Executives Warn of Paradigm Shift in R&D Spend

Orthopaedic professionals in attendance at OMTEC® 2015 received less of a warning and more of a mandate from surgeon and hospital executive, Wael Barsoum, M.D.: device companies that want to get paid must spend resources to produce transformational devices, or to produce today’s clinically-proven devices at a lower cost. Hospitals will no longer purchase devices with incremental changes at a slight surcharge, due to the reimbursement pressures they face from public and private payors.

Wael 2015_WEB“This is a paradigm shift in how we think about spending our R&D dollars,” said Barsoum, President of Cleveland Clinic Florida and Vice Chairman of the hospital system’s Orthopaedic Department. “It requires a completely different thought process than we’ve used in the last 30 years.”

Barsoum’s comments offered context to the perspective provided by device company executives in the previous day’s keynote. Panelists agreed that one of today’s major obstacles to commercialization is getting products through value analysis committees—a challenge that will remain for the foreseeable future.

Ken Gall, Ph.D., Founder and Chief Technology Officer of MedShape and Chair of the Mechanical Engineering and Materials Science Department at Duke University, who has pushed new biomaterials like NiTiNOL and additively-manufactured devices through regulatory bodies, said FDA has a bad rap for its slow and convoluted processes, but the value analysis committees have been five times worse than FDA.

Rod Mayer, President of Nextremity Solutions, also noted that Nextremity has experienced value analysis committee decision-making terms from 30-60 days up to 18 months. Doug Kohrs, Past President and CEO of Tornier and Managing Director of Responsive Orthopedics, shed light on the Mayo Clinic’s process, adding that the hospital system’s new product committee has 14 people: one orthopaedic surgeon, one cardiologist and 12 accountants.

As a joint replacement surgeon at the University of Missouri’s orthopaedic hospital, B. Sonny Bal, M.D., J.D., Chairman, President and CEO of Amedica, said that he and his colleagues face procedure-specific price parameters. If he wants to use a knee system that costs more than the set price, he must justify his decision to a committee. He described the uphill climb that is getting new materials and differentiated products through the committees.

What, then, will hospitals pay for? And what is needed to get through committees?

Barsoum, who sits on the new products committee at the Cleveland Clinic, said that if the device is not cheaper or if it’s new, companies must present one or more of the following: existing human data, level 1 studies, reproducible published studies in peer-reviewed literature and cost-benefit studies.

Herein lies the gap: development of differentiated products takes time and money. Collection of data takes time and money.

“A lot of devices don’t have clinical data,” Bal said. “You introduce a new knee system, and by the time you get clinical data that compares it to its predicate, it’s been a decade. Most of us are dead by that time.





The OMTEC 2015 speakers covered myriad important topics faced by the orthopaedic
industry. Here are a few quotes from them.

B. Sonny_Bal_MD_JD_MBA_Photo“We’re going to continue to see technologies like 3D printing
drive innovation in the future. 
It’s an easy sell to the patient.
‘Which knee do you want? The one off the shelf or a knee that is already made for your body?’
You can imagine the answer every time. These technologies are not the only factor, but they make a difference.”
-Sonny Bal, M.D.

Ken Gall_web“One of the key challenges going forward will be, how do we continue to push innovation without bringing up cost. It can be done. That’s the positive aspect. It’s easy to come in and say, ‘We’re going to bring a
new material in, and we’re only going to do this.’ There has to be some investment. The challenge with orthopaedics will be how do we bring these new technologies in without
increasing costs across the board.”
-Ken Gall, Ph.D.

Mayer 2015_WEB“The greatest challenge 
over the next five years is repositioning surgeons to drive the process of empowerment to utilize the products that we truly believe will provide the best results for the patients. This is the economic reality that we all face. My personal, professional objective is to see surgeons take control of this business again and take it out of the bureaucratic structure
of healthcare as we know it.”
-Rod Mayer

“What the industry needs—and this is a challenge—is good, validated, short-term proxies for how something will perform over the long run. It’s very important so that we can go to value analysis committees and say, ‘Some clinical data is impossible to obtain because of ethical reasons; some are decades out, but here’s the valid testing we’ve done that shows an advantage.’ ”

Business changes, whether they center upon manufacturing, marketing or organization, take time and money, too. The price squeeze has driven consolidation at the device company and supplier level in order to increase breadth of product and capacity and achieve operational synergies.

Amidst these market changes, all five keynote participants maintained that orthopaedic innovation is not dead. However, innovation will need to focus on differentiated products, efficient processes and surgeon education. The ability to navigate these pathways will stand as the greatest challenge throughout the next five years.

The full article, Success in Orthopaedics Lies in Products that Improve Quality, Decrease Costs, can be found here.

Carolyn LaWell is ORTHOWORLD’s Content Manager. She can be reached by This email address is being protected from spambots. You need JavaScript enabled to view it..