Merz (2010) indicates that with nearly 1 million physicians and 6,000 hospitals treating 310 million consumers, the US healthcare market is the largest in the world, making up 43% of world market for medical devices and pharmaceuticals. This, coupled with the fact that the United States spends more of its GDP on healthcare than any other country, leads to some of the highest pricing for devices and other medical products. Keefer and Merz (2011) indicate that the United States is universally known in product development circles as virtually the “holy grail of markets”. So, if a manufacturer has truly found the holy grail of markets, why are many high quality medical products, specifically medical devices, developed by non-US companies and marketed successfully everywhere except the United States? “Why would a company disregard this large lucrative market?
As consumers and human beings we are all concerned with the safe development of every single medical product that we use to enlighten and extend our life. As audiologists in a sophisticated world, we are most interested in the development of the products or medical devices that we use to practice our profession and facilitate hearing rehabilitation in our patients. Medical devices, as defined by the World Health Organization (2003), refers to any instrument, apparatus, implement, machine, appliance, implant, in vitro reagent or calibrator, software, material or other similar or related article, intended by the manufacturer to be used, alone or in combination, for human beings for one or more of the specific purposes of:
• diagnosis, prevention, monitoring, treatment or alleviation of disease.
• diagnosis, monitoring, treatment, alleviation of or compensation for an injury.
• investigation, replacement, modification, or support of the anatomy or of a physiological process.
• supporting or sustaining life
• control of conception
• disinfection of medical devices
• providing information for medical purposes by means of in vitro examination of specimens derived from the human body and which does not achieve its primary intended action in or on the human body by pharmacological, immunological or
metabolic means, but which may be assisted in its function by such means.
Medical devices are the products that we use for medical and non medical assessment and hearing rehabilitation. They include everything we use from otoscopes to drills, tympanostomy tubes, hearing aids, middle ear and cochlear implants and the products that are used to install them or electronically adjust their parameters.
European Trials – Why go there and Not to the US?
Even though the US’s 43% of the world’s marketshare may be the holy grail to the likes of Monty Python, Merz (2010) indicates that, Europe and, in particular, certain European countries offer great advantages for obtaining approval for a medical device. He estimates the European share of the world market at about 30% for products and some of the 27% of the rest of the world follow the European Union CE Mark. Merz (2010) offers basic four reasons why companies should consider Europe for the first approval of their product:
1. Less Costly Clinical Trials
Product development is a very expensive process. From the inital engineering, to the production of wafers, specific chip design, software development and production of the final product, companies can invest millions so any reduction in costs on the way to approval for sale is very welcome. The European Union (EU) now includes central and eastern European countries such as Estonia, Czech Republic, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Bulgaria and Romania. The European Clinical Trial (EUCT) Directive created one pan-European clinical research market and uniﬁed the legal environment. Their are obvious cost/quality advantages in placing clinical research studies into these countries where over 300 million people are treated in centralized healthcare systems with large, highly specialized hospitals. These hospitals offer high quality medical care where clinical data (and clinical trial data) is conﬁrmed by audits and inspections. This creates lower costs for clinical trials as subjects are easier to recruit and results in a lower percentage of rejected data.
2. Easier Approval
In Europe there is no approval agency similar to the US Food and Drug Administration (FDA) for medical devices. As we discussed in last weeks blog, EU countries require medical devices to be issued a CE (Conformité Européenne) Mark by the European Commission before they can be marketed. CE Mark certiﬁes that the product meets EU standards for health, safety, quality and the environment. Once a product has received CE Marking, it can be marketed in all 27 EU countries without further evaluation by individual countries. The ﬁrst step is to determine a product’s risk class: Class I are considered low risk (otoscopes), Class IIa are low-medium risk (hearing aids), Class IIb are medium risk (ABR Units, Audiometers) and Class III are high risk (cochlear implants and middle ear implants). Keefer and Merz (2011) indicate that low risk devices can be “self certiﬁed” meaning that once the device is determined low risk and all requirements of the relevant directive are met, the CE Mark may be placed on the device. A Notiﬁed Body is an organization recognized by the European Commission to certify higher risk medical devices through an audit of the manufacturer’s quality system.
3. Well-funded healthcare systems
European insurers cover a broader range of diseases than in the United States. Fibromyalgia and chronic fatigue syndrome, for example, are controversial diagnoses in the United States, while in Europe they are recognized illnesses. If a diagnostic test or therapeutic treatment targets a condition that is not fully recognized in the United States, it may ﬁnd better market acceptance in Europe. European reimbursement policies generally cover more conditions, but it is important to know the speciﬁc reimbursement policies and procedures as they differ from country-to-country and organization-to-organization. Pricing and government controls will also vary from country-to-country.
4. High-quality Specialty Centers
Although there are specialty healthcare centers in the United States, these centers are much more prevalent in Europe. For example, in Germany there are at least 50 centers that specialize in the treatment of tinnitus. It is important early on to identify specialty centers that are most relevant to the product and where it is most likely to be used. The existence of centers specializing in the target therapeutic area can offer several advantages to launching a medical device in Europe. First, recruiting candidates for clinical trials and tracking results is easier and more efﬁcient if there are centers specializing in that condition or disease. The key opinion leaders from these centers can offer crucial feedback on current practices and the medical need for the product. In fact, these leaders may be even more important to a successful product launch in Europe than in other markets. Secondly, when attempting to generate a market for a new product, selling to a recognized center of excellence ﬁrst can lead to a more effective product launch. Keefer and Merz (2011) put it this way, ” Let’s say you have a medical device for the treatment of tinnitus. Targeting a few key specialty centers could generate word-of-mouth advertising as the physicians in those centers publish papers and give presentations to the wider tinnitus community. Marketing that same product in the United States would be more difﬁcult because physicians who specialize in tinnitus are not centralized. Even with these advantages, a European launch is not without its complications, which means potential pitfalls if you don’t know the individual geographical and customer markets and develop the right strategy for each”.
So what have we learned over the past two weeks at Hearing International about why the Europeans get the cool stuff first? As usual, it all comes down to costs. Medical device development is business like any other business and, especially these days, has to control its costs. The US medical device development process is costly and can take some time for approval without the possibility of selling any of the products for quite some time. European approval may get you to the market sooner, however, is not without its own pitfalls as some of the pricing and government controls changing from country to country can be frustrating. -RMT-
CE Mark (2011). How do I get CE Mark and what does it mean. CE Marking.org: Retrieved from the World Wide Web August 27, 2011: http://www.ce-marking.com/what-is-CE-marking.html
Food and Drug Administration Website (2011). http://www.fda.gov/AboutFDA/CentersOffices/default.htm
Internet Movie Database (IMDB) (1975). Monty Python and the Holy Grail. Image retrieved from the World Wide Web September 6, 2011: http://www.imdb.com/title/tt0071853/
Keefer, R & Merz, R., (2011). Hello, Europe Be the first to meet my new product. Retrieved from the World Wide Web September 6, 2011: http://www.t-c-group.com/website_Sections/publications/white_papers/documents/helloeurope_final.pdf
Merz., R. (2010). Doing business in the US: Medical Devices and Pharmaceuticals. Retrieved from the World Wide Web September 6, 2011: http://www.tcgmedtech.com/website_Sections/publications/publications.html
World Health Organization (2003). Medical Device Regulations: Global Overview and guiding principles. Retrieved from the World Wide Web September 6, 2011: http://www.who.int/medical_devices/publications/en/MD_Regulations.pdf