Michael Barbella, Managing Editor12.02.19
“Things are not always what they seem; outward form deceives many; rare is the mind that discerns what is carefully concealed within.” —”The Phaedrus,” by Plato
Humankind is so easily fooled by appearances.
Smiles, scowls, stares—none are indicative of emotional well-being (or discontent). Similarly, attire and grooming can mask truly one-of-a-kind gems or depravity. Consider, for a moment, the 2007 busking experiment involving world renowned violinist Joshua Bell. On a random winter morning that year, Bell—donning jeans, a T-shirt, and baseball cap—performed Bach’s D minor Chaconne in a Washington, D.C., subway station. The repertoire is among the most difficult pieces of music ever composed.
Conductor Leonard Slatkin expected more than three dozen people (out of 1,000) to recognize Bell’s talent and up to 100 to stop and listen. He also predicted Bell would earn $150 for his efforts.
Slatkin, however, was way off: Bell captured the attention of only seven passers-by that day (out of 1,097) and just 27 gave money. Bell earned a staggering $52.17 for his 43-minute set, with nearly half of that total coming from a person who actually recognized him.
When he repeated the experiment seven years later (2014), Bell dressed better, styled his hair, and announced his performance.
Basically, he looked and played the part of a celebrated violinist this time.
As a result, thousands of people attended his performance.
Alas, appearances are not the most reliable sources of truth, as the medtech industry discovered quickly this year. A healthy American economy, solid corporate growth, and a more cooperative, collaborative partnership with the U.S. Food and Drug Administration failed to abate underlying angst from looming EU regulatory changes, Brexit chaos, slowing sales in China, and possible return of the medical device tax. The usual headwinds didn’t go away, either: Pricing pressures, reimbursement challenges, and cybersecurity issues, among others, only added to industry’s concerns, eventually causing a general sense of uneasiness to seep into corporate boardrooms.
For perspective on these anxieties and other memorable moments of 2019, join Orthopedic Design & Technology on its annual stroll down memory lane. No need to fret, either. The trip shouldn’t be too stressful.
Under the MDR Big Top
It’s been a mad scramble.
Shocking, to say the least.
Medtech’s frenzied sprint toward MDR compliance took on a circus-like ambiance this year as Notified Body shortages, unclear EUDAMED requirements, and product certification backlogs derailed overall conformity efforts.
“European quality assurance and regulatory affairs personnel seem to be overwhelmed by preparations for the new MDR,” Rob Packard, founder/president of the Medical Device Academy, noted in a March 2019 MasterControl whitepaper. “This realization has not quite hit American companies.”
Not right away, anyway. But U.S. companies came to such an understanding rather quickly, likely spurred in part by their European counterparts’ springtime concerns with final MDR implementation. In April, MedTech Europe expounded various misgivings about industry’s preparedness for the new regulatory system, citing incomplete work on guidance documents, expert panels, EU reference laboratories, IVD common specifications and Notified Bodies (NBs) as major impediments to compliance.
To help companies overcome some of those hurdles, the agency outlined a seven-point plan in June that entailed faster NB designation and the uniform application of product recertifications. The proposal also called for guidance on software classification and unique device identification; more coherent EUDAMED deployment timelines; rapid establishment of expert panels and EU reference labs; and harmonized standards in high-priority areas (symbols, labelling, risk management, good clinical study practice).
In a power-point presentation detailing the plan, MedTech Europe advised device companies to be vigilant and vocalize the challenges they face in executing the new rules by the May 26, 2020, deadline. Additionally, the group urged the European Commission and Member States to work harder to ensure the MDR is ready on time.
A half-dozen other trade associations echoed MedTech Europe’s call for expedited MDR implementation. Shortly after MedTech Europe’s power point presentation, the groups penned an open letter to the Commission and Member States accentuating the importance of the regulatory system’s “timely functionality” and cautioning against delays.
“...less than one year from now, the new Regulation for Medical Devices will enter into full effect,” the one-page letter stated. “However, the new regulatory system will need to be fully functional months before this deadline to enable the thousands of medical devices currently on the market to go through a mandatory three to nine months re-certification process. The timely functionality of the system is critical to guarantee the continued supply of devices to health institutions. But achieving this is very unlikely, thereby putting patient care across Europe at risk. Immediate action is needed now to avoid severe disruption of product supply to patients and hospitals as well as to safeguard the innovation capacity of the sector in developing new life-saving and life-transforming technologies. We thus call on the European Commission and Member States to accelerate the implementation of the regulatory system to prevent a ‘cliff-edge’ scenario for patients, healthcare professionals, and healthcare systems in Europe.”
The Commission, however, insisted the deadline is feasible but acknowledged that implementation could be a “significant challenge” and delayed the launch of EUDAMED by two years (May 2022). Even so, the agency has refused to modify its final timeframe, claiming rule changes at such a late stage in the process would be unfair to “serious operators that have carried efforts to ensure their timely compliance.”
“In conclusion, May 2020 is a realistic and achievable deadline,” European Commissioner for Health and Food Safety Vytenis Andriukaitis said in mid-June, “and the implementation process remains a shared responsibility among all partners, including member states, NBs, and operators.”
It’s difficult to share that responsibility equally without the proper resources, though. Only a handful of NBs have thus far been designated to certify medical devices—stoking worldwide panic—and reports have surfaced that some notified bodies are no longer accepting new applications under the current medical device directives (which would enable a longer transitional period under the MDR). Moreover, two NBs (LRQA and QS Zurich) have opted out of the MDR universe and nearly a dozen are still awaiting designation.
Previously there were as many as 75 different Notified Bodies to choose from, now we are looking to have under 40 that will apply for designation under MDR,” observed Thor Rollins, director of Toxicology and E&L Consulting for Salt Lake City-based Nelson Labs, A Sotera Health company. “As of right now [mid-October] we only have five that are designated to approve devices under MDR and the deadline is May 2020. We have heard from companies that their Notified Bodies are telling them it could take up to six months to even hear back from them, so unless we get an injection of notified bodies I am not sure how we will be ready by May.”
Relatively few are actually expecting to be ready: A KPMG/RAPS (Regulatory Affairs Professionals Society) survey conducted earlier this year showed only 27 percent of medtech executives believe they will be MDR compliant by next May’s deadline, with more than 35 percent citing NB availability (or lack thereof) as a “significant barrier” to full implementation.
An even greater hindrance to compliance is the lack of guidance or standards on documents and requirements (Summary of Safety and Clinical Performance, Periodic Safety Update Report, Post-Market Surveillance). More than half of the 230 KPMG/RAPS survey respondents (55.2 percent) listed guidance deficiency as their top gripe with MDR conformity; of that total, 43 percent revealed they have not yet begun updating their PMS procedures or creating any templates for the reports, and 13 percent have no PMS strategy in place. Only 11 percent have updated all PMS procedures and reports, and 33 percent are just now finalizing their PMS plan and templates.
That’s quite a juggling act. Barnum & Bailey would be proud.
With the NB and guidance sideshows showing no signs of abating (or improving), the United States appealed to the World Trade Organization (WTO) over the summer to delay MDR implementation. America specifically asked for a three-year deadline extension, contending the NB shortfall and guidance dearth justify the extra time (mostly for adaptation to the new standards). Should the deadline stand, the United States requested that legacy products (already deemed safe) be allowed for sale through 2024 and NBs prioritize devices requiring new certification.
“The United States supports the development and enforcement of a well-defined medical device regulatory system which assures the safety and performance of medical devices,” stated a July 24 letter to the WTO’s Committee on Technical Barriers to Trade. “However, the United States has serious concerns regarding the implementation of the MDR and IVDR, and our industry is worried about their continued access to the EU’s $125 billion medical device market, $20 billion of which is supplied by U.S. products. MDR/IVDR’s implementation is behind schedule.”
The Commission still doesn’t think so, but the deadline may no longer be set in stone. In May, the agency initiated a corrigendum to amend or modify parts of the MDR; the changes could potentially give some Class I devices—reusable products like surgical instruments and endoscopes—a four-year transitional period before they are required to meet the new regulation’s standards.
However, there is no guarantee the extension will be granted. Published reports claim the Commission is under “pressure” to allow Class I “upclassified” products to benefit from the grace period, but any respites would require agreements from both the Commission and member states.
Time will tell.
Thus continues the Greatest Show on Earth.
Read more: https://bit.ly/2Ctd0I0
Over-Bearing Concerns
The U.S. stock market is up (way up, as in double digits), unemployment is down (way down, as in historic lows), and the GDP growth rate is ideal (holding steady at 2-3 percent). Both inflation and deflation are in check, corporate profits are back on the rise, and the yield curve is still right-side up.
All hail the Goldilocks economy: Not too hot, not too cold. Just right.
Like the popular children’s fairy tale character, the U.S. economy found its optimal level of sustainability this year, delivering a performance that was neither overheated nor underwhelming.
“I think last year [2018] you almost had too much growth, too many inflationary fears in the U.S. And so, you could argue that the porridge, if you are Goldilocks, was too hot,” Jim Cielinski, global head of fixed income for Janus Henderson Investors, wrote in a mid-April article for the crowd-sourced content service Seeking Alpha. “I think now that we have worked our way through that, you are seeing growth moderate. It is important it doesn’t slow down too much. I think so far, so good, right?”
Right—so far.
But the bears are lurking nearby. And eventually, they’re going to return home, scaring off the Goldilocks economy.
For most of the year, the bruins kept their distance, though their mere presence was enough to give Corporate America the jitters. Medtech firms were particularly on edge as they grappled with the triple-bear threat of Brexit, tariff wars, and the medical device tax.
The latter issue has been a thorn in companies’ sides for nearly a decade, having survived industry’s numerous assassination attempts and eternal lobbying efforts. Over the last seven years, the device sector—led by the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association (MDMA)—has spent roughly $220.6 million gunning for the tax’s demise through a bevy of print and online ads, videos, infographics, surveys, and savvy marketing tactics (industry bigwigs, for example, used empty red “medtech” boxes two years ago to illustrate the loss of innovation due to the levy).
The industry’s most recent campaign ploy manifested itself in survey form. An MDMA analysis released in June showed the kind of contingency planning under consideration as the tax’s two-year moratorium enters its final months: Eighty-five percent of survey respondents plan to reduce or freeze R&D investments (with the cuts averaging 15.8 percent), and 56 percent of companies intend to shrink or freeze employee salaries to compensate for the 2.3 percent levy. Overall, 82 percent of survey respondents have already begun planning for the excise tax’s reinstatement next year, citing a Sept. 30 deadline for legislative intervention on an extension.
“This survey highlights the negative impacts a reinstatement of the medical device tax would have, and we simply cannot allow this to happen,” Jeff McCaulley, DJO Surgical global president and MDMA board chairman, noted upon release of the survey results. “We will never fully repair the damage caused when the medical device tax was in place from 2013-2015, but we must ensure that patient care is never punished again by a policy that diverts billions of dollars in investments away from innovation. At a time when there is so much division among policy makers over how to improve health care and spur innovation, the full repeal of the medical device tax is a rare example where an overwhelming, bipartisan majority in Congress agrees on what needs to be done...Congress needs to once and for all put an end to the medical device tax.”
While it certainly would appease industry, an end does not seem very likely at this point—at least not from Congress. Now approaching the end of its fourth year on temporary hiatus, bipartisan tax repeal efforts begun in the spring have since languished in the House and U.S. Senate; repeal legislation could be piggybacked onto budget proposals, tax bills, or end-of-year omnibus spending measures, but the presidential impeachment inquiry currently looming over Washington threatens to overshadow any non-essential, routine business.
To prevent such an eclipse from occurring, AdvaMed President/CEO Scott Whitaker appealed directly to President Trump for help in securing a permanent repeal of the tax before its Jan. 1 return. In an Oct. 17 letter to the White House, Whitaker told Trump the tax could have “devastating” economic effects.
“Given your remarkable accomplishments in the private sector, you know a suspended tax is little more than a looming tax,” Whitaker wrote. “Innovators and entrepreneurs must plan and act as if the tax will ultimately be imposed on them. The highly competitive medical technology industry needs certainty to make multi-year investments in the R&D, hiring, and growth necessary to unleash life-changing innovation. Economic trends in the industry are moving in the right direction, and this tax puts that [at] risk.”
But time is running out to mitigate that risk. Once again.
Clearly, this bear isn’t planning to hibernate anytime soon.
Neither are his housemates: Despite some progress on Brexit and the U.S.-China trade war, both creatures are likely to forgo their winter slumber and remain a menace to the medtech industry well into the new year.
The bears are within sight, Goldilocks. Skip the nap.
After simmering all summer, U.S.-Sino and Britain-E.U. tensions cooled off a bit in the fall, allowing for some encouraging first steps toward respective resolutions. On Oct. 11, the United States and China announced a truce in their longstanding trade war—America agreed to suspend new tariff hikes in exchange for higher Chinese purchases of U.S. agricultural products (up to $50 billion annually).
While promising, the accord nevertheless has significant hurdles to clear before ratification: China, for example, reportedly wants rollbacks on some existing tariffs before it boosts its American agricultural purchases, and Washington is still frustrated with Middle Kingdom support for state-owned enterprises and industry subsidies. Final approval also could be hindered by domestic politics and a lack of trust between both countries’ senior leadership, experts claim.
Even a final deal may not necessarily end the trade war, though. Richard McGregor, senior fellow at the Lowry Institute and a Chinese Communist Party expert, contends the prospective trade agreement will not resolve deep-seated issues between the United States and China. “The two sides might be able to finalize the mini-deal in coming weeks,” McGregor wrote in The Washington Post in mid-October, “but Chinese scholars and officials I have spoken to over the past year recognize that any accord will just be a stopover on the way to the next fight.”
A Brexit resolution is likely to be just as complicated and contentious. On Oct. 19, the British Parliament rejected an EU-approved separation plan from Europe that potentially could prolong the United Kingdom’s divorce decree through the new year. The 322-306 vote legally forced U.K. Prime Minister Boris Johnson to seek a three-month extension to the Halloween deadline—a fate he once deemed worse than death. “I will not negotiate a delay with the EU and neither does the law compel me to do so,” he insisted after the rare “Super Saturday” Parliament vote. “Next week the government will introduce the legislation needed for us to leave the EU.”
Despite the tough talk, Johnson grudgingly complied with the law and formally requested a delay for Brexit. But he remained true to his word about pressing forward with Brexit, warning EU leaders by letter that further delay would be damaging. “I have made clear since becoming Prime Minister...that a further extension would damage the interests of the U.K. and our EU partners, and the relationship between us,” Johnson wrote in an Oct. 19 letter to European Council President Donald Tusk. “We must bring this process to a conclusion so that we can move to the next phase and build our new relationship on the foundations of our long history as neighbors and friends in this continent our people’s share.“
The exact timing of that conclusion is still murky, though. European Union leaders agreed to delay Brexit until the end of January—a deadline Johnson could possibly meet if he wins a majority in a Dec. 12 special election (the U.K.’s first December balloting in 96 years). An election, however, will not necessarily resolve the issue of Brexit or the political paralysis gripping Britain. Johnson’s Conservative Party leads the polls by as much as 16 percentage points (as of late October) but a Labour Party victory could negate the deal Johnson negotiated earlier this fall with EU leaders. The Labour Party wants to negotiate its own deal and put it up for a referendum vote; others such as the Liberal Democrats and Scottish Nationalist Party want to cancel Brexit altogether.
If Conservatives or Labour leaders were to secure a decisive enough victory, they could, in theory, push ahead with their agenda on Brexit and other issues. But the December election also could return a Parliament just as deadlocked as the current one.
Then it’s back to square one.
So many uncertainties. So many questions (still). So little clarity.
So much anxiety.
Beware, Goldilocks. The bears are closing in.
Read more: https://bit.ly/2WVRhSB
A Not-So-Fond Farewell
Colleen Haller can finally breathe a little easier. So can her son, her relatives, and dozens of her closest friends and neighbors.
“The residents of Willowbrook and this area, you can breathe again,” U.S. Rep. Jim Durkin (R-Ill.), affirmed earlier this fall. “You can go back to living a normal life.”
If only it were that easy. Normalcy abandoned Willowbrook years ago, leaving little more than memories in its wake. Life is anything but typical now in that affluent Chicago suburb; veritably, words like “ordinary” and “normal” have become relative terms: Resident Katherine Howard gauges normality these days by the severity of her chronic pain and the overall efficiency of her feeding tube. Jana Conev, on the other hand, prefers to track malignancies among neighbors. And Colleen Haller’s new normal? Life as a widow.
Indeed, cancer diagnoses, chemotherapy/radiation treatments, and malignancy mortality rates are deeply embedded in the daily fabric of Willowbrook. For more than three decades, residents of the tiny village (pop. 8,540) have shared living space with a medical device sterilization facility that emitted a harmful gas into the surrounding air. The gas—ethylene oxide (EtO)—was first listed as a carcinogen in 1985 but was not linked more conclusively to breast and blood cancers until 2016. The colorless, easily absorbed chemical is used as a fumigant to sterilize heat-sensitive medical equipment and other goods; about half of all medical devices in the United States are sterilized with room temperature ethylene oxide—everything from plastic surgical gowns to syringes, catheters, bandages, gauze, and pacemakers.
Residents living near the sterilization plant were unaware of its potential hazards until an EPA study released last summer (2018) revealed higher than normal cancer rates in Willowbrook and several bordering communities. The data showed cancer rates in a 13-mile area around the plant were nine times higher than the national average—among the worst in the country.
The startling revelation spawned a grassroots effort to close the facility. “...our community is in crisis. A real crisis,” Andrea Thome, wife of Chicago White Sox and Cleveland Indians slugger Jim Thome, wrote in a Sept. 19, 2018, blog. “We’ve been poisoned by a company called Sterigenics, and it’s been happening without our knowledge since the mid-1980s. They burn and emit 24 hours a day, seven days a week. They are less than one mile from where we’re reluctant to send our son to play his almost-daily fall baseball and flag football games, depending on which way the wind blows. My mom died in October 2014 after an excruciating battle with liver and kidney disease. She didn’t drink. She didn’t smoke. She didn’t do drugs. She was a life-long vegetarian. She meditated daily...My dad...What’s he up to these days? He’s trying to reclaim his life after he almost lost it to a huge brain tumor. The time for being quiet is over. It’s time to act.”
Though not its intention, Thome’s blog nevertheless served as a call to arms for the greater Willowbrook community, prompting residents living near Sterigenics’ sterilization plant to organize protests and solicit the support of local, state, and federal politicians. In the fall of 2018, as the EPA monitored the air outside its facility, the company penned an open letter to Willowbrook and “Chicagoland” residents, attempting to allay the public’s concerns about discharged gas. In its letter, Sterigenics disputed the reported amounts of EtO released by the plant (less than 0.1 percent, the company claimed) and noted the facility was operating well within federal EtO emission standards.
Opponents, however, were quick to adduce the antiquity of those standards—ethylene oxide has been classified as a known human carcinogen for nearly 20 years, according to the National Institutes of Health. Consequently, residents demanded Sterigenics reduce its EtO emissions to zero or close the plant. Naturally, the company balked.
The Illinois Environmental Protection Agency (IEPA) resolved the standoff in mid-February (2019) by shutting Sterigenics’ Willowbrook plant amid high EtO levels. The agency based its decision on new readings from an independent air monitoring test commissioned by the village; those results showed outdoor EtO levels of 21 parts per billion at Village Hall and 89 parts per billion at the police department, with indoor readings at both locations “even higher in some cases.”
Sterigenics called the closure “indefensible” and disputed Willowbrook’s air monitoring results. It also threatened legal action to reverse the shutdown order. “Unilaterally preventing a business that is operating in compliance with all state permits and regulations from carrying out its vital function sets a dangerous precedent,” a Feb. 15 statement from the company read. “The Illinois EPA’s decision will place the health and lives of thousands of patients who rely on the critical medical products sterilized at Willowbrook at risk.”
Though it was temporary, the IEPA directive nevertheless served as a rallying cry to anti-EtO advocates in the Chicago suburbs. During the spring, residents of Burr Ridge, Darien, Hinsdale, and Willowbrook formed a Facebook group called Stop Sterigenics that mobilized efforts to keep Sterigenics closed. The U.S. Food and Drug Administration (FDA), meanwhile, warned of possible device shortages due to the shutdown, publishing a list of 594 endangered products. Ultimately, however, only one device—a tracheostomy tube—was impacted by the shutdown, and it was quickly made available again (within 10 days) after the FDA cut its own red tape on sterilization facility changes.
In June, Illinois Gov. J.B. Pritzker signed into law some of the nation’s most stringent ethylene oxide regulations; one bill bans EtO facilities from operating in the Prairie State unless they can capture all emissions within the facility and reduce ethylene oxide emissions to 0.2 parts per million. Other legislation requires non-sterilization facilities that emit EtO to obtain an IPEA permit and calls for unannounced agency inspections and air testing at least once annually.
“Illinois now has the strictest safeguards in the nation,” Pritzker said in a late June news release touting the new laws. “Families in affected areas can breathe easy.”
They didn’t breathe easy for long, though. About a month after Pritzker signed the two bills, Sterigenics struck a deal with the state to resume its operations in Willowbrook. The consent order required the company to install new emissions capture and control systems to collect all gas within its facility with a 99.9 percent (0.2 parts per million) control efficiency. Sterigenics also agreed to fund $300,000 in community improvements near the plant.
A DuPage County judge approved the consent order in early September, triggering another round of proposed EtO regulations and fresh community outrage. But that fury virtually disappeared (albeit briefly) with Sterigenics’ sudden decision on Sept. 30 to permanently close its Willowbrook facility.
“Sterigenics appreciates that the State of Illinois clearly acknowledged the company’s consistent record of regulatory compliance as well as the safety of the new controls we agreed to implement, and we made every effort to reach a constructive conclusion,” the company said in a statement. “Unfortunately, inaccurate and unfounded claims regarding Sterigenics and the unstable legislative and regulatory landscape in Illinois have created an environment in which it is not prudent to maintain these critical sterilization operations in Willowbrook. Hospitals and patients around the United States and the world depend on Sterigenics for vital, sterilized medical products, and we cannot provide them with the certainty they require while operating safely in a state that will suspend operations of a business despite the company’s compliance with applicable rules and regulations.”
Sterigenics’ surprising announcement was met with a mix of shock, joy, and disbelief from opponents. Yet there also was an undertone of anger and resentment among Willowbrook area residents that day as they pondered their uncertain futures. “We’re not going to not celebrate—this is a huge victory,” local activist Lauren Kaesberg told The Daily Herald (Arlington Heights, Ill.). “But we’re super angry. For years, they’ve been poisoning people across town.”
That anger is likely to hound Sterigenics and other ethylene oxide sterilizers well into the future too: The company faces more than 40 lawsuits from Willowbrook area residents over alleged EtO-related illnesses, and increased scrutiny over its operations in Smyrna, Ga. (that facility is currently closed for emission-control upgrades). Ethylene oxide pollution concerns also have spread to nearby Atlanta, where Sterilization Services of Georgia is presently upgrading its air vents, and Covington, Ga., where BD is under fire for a week-long EtO leak in September. The company is fighting to keep its sterilization facility open amid community backlash; Georgia’s Environmental Protection Division is demanding the plant shut down until better pollution control equipment is installed but BD insists its EtO emissions are well within state health guidelines.
A shutdown, however, could be disastrous for the medtech industry. Manufacturers already face a dwindling number of ethylene oxide sterilizers (two facilities in two states are no longer operating); closing another—even temporarily—might put more than 1 billion devices at risk, the Advanced Medical Technology Association (AdvaMed) cautioned earlier this fall.
“With these three facilities closed, procedures for urological conditions, cardiothoracic and lung cancer surgeries, retinal detachments, and tumor ablations are now in jeopardy because, for these devices, there is no other way to sterilize them properly for the patients who need them,” AdvaMed President and CEO Scott Whitaker said in an Oct. 23 statement. “Even those entering intensive care units could see delays in their care or lack of availability because every patient requires a catheter that must be sterilized with [ethylene oxide].”
AdvaMed’s dire warning could get lost, though, amongst mounting public outcry over ethylene oxide use. Georgia is planning to create an environmental task force to examine the regulation of medical sterilization companies and EtO use in the state, while Illinois lawmakers are working on additional legislation to address air pollution concerns from ethylene oxide emitters in Gurnee and Waukegan.
The battle may be over in Willowbrook, but the war against ethylene oxide is just beginning. As Thome wrote in an Oct. 1 blog, “This was our wake-up call. If we know better, we must do better.”
To make life better.
Read more: https://bit.ly/2pVQfd5
I, Robot
Sir Arthur C. Clarke was quite the optimist.
As a young radar engineer during WWII, Clarke was a frontline witness to the death and destruction befalling England from German Wehrmacht V-2 rockets, the world’s first long-range guided ballistic missiles. Rather than focus on the rockets’ atrocities, though, Clarke regarded them with hope: He knew the weapons passed through outer space en route to London, and thus was excited by the discovery of interplanetary travel technology. In fact, legend holds that Clarke and his British Interplanetary Society friends toasted the newborn space age in a London pub upon hearing a V-2 rocket in the distance.
Clarke’s optimism influenced much of his literary work. In a 1962 essay, Clarke created three adages that address technology, innovation, and imagination; the best known and most widely cited is: “Any sufficiently advanced technology is indistinguishable from magic.”
Undoubtedly so. Take Star Trek’s tricorder, for example: The handheld analyzer featured in the 1966 television series seemed to work entirely by conjuration, as it needed no blood tests, X-rays, genetic sequencing, or physical exam to diagnose disease. Users (mostly Dr. Leonard “Bones” McCoy) simply pointed the device at subjects to instantly obtain a prognosis.
Nearly half a century after the series ended, the tricorder’s “magic” is close to casting its spell on real-life patients. Paoli, Pa.-based Basil Leaf Technologies LLC has built a working, AI-driven tricorder prototype called DxtER that provides immediate diagnosis of up to 34 medical conditions (Quazulu VIII virus excluded). Comprised of various smartphone- and tablet-enabled specialized medical devices, DxtER is not yet as enchanting as the tricorder (it cannot scan subjects at a microscopic level) but it improves upon the original in that it can be used directly by patients.
DxtER is one of many innovations that seem fantastical by nature. Remember the bionic hand Luke Skywalker received to replace the one he lost in battle to his father, Darth Vader, in “Star Wars Episode V: The Empire Strikes Back”? The U.S. Food and Drug Administration (FDA) approved a similar prosthetic (a neuro-controlled arm called “Luke”) in 2014. That same year, the agency greenlighted a robotic device (ReWalk) for individuals with lower body paralysis from a spinal cord injury—an idea loosely modeled after the Power Loader first officer Ellen Ripley uses to battle the Xenomorph Queen in the 1986 film “Aliens.”
“Ender’s Game” fans, meanwhile, might not know the robot that performs brain surgery on one of the main characters is actually a working research robot from a Seattle, Wash.-based company called Applied Dexterity. A clinical version is being perfected in Taiwan, where startup Brain Navi Biotechnology is combining AI, machine vision, and robotic technology to provide doctors with a robot-assisted surgical system for brain procedures.
Robots are dramatically reshaping the practice of surgery, radiology, and interventional medicine as healthcare providers seek to lower both procedural risk and costs, and patients gravitate toward less invasive techniques with speedier recoveries.
“The field of robotics is on fire. All the major players now have a stake in this game with a wide variety of technical strategies,” noted Bryce G. Rutter, Ph.D., founder and CEO, Metaphase Design Group. “Over the next two years, we will see how this active market space evolves and how players like Medtronic, Stryker, Intuitive Surgical, Verb, TransEnterix, and others carve out unique areas of specialization.”
The carve-outs unfolded in earnest this year within the orthopedic sector. Within the first two months of 2019, Zimmer Biomet Holdings Inc. received FDA 510(k) clearance of its ROSA Knee system for robotically-assisted total knee replacement surgeries, and Johnson & Johnson augmented its surgical robotics platform with the purchase of startup Auris Health, developer of lung cancer diagnostic and treatment technology. The $5.7 billion deal will help J&J create digital tools for lung cancer diagnosis and early-stage intervention—areas in which the healthcare behemoth has increasingly been focused.
The Auris Health deal is just one of the components in J&J’s overall quest to build a comprehensive surgical robotics offering that can compete with lineups from Medtronic plc, Intuitive Surgical Inc., Stryker Corp., Stereotaxis, Smith+Nephew plc, Zimmer Biomet Holdings Inc., and others. J&J launched a joint venture in late 2015 with Alphabet’s Verily (called Verb Surgical) and last year acquired French robot-assisted orthopedic surgery firm Orthotaxy, a privately held developer of software-enabled surgical technologies.
Smith+Nephew plc and Globus Medical Inc. bolstered their robotics portfolios via M&A this year as well. Smith+Nephew’s summertime snag of Swiss optical tracking technology maker Atracsys Sarl gives the U.K.-based company a core enabling technology (fusionTrack 500) for its next-generation robotic system, set for commercial launch in 2020. Globus countered with the $24.1 million purchase of StelKast, a privately held hip and knee implant/instrument manufacturer headquartered in McMurray, Pa. The deal, which includes an additional $4.3 million incentive in product sales milestones, is part of Globus’ overall strategy to leverage its robotics expertise beyond spine into cranial and arthroplasty procedures.
Already well ahead of the pack with its MAKO robotic system for total hip and knee arthroplasty, Stryker extended its lead in the robotics race in September with the $370 million acquisition of Shirley, Mass.-based Mobius Imaging and its sister company GYS Tech, which conducts business as Cardan Robotics. Although the purchase ostensibly appears like a simple tuck-in deal, industry analysts say the transaction gives Stryker the tools it needs to directly compete with Medtronic plc for spine market share.
“We view the M&A positively as it provides Stryker’s Spine division with an immediate entry into the intra-operative imaging market, complements its existing implant and navigation offerings, and significantly bolsters the company’s robotic and navigation expertise, something we continue to view as the future of spine surgery,” Canaccord Genuity analyst Kyle Rose commented in a Sept. 4 research note. “What’s more, we believe the addition of these technologies, when fully integrated into [Stryker’s] broader product portfolio (navigation and implant systems), substantially improves [Stryker’s] ability to compete head-to-head with Medtronic on bundled contracts, given [Medtronic’s] very public focus on using its ‘enabling technologies’ to secure market share and pull through implant utilization.”
Medtronic, though, still remains one step ahead of Stryker. Late last year, the company closed on its $1.7 billion purchase of Mazor Robotics and shortly thereafter (January 2019), launched its Mazor X Stealth robotic-assisted spinal surgical platform in the United States. Then, in September, Medtronic revealed an ace up its sleeve: a new robotics surgical platform that reportedly is more flexible and cost-effective than other systems currently on the market.
Developed to address a growing market that is dominated by Intuitive Surgical and its da Vinci robot, the Hugo RAS from Medtronic is a modular system that can adapt to individual patient or hospital needs, and can be upgraded as technology evolves. Hugo will include up to four robotic arms tipped with Medtronic surgical tools, but each arm can be mounted on its own cart and wheeled to a different room for other surgeries if needed.
“Robotics is something that is going to be a big part of the company going forward,” Geoff Martha, executive vice president and president, Restorative Therapies Group, and incoming CEO said at Hugo’s unveiling. “This is going to be something that we do, and something that we win at.”
Medtronic also is focusing on winning the enabling technology race, too. The company reinforced its enabling technologies prowess this past spring (perhaps anticipating Stryker’s move) by purchasing Titan Spine, a privately held titanium spine interbody implant and surface technology firm. The addition of Titan Spine’s product portfolio bolsters Medtronic’s ability to bundle interbodies, screws, rods, biologics, and enabling technologies like imaging and navigation to develop integrated procedural offerings.
“We think the whole enabling technology and robotic strategy, that’s where the market is going,” Martha said on an Aug. 20 earnings conference call. “It’s going to cause the market to consolidate around a few players, and we intend to lead that and take share now and going forward.”
Market consolidation intensified this year as M&A deal value rebounded considerably after falling off a proverbial cliff in 2018. Through late October, M&A deal value totaled $43.42 billion, a 58.5 percent increase over the $27.4 billion recorded last year, according to preliminary 2019 acquisition activity estimates. Although the total is still far short of 2017’s $100 billion sum, the mean value is rising, averaging $755 million this year—more than twice the mean price gleaned in 2018, reports life science commercial intelligence provider Evaluate Ltd.
Some of the more sizable deals that occurred in 2019 included Stryker’s $5.4 billion purchase of Wright Medical Group N.V., Smith+Nephew’s $660 million buyout of Osiris Therapeutics Inc., Boston Scientific Corp.’s $465 million procurement of Vertiflex Inc., and Stryker’s $220 million acquisition of OrthoSpace Ltd.
“M&A spending increased but most of the difference comes from a small number of megadeals (absent last year),” EY’s Pulse of the Industry 2019 states. “Strip these out, and the total value of M&A is similar, albeit spread over a much larger number of deals. That means deals are getting smaller, with medtechs prioritizing tuck-ins and portfolio optimization, rather than bold or transformative deals.”
Alas, bigger isn’t always better.
Read more: https://bit.ly/2NvjOLz
Interested in hearing more about these topics and others from industry voices? Click here to read "Sounding Board: Looking Back at 2019 and Gazing at 2020" with insights from members of ODT's editorial board.
Humankind is so easily fooled by appearances.
Smiles, scowls, stares—none are indicative of emotional well-being (or discontent). Similarly, attire and grooming can mask truly one-of-a-kind gems or depravity. Consider, for a moment, the 2007 busking experiment involving world renowned violinist Joshua Bell. On a random winter morning that year, Bell—donning jeans, a T-shirt, and baseball cap—performed Bach’s D minor Chaconne in a Washington, D.C., subway station. The repertoire is among the most difficult pieces of music ever composed.
Conductor Leonard Slatkin expected more than three dozen people (out of 1,000) to recognize Bell’s talent and up to 100 to stop and listen. He also predicted Bell would earn $150 for his efforts.
Slatkin, however, was way off: Bell captured the attention of only seven passers-by that day (out of 1,097) and just 27 gave money. Bell earned a staggering $52.17 for his 43-minute set, with nearly half of that total coming from a person who actually recognized him.
When he repeated the experiment seven years later (2014), Bell dressed better, styled his hair, and announced his performance.
Basically, he looked and played the part of a celebrated violinist this time.
As a result, thousands of people attended his performance.
Alas, appearances are not the most reliable sources of truth, as the medtech industry discovered quickly this year. A healthy American economy, solid corporate growth, and a more cooperative, collaborative partnership with the U.S. Food and Drug Administration failed to abate underlying angst from looming EU regulatory changes, Brexit chaos, slowing sales in China, and possible return of the medical device tax. The usual headwinds didn’t go away, either: Pricing pressures, reimbursement challenges, and cybersecurity issues, among others, only added to industry’s concerns, eventually causing a general sense of uneasiness to seep into corporate boardrooms.
For perspective on these anxieties and other memorable moments of 2019, join Orthopedic Design & Technology on its annual stroll down memory lane. No need to fret, either. The trip shouldn’t be too stressful.
Under the MDR Big Top
It’s been a mad scramble.
Shocking, to say the least.
Medtech’s frenzied sprint toward MDR compliance took on a circus-like ambiance this year as Notified Body shortages, unclear EUDAMED requirements, and product certification backlogs derailed overall conformity efforts.
“European quality assurance and regulatory affairs personnel seem to be overwhelmed by preparations for the new MDR,” Rob Packard, founder/president of the Medical Device Academy, noted in a March 2019 MasterControl whitepaper. “This realization has not quite hit American companies.”
Not right away, anyway. But U.S. companies came to such an understanding rather quickly, likely spurred in part by their European counterparts’ springtime concerns with final MDR implementation. In April, MedTech Europe expounded various misgivings about industry’s preparedness for the new regulatory system, citing incomplete work on guidance documents, expert panels, EU reference laboratories, IVD common specifications and Notified Bodies (NBs) as major impediments to compliance.
To help companies overcome some of those hurdles, the agency outlined a seven-point plan in June that entailed faster NB designation and the uniform application of product recertifications. The proposal also called for guidance on software classification and unique device identification; more coherent EUDAMED deployment timelines; rapid establishment of expert panels and EU reference labs; and harmonized standards in high-priority areas (symbols, labelling, risk management, good clinical study practice).
In a power-point presentation detailing the plan, MedTech Europe advised device companies to be vigilant and vocalize the challenges they face in executing the new rules by the May 26, 2020, deadline. Additionally, the group urged the European Commission and Member States to work harder to ensure the MDR is ready on time.
A half-dozen other trade associations echoed MedTech Europe’s call for expedited MDR implementation. Shortly after MedTech Europe’s power point presentation, the groups penned an open letter to the Commission and Member States accentuating the importance of the regulatory system’s “timely functionality” and cautioning against delays.
“...less than one year from now, the new Regulation for Medical Devices will enter into full effect,” the one-page letter stated. “However, the new regulatory system will need to be fully functional months before this deadline to enable the thousands of medical devices currently on the market to go through a mandatory three to nine months re-certification process. The timely functionality of the system is critical to guarantee the continued supply of devices to health institutions. But achieving this is very unlikely, thereby putting patient care across Europe at risk. Immediate action is needed now to avoid severe disruption of product supply to patients and hospitals as well as to safeguard the innovation capacity of the sector in developing new life-saving and life-transforming technologies. We thus call on the European Commission and Member States to accelerate the implementation of the regulatory system to prevent a ‘cliff-edge’ scenario for patients, healthcare professionals, and healthcare systems in Europe.”
The Commission, however, insisted the deadline is feasible but acknowledged that implementation could be a “significant challenge” and delayed the launch of EUDAMED by two years (May 2022). Even so, the agency has refused to modify its final timeframe, claiming rule changes at such a late stage in the process would be unfair to “serious operators that have carried efforts to ensure their timely compliance.”
“In conclusion, May 2020 is a realistic and achievable deadline,” European Commissioner for Health and Food Safety Vytenis Andriukaitis said in mid-June, “and the implementation process remains a shared responsibility among all partners, including member states, NBs, and operators.”
It’s difficult to share that responsibility equally without the proper resources, though. Only a handful of NBs have thus far been designated to certify medical devices—stoking worldwide panic—and reports have surfaced that some notified bodies are no longer accepting new applications under the current medical device directives (which would enable a longer transitional period under the MDR). Moreover, two NBs (LRQA and QS Zurich) have opted out of the MDR universe and nearly a dozen are still awaiting designation.
Previously there were as many as 75 different Notified Bodies to choose from, now we are looking to have under 40 that will apply for designation under MDR,” observed Thor Rollins, director of Toxicology and E&L Consulting for Salt Lake City-based Nelson Labs, A Sotera Health company. “As of right now [mid-October] we only have five that are designated to approve devices under MDR and the deadline is May 2020. We have heard from companies that their Notified Bodies are telling them it could take up to six months to even hear back from them, so unless we get an injection of notified bodies I am not sure how we will be ready by May.”
Relatively few are actually expecting to be ready: A KPMG/RAPS (Regulatory Affairs Professionals Society) survey conducted earlier this year showed only 27 percent of medtech executives believe they will be MDR compliant by next May’s deadline, with more than 35 percent citing NB availability (or lack thereof) as a “significant barrier” to full implementation.
An even greater hindrance to compliance is the lack of guidance or standards on documents and requirements (Summary of Safety and Clinical Performance, Periodic Safety Update Report, Post-Market Surveillance). More than half of the 230 KPMG/RAPS survey respondents (55.2 percent) listed guidance deficiency as their top gripe with MDR conformity; of that total, 43 percent revealed they have not yet begun updating their PMS procedures or creating any templates for the reports, and 13 percent have no PMS strategy in place. Only 11 percent have updated all PMS procedures and reports, and 33 percent are just now finalizing their PMS plan and templates.
That’s quite a juggling act. Barnum & Bailey would be proud.
With the NB and guidance sideshows showing no signs of abating (or improving), the United States appealed to the World Trade Organization (WTO) over the summer to delay MDR implementation. America specifically asked for a three-year deadline extension, contending the NB shortfall and guidance dearth justify the extra time (mostly for adaptation to the new standards). Should the deadline stand, the United States requested that legacy products (already deemed safe) be allowed for sale through 2024 and NBs prioritize devices requiring new certification.
“The United States supports the development and enforcement of a well-defined medical device regulatory system which assures the safety and performance of medical devices,” stated a July 24 letter to the WTO’s Committee on Technical Barriers to Trade. “However, the United States has serious concerns regarding the implementation of the MDR and IVDR, and our industry is worried about their continued access to the EU’s $125 billion medical device market, $20 billion of which is supplied by U.S. products. MDR/IVDR’s implementation is behind schedule.”
The Commission still doesn’t think so, but the deadline may no longer be set in stone. In May, the agency initiated a corrigendum to amend or modify parts of the MDR; the changes could potentially give some Class I devices—reusable products like surgical instruments and endoscopes—a four-year transitional period before they are required to meet the new regulation’s standards.
However, there is no guarantee the extension will be granted. Published reports claim the Commission is under “pressure” to allow Class I “upclassified” products to benefit from the grace period, but any respites would require agreements from both the Commission and member states.
Time will tell.
Thus continues the Greatest Show on Earth.
Read more: https://bit.ly/2Ctd0I0
Over-Bearing Concerns
The U.S. stock market is up (way up, as in double digits), unemployment is down (way down, as in historic lows), and the GDP growth rate is ideal (holding steady at 2-3 percent). Both inflation and deflation are in check, corporate profits are back on the rise, and the yield curve is still right-side up.
All hail the Goldilocks economy: Not too hot, not too cold. Just right.
Like the popular children’s fairy tale character, the U.S. economy found its optimal level of sustainability this year, delivering a performance that was neither overheated nor underwhelming.
“I think last year [2018] you almost had too much growth, too many inflationary fears in the U.S. And so, you could argue that the porridge, if you are Goldilocks, was too hot,” Jim Cielinski, global head of fixed income for Janus Henderson Investors, wrote in a mid-April article for the crowd-sourced content service Seeking Alpha. “I think now that we have worked our way through that, you are seeing growth moderate. It is important it doesn’t slow down too much. I think so far, so good, right?”
Right—so far.
But the bears are lurking nearby. And eventually, they’re going to return home, scaring off the Goldilocks economy.
For most of the year, the bruins kept their distance, though their mere presence was enough to give Corporate America the jitters. Medtech firms were particularly on edge as they grappled with the triple-bear threat of Brexit, tariff wars, and the medical device tax.
The latter issue has been a thorn in companies’ sides for nearly a decade, having survived industry’s numerous assassination attempts and eternal lobbying efforts. Over the last seven years, the device sector—led by the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association (MDMA)—has spent roughly $220.6 million gunning for the tax’s demise through a bevy of print and online ads, videos, infographics, surveys, and savvy marketing tactics (industry bigwigs, for example, used empty red “medtech” boxes two years ago to illustrate the loss of innovation due to the levy).
The industry’s most recent campaign ploy manifested itself in survey form. An MDMA analysis released in June showed the kind of contingency planning under consideration as the tax’s two-year moratorium enters its final months: Eighty-five percent of survey respondents plan to reduce or freeze R&D investments (with the cuts averaging 15.8 percent), and 56 percent of companies intend to shrink or freeze employee salaries to compensate for the 2.3 percent levy. Overall, 82 percent of survey respondents have already begun planning for the excise tax’s reinstatement next year, citing a Sept. 30 deadline for legislative intervention on an extension.
“This survey highlights the negative impacts a reinstatement of the medical device tax would have, and we simply cannot allow this to happen,” Jeff McCaulley, DJO Surgical global president and MDMA board chairman, noted upon release of the survey results. “We will never fully repair the damage caused when the medical device tax was in place from 2013-2015, but we must ensure that patient care is never punished again by a policy that diverts billions of dollars in investments away from innovation. At a time when there is so much division among policy makers over how to improve health care and spur innovation, the full repeal of the medical device tax is a rare example where an overwhelming, bipartisan majority in Congress agrees on what needs to be done...Congress needs to once and for all put an end to the medical device tax.”
While it certainly would appease industry, an end does not seem very likely at this point—at least not from Congress. Now approaching the end of its fourth year on temporary hiatus, bipartisan tax repeal efforts begun in the spring have since languished in the House and U.S. Senate; repeal legislation could be piggybacked onto budget proposals, tax bills, or end-of-year omnibus spending measures, but the presidential impeachment inquiry currently looming over Washington threatens to overshadow any non-essential, routine business.
To prevent such an eclipse from occurring, AdvaMed President/CEO Scott Whitaker appealed directly to President Trump for help in securing a permanent repeal of the tax before its Jan. 1 return. In an Oct. 17 letter to the White House, Whitaker told Trump the tax could have “devastating” economic effects.
“Given your remarkable accomplishments in the private sector, you know a suspended tax is little more than a looming tax,” Whitaker wrote. “Innovators and entrepreneurs must plan and act as if the tax will ultimately be imposed on them. The highly competitive medical technology industry needs certainty to make multi-year investments in the R&D, hiring, and growth necessary to unleash life-changing innovation. Economic trends in the industry are moving in the right direction, and this tax puts that [at] risk.”
But time is running out to mitigate that risk. Once again.
Clearly, this bear isn’t planning to hibernate anytime soon.
Neither are his housemates: Despite some progress on Brexit and the U.S.-China trade war, both creatures are likely to forgo their winter slumber and remain a menace to the medtech industry well into the new year.
The bears are within sight, Goldilocks. Skip the nap.
After simmering all summer, U.S.-Sino and Britain-E.U. tensions cooled off a bit in the fall, allowing for some encouraging first steps toward respective resolutions. On Oct. 11, the United States and China announced a truce in their longstanding trade war—America agreed to suspend new tariff hikes in exchange for higher Chinese purchases of U.S. agricultural products (up to $50 billion annually).
While promising, the accord nevertheless has significant hurdles to clear before ratification: China, for example, reportedly wants rollbacks on some existing tariffs before it boosts its American agricultural purchases, and Washington is still frustrated with Middle Kingdom support for state-owned enterprises and industry subsidies. Final approval also could be hindered by domestic politics and a lack of trust between both countries’ senior leadership, experts claim.
Even a final deal may not necessarily end the trade war, though. Richard McGregor, senior fellow at the Lowry Institute and a Chinese Communist Party expert, contends the prospective trade agreement will not resolve deep-seated issues between the United States and China. “The two sides might be able to finalize the mini-deal in coming weeks,” McGregor wrote in The Washington Post in mid-October, “but Chinese scholars and officials I have spoken to over the past year recognize that any accord will just be a stopover on the way to the next fight.”
A Brexit resolution is likely to be just as complicated and contentious. On Oct. 19, the British Parliament rejected an EU-approved separation plan from Europe that potentially could prolong the United Kingdom’s divorce decree through the new year. The 322-306 vote legally forced U.K. Prime Minister Boris Johnson to seek a three-month extension to the Halloween deadline—a fate he once deemed worse than death. “I will not negotiate a delay with the EU and neither does the law compel me to do so,” he insisted after the rare “Super Saturday” Parliament vote. “Next week the government will introduce the legislation needed for us to leave the EU.”
Despite the tough talk, Johnson grudgingly complied with the law and formally requested a delay for Brexit. But he remained true to his word about pressing forward with Brexit, warning EU leaders by letter that further delay would be damaging. “I have made clear since becoming Prime Minister...that a further extension would damage the interests of the U.K. and our EU partners, and the relationship between us,” Johnson wrote in an Oct. 19 letter to European Council President Donald Tusk. “We must bring this process to a conclusion so that we can move to the next phase and build our new relationship on the foundations of our long history as neighbors and friends in this continent our people’s share.“
The exact timing of that conclusion is still murky, though. European Union leaders agreed to delay Brexit until the end of January—a deadline Johnson could possibly meet if he wins a majority in a Dec. 12 special election (the U.K.’s first December balloting in 96 years). An election, however, will not necessarily resolve the issue of Brexit or the political paralysis gripping Britain. Johnson’s Conservative Party leads the polls by as much as 16 percentage points (as of late October) but a Labour Party victory could negate the deal Johnson negotiated earlier this fall with EU leaders. The Labour Party wants to negotiate its own deal and put it up for a referendum vote; others such as the Liberal Democrats and Scottish Nationalist Party want to cancel Brexit altogether.
If Conservatives or Labour leaders were to secure a decisive enough victory, they could, in theory, push ahead with their agenda on Brexit and other issues. But the December election also could return a Parliament just as deadlocked as the current one.
Then it’s back to square one.
So many uncertainties. So many questions (still). So little clarity.
So much anxiety.
Beware, Goldilocks. The bears are closing in.
Read more: https://bit.ly/2WVRhSB
A Not-So-Fond Farewell
Colleen Haller can finally breathe a little easier. So can her son, her relatives, and dozens of her closest friends and neighbors.
“The residents of Willowbrook and this area, you can breathe again,” U.S. Rep. Jim Durkin (R-Ill.), affirmed earlier this fall. “You can go back to living a normal life.”
If only it were that easy. Normalcy abandoned Willowbrook years ago, leaving little more than memories in its wake. Life is anything but typical now in that affluent Chicago suburb; veritably, words like “ordinary” and “normal” have become relative terms: Resident Katherine Howard gauges normality these days by the severity of her chronic pain and the overall efficiency of her feeding tube. Jana Conev, on the other hand, prefers to track malignancies among neighbors. And Colleen Haller’s new normal? Life as a widow.
Indeed, cancer diagnoses, chemotherapy/radiation treatments, and malignancy mortality rates are deeply embedded in the daily fabric of Willowbrook. For more than three decades, residents of the tiny village (pop. 8,540) have shared living space with a medical device sterilization facility that emitted a harmful gas into the surrounding air. The gas—ethylene oxide (EtO)—was first listed as a carcinogen in 1985 but was not linked more conclusively to breast and blood cancers until 2016. The colorless, easily absorbed chemical is used as a fumigant to sterilize heat-sensitive medical equipment and other goods; about half of all medical devices in the United States are sterilized with room temperature ethylene oxide—everything from plastic surgical gowns to syringes, catheters, bandages, gauze, and pacemakers.
Residents living near the sterilization plant were unaware of its potential hazards until an EPA study released last summer (2018) revealed higher than normal cancer rates in Willowbrook and several bordering communities. The data showed cancer rates in a 13-mile area around the plant were nine times higher than the national average—among the worst in the country.
The startling revelation spawned a grassroots effort to close the facility. “...our community is in crisis. A real crisis,” Andrea Thome, wife of Chicago White Sox and Cleveland Indians slugger Jim Thome, wrote in a Sept. 19, 2018, blog. “We’ve been poisoned by a company called Sterigenics, and it’s been happening without our knowledge since the mid-1980s. They burn and emit 24 hours a day, seven days a week. They are less than one mile from where we’re reluctant to send our son to play his almost-daily fall baseball and flag football games, depending on which way the wind blows. My mom died in October 2014 after an excruciating battle with liver and kidney disease. She didn’t drink. She didn’t smoke. She didn’t do drugs. She was a life-long vegetarian. She meditated daily...My dad...What’s he up to these days? He’s trying to reclaim his life after he almost lost it to a huge brain tumor. The time for being quiet is over. It’s time to act.”
Though not its intention, Thome’s blog nevertheless served as a call to arms for the greater Willowbrook community, prompting residents living near Sterigenics’ sterilization plant to organize protests and solicit the support of local, state, and federal politicians. In the fall of 2018, as the EPA monitored the air outside its facility, the company penned an open letter to Willowbrook and “Chicagoland” residents, attempting to allay the public’s concerns about discharged gas. In its letter, Sterigenics disputed the reported amounts of EtO released by the plant (less than 0.1 percent, the company claimed) and noted the facility was operating well within federal EtO emission standards.
Opponents, however, were quick to adduce the antiquity of those standards—ethylene oxide has been classified as a known human carcinogen for nearly 20 years, according to the National Institutes of Health. Consequently, residents demanded Sterigenics reduce its EtO emissions to zero or close the plant. Naturally, the company balked.
The Illinois Environmental Protection Agency (IEPA) resolved the standoff in mid-February (2019) by shutting Sterigenics’ Willowbrook plant amid high EtO levels. The agency based its decision on new readings from an independent air monitoring test commissioned by the village; those results showed outdoor EtO levels of 21 parts per billion at Village Hall and 89 parts per billion at the police department, with indoor readings at both locations “even higher in some cases.”
Sterigenics called the closure “indefensible” and disputed Willowbrook’s air monitoring results. It also threatened legal action to reverse the shutdown order. “Unilaterally preventing a business that is operating in compliance with all state permits and regulations from carrying out its vital function sets a dangerous precedent,” a Feb. 15 statement from the company read. “The Illinois EPA’s decision will place the health and lives of thousands of patients who rely on the critical medical products sterilized at Willowbrook at risk.”
Though it was temporary, the IEPA directive nevertheless served as a rallying cry to anti-EtO advocates in the Chicago suburbs. During the spring, residents of Burr Ridge, Darien, Hinsdale, and Willowbrook formed a Facebook group called Stop Sterigenics that mobilized efforts to keep Sterigenics closed. The U.S. Food and Drug Administration (FDA), meanwhile, warned of possible device shortages due to the shutdown, publishing a list of 594 endangered products. Ultimately, however, only one device—a tracheostomy tube—was impacted by the shutdown, and it was quickly made available again (within 10 days) after the FDA cut its own red tape on sterilization facility changes.
In June, Illinois Gov. J.B. Pritzker signed into law some of the nation’s most stringent ethylene oxide regulations; one bill bans EtO facilities from operating in the Prairie State unless they can capture all emissions within the facility and reduce ethylene oxide emissions to 0.2 parts per million. Other legislation requires non-sterilization facilities that emit EtO to obtain an IPEA permit and calls for unannounced agency inspections and air testing at least once annually.
“Illinois now has the strictest safeguards in the nation,” Pritzker said in a late June news release touting the new laws. “Families in affected areas can breathe easy.”
They didn’t breathe easy for long, though. About a month after Pritzker signed the two bills, Sterigenics struck a deal with the state to resume its operations in Willowbrook. The consent order required the company to install new emissions capture and control systems to collect all gas within its facility with a 99.9 percent (0.2 parts per million) control efficiency. Sterigenics also agreed to fund $300,000 in community improvements near the plant.
A DuPage County judge approved the consent order in early September, triggering another round of proposed EtO regulations and fresh community outrage. But that fury virtually disappeared (albeit briefly) with Sterigenics’ sudden decision on Sept. 30 to permanently close its Willowbrook facility.
“Sterigenics appreciates that the State of Illinois clearly acknowledged the company’s consistent record of regulatory compliance as well as the safety of the new controls we agreed to implement, and we made every effort to reach a constructive conclusion,” the company said in a statement. “Unfortunately, inaccurate and unfounded claims regarding Sterigenics and the unstable legislative and regulatory landscape in Illinois have created an environment in which it is not prudent to maintain these critical sterilization operations in Willowbrook. Hospitals and patients around the United States and the world depend on Sterigenics for vital, sterilized medical products, and we cannot provide them with the certainty they require while operating safely in a state that will suspend operations of a business despite the company’s compliance with applicable rules and regulations.”
Sterigenics’ surprising announcement was met with a mix of shock, joy, and disbelief from opponents. Yet there also was an undertone of anger and resentment among Willowbrook area residents that day as they pondered their uncertain futures. “We’re not going to not celebrate—this is a huge victory,” local activist Lauren Kaesberg told The Daily Herald (Arlington Heights, Ill.). “But we’re super angry. For years, they’ve been poisoning people across town.”
That anger is likely to hound Sterigenics and other ethylene oxide sterilizers well into the future too: The company faces more than 40 lawsuits from Willowbrook area residents over alleged EtO-related illnesses, and increased scrutiny over its operations in Smyrna, Ga. (that facility is currently closed for emission-control upgrades). Ethylene oxide pollution concerns also have spread to nearby Atlanta, where Sterilization Services of Georgia is presently upgrading its air vents, and Covington, Ga., where BD is under fire for a week-long EtO leak in September. The company is fighting to keep its sterilization facility open amid community backlash; Georgia’s Environmental Protection Division is demanding the plant shut down until better pollution control equipment is installed but BD insists its EtO emissions are well within state health guidelines.
A shutdown, however, could be disastrous for the medtech industry. Manufacturers already face a dwindling number of ethylene oxide sterilizers (two facilities in two states are no longer operating); closing another—even temporarily—might put more than 1 billion devices at risk, the Advanced Medical Technology Association (AdvaMed) cautioned earlier this fall.
“With these three facilities closed, procedures for urological conditions, cardiothoracic and lung cancer surgeries, retinal detachments, and tumor ablations are now in jeopardy because, for these devices, there is no other way to sterilize them properly for the patients who need them,” AdvaMed President and CEO Scott Whitaker said in an Oct. 23 statement. “Even those entering intensive care units could see delays in their care or lack of availability because every patient requires a catheter that must be sterilized with [ethylene oxide].”
AdvaMed’s dire warning could get lost, though, amongst mounting public outcry over ethylene oxide use. Georgia is planning to create an environmental task force to examine the regulation of medical sterilization companies and EtO use in the state, while Illinois lawmakers are working on additional legislation to address air pollution concerns from ethylene oxide emitters in Gurnee and Waukegan.
The battle may be over in Willowbrook, but the war against ethylene oxide is just beginning. As Thome wrote in an Oct. 1 blog, “This was our wake-up call. If we know better, we must do better.”
To make life better.
Read more: https://bit.ly/2pVQfd5
I, Robot
Sir Arthur C. Clarke was quite the optimist.
As a young radar engineer during WWII, Clarke was a frontline witness to the death and destruction befalling England from German Wehrmacht V-2 rockets, the world’s first long-range guided ballistic missiles. Rather than focus on the rockets’ atrocities, though, Clarke regarded them with hope: He knew the weapons passed through outer space en route to London, and thus was excited by the discovery of interplanetary travel technology. In fact, legend holds that Clarke and his British Interplanetary Society friends toasted the newborn space age in a London pub upon hearing a V-2 rocket in the distance.
Clarke’s optimism influenced much of his literary work. In a 1962 essay, Clarke created three adages that address technology, innovation, and imagination; the best known and most widely cited is: “Any sufficiently advanced technology is indistinguishable from magic.”
Undoubtedly so. Take Star Trek’s tricorder, for example: The handheld analyzer featured in the 1966 television series seemed to work entirely by conjuration, as it needed no blood tests, X-rays, genetic sequencing, or physical exam to diagnose disease. Users (mostly Dr. Leonard “Bones” McCoy) simply pointed the device at subjects to instantly obtain a prognosis.
Nearly half a century after the series ended, the tricorder’s “magic” is close to casting its spell on real-life patients. Paoli, Pa.-based Basil Leaf Technologies LLC has built a working, AI-driven tricorder prototype called DxtER that provides immediate diagnosis of up to 34 medical conditions (Quazulu VIII virus excluded). Comprised of various smartphone- and tablet-enabled specialized medical devices, DxtER is not yet as enchanting as the tricorder (it cannot scan subjects at a microscopic level) but it improves upon the original in that it can be used directly by patients.
DxtER is one of many innovations that seem fantastical by nature. Remember the bionic hand Luke Skywalker received to replace the one he lost in battle to his father, Darth Vader, in “Star Wars Episode V: The Empire Strikes Back”? The U.S. Food and Drug Administration (FDA) approved a similar prosthetic (a neuro-controlled arm called “Luke”) in 2014. That same year, the agency greenlighted a robotic device (ReWalk) for individuals with lower body paralysis from a spinal cord injury—an idea loosely modeled after the Power Loader first officer Ellen Ripley uses to battle the Xenomorph Queen in the 1986 film “Aliens.”
“Ender’s Game” fans, meanwhile, might not know the robot that performs brain surgery on one of the main characters is actually a working research robot from a Seattle, Wash.-based company called Applied Dexterity. A clinical version is being perfected in Taiwan, where startup Brain Navi Biotechnology is combining AI, machine vision, and robotic technology to provide doctors with a robot-assisted surgical system for brain procedures.
Robots are dramatically reshaping the practice of surgery, radiology, and interventional medicine as healthcare providers seek to lower both procedural risk and costs, and patients gravitate toward less invasive techniques with speedier recoveries.
“The field of robotics is on fire. All the major players now have a stake in this game with a wide variety of technical strategies,” noted Bryce G. Rutter, Ph.D., founder and CEO, Metaphase Design Group. “Over the next two years, we will see how this active market space evolves and how players like Medtronic, Stryker, Intuitive Surgical, Verb, TransEnterix, and others carve out unique areas of specialization.”
The carve-outs unfolded in earnest this year within the orthopedic sector. Within the first two months of 2019, Zimmer Biomet Holdings Inc. received FDA 510(k) clearance of its ROSA Knee system for robotically-assisted total knee replacement surgeries, and Johnson & Johnson augmented its surgical robotics platform with the purchase of startup Auris Health, developer of lung cancer diagnostic and treatment technology. The $5.7 billion deal will help J&J create digital tools for lung cancer diagnosis and early-stage intervention—areas in which the healthcare behemoth has increasingly been focused.
The Auris Health deal is just one of the components in J&J’s overall quest to build a comprehensive surgical robotics offering that can compete with lineups from Medtronic plc, Intuitive Surgical Inc., Stryker Corp., Stereotaxis, Smith+Nephew plc, Zimmer Biomet Holdings Inc., and others. J&J launched a joint venture in late 2015 with Alphabet’s Verily (called Verb Surgical) and last year acquired French robot-assisted orthopedic surgery firm Orthotaxy, a privately held developer of software-enabled surgical technologies.
Smith+Nephew plc and Globus Medical Inc. bolstered their robotics portfolios via M&A this year as well. Smith+Nephew’s summertime snag of Swiss optical tracking technology maker Atracsys Sarl gives the U.K.-based company a core enabling technology (fusionTrack 500) for its next-generation robotic system, set for commercial launch in 2020. Globus countered with the $24.1 million purchase of StelKast, a privately held hip and knee implant/instrument manufacturer headquartered in McMurray, Pa. The deal, which includes an additional $4.3 million incentive in product sales milestones, is part of Globus’ overall strategy to leverage its robotics expertise beyond spine into cranial and arthroplasty procedures.
Already well ahead of the pack with its MAKO robotic system for total hip and knee arthroplasty, Stryker extended its lead in the robotics race in September with the $370 million acquisition of Shirley, Mass.-based Mobius Imaging and its sister company GYS Tech, which conducts business as Cardan Robotics. Although the purchase ostensibly appears like a simple tuck-in deal, industry analysts say the transaction gives Stryker the tools it needs to directly compete with Medtronic plc for spine market share.
“We view the M&A positively as it provides Stryker’s Spine division with an immediate entry into the intra-operative imaging market, complements its existing implant and navigation offerings, and significantly bolsters the company’s robotic and navigation expertise, something we continue to view as the future of spine surgery,” Canaccord Genuity analyst Kyle Rose commented in a Sept. 4 research note. “What’s more, we believe the addition of these technologies, when fully integrated into [Stryker’s] broader product portfolio (navigation and implant systems), substantially improves [Stryker’s] ability to compete head-to-head with Medtronic on bundled contracts, given [Medtronic’s] very public focus on using its ‘enabling technologies’ to secure market share and pull through implant utilization.”
Medtronic, though, still remains one step ahead of Stryker. Late last year, the company closed on its $1.7 billion purchase of Mazor Robotics and shortly thereafter (January 2019), launched its Mazor X Stealth robotic-assisted spinal surgical platform in the United States. Then, in September, Medtronic revealed an ace up its sleeve: a new robotics surgical platform that reportedly is more flexible and cost-effective than other systems currently on the market.
Developed to address a growing market that is dominated by Intuitive Surgical and its da Vinci robot, the Hugo RAS from Medtronic is a modular system that can adapt to individual patient or hospital needs, and can be upgraded as technology evolves. Hugo will include up to four robotic arms tipped with Medtronic surgical tools, but each arm can be mounted on its own cart and wheeled to a different room for other surgeries if needed.
“Robotics is something that is going to be a big part of the company going forward,” Geoff Martha, executive vice president and president, Restorative Therapies Group, and incoming CEO said at Hugo’s unveiling. “This is going to be something that we do, and something that we win at.”
Medtronic also is focusing on winning the enabling technology race, too. The company reinforced its enabling technologies prowess this past spring (perhaps anticipating Stryker’s move) by purchasing Titan Spine, a privately held titanium spine interbody implant and surface technology firm. The addition of Titan Spine’s product portfolio bolsters Medtronic’s ability to bundle interbodies, screws, rods, biologics, and enabling technologies like imaging and navigation to develop integrated procedural offerings.
“We think the whole enabling technology and robotic strategy, that’s where the market is going,” Martha said on an Aug. 20 earnings conference call. “It’s going to cause the market to consolidate around a few players, and we intend to lead that and take share now and going forward.”
Market consolidation intensified this year as M&A deal value rebounded considerably after falling off a proverbial cliff in 2018. Through late October, M&A deal value totaled $43.42 billion, a 58.5 percent increase over the $27.4 billion recorded last year, according to preliminary 2019 acquisition activity estimates. Although the total is still far short of 2017’s $100 billion sum, the mean value is rising, averaging $755 million this year—more than twice the mean price gleaned in 2018, reports life science commercial intelligence provider Evaluate Ltd.
Some of the more sizable deals that occurred in 2019 included Stryker’s $5.4 billion purchase of Wright Medical Group N.V., Smith+Nephew’s $660 million buyout of Osiris Therapeutics Inc., Boston Scientific Corp.’s $465 million procurement of Vertiflex Inc., and Stryker’s $220 million acquisition of OrthoSpace Ltd.
“M&A spending increased but most of the difference comes from a small number of megadeals (absent last year),” EY’s Pulse of the Industry 2019 states. “Strip these out, and the total value of M&A is similar, albeit spread over a much larger number of deals. That means deals are getting smaller, with medtechs prioritizing tuck-ins and portfolio optimization, rather than bold or transformative deals.”
Alas, bigger isn’t always better.
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