In Vivo: strategic insights for life sciences decision-maker...
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Navigating from concept through reimbursement and market acceptance can be a long haul for a traditional medical device company, so consider how much more complicated and potentially lengthy the process can be for digital and connected care products. And also consider the risks of being behind the curve, because some medtechs are already mapping out their digital futures, says Pete Masloski, a managing principal at ZS Associates.
Speaking to In Vivo, Masloski, who also leads ZS' global digital and connected health practice, put it flatly: manufacturers of devices that don't have an explicit plan to incorporate data collection, software or technology components into their development pipeline are missing an opportunity – and may even be missing the boat entirely.
Just as it is with that other medtech talking point du jour– value-based health care – successful manufacturers are seeking to enhance value to providers through digital solutions by adding functionality and integrating with providers' operations.
Forward-thinkers see new opportunities across the whole spectrum, including tapping into whole new businesses and markets that are centered around digital technologies. Areas such as remote monitoring and clinical decision support are now emerging as significant drivers.
Capturing value from the data collected from these solutions is one of the biggest untapped opportunities out there, says ZS Associates' Pete Masloski.
"It's also an opportunity to gain more insight and capture value from the data collected from these solutions," says Masloski, adding, "This is one of the biggest untapped opportunities out there, and even companies that are capturing the data aren't yet gaining enough insight from the data they are collecting; the promise is substantial."
Why is the insight eluding the manufacturers still? It's a field full of complexities, and interpreting the data requires a steep learning curve. Typically, understanding big data needs new sets of capabilities. Manufacturers need to know the right questions to ask. Equally, it's hard to fund a research effort based on a hypothesis that "something" will be found in the data, says Masloski. Add to this the fact that the quality of the data is evolving rapidly, and it also becomes something of a moving target.
On the other hand, innovators are rushing to fill the space with new technologies, and literally thousands of digital health care start-ups are racing toward their goals, with billions of dollars having already been spent on connected technology research. The larger companies have the advantage, as they have the ear of the clinician, and for them it's a great opportunity to get differential attention from providers. But from the provider's perspective, there is no way to keep a handle on it.
But this whole area that is unfolding is not just about device manufacturers, Masloski stresses. Many large providers have their own digital or connected health groups, and are partnering with companies around population health management programs, or productivity and quality control initiatives, or have set up ways of devising care coordination programs or reducing re-admissions. And pharma companies, pharmacies and payers are also developing digital strategies.
But the device industry is perceived as a leader in integrating digital technology. Medtronic PLC, for instance, was one of the first companies to capture data from a device and send it over the phone (via its CareLink platform). And the device industry pioneered the whole remote monitoring charge, but so much has happened so fast and, as mentioned, innovators are vying for the attention of providers who are now finding it hard to keep track of it all.
Where the smaller companies come into their own is in the ability to move quickly, and be nimble in their digital development projects. They can do product iteration and evolution at low cost and be very focused on single tasks. Larger companies often struggle with this in the fleet-footed digital technology world, necessarily moving at the slower speed of a large enterprise that has complex infrastructures.
Crucially, companies must build an operating model that lets them move at the speed of digital while also recognizing the need to live within the boundaries of compliance.
Much as they might wish, many larger medtechs cannot easily be that organization that puts two dedicated technologists on a project to create, say, an app, very quickly and at very low cost. They must weigh what to do internally, what to outsource, and who to partner with and on what. And crucially, they must build an operating model that lets the company move at the speed of digital that also recognizes the need to live within the boundaries of compliance.
It can be a challenge, says Masloski, but many organizations are up meeting it head on. Device manufacturers in the cardiovascular industry have perhaps made the biggest and deepest inroads, with Medtronic being an obvious example; whereas diagnostics and monitoring companies like Philips Healthcareare investing heavily in their segments; and diabetes device companies have been both very opportunity- and patient-focused in their approach to digital applications, such as Dexcom Inc., with its real-time continuous glucose monitoring system Dexcom G5Mobile. There are many other examples.
Payment models remain the key barrier to the growth of these solutions. Many of the digitally-enabled solutions and connected devices are focused on population health management or chronic disease management, where the payment structures, in the US say, are not aligned to support investments in these areas in a significant way.
"Reimbursement for these solutions is really lagging the innovation," Masloski observes. The longer-range payoffs mean than not many systems are aligned. Integrated payer providers, the Veteran's Association and Accountable Care Organizations (ACOs) are closest to developing the required integrated structure, but it's a work in progress and for now the US, in particular, is still mostly on a fee-for-service (FFS) payer basis.
For these reasons, payers in the US are questioning the value of these solutions and want the evidence to prove value, but that data will take a while to collect.
In spite of the perceived hurdles, the market has now evolved to the point where winners within the digital and connected health landscape are starting to emerge, says the ZS principal. These are companies that are showing significant health outcomes and are able to garner the attention of the payer and provider communities.For them, experience has been building, momentum is gathering and the data have started to come back. Reimbursement is also in prospect, as payments will follow the data and the evidence that comes with it.
"We'll see a lot more growth of the leading solutions in this space in the next three to five years," Masloski predicts. While solutions are available now, this will likely be the time frame for major uptake of these new technologies, in particular those focused on population health or care coordination. But the implications for the device industry are getting more serious: players don't want to be left out in the cold – but that will likely happen if solutions are be being developed that can disintermediate the products of rivals that are not playing in this space.
The three- to five-year time-frame is needed, he insists, as there are so many moving parts in the digital segment: patient behavior, the evolving technology, provider acceptance, and more. For these patient-centric solutions and chronic disease management tools to really get traction, a physician needs to be "on board" and the solutions must suit providers' workflows, connecting with EMRs. They also must be supported by payers, and be aligned long enough to develop the evidence to convince the broader market that adoption at scale is simply worth it. "These are some of the reasons it's taken us so long to get to where we are, and an illustration of why it's so hard to change health care," explains Masloski.
Furthermore, the data are only as good as the design of the study from where they were collected, and many providers might agree that the data are interesting, but then push back and ask for more evidence of how the results would be applied in their own organizations. But payers are now looking to conduct trials or longer pilots to demonstrate solutions that have data collected elsewhere. There are a lot of trials and experimentation going on in this space right now, and that can make it hard for the innovators in the trials, especially the start-ups with an eye on their burn rate, and fears over funding drying up as investors become impatient.
In the US, there has been growing recognition that further adoption of these tools really can affect cost and outcomes. The new US administration has shown interest in working with industry, and the forward-thinking FDA, for its part, has a team focused on digital health. The agency has established the Pre-Cert program for digital innovators as a means of speeding new processes and iterations to market. It is seeking to establish guidelines for software as a medical device, and aims to avoid the need for companies to have every iteration of their software approved. (Also see "Coming Together On Pre-Cert: Digital Health World Engages With FDA To Hash Out Regulatory Future" - Medtech Insight, 6 Feb, 2018.)
As part of the generalized move into the digital age, AI solutions will start to appear with more regularity in areas like diagnostic imaging. Home assistant technologies (such as Amazon's Alexa) are getting traction and to a certain extent are helping to demystify the space for the public. In health care, there is still a lot of room for innovation, and given the time it takes to prove a technology and bring it to market, most of the impact from digital and connected care is still some way off.
But the momentum is unstoppable, and new FDA guidance on Clinical and Patient Decision Support Software is part of the agency's evolution of its policies to enable advancement of beneficial innovations and greater consumer access to technologies.
And as more data and evidence become available, the advantages of providing physicians with meaningful assistance – not to replace but to augment their skills – will be all the more evident and compelling. There will always be the skeptical physicians, and there will surely be some bumps along the road to digital and AI acceptance, perhaps in areas such as ensuring security and quality of data input, Masloski suggests. But that is to be expected.
Patient-centric solutions that involve some type of wearable device or sensing device that collects data is a big focus of the industry right now. The leading companies are starting to develop models that show how to make these successful – such as using medical-grade sensors that are very non-intrusive to the patient. In addition, the data must come back to the physicians in a way that fits into their workflows. Industry players need to be work toward that space. "If you're in the device space and you're not part of developing that solution, you risk being left out in the cold," Masloski warns.
In addition, there is much focus on patient behavior change. A lot of device industry revenues come from treating conditions in patients whose medical therapy has failed – in part because their own behavior hasn't changed. But as the device industry becomes a more effective player in prevention and digitally assisted behavioral change among patients – or prospective patients – the "pipeline" of potential patients will change and the industry could start to see a slowdown in the progression of disease that needs surgical intervention.
That makes it all the more necessary for the device industry to be part of the solution in the evolving health care industry. It can champion change by leading the charge, leveraging its resources and expertise in getting the clinical community to adopt digital technologies. It must not simply wait for patient flows to dry up based on improved patient behaviors, says Masloski. He adds a warning for the device industry: "If you're not playing at the top of the funnel you risk being disintermediated."
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