The future of medical innovation in the U.S. is a critical issue and at a critical crossroads. Still one of the 'crown jewels' in the U.S. economy the pharmaceutical, medical device and diagnostic sectors represent a significant component of GDP and a major source of good jobs...to say nothing about the value their products contribute to overall productivity as a function of improved health and functioning.
Globally, these segments are being pushed by stricter regulation and requirements for more robust evidence in order to bring products to market and once in-market, to remain viable. Post-market safety surveillance is just beginning to take hold in the device sector, and drugs are also challenged to demonstrate continued clinical safety once in the market...even while they're being compared to generics and other interventions, including watchful waiting. The 'Big' news (and threat) has always been comparative effectiveness research and the requirement to demonstrate economic and clinical value. As CER makes its way to delivery and new requirements for predictive care paths emerge alongside downward reimbursement pressure, having products "baked in" to these care paths will be essential to future success.
Thus, I have long argued that the SCOTUS decision on PPACA wouldn't change these market dynamics. Increasing interest in personalized medicine and treatment outside the hospital setting are forcing delivery organizations to rethink their business models in the face of declining reimbursement. In the treatment of cancer, for example, insurers will ultimately need to pay for diagnostics to identify which patients will respond to which chemo agents and which ones won't. Finally, like other countries, CMS and the FDA are in active conversation. CMS is unlikely to allow Medicare insolvency, so downward reimbursement pressure is only likely to continue.
Now that PPACA has been upheld, downward pressure on innovation will accelerate short-term as we see more consolidation in the marketplace and rapid belt-tightening to fund enormous bureaucratic costs. The passage of the PPACA imposes new costs on the industry that cannot be passed along in this cost-constrained environment, essentially reducing available margin. The risk-to return ratio was already being strained by the growing cost of regulation. PPACA will dampen the appetite for innovation and its associated risk.
But PPACA is only the tip of the iceberg. There would have been business model changes for manufacturers anyway. Diminished reimbursement is forcing a requirement for greater evidence, and thus, fewer me-too products. More consumer exposure is putting their voice front and center. Global reference pricing and regulatory harmonization are forcing more transparency. Pressures for demonstrated value will require a shift in investment from commercial channels to R&D.
Manufacturers must continue to innovate; significant unmet medical needs remain. Patent protection (outside the domain of PPACA) will be key to this as will more visible engagement with the patient community in the identification of real unmet need and ongoing monitoring in post-market safety and real world evidence (RWE).