At the recent AdvaMed conference, held in Chicago in October 2014, many of the speakers discussed changes in the medical device industry, especially regarding FDA and reimbursement procedures.

In past years, the FDA was much criticized, but this year the agency was praised for instituting changes that resulted in improved collaboration and faster review of new products. Mike Mussallem, CEO of Edwards Lifesciences, believes that the FDA is now committed to bringing innovative healthcare to Americans and that this has reduced tension between medical device companies and the agency.

In fact, two representatives of the FDA - Dr. Jeffrey Shuren, director of the Center for Devices and Radiological Health at the FDA and the agency's commissioner, Margaret Hamburg – spoke about encouraging companies to conduct their first human trials in the United States. Until recently, the industry has relied heavily on human trials conducted overseas.

Now that the FDA is no longer the enemy, the medical device industry is at loggerheads with insurance companies over reimbursements. Insurance companies are reluctant to adopt new technologies even if they are convinced that they are superior, due to the high costs for both providers and payors. Companies have actually become more selective in approving new products, which poses a challenge for patients and for medical device companies.

On the positive side, this selectiveness has led medical device companies to abandon the practice of adding a few new features to an old product and selling it as a new one. Providers and payors are reluctant to approve devices unless data demonstrates that they provide real healthcare value – i.e. by reducing costs, improving clinical outcomes and/or raising patient satisfaction scores.

Medical device companies are now being forced to focus on quality and value of products. They must solve real problems in the medical industry. For instance, heart readmission rates are unreasonably high, so the Centers for Medicare and Medicaid Services have begun fining hospitals if their patients are readmitted within 30 days. A groundbreaking medical device which would prevent recurring heart episodes would surely be adopted by both providers and payors.

As we move toward 2015, medical device companies can take advantage of the new openness at the FDA to push forward with new and innovative products that provide real value to the healthcare system. However, they must be careful to provide concrete data that these products are innovative and high-quality, in order to convince providers and payors to approve them.

Patrick Sirois

At Triode, we specialize in developing new products and services for complex industries like medical devices and transportation. We work with you closely to help define product strategy, with an emphasis on reducing the risks associated with innovating in these sophisticated and often regulated consumer-oriented environments.