The most interesting article about medical innovation to come along in a while, A Future At Risk: Economic Performance, Entrepreneurship, and Venture Capital in the US Medical Technology Sector.
This article was brought to my attention by one of my numerous readers (tip of the hat to TB) of this Healthcare blog because it points out one of the most essential components of the healthcare job market. Not many people realize that during the economic downturns that occurred over the last 20 years healthcare has steadily increased its presence in the job market, yearly almost without fail. One of the main reasons that this is occurring is because of the US medical technology sector.
Historically the United States has been at the forefront of medical innovation and more than half of all worldwide global value adding technology occurs in the US! Between 1980 and 2010 Life expectancy for Americans increased by five years, mortality from breast cancer decreased 31%, and overall disability rates decreased 25%. Medical technology has directly contributed to the betterment of mankind.
Unfortunately, with the changing healthcare market over the last 25 years there has been a decrease of medical venture capital, and an increasing consolidation of fewer companies fueling the pipelines of medical innovation. The continued path that we are on, will only serve to place a stranglehold on innovation in the future and more healthcare goals further out of reach. As an example of this type of merging of medically oriented investment capital consider the following: the number of meditech firms has decreased by two thirds from 1500 firms annually in the late 1970s to 600 firms in 2012; one third of meditech corporations are greater than a quarter century old! Meditech’s share of venture capital has decreased from 13% in the early 1990s to 4% in 2014.
Certainly, with all of the Silicon Valley technology that is being invested in increasing our longevity there has been an upturn in the interest of prolonging life, and mitigating suffering. Unfortunately, do we sincerely believe that companies dedicated to search engines, space exploration, one-stop shopping and social networking are going to have the same cutting age medical/biological orientation?
If we are to continue to make progress against disease and improve life for everyone, not just those in the United States, there are some things that need to be focused on. By no means is this an exhaustive list, but these are ideas that go a long way to help bring back medical innovation in the US:
- More clearly delineated pathway for FDA medical device and drug approval that allows parity between the device pathway in the drug pathway
- Mandated private insurance coverage that supports medical innovation
- Medicare insurance coverage that supports medical innovation
- Tax changes including the repeal of the medical device exemption (why do we tax a device that can save your life, and not subsidize it?)