Why not use a cheap tube for glaucoma filtering surgery instead of an expensive device? The simple answer is that the design of a Minimally Invasive Glaucoma Surgery (MIGS) device has little bearing on its price. The costs of bringing a product to market and return on investment determine the ultimate value. This editorial examines the costs of developing a device through the Investigational Device Exemption/Premarket Approval (IDE/PMA) process. The information regarding the costs of development is based on conversations with leaders of several manufacturers of MIGS devices.

A medical device diagnoses, cures, mitigates, treats, or prevents a disease or condition that affects the function or structure of the body; does not achieve the intended use through chemical action; and is not metabolized. If a novel implantable device lowers uncontrolled intraocular pressure (IOP) and is intended for use as the initial procedure after medical and/or laser therapy (nonrefractory glaucoma), then the United States Food and Drug Administration (FDA) will consider approval for this Class III device through the IDE/PMA process. The application must contain sufficient valid scientific evidence to provide reasonable assurance that the device is safe and effective for its intended use. The 510(k) Premarket Notification Program is used generally for Class II Medical Devices, such as aqueous shunts when “intended to reduce IOP in neovascular glaucoma or glaucoma where medical and conventional surgical treatments have failed.” Premarket Notification 510(k) must show substantial equivalence to a legally marketed “predicate” device, such as the Ahmed Glaucoma Valve Implant (New World Medical, Inc, Rancho Cucamonga, California, USA).

To produce a Class III device, a manufacturer requires highly skilled employees for research and development, regulatory, quality assurance, financing, and fabrication. The facility must comply with American National Standard for Ophthalmic Implantable Glaucoma Devices (ANSI-Z80.27) (oral presentation, Eva Rorer, MD, FDA—American Glaucoma Society Workshop, Supporting Innovation for Safe and Effective Minimally Invasive Glaucoma Surgery [MIGS], Washington, DC, February 26, 2014) and Good Manufacturing Practices (GMP), and achieve ISO 13485 certification to produce implantable products of sufficient grade. The overhead costs are estimated at $4 million (MM) per year from the moment the first prototype device is built until product launch.

The preclinical development and evaluation before performing an IDE study includes chemical and biocompatibility tests that are performed on many samples after shelf-life expiration. Expensive tests include mutagenicity and carcinogenicity evaluations, animal studies with implantation of prototype devices, and eventually feasibility clinical studies in patients that are often performed outside the United States. Most companies developing Class III devices will first test their devices outside the United States as financiers of new technology will want to know if it is likely to be successful before they invest. The costs of generating data to support approval outside the United States may be considerably less than testing in the United States, and perhaps as small as 10% by some estimates. The FDA reviews initial clinical data from outside the United States in evaluating an IDE study design. Although the FDA reviews the IDE within 30 days of receipt, the 3- to 5-year development period required to generate the data for the IDE submission could add $15–25 MM of expenses for the company depending on the number of prototypic iterations.

The draft proposal, ANSI-Z80.27 2014 D.3, reads “the type of clinical investigation recommended, where feasible, is a randomized controlled study with an appropriate control group.” An alternative design to the randomized controlled study should be considered when a randomized controlled study is not feasible. The number of subjects in the investigational device group should be sufficiently large that any adverse event (of a given type) that occurs in the population at a rate of 1% or greater is likely to be observed in the population. There should be at least 95% probability that at least 1 adverse event of this type will be detected. The total number of enrolled study patients, including the control arm with an unbalanced randomized study design, could be in excess of 500 and include a 10% loss to follow-up. To achieve a study with 500 patients, screening potential participants who fail to meet the eligibility criteria could result in the addition of many hundreds of patients and delay the time for study initiation. The company must absorb the cost of screening all patients.

The FDA has required a clinical study with 1 year follow-up data for MIGS devices. For example, in an approved study design of a randomized clinical trial, although directly comparing results of IOP reduction, reintroduction of glaucoma medications, and adverse outcome rates of a new device vs an appropriate control may seem sufficient, in cases where the extent of IOP-lowering effect of the investigational device is anticipated to be temporal and as low as 1 mm Hg, the FDA has required IOP baseline measurements after washout of hypotensive medications, where feasible, in nonrefractory glaucoma studies and postoperatively at yearly intervals to reduce the impact of bias in these unmasked studies. The time frame from the beginning of enrollment to the requisite follow-up could total 4 years.

To properly execute a clinical trial, the company usually employs a clinical research organization and clinical research associates to provide onsite inspection and data gathering and assure protocol compliance. These expenses and the costs of Institutional Review Board fees, FDA user fees, a Data and Safety Monitoring Board, meetings of investigators, and data collection at 25 clinical sites with 500 patients are estimated at $14–21 MM.

After submission of the clinical results, the FDA requires sufficient time to evaluate all aspects of device manufacturing and convene a panel meeting, if necessary. After the panel makes a recommendation about approvability of the device based largely on a review of the clinical data, additional time can elapse before the FDA fully approves the device. Twenty-three months elapsed from the first panel meeting of July 30, 2010, until final approval of the Glaukos iStent (Glaukos Corporation, Laguna Hills, California, USA) on June 25, 2012. If we assume the PMA approval process could take 1.0–1.5 years, then the time elapsed to market release would be 5.0–5.5 years from the beginning of recruitment for the study. Overhead costs alone of $4 MM/year during the clinical study and PMA process could total $20 MM.

Commercial insurance carriers and federally funded programs will not pay for the evaluation of new surgical devices without preapproval, which could take many months. Consequently, it may be less expensive for the manufacturer to pay for the procedure than to wait. The costs of recruiting, treating, and following patients for 2 years could total $10 000/patient for the investigator and clinical researcher plus an additional $4000/patient for the procedure. Centers for Medicare and Medicaid Services would pay for the cataract portion of a procedure in both the control and the investigational device arm, if cataract surgery and intraocular lens implantation is part of both groups. Assuming reimbursement for the appropriate control arm is available and not for the use of the device in the study arm, the total cost could be $7 MM for 500 patients. Some new devices used in nonrefractory patients may be entitled to reimbursement as a consequence of the FDA approval of the Glaukos iStent.

For nonrefractory glaucoma studies, preoperative and postoperative corneal endothelial cell counts are used to demonstrate safety because low endothelial cell count is associated with corneal edema when used with certain glaucoma medications. The company must lease or purchase specular microscopes and pay for masked readings of the study data. If the FDA-approved study protocol for patients in the device test arm or the control arm requires the intraoperative application of mitomycin C, then the company must supply the only officially approved product by the Center for Drug Evaluation and Research for use in glaucoma surgery, Mitosol (Mobius Therapeutics, LLC, St Louis, Missouri, USA.). These 2 items will add an additional $1 MM, bringing the total costs of the clinical study and overhead to approximately $35 MM. Total costs of the PMA clinical study and preclinical development work are estimated at $55 MM. This calculated number is very conservative as a polling of the industry leaders from 5 companies developing MIGS devices revealed that the average funds raised are $90 MM (range, $30–156 MM), with only Glaukos Corporation (Laguna Hills, California, USA) achieving PMA.

Assuming the $55 MM cost, the interest rate would likely be no less than 8% per year for the remainder of the patent life on the new device. The costs of securing protection for the intellectual property by obtaining patent rights are highly variable and unpredictable, but could result in additional expense of several millions of dollars. If a company cannot secure a patent, then it is very unlikely investors would finance its development. Patents are usually enforceable and provide protection to the innovator for 17 years from the date of issue. Assuming 15 years remain on the lifetime of the patent by the time of product launch, the new device must therefore generate $12 MM/year in revenue for 15 years to retrieve the costs of principal and interest. Added to this yearly cost is the original $4 MM/year to support operation of the company plus a similar amount to support a sale and marketing team. The total baseline revenue that must be generated from the sales of the device is approximately $20 MM annually.

Assuming for the sake of computation that at least 100 000 trabeculectomies or glaucoma drainage devices or both are performed annually in the world, and that half of these procedures will be replaced with the new device, the sales cost would be $20 MM/$0.05 MM or $400/unit. If added to this are the costs of inserters, kit supplies, and sterilization, then the cost per unit could be $500. Corporate sales and federal tax on medical devices could bring the cost to the consumer to$800/unit. Moreover, as mentioned earlier, with actual costs averaging $90 MM, the break-even cost to the consumer in the above model should be closer to $1000/unit. The sales price is calculated to achieve break-even status, but this is insufficient to support a sustainable business model. In view of this fact, the new glaucoma companies are targeting a potentially larger patient base with less severe glaucoma and seeking implementation of the device in patients with mild glaucoma who require cataract surgery.

According to manufacturers polled, the cost for approval in Europe before 2012 by achieving “CE Marking” (“Conformité Européene”), the medical device manufacturer’s claim that a product meets the essential requirements of all relevant European Medical Device Directives and which is a legal requirement to place a device on the market in the Europe, was about 10% that of a successful US IDE/PMA. The major cost saving was attributed to requiring that fewer patients be followed for as little as 6 months. However, the European socialized medicine systems do not reimburse comparably for a new glaucoma device, unless compelling data from a clinical trial against a suitable control, like trabeculectomy, substantiate that the higher price will save money for patient care. The consequence is that sales outside the United States based on current reimbursement would be insufficient to support a United States clinical trial.

Irrespective of the MIGS design, the costs of bringing a novel device to market are economically risky, with much of the sales price used to pay for the development costs. As a result, the impetus to develop glaucoma devices that could improve patient care, reduce medical costs, and foster innovation in the United States is tempered with caution. To accelerate the current PMA process, reduce the time of getting safe and effective glaucoma devices to market, and stimulate development of MIGS in the United States, the FDA is proposing “leapfrog guidance” that will distribute new and important information to manufacturers in real time. Key issues, such as the type of patients recruited based on disease severity, recommended length of follow-up, safety and effectiveness endpoints, and the washout of baseline and follow-up glaucoma medications, are actively being discussed (oral presentation, Malvina Eydelman, MD, FDA—American Glaucoma Society Workshop, Supporting Innovation for Safe and Effective Minimally Invasive Glaucoma Surgery [MIGS], Washington, DC, February 26, 2014). These forward-thinking steps and newly focused attention to the regulatory detail will benefit both the surgical innovators and the patients and will likely reduce the costs for all parties in the near future.