Person:

Stern, Ariel

The first chapter of this dissertation explores how the regulatory approval process affects innovation incentives in medical technologies. While prior studies of medical innovation under regulation have found an early mover regulatory advantage for drugs, I find the opposite to be true for medical devices. Using detailed data on over three decades of high-risk medical device approval times in the United States, I show pioneer entrants spend approximately 34 percent (7.2 months) longer in the approval process than the first follow-on innovator. Back-of-the-envelope calculations suggest that the opportunity cost of capital of a delay of this length is upwards of 7 percent of the total cost of bringing a new device to market. I consider how different types of regulatory uncertainty affect approval times and find that a product's technological novelty is largely unrelated to time spent under review. In contrast, uncertainty about application content and format appears to play a large role: when objective guidelines for evaluation are published, approval times quicken for subsequent entrants. Finally, I consider how the regulatory process affects firms’ market entry strategies and find that financially constrained firms are less likely to enter new device markets as pioneers.

Over recent years, the adoption of connected technologies has grown dramatically, with potential for improving health care delivery, research, and patient experience. Yet, little has been documented about the prevalence and use of connected digital products (e.g., products that capture physiological and behavioral metrics) in formal clinical research. Using 18 years of data from ClinicalTrials.gov, we document substantial growth in the use of connected digital products in clinical trials (~34% CAGR) and show that these products have been used across all phases of research and by a diverse group of trial sponsors. We identify four distinct use cases for how such connected products have been integrated within clinical trial design and suggest implications for various stakeholders engaging in clinical research.

The 2011 German Pharmaceutical Market Restructuring Act (“AMNOG”) subjected branded, non-rare disease drugs to price regulation based on an assessment of their clinical benefit. Assessment outcomes range from “major added benefit” to “less benefit than the appropriate comparator,” and impact price negotiations beyond the first year on the market. Using data on drugs that entered the market from 2012 to 2016, we evaluated benefit assessment findings, subsequent drug exits, and their correlates. We considered 171 drug-indication pairs, corresponding to 138 different drugs. Of these, 66 drug-indication pairs (55 different drugs) were found to have any additional benefit. Almost all drugs with any positive benefit assessment (98%) remained on the market, while drugs without a positive benefit assessment were over ten times more likely to exit (25% vs. 2%). U.S. policymakers considering how to address rapidly increasing drug costs may draw valuable lessons from the German experience.

Reimbursement is a key challenge for many new digital health solutions, whose importance and value have been highlighted and expanded by the current COVID-19 pandemic. Germany’s new Digital Healthcare Act (Digitale–Versorgung–Gesetz or DVG) entitles all individuals covered by statutory health insurance to reimbursement for certain digital health applications (i.e., insurers will pay for their use). Since Germany, like the United States (US), is a multi-payer health care system, the new Act provides a particularly interesting case study for US policymakers. We first provide an overview of the new German DVG and outline the landscape for reimbursement of digital health solutions in the US, including recent changes to policies governing telehealth during the COVID-19 pandemic. We then discuss challenges and unanswered questions raised by the DVG, ranging from the limited scope of the Act to privacy issues. Lastly, we highlight early lessons and opportunities for other countries.

An abundant and growing supply of digital health applications (apps) exists in the commercial tech-sector, which can be bewildering for clinicians, patients, and payers. A growing challenge for the health care system is therefore to facilitate the identification of safe and effective apps for health care practitioners and patients to generate the most health benefit as well as guide payer coverage decisions. Nearly all developed countries are attempting to define policy frameworks to improve decision-making, patient care, and health outcomes in this context. This study compares the national policy approaches currently in development/use for health apps in nine countries. We used secondary data, combined with a detailed review of policy and regulatory documents, and interviews with key individuals and experts in the field of digital health policy to collect data about implemented and planned policies and initiatives. We found that most approaches aim for centralized pipelines for health app approvals, although some countries are adding decentralized elements. While the countries studied are taking diverse paths, there is nevertheless broad, international convergence in terms of requirements in the areas of transparency, health content, interoperability, and privacy and security. The sheer number of apps on the market in most countries represents a challenge for clinicians and patients. Our analyses of the relevant policies identified challenges in areas such as reimbursement, safety, and privacy and suggest that more regulatory work is needed in the areas of operationalization, implementation and international transferability of approvals. Cross-national efforts are needed around regulation and for countries to realize the benefits of these technologies.

IMPORTANCE: Although the Health Information Technology for Economic and Clinical Health (HITECH) Act has accelerated electronic health record (EHR) adoption since its passage, clinician satisfaction with EHRs remains low, and the association of HITECH with health care information technology (IT) entrepreneurship has remained largely unstudied.

OBJECTIVE: To determine whether the passage of the HITECH Act was associated with an increase in key measures of health care IT entrepreneurship.

DESIGN, SETTING, AND PARTICIPANTS: This economic evaluation of venture capital (VC) activity in the US from 2000 to 2019 examined funding trends in health care IT, EHR-related companies, and all VC investments before and after the passage of HITECH. A difference-in-differences analysis compared investments in health care IT companies with those of companies in 3 categories: general health care (non-IT), IT (non–health care), and all US VC transactions. Data were analyzed from September 2018 to August 2019.

EXPOSURES: Venture capital funding received by US companies before and after the HITECH Act.

MAIN OUTCOMES AND MEASURES: Venture capital investment in health care IT companies and the proportion of those investments going to seed-stage companies, a proxy for very early-stage entrepreneurship and innovation.

RESULTS: The data included 70 982 investments, of which 9425 (13.3%) were seed stage, 10 706 (15.1%) were early stage, and 50 851 (71.6%) were growth stage. After passage of the HITECH Act, investment in both health care IT companies and EHR-related companies increased at a rate much faster (13.0% and 11.4%, respectively) than VC as a whole (6.9%). In addition, the proportion of investments going to seed-stage health care IT companies increased compared with both overall VC investments and non-IT health care investments. Health care IT companies saw increased probabilities of transactions being seed-stage of 5.1% (SE, 2.2%; 95% CI, 0.8% to 9.3%; P = .02) compared with the entire sample of VC transactions and 13.6% (SE, 1.9%; 95% CI, 9.9% to 17.2%; P < .001) compared with non-IT health care VC transactions. Health care IT had essentially 0 increased probability of a transaction being seed stage compared with IT companies outside health care (−0.8% probability; SE, 2.4%; 95% CI, −5.4% to 3.9%; P = .75).

CONCLUSIONS AND RELEVANCE: Although widespread clinician dissatisfaction with EHR systems remains a challenge, the HITECH Act’s incentive program may have catalyzed early-stage entrepreneurship in health care IT, suggesting an important role for incentives in promoting innovation.

Background: The adoption of digital health care within health systems is determined by various factors, including pricing and reimbursement. The reimbursement landscape for digital health in Europe remains underresearched. Although various emergency reimbursement decisions were made during the COVID-19 pandemic to enable health care delivery through videoconferencing and asynchronous care (eg, digital apps), research so far has primarily focused on the policy innovations that facilitated this outside of Europe. Objective: This study examines the digital health reimbursement strategies in 8 European countries (Belgium, France, Germany, Italy, the Netherlands, Poland, Sweden, and the United Kingdom) and Israel. Methods: We mapped available digital health reimbursement strategies using a scoping review and policy mapping framework. We reviewed the literature on the MEDLINE, Embase, Global Health, and Web of Science databases. Supplementary records were identified through Google Scholar and country experts. Results: Our search strategy yielded a total of 1559 records, of which 40 (2.57%) were ultimately included in this study. As of August 2023, digital health solutions are reimbursable to some extent in all studied countries except Poland, although the mechanism of reimbursement differs significantly across countries. At the time of writing, the pricing of digital health solutions was mostly determined through discussions between national or regional committees and the manufacturers of digital health solutions in the absence of value-based assessment mechanisms. Financing digital health solutions outside traditional reimbursement schemes was possible in all studied countries except Poland and typically occurs via health innovation or digital health–specific funding schemes. European countries have value-based pricing frameworks that range from nonexistent to embryonic. Conclusions: Studied countries show divergent approaches to the reimbursement of digital health solutions. These differences may complicate the ability of patients to seek cross-country health care in another country, even if a digital health app is available in both countries. Furthermore, the fragmented environment will present challenges for developers of such solutions, as they look to expand their impact across countries and health systems. An increased emphasis on developing a clear conceptualization of digital health, as well as value-based pricing and reimbursement mechanisms, is needed for the sustainable integration of digital health. This study can therein serve as a basis for further, more detailed research as the field of digital health reimbursement evolves.

Worldwide spending on prescription drugs has increased dramatically in recent years. Although this increase has been particularly pronounced in the U.S., it remains largely unaddressed there. In Europe, however, different approaches to regulating drug prices have been implemented. Under the 2011 German Pharmaceutical Market Restructuring Act (Arzneimittelmarktneuordnungsgesetz, or AMNOG), for example, manufacturers freely set the prices of newly authorized drugs during their first year on the market. Benefit assessments are carried out during this year and then used in price negotiations between manufacturers and representatives of the country’s statutory health insurers. Using data on 57 anticancer drugs launched in Germany from 2002 to 2017, we found that implementation of AMNOG was associated with drug prices being more closely aligned with clinical benefit. Introducing price negotiations led to a 24.5% decrease in negotiated prices relative to launch prices. We did not find evidence that manufacturers responded by setting higher launch prices. AMNOG is an example of how government price negotiation can be designed to better align prices with clinical benefit without delaying patient access.

Regulators of new products confront a tradeoff between speeding a new product to market and collecting additional product quality information. The FDA’s Breakthrough Therapy Designation (BTD) provides an opportunity to understand if a regulator can use new policy to innovate around this tradeoff—i.e., whether it improved regulator productivity by allowing products to come to market more quickly without compromising quality. We find that the BTD program shortened clinical development times by 23 percent and did not impact the ex post safety profile of drugs with the designation. In exploring mechanisms, we find that the BTD program had the greatest impact on less experienced firms and was associated with reduced BTD clinical trial design complexity. The results suggest that targeted regulatory innovation can shorten R&D periods without compromising the quality of new products.

In the area of cardiac monitoring, the use of digitally driven technologies is on the rise. While the development of medical products is advancing rapidly, allowing for new use-cases in cardiac monitoring and other areas, regulatory and legal requirements that govern market access are often evolving slowly, sometimes creating market barriers. This article gives a brief overview of the existing clinical studies regarding the use of smart wearables in cardiac monitoring and provides insight into the main regulatory and legal aspects that need to be considered when such products are intended to be used in a health care setting. Based on this brief overview, the article elaborates on the specific requirements in the main areas of authorization/certification and reimbursement/compensation, as well as data protection and data security. Three case studies are presented as examples of specific market access procedures: the USA, Germany, and Belgium. This article concludes that, despite the differences in specific requirements, market access pathways in most countries are characterized by a number of similarities, which should be considered early on in product development. The article also elaborates on how regulatory and legal requirements are currently being adapted for digitally driven wearables and proposes an ongoing evolution of these requirements to facilitate market access for beneficial medical technology in the future.