Medical technologies often take years to transform from an inventor's idea into a government-approved product. But getting Food and Drug Administration approval is no longer the end game. Med-tech buyers want scientific proof that a device will work as intended often enough to justify the expense. Industry consultants like Joe Galatowitsch say device companies face an increasingly complex job in creating the "post-market" demand for medical devices after securing FDA approval. Galatowitsch, a former executive with 3M and Medtronic, recently sold the med-tech market development firm he co-founded with Ross Meisner, called Dymedex Consulting. Chicago's Navigant Consulting bought the Dymedex practice and moved it into a Minneapolis office tower.
Sunday conversation with Joseph Galatowitsch of Navigant Consulting
Q: What do you do for Navigant?
A: We help companies understand the realizable market for their technology and then what does it take to get broad adoption for that technology in the marketplace. So we do a lot of data-driven kinds of analysis to get really at that.
Q: How much of the difficulty of selling a new medical device stems from government red tape and bureaucracy?
A: Those are meaningful in getting [a new device] to market. But getting utilization — getting adoption — is really completely independent of that stuff. And that's where companies fail.
Q: How so?
A: Once you get through your early animal work and pivotal trials and prove safety and efficacy, then of course you have to go through the red-tape process to get everybody to agree that your device is safe and efficacious. But once that's done, then the real work starts. And that is the part that people just don't think about: 'Now I am in the market and I have a license to sell, but there is no commitment to buy.'
Q: So the inventor thinks they've crossed the finish line, they've done their FDA study and gotten approval. And now they have to go do another study?
A: Maybe two or three more studies.
Q: What are those studies doing?
A: Most of these post-market studies are around giving more nuanced understanding of how the therapy works on different types of patients. Getting through the FDA is primarily about safety and efficacy, generally. You do the postmarked work to help clarify the benefit of different subclasses of patients. One of the things we talk about with our clients is, how do you identify the perfect patient?
Q: It seems like there might be a natural tension there. You're describing a study that would narrow the market to patients who would benefit the most, but I would think a manufacturer would want to run a study to find the widest possible market.
A: That tension is out there all the time. One of the things we coach our clients is, you can get to both. You just don't want to do the big, broad study to start with.
Let's say your average benefit is a 15 percent improvement in complication rates, but in the best patients, it is 45 percent reduction. So you can anchor your value proposition on these best patients and this dramatic improvement, and then clinicians understand that 'I get 45 percent reduction in complications in these patients, and for the less-sick patients it will be less, but I know it will still be good.' And so you kind of want to create this anchor for your technology to be able to motivate clinicians to want to use it in the first place. Because they are like everybody else — they're busy as heck and they're not going to try something just because you think it's great.
Q: Do device prices prevent adoption?
A: It depends. If you have a [Medicare procedure code] that already exists, as long as you price [the device] to allow the hospital to make money and the physician to make money — as long as you've not taken away the economics for everyone else — that price doesn't matter too much. Whether it is $6,000 or $7,000 or $9,000 is kind of irrelevant against a $35,000 [procedure code]. Now if you wanted to charge $40,000 against that $35,000 [procedure code], you'd have a problem. But that is a solvable problem. There is something called a "new tech add-on payment," where the government will allow that to be reimbursed for two years at say $40,000, and then at the end of two years, that [overall procedure code] gets reset to $70,000. That doesn't mean that companies can just price with impunity. But there is a mechanism for, if you've got something that has a great lifesaving value, and it really is $40,000, there is a mechanism for the whole system to reset.
Q: So if postmarked adoption is not being hindered by red tape or high prices, what are the barriers?
A: One big barrier we find our clients don't realize is [the need to answer the question,] what is the diagnostic trigger for the use of the technology? If a patient comes in with acute decompensated heart failure, should we apply this new technology to them, and why? What are the triggers? A clinician needs to have a bit of a road map to say, now is when we apply the technology.
Health care spending rose by 15%, driven by higher prices. Officials say solutions are needed to prevent Minnesotans from being priced out or delaying care they need.
