A New Era of Growth

April has been a good month for the neurotechnology industry. Perhaps the biggest news is Abbott’s purchase of St. Jude Medical [see article, p3], which will instantly make the medical device firm a key player in the neurotech space. Though Abbott did not previously have a neuromodulation product line, it’s obvious that the higher growth rates of St. Jude Medical’s neuromodulation products made the deal more attractive to them.

With Abbott now firmly established in the neurotech industry, perhaps there will be increased pressure on other medical device giants like Johnson & Johnson and Stryker to enter the space. This and other recent mergers such as Medtronic/Covidien and Cyberonics/Sorin certainly seem to indicate that large medical device firms should have at least a piece of the neuromodulation industry.

We were also pleased to learn of the $185 million gift to UC San Francisco, which will be used to create the Weill Institute for Neurosciences [see article, p8]. The institute will likely play a major role in future developments in applications like deep brain stimulation, brain-computer interfaces, and pain neuromodulation. At a time when government, venture capital, and strategic investment in neurotech are each at their highest levels, it’s one more positive sign to see such a high level of financial support from wealthy individuals and families.

Finally, we were encouraged to see a bill proposed in the U.S. House of Representatives that would mandate automatic Medicare coverage for newly approved medical devices. The Breakaway Pathways for New Medical Technologies Act, if passed, would provide coverage through the Medicare New Technologies Add-on Payment process for three years, after which time CMS would have the option to reevaluate coverage on a permanent basis. Passage of this act would address one of the few remaining barriers to investment in neurotech startup activity.

On another front, we were also pleased to see the FDA propose that cranial electrical stimulation systems used for treatment of insomnia and anxiety be reclassified from class III to class II devices. The reclassification would not apply to brain stimulation devices treating depression, which would be subject to premarket approval by the FDA. Many clinicians and vendors have contacted the FDA to recommend the reclassification apply to depression as well. This seems logical, given the FDA’s lax approach to consumer devices such as Thync’s, which don’t require FDA clearance. Still the FDA’s continued movement in the direction of expediting access to market is a good sign.

Taken together, these developments in capital markets, government affairs, and private investment highlight a new area of promising growth and maturation for the neurotechnology industry.

James Cavuoto

Editor and Publisher

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