churning sector of life science. The January Journal of the American College of Cardiology offered a comparative effectiveness report on coronary artery bypass and PCI for stable ischemic heart disease, and the authors concluded that at four years or longer, patients undergoing bypass "had better outcomes but at higher costs than those undergoing PCI."
But as the song says, that’s [not] where the fun is. This study drew on Medicare data for patients treated between 2004 and 2008, and of course the data are obsolete. The authors said as much, remarking, that most interventionalists "now have at least four types of DES available," and thus the question facing policymakers now is whether these outcomes would hold "if second-generation DES were to be implanted" in such a population.
[caption id="attachment_3798" align="alignleft" width="240"]Some things just look a lot better from this perspective[/caption]
It doesn’t take 365 days to do useful things or to stink up the joint, but a year gives us plenty to work with, doesn’t it? Following is a list of a few things that were very interesting about 2014 to put it mildly.
To start, there’s the March 25 FDA notice in the Federal Register about medical device classification rules. I’ve blogged about this before, so there’s not much else to say other than that the agency seems to have bit off far more than it can chew on this one, given that the proposal seems to have fallen off the face of the Earth. One suspects its not over yet, though.
Congress got into the act, too – albeit inadvertently – where the Menaflex case is concerned. One interpretation (mine, anyway) is that the passage of the Food and Drug Safety and Innovation Act, which was itself not a 2014 event, allows FDA to up-classify a device without going through the rulemaking process. The upshot may be that Congress gave the agency a get-out-of-court-free card despite that FDA lost the Menaflex lawsuit at the end of September 2014.
Unapproved literature more to your liking? You would love the February 2014 revised draft guidance FDA dealt for the distribution of peer-reviewed articles dealing with off-label uses of medical devices. This has been in the works since 2008, and the latest effort prompted nearly 160 responses, which says a lot. As best as I can tell, this is another stalled FDA effort.
Maybe the biggest news from the CMS side is the new paradigm for coverage with evidence development (CED) program, a remarkably brief document given the fuss and bother that preceded it. Here’s a passage I find odd:
“CED will lead to the production of evidence complementary to existing medical evidence.”
If the device in question has to have been approved by FDA …
2014 was also the year that brought an end to the reign of Harry Reid over the U.S. Senate. Reid was one of the most Machiavellian Senate majority leaders in recent memory, blocking legislation – including dozens of spending bills – so routinely that the Senate became the ultimate do-nothing legislative body.
As for the health IT crowd, the Office of the National Coordinator became the HHS orphan with the announcement that the freshly-minted director, Karen De Salvo, would take the job of Ebola czar. Some now see ONC as a paper tiger, so…
And finally, one of the more interesting developments in the world of health research was that NIH finally pulled the plug on the National Children’s Study, an overly-ambitious undertaking that commenced when Bill Clinton was in the White House. Common sense mercifully prevailed where this gigantic life-science boondoggle is concerned, but not before $1.3 billion was siphoned off by the glitterati of the world of epidemiology.
So 2014 was certainly a scintillating year, but there’s tremendous potential for controversy waiting for us in the coming year!