The tortuous road from innovation to market

Dr Einarsson, Deputy Editor of Contemporary OB/GYN, is Associate Professor of Obstetrics and Gynecology, Harvard Medical School, and Director, Division of Minimally Invasive Gynecologic Surgery, Brigham and Women’s Hospital, Boston, Massachusetts. He reports having ownership interest in Lattis Surgical.

Last year, 13,522 medical device patents were granted in the United States. The cost to file a patent application ranges from $10,000 to $30,000. Approximately 1%–2% of such filings result in commercially available medical devices. Why is it that so few clever and novel ideas translate into products that reach the marketplace?

The answer to that question is complex, but here I focus on one aspect with which many clinicians are familiar: The way academic organizations conduct their innovation business. Currently the process works roughly like this:

A busy clinician comes up with an idea for a new medical device or a significant improvement upon a current device. The clinician then brings the idea to his or her innovation office (IO). The IO evaluates the claim for 3 key patent criteria:

• Is the invention novel?

• Is the invention useful?

• Is the invention non-obvious?

If the answer to all these questions is yes, the institution will file a patent on behalf of the physician.

Often the initial patent is provisional and needs to be converted to a non-provisional patent within 12 months. The IO and the inventor must then decide whether to protect the invention only in the United States or outside the country as well. Some institutions will file for protection only in the United States because of the cost of filing internationally. A physician investigator generally has 2 options once the patent is filed-having the institution attempt to license the technology to an established medical device company or forming a startup company. Let’s examine these 2 options in more detail.

Option 1:License the technology.

Medical device companies are generally not interested in a product that is only a concept or sketches on paper. Their goal is to identify products that address a known market opportunity, and they want a device that has regulatory approvals and has been tested on human subjects to minimize their risks. Better yet, they want a product that has demonstrated market traction, with multiple institutions reordering it. Therefore, the physician investigator needs to raise funds and develop a prototype. The prototype then needs to be tested in order to show that it actually works as intended. Usually, changes to the initial design and iterations of the prototype are required before the final version becomes available.

Because most institutions do not have the resources to develop a concept through these stages, the physician investigator is unable to proceed.

A further complication with licensing a new technology is the expectation of the institution’s negotiators. Often they will ask for financial or royalty commitments from device companies, which those companies will find unreasonable if the idea is still immature. Many institutions are unwilling to delay their payouts until commercialization, burdening medical device companies with upfront payments. These challenges have left many good ideas lying unaddressed in institutions’ files, frustrating physician investigators.

Option 2:Form a startup company. 

This requires formulating a business plan, establishing a company, and negotiating an agreement with the parent institution to acquire exclusive rights to the provisional patent. The parent institution will want to maximize the chance of seeing a return and will critically examine the team, business plan, and resources. This option requires considerably more resources, time, and manpower than the licensing route, but the payout could be much larger if the company does well and/or is acquired by another company. Very few physicians have the time or expertise to go down this road.

Given the complexity and the resources required for these 2 options, most provisional patents do not move forward. One reason is that current institutional strategy is focused too much on protecting intellectual property (IP) and not enough on the process of maturing an idea. Typically IP activities consume all resources with no funding available for engineering, market, and regulatory expertise.

NEXT: An alternative strategy >>

An alternative strategy

1. The physician investigator brings the novel idea to the IO.

2. A patent search is performed. If the device does not meet criteria for filing, the IO notifies the investigator and the journey ends there. The investigator is free to pursue a patent independently if he or she desires.

3. Once the idea is deemed to be suitable for a patent application, the IO refers the concept to an innovation review committee (IRC). The IRC evaluates the market size, clinical needs, commercialization opportunities, possible cost, ease of production, and profitability. If the evaluation is favorable, the IO provides resources (money, engineering expertise, etc.) to rapidly build a simple prototype.

4. Once this prototype is developed, feasibility is again evaluated and further small modifications are performed if needed. This process should be completed within 2 months. The provisional patent is reviewed and revised as needed and a patent application is filed.

5. The IO examines 3 options:A.Contacting industry executives to gauge their interest in licensing the technology; B. Industry funding for further development in conjunction with the institution; or C. Forming a startup company to bring it to market.

This approach results in a higher probability of the device becoming a commercially available product. It also utilizes funds to address the elements needed to demonstrate feasibility while demonstrating technical and clinical proof of principle. Another advantage is that by delaying the patent filing until initial proof-of-concept prototyping is complete, important details discovered in the prototyping process are included in the filing.

If the institutional review board is prompt in its evaluation process (< 3 months from submission date) and it decides to pass on the opportunity, the physician investor is free to pursue the idea independently. This strategy would make the vetting process far more transparent and would increase the odds of successful commercialized products. Both the institution and the physician would benefit from a more active partnership in which both have “skin in the game.”

There are downsides to this strategy-especially the potential loss of valuable licensing opportunities. In 2013, patent laws were changed from “first to invent” to “first to file.” Therefore timely filing is important. However, given the low probability of success of filed intellectual property, the risk of valuable loss is low. Also, processing speed is very important and resources should be in place to complete the work quickly.

Successful innovation requires a strong, motivated, and tenacious team. Medical device innovation fosters creativity and out-of-the-box thinking and ultimately may bring to market a device that will contribute to better patient care. That is, of course, the ultimate reward for all the hard work.