Medical Device Daily Senior

A new white paper from Fuld (Cambridge, Massachusetts), a research and consulting firm in the field of business and competitive intelligence, suggests that generic medical devices are “closer than they appear.“

The paper, written by Laura Ruth, PhD, a director with Fuld's pharmaceutical and healthcare practice, concludes that several market forces, including changing distribution channels, increasing economic pressures, responsive legislation, patent expirations, and technology innovations, will act as catalysts toward the acceptance of device generics at a faster rate than ever before.

The paper highlights one company in particular, Generic Medical Device (GMD; Gig Harbor, Washington), that launched the Universal Sling System for female stress urinary incontinence, a class II medical device, during the summer of 2009.

In 2007 GMD reported FDA clearance of a universal surgical mesh, also a class II device, intended to support tissue growth in open or laparoscopic procedures common for hernia repair (Medical Device Daily, May 14, 2007). Earlier that same year the company received a CE mark and a EC-Declaration of Conformity allowing it to sell its universal circumcision clamp in all European Union countries (MDD, Feb. 9, 2007).

Shawn Lunney, GMD VP of sales and marketing, is quoted in the white paper stating that GMD's mission is to develop and bring to market “cost-effective equivalent medical devices that provide equivalent outcomes at substantially lower cost.“ Lunney says GMD looks for products in the hospital that have a bad price/value balance and the next innovation in life cycle doesn't gain any significant patient value. He adds that generic devices are possible in all device classes but simpler ones become commodities and physicians have more brand preference with sophisticated high-end devices.

The FDA says there is no such thing as a generic medical device that is equivalent to the meaning of generic drugs. A generic medical device does not have a regulatory pathway like a generic drug and it is not a commonly used term in healthcare, according to the paper. But, the paper suggests that despite the lack of FDA acknowledgment or official label, lower-cost generic devices are one sector of the healthcare industry that is likely to grow due to economic pressures.

A generic asthma albuterol inhaler is an example of a generic medical device that manufacturers have developed, Ruth notes in the paper. There are other types of devices, such as the female urinary incontinence sling, that are likely to grow in their respective markets.

GMD's Universal Sling System competes with existing brand devices, such as the Gynecare TVT Obturator System Ethicon Endo-Surgery (Blue Ash, Ohio), Boston Scientific's (Natick, Massachusetts) Lynx System, Caldera's (Agoura Hills, California) Desara, and Coloplast's (Minneapolis) Aris and Supris.

“The doctors seem interested and we are building commercialization,“ Lunney says. After a year on the market, GMD says organizations can save 25% to 50% by using their slings versus a branded sling. One Texas hospital reports a $50,000 savings after one year and other organizations are saving roughly $20,000 in a period of less than a year, according to the white paper.

GMD launched in December 2006 calling itself the first to offer commonly used and efficacious surgical products as generic products.

GMD plans to follow the same formula used by the generic drug industry to develop and distribute alternatives to standard-of-care devices, offering payors, clinics, hospitals and physician-owned surgical centers the benefit of medical devices with equivalent safety and efficacy, but at lower prices.

Richard Kuntz, president/CEO of GMD, told Medical Device Daily in 2006 shortly after the company made its official launch that he got the idea for the company a couple years earlier while he was traveling and found a newspaper article slipped under his hotel room door about Medicare predicting bankruptcy by 2019, seven years earlier than previously predicted (MDD, Dec. 12, 2006).

“I didn't understand why the medical device industry had not followed in the pharmaceutical industry's path of when a product patent expires offering a generic alternative,“ Kuntz said. “It was sort of a 'duh' – as my kids say – and a 'Why not?'“

So that's exactly what GMD set out to do.

“Many of the medical devices commonly used in today's healthcare organizations have undergone few, if any, changes in the decades since they were first introduced to the market,“ Kuntz said. “Nevertheless, purchasers of medical devices continue to pay a premium for these commoditized products and are demanding alternatives. Like with generic pharmaceuticals, GMD will be offering medical devices that are equivalent, if not better, than their branded counterparts and at prices that will be attractive to hospitals, physician-owned surgery centers, Medicare and third-party payors.“

In the pharmaceutical industry, once the patent on a brand name drug expires, competitors are allowed to develop, market and sell generic alternatives as long as they offer the same safety and efficacy as their branded counterparts, thus avoiding the standard high development costs: R&D expenses, costly clinical trials, protracted governmental approval and marketing costs. As a result, these companies are able to sell equivalent versions of brand name products at significantly reduced prices.

And by reducing the costs of some drugs, generics make room in the system for new products, the generic manufacturers contend.

In Fuld's white paper, Ruth notes that one reason generic devices have failed to achieve market acceptance is group purchasing organizations (GPOs). According to the paper, the funding relationship between the hospital GPO medical device distribution channel and medical device manufacturers has historically been a market force that can prevent lower-cost alternative treatments from entering the market. Typically, manufacturers who are selling products to a GPO can also be paying a GPO's operating expenses, which creates a conflict of interest.

However, according to the paper, further examination of market forces, such as distribution channels, pricing, technology innovation, and patents, explains why generic medical devices have developed and why they can continue to develop in the future.

Relatively simple devices, such as the female urinary incontinence sling and asthma inhaler, are evidence of where generic medical devices can develop, Ruth noted in the paper. Patent expirations and scientific research studies demonstrating equivalent outcomes between brand technologies are indicators of where generic medical devices can develop, the paper concluded.

Amanda Pedersen, 309-351-7774;

amanda.pedersen@ahcmedia.com