1. Uncertainties, Concerns, and the Innovation Landscape: An Industry View
Neal E Fearnot, PhD, FASA
February 6, 2012

2. Uncertainties, Concerns, and the Innovation Landscape
Uncertainties and Concerns
Changing demographics
Changing global economy
Need for increased cost efficiency
Increasing regulation
Effect on Global Innovation Landscape
More focus on ethics and compliance
More focus on prevention, early diagnosis and intervention
Less margin for innovation, more room for opportunists
Conclusion: Synergies to avoid compromised benefit to patients 2

3. Uncertainties and Concerns: Changing Demographics3

4. General Population Pyramids
Pattern typical of growing society
In the 1950s, more younger people relative to older people (20:1)
Over time, people tend to live longer.
Also over time, there are fewer younger/working individuals relative to older individuals (3-1). 4

5. Bulging Elderly Populations
15%
Bulging Elderly Populations
Japan – “upside down” USA – trending “upside down”
accessed 17 OCT 2011 5

6. Demographic Changes and Health Care Policy
15%
15%
15%
Demographic Changes and Health Care Policy
Percent of population 65+
Age as a predictor of health care use – older individuals have more health issues.
Demographic changes show the trends of the aging population relative to working individuals, who may be paying a greater share for the care of aging individuals.
Japan/US Shared concern: How will a smaller working age population care for the health needs of a bulging elderly population? 6

7. Uncertainties and Concerns: Changing Global Economy7

8. West to East Economic Shift
“In terms of size, speed, and directional flow, the transfer of global wealth and economic power now under way – roughly from West to East – is without precedent in modern history.” 
“…lower costs combined with government policies have shifted the locus of manufacturing and some service industries to Asia.”
US/Japan traditional, global economic powers
China and Middle Eastern economies growing
Japan/US Shared concern: How will national economic struggles affect innovation?
accessed 17 October, 2011

9. Uncertainties and Concerns: Need for Increased Cost Efficiency9

10. Cost Containment U.S. Provider cuts
Enhanced fraud and abuse reform initiatives (US and UK)
Bundled payments (ACOs), Value-Based Purchasing Demonstrations
Independent Payment Advisory Board (IPAB)
Debt-Ceiling 12-Member Committee vs. 2% across-the-board cut on providers
More demand for clinical outcomes (HTAs).
Demand for health economics data
Global
Austerity packages (Italy, Greece, Ireland, Spain)
Hospital budget cuts (Austria)
Tender/procurement mechanisms (Europe)
Late payments procedures (Italy, Spain)
HTA and DRG/reimbursement reforms
Reference Pricing (Japan)

11. Uncertainties and Concerns: Increasing Regulation11

12. Regulatory Challenges
More hurdles to overcome and more uncertainties
More delays in decisions and longer approval times
More reviewers on fewer applications, some with inadequate training and knowledge; less management oversight
Less predictable review
During review cycle, concentration on more issues of less importance
More clinical studies
New requirements late in the cycle, without clear basis in science
More demand for increased clinical safety & effectiveness data and other evidence from more stakeholders
Japan/US Shared Initiative: Making efforts through “harmonization by doing”

13. Effect on Medical Device Landscape: More Focus on Ethics and Compliance13

14. Managing Conflict of Interest
Conflict of interest issues
Best knowledge vs. undue influence
Fair profit vs. undue influence
Financial Disclosure – transparency
Japan/US Shared Concern: How to balance conflict of interest issues to result in best treatment options for patients.

15. Effect on Medical Device Landscape: More Focus on Prevention, Early Diagnosis and Intervention15

16. Improve Lives, Manage Cost
Prevention through lifestyle improvements
– Smoking
– Obesity
– Exercise
Early Diagnosis – Screenings with emphasis on lower radiation content (e.g., ultrasound)
Early Intervention – Minimally/less invasive diagnoses and treatments
Japan/US Shared Concern: How to leverage prevention, early diagnosis and early intervention to impact costs within the industry, yielding increased funds for innovation.

17. Effect on Medical Device Landscape: Less Margin for Innovation17

18. Decreased Margin for Innovation… Increased Financial Pressure on Innovation
Price
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Cost
Time

19. Effect of Decreasing Margin for Innovation
Decreasing margin of innovation for industry
Decreasing patient access to new treatments

20. Conclusion: Synergies to Avoid Compromised Benefit to Patients20

21. Summary Remarks
Demographics require treatment of more patients at less cost
Infrastructure for product development and clinical research is suffering due to policies and economics
Current policies stifle innovation, especially for smaller patient populations
Patients still want better therapies

22. Shared Commitment
In the Japan and the US, physicians, regulators and industry professionals must support:
Testing compliant with harmonized, globally accepted pre-clinical standards with a risk-based, least burdensome policy
Global clinical trials compliant with harmonized, globally accepted clinical standards with a risk-based, least burdensome policy
Improved regulatory review processes, including:
Simultaneous premarket consultation
Single protocol, multinational clinical studies
Simultaneous premarket review
Coordinated postmarket surveillance
Willingness to work toward predictability and efficiency in the regulatory process, as we would in any sector of business
Keep looking for synergies for the benefit of patients

23. Thank you! 23