Orphan device incentives could spur development of imaging products

Vendors are increasingly emphasizing the development of devices that have proven clinical value. The reason is simple. These are the products that sell the best in a tight economic environment.

The upside about developing such practical technology is that R&D is more focused, leading to the development of equipment likely to have a major impact on the practice of medicine. The downside is that equipment offering the biggest bang for the buck is the priority, while other technology that might address an important but less profitable need is passed over.

The pharmaceutical industry has long struggled with how to balance the needs of patients with the need to invest wisely in R&D. The answer-establishing regulatory and commercial incentives for pharmaceutical houses that come up with "orphan" drugs (drugs that fill a medical need but don't serve a market big enough to recoup investment in their development)-might be a model for the medical device industry.

"These types of incentives can make a major impact on the types of devices we're going to need (to improve public health) and to continue getting the money we need into this sector," said Morgan Nields, chair of the board of Fischer Imaging.

The developers of orphan drugs have at various times received several types of incentives from the government, including tax credits for R&D, grants to further defray the cost of development, speedier and less rigorous testing and review requirements from the FDA, and exclusive marketing rights for up to seven years. These incentives, particularly multiyear exclusive marketing rights, could be just the ticket to persuade investors to take an interest in small device manufacturing companies that have set their sights on the development of innovative approaches to less profitable diseases or conditions.

Now more than ever these incentives are necessary. Consolidation has reduced the number of imaging companies and large companies tend to address large markets, according to Nields.

"It is hard for these companies to get excited about a $100 million global market," he said.

Ironically, the size of the equipment market may have no relation to the cost these diseases exact from society. Breast and prostate cancer cost U.S. society tens of billions of dollars a year, a cost that could be reduced by new imaging techniques that allow earlier treatment and higher cure rates. Yet the financial rewards are not there, even for practitioners. Reimbursement for mammography screening is among the lowest paid for any type of imaging procedure. Imaging solutions, notably digital mammography, continue to be a high priority in government and at imaging companies, but this is the result primarily of grassroots political efforts that keep breast cancer and women's health in the public eye. Prostate cancer, for instance, lacks this kind of political and social visibility and so could be an ideal first choice for orphan device development.

Prostate cancer's potential role as a trailblazer is linked to the inadequacies of current diagnostic technologies such as ultrasound, CT, MRI, and PET to find and identify it. The application of complementary or even primary methodologies-namely molecular imaging, 3-D virtual reconstruction at a cellular level, and fused anatomical and functional imaging-could have a direct and substantial effect on patients with this disease.

"Ultimately, we're talking about increasing the ability to diagnose disease and improve patient comfort while making sure the cost is not prohibitive," said Thomas N. McCausland, president and CEO of Siemens Medical Solutions. "We get very focused on the initial cost of equipment or process, but what we need to do is take a step back and say, 'What is the total cost to society?'"

An enlightened government with progressive policies could be the catalyst.

2/28/01, Issue # 1504, page 5.