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Category: Medical Devices

Partner Progress: Forest Devices Hits Milestone with AlphaStroke™ Device

Posted on March 15, 2021 by Diana Cugliari

By:  Diana Cugliari
President & CEO
Pittsburgh Life Sciences Greenhouse

 

PLSG partner Forest Devices, an innovative Pittsburgh-based medical device company, has earned high praise for its AlphaStroke™ diagnostic platform that enables first responders to accurately diagnose stroke in the field, pre-hospital. This knowledge provides more accurate triage, which reduces time to treatment and improves outcomes for patients.

The company recently published positive results from the Emergency Data Gathering AlphaStroke Refinement (EDGAR) study of AlphaStroke™ in the America Heart Association Journal, STROKE. We sat down with Forest Devices CEO Matt Kesinger to learn more about this landmark study and what the future holds for Forest Devices.

PLSG: Before attending medical school at the University of Pittsburgh, you worked as an EMT. How did that experience influence your development of AlphaStroke™?

Matt Kesinger: “I didn’t know it at the time, but that experience would shape my future. I learned first-hand how hard it is to identify stroke in the field. In medical school, my research focus was trying to improve the pre-hospital experience for stroke by developing clinical exams beyond the standard, ‘squeeze my finger/what month is it/follow my finger’ assessment. I eventually found that the biggest problem in my work became a research problem, and then later became a business opportunity.

PLSG: Why is it so essential for first responders to accurately determine whether or not a patient is having a stroke before transporting them to the hospital?

Matt Kesinger: The single greatest cause of disability from stoke is pre-hospital misdiagnosis. Wrong decisions delay treatment, and in stroke care shortening time to treatment is essential. If a patient is in fact having a stroke, they will wither need specific medication or a surgical procedure. The problem is, not all hospitals provide these treatments. The wrong assessment could either lead to taking the patient to a hospital that is not equipped to handle the case, which would require a second transport and more time until treatment, or, conversely, a patient could be taken to a hospital much further away for surgical intervention when a local hospital would have been able to manage the case with medication.

PLSG: How does AlphaStoke™ support field triage and improve patient outcomes?

Matt Kesinger: The single most important thing for a stroke patient is what happens pre-hospital. There is too little time to make the most important decision in that patient’s life, and no system was really accurate. There was a need for an objective way to determine whether the patient was having a stroke or not, so six years ago I developed AlphaStroke™ – a compact and portable EKG for the brain – to reduce delays in stroke treatment.

PLSG: How does the AlphaStroke™ device work?

Matt Kesinger: Instead of relying solely on a clinical exam, AlphaStoke™ can determine if a patient is experiencing a large vessel occlusive (LVO) stroke, a type of ischemic stroke that requires surgical intervention, a thrombectomy, which is only available at highly specialized hospitals. The portable AlphaStroke™ device utilizes a single-use disposable head cap that quickly delivers a binary result – stroke or no stroke. Better diagnosis empowers first responders to make the most appropriate transport decision for the patient, shortening the time to treatment and reducing the risk of death and permanent disability.

PLSG: The accuracy of the device has been clinically validated – how was this achieved?

Matt Kesinger: Clinical results have shown that Alpha Stroke™ is 80% accurate. Better diagnosis shortens time to treatment, improving patient outcomes. We recently published positive results from the EDGAR study of our AlphaStroke™ technology in the American Heart Association Journal, STROKE. The study showed that, compared to the clinical exams currently used by medics in the field to make triage decisions, AlphaStroke™ was 28% – 40% superior at correctly identifying patients with LVO, and was equally as good as the clinical exams at correctly ruling out patients with non-LVO diagnoses.

PLSG: What’s next for AlphaStroke™ and for Forest Devices?

Matt Kesinger: For AlphaStroke™, the final test before market launch is in the field and starts in a few weeks. The SEGUE study will test AlphaStroke™ on over 1,000 patients on ambulances in Alberta, Canada. EMS is not a market familiar to most investors in the United States, and that has been the biggest challenge the company has faced. Raising the series-B needed to get AlphaStroke™ to market has been so challenging that I and a large part of the company are planning to move to Europe to obtain financing.

To learn more about AlphaStroke™ and Forest Devices, visit the website or read more about study results.

Posted in Medical DevicesLeave a comment

Meet our Companies: Medical Device Innovators in the PLSG Portfolio

Posted on June 24, 2019 by Jim Jordan

This is an exciting time to be involved in life sciences. Our industry is rapidly evolving. Some of that, of course, is connected to the shift in healthcare paradigms as dictated by policy changes and new business models. Another factor, however, is the rapid pace of health technology innovation. Here, at the Pittsburgh Life Sciences Greenhouse, we have the privilege of seeing some of these game changers grow from an idea into a company. In fact, we have worked with nearly 500 companies and scores of entrepreneurs in all aspects of life sciences: Biotech Tools, Diagnostics, Medical Devices, Therapeutics and Health IT. Today, we invite you to meet some of the medical device companies within our portfolio.

ALung Technologies

ALung Technologies respiratory assist system, called Hemolung (RAS), is for patients with acute exacerbations of chronic obstructive pulmonary disease, a $6.3B worldwide market. Clinical trials are currently underway.

Carmell Therapeutics

Carmell Therapeutics has developed plasma-based bioactive materials (PMA) that contain a concentration of natural regenerative factors that promote healing, reduce complications, and save healthcare costs. The company recently announced the publication of the results of its pre-clinical studies on its tissue healing accelerant for the treatment of cutaneous radiation injury.

Medrobotics

Medrobotics’ flagship product is the Flex® Robotic System, a robot-assisted platform that provides physicians with single-site access and visualization of hard-to-reach anatomical locations. Medrobotics co-founder Howie Choset was recently awarded the 2019 Engelberger Robotics Award for Education in part for his work on the Flex Robotic System.

Quantum OPS

Quantum OPS develops devices that facilitate the effortless, rapid, and secure positioning of a patients’ shoulder, arm, hip or knee for surgery. These devices can be used to safely support anesthetized patients in the proper position for several hours during surgery.

ViaTherm Therapeutics

ViaTherm Therapeutics is an industry leader in diathermy technology. Their therapeutic deep heating products can reduce the pain associated with injury and aging while helping to promote flexibility, mobility and assist circulation.

ChemDAQ Inc.

ChemDAQ Inc.’s toxic (sterilant) gas monitoring systems protect workers from exposure to airborne toxins. The system was originally used in hospital and medical device sterilization operations in the US. It has since expanded internationally and to other industries such as food and beverage processing, water treatment facilities and other industries that use Peracetic Acid, Hydrogen Peroxide or Ethylene Oxide.

Forest Devices

Forest Devices’ ALPHASTROKE helps first responders quickly identify whether a patient has had a stroke so they can route the patient to the proper hospital. This ability to identify and triage stroke victims in the field can reduce the time it takes to begin treatment. This is significant as early treatment can prevent up to 6,000 deaths per year.

Neuro Kinetics

Neuro Kinetics, Inc. (NKI) has developed a unique, eye-tracking technology to be used for non-invasive, neuro-otologic diagnostic testing. The company is expanding its applications to include concussions and is currently conducting clinical trials.

Circadiance

Circadiance has developed respiratory products for individuals with sleep-disordered breathing. These patients need non-invasive ventilation or require monitoring. The company has innovated a collection of comfortable, breathable, easy-care cloth respiratory products designed to improve the patient compliance rate. Circadiance’s NeoPAP CPAP is designed to treat newborns and infants with (or recovering from) respiratory distress syndrome.

Intelomed

Intelomed has redefined the standard of patient monitoring and informatics with their non-invasive device that dynamically assesses a patient’s cardiovascular health by analyzing pulse and pulse oximetry waveforms in response to small perturbations. The company has received FDA and European (CE Mark) approvals for their first product, CVInsight® Patient Monitoring & Informatics System.

PECA Labs

Created out of CEO Doug Bernstein’s personal experience with congenital heart defects, PECA Labs is developing a suite of products designed to improve outcomes for children born with rare congenital heart defects. For example, the company has developed a synthetic valve conduit for pediatric right ventricular outflow tract (RVOT) reconstruction and a valve shunt for the treatment of hypoplastic left heart syndrome (HLHS).  You can read more about PECA Labs and Doug Bernstein’s story here.

Rinovum Women’s Health

Rinovum’s product, the Stork™, aids in natural fertility and conception by “supported” natural conception conducted in the privacy of a patient’s home. The product is FDA-cleared to be used without a prescription and offers a low-cost alternative to clinical treatment options.

Starr Life Sciences

Starr Life Sciences is a leader in small animal research equipment. Their products include the MouseOx Plus® pulse oximeter, the world’s first and only patented non-invasive vital signs monitor specifically designed for mice, rats and other small laboratory animals.

These companies represent just one category of the PLSG portfolio. In addition to these innovative medical device companies, we also work with innovators that are disrupting the status quo in the areas of Therapeutics, Health IT, Diagnostics, and Bio Tools. You can learn more about those companies here.

Posted in Uncategorized, PLSG News, Medical Devices, Portfolio CompaniesLeave a comment

Using Public Disclosures to Prevent Competitive Patents

Posted on August 15, 2018 by Alan West

When does disclosing a secret actually help the secret-keeper?  In the world of patents and patent protection, it can be a key strategy.

Most entrepreneurs understand that an invention must be truly novel to receive a patent.  According to the U.S. Patent and Trademark Office (uspto.gov), an invention cannot be one that has been previously “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”

As an example, I once worked at a company that acquired a medical device patent from a physician.  The resulting product achieved rapid market penetration, and the physician inventor received substantial royalty payments – until a competitor discovered that the inventor had described the concept to a group of physicians during a Grand Rounds at a small hospital a few days before he had filed the patent.  As a result, the patent was invalidated, the competitor began marketing a look-alike product, and the company and inventor had to deal with the rather nasty legal business of all the royalties that had been paid.

You have to be especially cautious to not disclose a patentable idea to anyone before filing a patent, unless your audience has signed non-disclosure agreements in advance.  Otherwise, it is considered to be a “public disclosure,” even if it is to one person.

You can, however, use such public disclosures to your advantage.  Let’s say you are a start-up company with a patent covering your first product.  A common defensive patent strategy is to file additional patents covering improvements and line-extensions to your original patent – a tactic known as the “picket fence.”  In this way you create a “fence” surrounding your product, making it much more difficult for competitors to get around your patent.

These new patents are all subservient to your core patent in that they are offshoots of the original and cannot be independently practiced.  As a start-up company, however, you may not have the cash to file all these new applications.  A well-financed competitor, on the other hand, may decide to file patents covering improvements to your product as an offensive strategy.

By filing enhancements to your original patent, they can create bargaining chips to use with you to negotiate a cross license, giving them the right to your original patent in exchange for you to use their patents covering product improvements.  It is a common and effective strategy, but it’s crucial to realize that it can also undermine your company’s competitive advantage.

A simple way to avoid becoming fenced in by a competitor in this way is to publish a description of the improvement in a paper or on your website.  If you are not going to file a patent on the improvement, publicly disclose the idea so no one else can patent it.  In that case your product would still be protected by your core patent.

The Intellectual Property Pyramid Assessment©, a workbook published by the Pittsburgh Life Sciences Greenhouse, will soon be available to order on Amazon. To sign up to get more details please email info@plsg.com.

Posted in Therapeutics, Biotechnology Tools, Uncategorized, Business Development, Health IT, Words of Wisdom, Concentrations, Medical Devices, Diagnostics, Portfolio CompaniesLeave a comment

Why Invest in Nanomedicine? – Continuing the Discussion

Posted on January 16, 2018 by Marissa Kuzirian

By Marissa Kuzirian, Investment Manager, PLSG In collaboration with Fourth River Solutions

Innovations often require backing from those with the foresight to believe in them, and faith is required to overlook the risk associated with innovation. This is amplified in groundbreaking segments without much market validation. Such is the case today with nanomedicine, defined as the application of knowledge and tools of nanotechnology to the prevention and treatment of disease.

Investment activity in nanomedicine has been limited and unpredictable, primarily revolving around nanomedicine applications in oncology. Hesitation among investors may be attributable to the fact that nanomedicine is a non-product segment, meaning that technologies in this space need to be coupled with other attractive assets to provide a complete offering.

As nanomedicine tools and applications mature so will the investment opportunities.

Immunology and neurology are the next forefront of nanomedicine, as early-stage life science companies tackle new ways to approach autoimmune disorders and complicated CNS disorders such as Alzheimer’s and Parkinson’s disease. While investments in nanotechnology in immunology and neurology are still small and scattered, this may grow as nanomedicine enables effective therapeutics for previously intractable diseases.

Nanomedicine can be used as a tool to facilitate controlled release or delivery of therapeutics. This can be as simple as extended release formulations. However, as therapeutics move from blunt force inhibition or activation to a more sophisticated manipulation of endogenous signaling pathways, the question becomes: Can nanomedicine be a vital tool that enables this transformation?

Nanotechnology can deliver cargo to a specific tissue or act as the scaffold for complicated cellular signaling pathways. In this way, we can “tune” the release specifications for specific therapeutic applications.

Cell-therapies are popular because of their delicate and more endogenous manipulation of complex pathways, as compared with systemic administration of small-molecules therapeutics. But cell-therapy can be complex and difficult to control. Nanomedicine provides an opportunity to recapitulate cell signaling in a more precise, regulated fashion that may help mitigate the technical and regulatory complexities of cell-based approaches.

Nanomedicine may be in an early phase, but it is poised for a breakthrough. Risk is always present, as with any high-potential technology. Those with the faith to commit now, however, may be rewarded with significant returns.

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Posted in Therapeutics, Biotechnology Tools, Medical DevicesTagged Nanomedicine

Getting a Handle on Nanomedicine

Posted on December 11, 2017 by Marissa Kuzirian

By Marissa Kuzirian, Investment Manager, PLSG In collaboration with Fourth River Solutions

Imagine a market valued at $135 billion, yet still considered too immature in which to invest. A market that deals in products invisible to the naked eye, yet which can yield incredible advances in human health. That market is known as nanomedicine.

Defined as the application of knowledge and tools of nanotechnology to the prevention and treatment of disease, nanomedicine features applications such as biosensors, tissue engineering, diagnostic markers, and therapeutics. The promise of nanomedicine for the healthcare industry includes enabling personalized medicine, permitting clinical protocols to become more efficient, providing targeted delivery mechanisms and formulations that can cross the blood brain barrier, and enabling novel implant surfaces that can avoid infections.

The nanomedicine global market is currently valued at $135 billion and is projected to increase to $212 billion, $287 billion, and $365 billion by 2020, 2025, and 2030 respectively. These figures derive from the current development pace of products awaiting FDA approval and the major impact of the market associated with anticancer therapies.

Despite this growing global market, investors have held back from committing dollars to nanomedicine to date because the field remains in its infancy and the field somewhat ill-defined. At this point, most activity, technologies, and delivery systems have centered in and around oncology to treat cancers.

North America has captured 45% of the total market, with Europe and Asia Pacific following, at 35% and 15%, respectively. Industry watchers anticipate North America to continue dominating the market for the next five years, while the European market is expected to see the fastest growth rate due to an extensive product pipeline portfolio, an improving regulatory framework, and an increase in European Commission innovation initiatives.

In the U.S., the FDA is still determining how best to evaluate and regulate nanotechnology and as this comes into focus, investors are likely to become more keen to engage.

The truth remains, nanomedicine represents an incredibly diverse marketplace of opportunity and advancement, featuring a variety of products that can be segmented in multiple ways. It has the potential to significantly impact the field of life sciences for generations. Look for additional articles from the Pittsburgh Life Sciences Greenhouse and Fourth River Solutions exploring the future of nanomedicine.

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Posted in Medical Devices, Therapeutics, Biotechnology ToolsLeave a comment

Life Sciences Equals Economic Development

Posted on May 26, 2017 by Jim Jordan

Life Sciences drives economies, and for western PA it is one of our best contributors to economic development in the form of generating wealth and jobs. Just look at the math.

The term “life sciences” can include biotechnology, pharmaceutical, diagnostic, medical devices, and health care IT products – which make up approximately 40% of health care spending. And our nation’s health care system is projected to be $3.2 trillion by the end of the year. When you do the math, that’s $1.3 trillion in life sciences.  And that’s just the U.S.

In short, success in the life sciences is necessary for prosperity in a region, state, or nation.  We’re not talking about a subjective observation.  This statement comes via cold, irrefutable, objective calculations.  The economic impact of the life sciences industry is simply too big to ignore and too important not to invest in heavily.

Our local universities attract nearly $1 billion of federal funding each year to the region. That means if we were a state, the economic impact of western Pennsylvania’s federal funding for life sciences research alone would rank us among the top 12 states in the country.  That sounds big, and it is.

Lastly, the PLSG and its central role in fostering and advancing the life sciences in this region would not be in possible without foundation support.  Funding from regional foundations can be directly linked to an annual increase in Pittsburgh-area life sciences startups from three companies in 2002 to more than 12 today.  While we always would like to see more funding to support the innovation coming from our universities and entrepreneurs, the fact remains that our local foundations have been invaluable in moving the needle higher.

A high level of cooperation among investors, foundations, university researchers and technology transfer offices, local entrepreneurs, and organizations like PLSG is essential for success.  We must all focus on the same result – to generate economic prosperity, increased jobs, and a higher quality of life for our families, all through a stronger, more vibrant, and ever-expanding life sciences presence across this region.

Posted in Venture Capital Perspective, Medical Devices, Diagnostics, Therapeutics, Biotechnology Tools, Capital Investment Programs, Investment Growth Programs, PLSG News, Business Development, Health IT

It All Starts with An Idea

Posted on May 15, 2017 by Marissa Kuzirian

by Marissa Kuzirian, Investment Manager

Any project begins with an idea, the kernel of a concept that you hope pops into something bigger, something better.

The same holds true for those involved in the life sciences.  A new treatment or device or biochemical breakthrough begins with a simple idea.  It might be to ease patients’ suffering, or to make a surgeon’s task easier and more effective.  It could be any number of things.

And, in more instances than one might surmise, that idea could come from a personal experience or connection.  Take the case of PECA Labs, run by founder Doug Bernstein, as one example.

PECA Labs, begun in 2012 as a Carnegie Mellon University and University of Pittsburgh spin-off, focuses on pediatric and cardiovascular surgical devices.  Its proprietary MASA valve greatly lessens the likelihood of reconstructive surgery later in life for newborns with rare congenital heart defects, like the one suffered recently by the infant son of late-night host Jimmy Kimmel.

Bernstein had a great motivator for delving into research and development of these devices in particular – he had been born with the same kind of congenital heart defect.

“My life was saved, shortly after being born in Los Angeles, by a pediatric cardiac surgeon,” explained Bernstein.  “I only survived because a surgeon had been flown in when another baby, born at the same time, had a congenital heart defect.  When the doctors realized that I needed the same attention, they called the airport and had that surgeon come back to the hospital before flying off.  He saved me, which was so unbelievably lucky because there weren’t many surgeons who could perform that procedure then.

“When I had the opportunity to conduct research and start a company dedicated to addressing this issue, I was eager to do it,” Bernstein continued.  “I had the technical experience, passion, and drive, but right out of school, no business experience. If not for the PLSG and the one-to-one help, guidance, and perspective received from the Executive In Residence program there, we could never have advanced to where we are today.”

And it all started with a simple idea – to save and improve the long-term lives of babies born with the same heart defect Bernstein had.

Posted in Business Development, Health IT, Concentrations, Medical Devices, Diagnostics, Therapeutics, Biotechnology Tools

Just the Facts – Speaking the Language of Funders

Posted on May 1, 2017 by Diana Cugliari

In just about any TV police drama, detectives have a way of cutting through the clutter when interrogating a witness – they want just the facts.  In other words, don’t waste time on irrelevant information or pumped-up descriptions.  Eliminate distractions.  Just the facts.

Startup entrepreneurs can take this same advice when approaching funding sources.  Hopeful business owners may not be as confident in building a case, so a flashy PowerPoint presentation gets assembled to cover their tracks.  Or maybe they overemphasize or underplay the wrong aspects of their pitch, missing the mark in the end.  The potential for disappointment can be enormous.

It helps to speak the language of the people and organizations writing the checks.  Here’s why.

Funders are looking for indications – as strongly and clearly conveyed as possible – that a startup business is more than just a good idea, because an idea is just that.  It doesn’t make money yet.  It’s not real yet.  And it’s not going to get any funding yet.

Funders are looking for certain criteria before they will commit.  Is the business in an industry they typically fund?  Is the financial “ask” within a suitable range to generate the returns the funder expects?  Can the business win in its competitive space, and why, and how?  Can the business prove that others believe in it as much as the entrepreneur?  What has been done already, before receiving additional capital, to prove commitment to the concept – such as development of a working prototype, sales achieved to date, and hiring key talent?

Funders are looking for the right fit.  The business must appeal to some inherent, many times unspoken, intangible that’s important to the funder.  It could be a shared interest in the field that the business addresses, or the markets it will serve, or maybe a personal connection of being fellow alumni of a university.  The business seeking funding certainly must offer tangible, measurable, objective evidence that it’s worthy of financial support.  But the funder also needs to feel good on a subjective level about the decision.

The Pittsburgh Life Sciences Greenhouse works with startup entrepreneurs seeking early-stage funding.  We’ve seen presentations that worked and those that didn’t.  Bottom line – lose the extraneous stuff.  Stick with just the facts.

Posted in Business Development, Health IT, Medical Devices, Diagnostics, Therapeutics, Biotechnology Tools

Private vs Government (Public) Funded Medical Device and Therapeutic Development

Posted on September 13, 2016 by Hank Safferstein

A perfect, unflawed system in any business sector is virtually unachievable, and the biotechnology and therapeutics industries are no exception. Although we are innovating and making strides to end what were once thought of as incurable diseases, we still do not have one single agreed upon way of funding the research and development of drugs and medical devices.

Week after week, new devices and drugs are approved by the FDA, but where does all the money that funds these life science investments come from? Part of it comes from government grants through the National Institute of Health. More specifically, $32.3 billion annually is awarded through nearly 50,000 grants reaching over 300,000 scientists throughout the country. The rest of the estimated $117 billion comes from industry, foundations and other private sectors. And although $117 billion sounds like a lot of money, it only accounts for 0.7 percent of the gross domestic product while the healthcare industry provides 17 percent of the nation’s economy.

A recent U.K. government review stated that the future of research and development funding should be done through the government itself. With a backing from former Goldman Sachs chief economist Jim O’Neill, not only did the research say that it should be funded this way, but that those who don’t participate should be fined. Although this may seem like a good idea, there are many reasons why our current system benefits both private and government industries.

Government Funding Only

A government funded only system sounds like a good idea, but in reality it may take away the drive that pushes many to support the industries. If all of the industry’s money was distributed this way, research studies that may have not gotten a significant amount of money to use would then be awarded funds. Although this may seem like a win-win situation, it would create a much less competitive industry. You would no longer need to be the best, most precise researcher possible, because quite frankly you’d never be given a deserved reward for the service provided.

Private Funding Only

On the other hand, a system regulated only by private funding would be equally detrimental. One good thing that it would create is competitiveness. The best and the brightest would be rewarded for their work, but would they strive to help the next generation like they do now? It would create an industry run by the wealthiest, only trying to help them get richer and solve only their problems. Poverty in our world has already been one of the leading factors of the spread of disease, and if the research and development went private, this issue would only grow substantially. Each newly developed life science products could become a monopoly, similar to what happened when Martin Shkreli, former CEO of Turing Pharmaceutical, hiked up prices on his company’s drug, Daraprim, an antiparasitic commonly used to treat HIV patients. The government side of the industry is what keeps the private in check, just as congress is designed to do for the president.

Finding Balance

The key to addressing the seemingly intractable diseases of our time is to strike the appropriate balance between public and private financing.

For Government, there is simply too much focus on academic science and not enough on small business, one of the major engines of innovation in the drug and device sector.  For example, only a very small fraction of the total NIH funding goes to small businesses through SBIRs, STTRs, UO1s and RO1s.

From the private investment side, while angel investors have stepped up to the plate to fund innovation, venture and strategics have moved away from the risk and created huge funding gaps that, in the end, only hurt them in the long term through a complete loss of innovation in the pipeline.

So how do government and private funders pivot to drive research and development forward? Government funding needs to expand their effort towards funding the science beyond the bench. The private sector funding also needs to modify their investment models to allow for the risk in investing to the research. If both sides are able to support the translational process on the road to commercialization than more funds will become available to life sciences companies thus incentivizing them to research and develop life saving solutions to the public.

Hank Blog Image 2

 

Posted in Business Development, Medical Devices, Therapeutics

How The ACA’s Medical Device Tax Affects Startups

Posted on February 24, 2016 by Jim Jordan

Med Device Tax Affects Startups Blog

The Affordable Care Act (ACA) has helped a great many Americans get health insurance and much needed care, but parts of the bill have had less helpful effects. One of these provisions, the medical device excise tax, has been a thorn in the side of life science companies since the beginning of 2013. The tax is meant to help pay for the reforms at the heart of the ACA, but has been derided as a danger to job creation, healthcare innovation, and manageable healthcare costs.

To the delight of many legislators and medical device manufacturers, 2016 looks very different. With the passage of the Consolidated Appropriations Act of 2016, the 2.3% excise tax has been suspended for two years. Advocates for the medical device industry see the suspension as a victory; while others worry it will make it more difficult to fund the reforms of the ACA.

This tax has been projected to bring in $30 billion over a decade to help fund the ACA. In 2013, it brought in $1.4 billion in revenue. According to NPR, that jumped to $2.4 billion in 2014, with some companies paying as much as $10 million.

Opponents of repealing this tax assert that it was created to be balanced. The Center on Budget and Policy Priorities states that the increased business necessitated by the ACA would make up for the revenue lost by the tax. They claim that the tax would have a negligible impact on employment and innovation.

Indeed, as NPR notes in the above referenced story, employment in medical device companies has not been affected by this tax. But the assertion that innovation would not be affected is misguided. It might be true that larger, more established medical device producers have not been hindered by the excise tax, but it’s a different story for medical device startups..

Smaller device manufacturers are often still struggling through startup funding rounds, trying to attract investors and grants to stay afloat. Many investors already see these companies as risky investments. The ACA’s medical device excise tax makes them look even less advantageous as precious investor capital that could go into the company’s development must now go to taxes. This is a real problem for startups, as NPR reports, “because investors balked at putting their money into an industry that’s been singled out to pay a tax.”

2.3% might not be a lot for a big firm, but that can be a significant loss for startups. Funds put toward this tax are funds taken away from research and development, which hurts production, delays testing, and limits market penetration.

We’ve been fortunate to see success over the past year from medical device companies in Pittsburgh, including ALung Technologies and Rinovum Women’s Health. Think about the innovations we could have seen if other young medical device startups were not hampered by this tax.

Do you think it was right to suspend the medical device excise tax? Do you think medical device startups will benefit as expected from this? Share your thoughts in the comments below!

 

Image Source: https://pixabay.com/en/blood-pressure-blood-pressure-monitor-949093/

 

Posted in Medical Devices

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