Notes from the east: How to lower medtech development costs
Tim Fishlock, head of technology transfer at Health Enterprise East, and Rhanda Tajdeen, innovation manager at Health Enterprise East open this new regular column for 2019.
Innovation in healthcare
Innovative new products transform industries and improve lives every day. The pace of change has accelerated due to massive technological breakthroughs such as smartphones and 3D printing. However, when it comes to innovation, not all industries are created equal.
The healthcare sector is highly complex, and the medical care delivery ecosystem is under increasing pressures due to rising costs and patient expectations. These pressures and the inherent nature of the industry itself make innovation in healthcare more complicated than in most other sectors.
To break through the complexity and move innovation in healthcare forward, inventors must first overcome the many barriers to healthcare product development, including how to improve upon the current standard of medical care whilst simultaneously lowering costs.
Adopting an economic mindset
Global healthcare systems are shifting towards affordable technologies and models due to the unsustainable growth in healthcare expenditure. In response to this shift, device manufacturers will need to pay greater attention to the ramification of their innovations on the overall cost of care and focus on becoming strategic partners of health systems rather than suppliers.
Frugal innovations stand to benefit the healthcare sector the most by allowing greater exposure of technologies to a wider patient population. These innovations have the potential to increase value and provision of healthcare and can take the form of simple products with low unit costs (a strategy that many manufacturers are now pursuing with research centres in Asia), but can also include sophisticated products with high unit prices if they can lower the overall cost of care.
Such innovations have traditionally been associated with low- and middle-income countries or emerging markets, but are increasingly being used globally as they can eventually become “good enough” to displace established and costly technologies that are in use in the developed world, a process called reverse innovation.
Demonstrating true value-for-money
When developing a product, it is important to understand the real conditions under which the customer lives and uses the product. Considering the UK as a target market, the NHS would typically be a key customer.
NHS Trusts are financially constrained by tariffs on one hand and policies towards introductions of new technologies and patient demands on the other. Consequently, the definition of value-for-money has broadened from clinical efficacy and operator convenience to the effect on real-world clinical and patient-centric outcomes and the overall cost of care per episode. As a result, day-to-day purchasing decisions remain driven by costs.
In addition to product prices, implementation of new technologies can be costly to the NHS. Many may require changes to the workforce – professionals learning to work in new ways - or may lead to new workflows requiring clinician buy-in, effective leadership and adaptability. Therefore, to demonstrate value-for-money, innovation should be constructed based on not only affordability but also adaptability and accessibility.
It can be difficult to generate data on how innovation affects not only direct treatment but also the downstream healthcare supply chain. The more complex the technology, the more difficult it can be to understand the downstream effects, and consequently the more challenging it can be to determine the true value of the innovation. For early stage technologies a good start point would be to engage a health economist to provide a quantitative evaluation. For example, a cost-effectiveness analysis provides a means of assessing both the costs and health benefits (measured using a non-monetary indicator) of a new technology, providing a foundation upon which to build an investment proposition. In the complex world of healthcare, rigorous economic thinking can be the difference between a great new device that languishes unused in a laboratory or desk drawer, and one that instead successfully transforms the lives of patients.