Exam 2 Flashcards
(129 cards)
1
Q
Estimated Cost for Phase I Drug Development
A
$5M
2
Q
Estimated Cost for Phase II Drug Development
A
$20M
3
Q
Estimated Cost for Phase III Drug Development
A
$60M
4
Q
Total cost to bring new drug to market
A
$161M - $2B
5
Q
Time from clinical trials to market
A
7.5 years
6
Q
Total time to develop single drug
A
10 - 15 years
7
Q
Technology Derisking
A
As technology matures, its risk decreases and the value increases
8
Q
Stages of company funding (Drug development)
A
- Seed - Early stage prototype, proof of concept
- Start-up - Product Development, animal/preclinical trials.
- Expansion - Completion of clinical trials, initial product launch.
- Self-sustaining - Company generates profits, possible liquidity/exit events, merger, acquisition
9
Q
3 ways to obtain money for new technology
A
- Government: Grants and contracts
- Private: Friends, family, loans, investors, venture capital
- Public: Stock shares sold
10
Q
Small Business Innovation Research (SBIR)
A
- Competitive program sponsored by the US Gov
- Encourages small business to engage in R&D
- Driven by potential for commercialization
11
Q
What is a Small Business
A
- Organized for profit
- > 51% owned by US citizens
- Principle place in US
- < 500 employees
12
Q
Small Business Technology Transfer (STTR)
A
- Only large federal agencies with over $1B in R&D
- Requires formal partnership with university or another institution
- Primary employment of PI requirements vary by agency
13
Q
SBIR Phase I
A
- Establish technical merit, feasibility, commercial potential
- $150K for 6 - 12 months
14
Q
SBIR Phase II
A
- Continue R&D efforts
- $1M for 2 years
15
Q
SBIR Phase III
A
- Commercialization objectives
- Not funded
16
Q
Two mechanisms of private funding
A
- Equity
- Debt
17
Q
Equity
A
- Share of ownership in the business received by an investor in exchange for money
- No collateral
- Not repaid
18
Q
Debt
A
- Money borrowed from traditional lenders, banks, individuals
- Lender does not gain business control
- May require company assets as collateral
- Must be paid back
19
Q
Types of equity
A
- Common stock
- Preferred stock
20
Q
3 ways investors invest
A
- Triage
- Due diligence
- Term sheet
21
Q
Liquidity/Exit Events
A
- Licensing agreement
- Merger or acquisition
- Initial public offering (IPO)
22
Q
Publicly Traded Companies
A
- Subject to strict rules and regulations
- Must have board of directors and report financial info
- In US, report to Securities and Exchange Commission (SEC)
23
Q
4 Key Players in Public Trading/IPO
A
- Issuer
- Underwriter
- SEC
- Investors
24
Q
Money Raised =
A
Number of shares sold in IPO x Price of share sold in IPO
25
Gross Spread =
Price of shares sold - Price of shares agreed
26
What is the primary mechanism of financing of the medical device industry in the US?
Debt
27
Going Public/IPO step by step
1. Hire underwriter(s)
2. Negotiate contract: firm commitment or best effort agreement
3. Registration with SEC, approves ticker symbol, sets date for IPO
4. SEC sets cooling off period
28
Sole Proprietorship
- You are the business
- All profits and losses are yours
- You are responsible for taxes and liabilities
29
General Partnership
- You and your partners combine skills and expertise
- You and partners share responsibilities, profits, losses, taxes and liabilities
30
Limited Liability Partnership
- Similar to general
- You and partners share responsibilities and taxes
- Separate liabilities
31
Limited Liability Company
- Separate personal assets from business assets
- Pay taxes on profits but business liabilities do not threaten personal assets
- If member dies, retires or goes bankrupt, so does LLC
32
S-Corporation
- Legal entity separate from owners
- Issues shares to shareholders (<100)
- Corporation assumes all business liabilities
- Shareholders share profits and pay taxes
- Exists until dissolved
33
C-Corporation
- Company responsible for taxes and liabilities, not shareholders
- Most common form in US
34
Which type of corporation can sell shares on public exchanges?
Only C Corp
35
Flowchart of business oversight
- Chairman of the Board
- Board of directors
1. Secretary
2. President & CEO
3. CFO, Treasurer
- Operations
36
Holding/Operating Company
In example, C-Corp owns key assets and trades shares. Sets LLC as the "front" to run daily business operations.
37
4 reasons for declining value of technology
- Patent expiration
- Adverse events
- Obsolescence
- Competing technology
38
4 Stages of the product life cycle
1. Emergence (negative $)
2. Growth
3. Maturity (plateau $)
4. Decline
39
Disruptive innovations
- New technology
- Newcomers
- Dramatic change in cost or standards of care
- Considered external threat
40
Sustaining innovations
- Technological improvement addressing medical need
- Coming from industry leader
- Responsive to changes in industry, markets, medical needs
- Considered internal strength
41
First movers
High risk, high reward
42
Followers
Technology de-risking works to advantage
43
3 healthcare system performance indictors
1. Health based
2. Population based
3. Cost based
44
Health based indicators
- life expectancy
- infant mortality
- maternal mortality
- years of life lost (YLL)
- Disability adjusted life year (DALY)
45
Population based indicators
- % insured (universal access)
- % uninsured
- % underinsured
- populations under served
- modified community ratings
46
Cost based indicators
- health care cost per capita
- total health care cost
- health care cost as % GDP
- Health care spending per capita
- GDP, median income
47
3 paths to financing healthcare system in US
1. government
2. private insurers
3. cash
48
Medicare
- Federal program covering people over 65, some disabled
- Single payer program
- Part A: Hospital services
- Part B: Physician services
- Part C: Medicare advantage
- Part D: Rx benefit
- Financed by federal income taxes in payroll
- Cover most but not all health care expenses
49
Medicaid
- Program for low income and disabled (pregnant women, children, elderly, disabled, parents)
- Financed jointly by the states and federal government via taxes
- States have option to expand eligibility
- States are responsible for program
50
The State Children's Health Insurance Program (CHIP)
- When families make too much to qualify for Medicaid but too little to buy private insurance
51
Indian Health Services
- Agency of DHHS
52
Employer Sponsored Insurance
- The main way Americans receive insurance
- Administered by private companies
- Can be "self insured" and all costs are paid by the company directly
- Financed through employers and employees
- Benefits vary widely
53
Fee for Service (FFS)
- Payer reimburses provider for each service rendered
- Medicare Parts A and B, most private insurers
- May incentivize overtreatment
54
Capitated Payments
- Payer offers provider a per plan member
- Medicare Part C, employer contracted HMOs
- May incentivize undertreatment
55
Value Based Reimbursement (VBR)
- Launched by ACA.
- Promotes necessary services, clinical benefits.
- Requires determination of outcomes
- New type of Accountable Care Organizations (ACOs)
56
How reimbursement from private payers works
- Medicare coding sometimes used but not mandatory
- Coverage policies vary
- Payment policies vary
- Own standards of medical necessity
57
Non-profit hospitals
- Tax exempt, charity status
- Implied community service
58
For-profit hospitals
- Business structure
- Often specialty orientated
59
Governmental hospitals
- Federal, state, local
- Underserved population commitment
60
Billed Charge
List price, aka "charge master" price (made up cost of service)
61
Contractual adjustments
Payer negotiated discount
62
Allowed amount (insurance)
Billed Charge - Contractual Adjustment
63
How do hospitals make a profit?
Actual Cost < Billed Charge
64
How much is patient allowed to pay (insurance)?
- Allowed amount is split between Insurer and Patient
- Allowed Amount = Insurer Paid Amt + Patient Share
65
How do hospitals report markups?
Markup = (Amt Charged) / (Actual Cost)
66
What is the reciprocal of Markup?
Cost-to-Charge Ratio (CCR), always < 1
67
Examples of services with high markup
- Cardiovascular surgeries
- CT, MRI imaging
- Orthopedic surgery
68
Examples of services with low markup
- Burn treatment
- Trauma
- Psychiatric emergency
69
Uncompensated care charges
- Bad debt + charity care charges
- % ratio is calculated relative to the hospital billed charges (gross)
70
Bad debt charges
Payments hospital anticipated but not received
71
Charity Care Charges
Payments hospital did not anticipate nor received
72
Accountable Care Organizations (ACO)
- Network based health care delivery model
- Implementation of Value Based Care
73
Bundled Payment
- Episode based single payment model
- Implementation of Value Based Care
74
Patient Centered Medical Home (PCMH)
- Health care coordinated through primary care physician
- Implementation of Value Based Care
75
5 Provisions of ACA
1. Individual mandate
2. Employer mandate
3. Insurance Exchange aka Market Place
4. Federal Subsidies
5. Medicaid Expansion
76
How is P/E ratio calculated?
P/E = (Market Price Per Share) / (Earnings Per Share)
77
What does ACA prohibit?
- Lifetime limits on $ value of coverage
- Annual limits on the $ value of coverage
- Rescinding coverage
- Pre-existing condition exclusions
78
Four community ratings allowed for ACA
1. Smokers
2. Age
3. Family status
4. Geography
79
Universal Coverage with Single Payer System
- Everyone is covered by a national health care plan that is fully funded by the gov
- Doctors do not have to be gov workers
80
Universal coverage with Multi Payer system
- National health insurance system existing alongside private insurance option
- Gov keeps costs low through regulation and direct negotiation
81
Multi Payer system with no universal coverage
- Mix of health care programs, heath care is not required.
- Autonomy given to private insurance with no guarantee of coverage.
- United States
82
3 Factors of Human Development Index (HDI)
1. Health
2. Wealth
3. Education
83
HDI Calculation
cbrt(LEI x EDI x INI)
84
Gross National Income (GNI)
Total economic output claimed by residents of the country
85
Gross Domestic Product (GDP)
Total economic output of the country
86
What are 2 health indicators around the world
1. Infant mortality
2. Life expectancy
87
Prevalance
Number of people having the condition
88
Incidence
Number of new cases
89
Mortality
Deaths
90
Morbidity
Illnesses
91
YLL
- Years of life lost
- Measures impact of premature mortality
92
DALY
- Disability adjusted life year
- Measures years lost due to mortality or morbidity
93
Stats of High income countries
- More than 2/3 people live beyond 70
- Die mostly from chronic diseases
94
Stats of low income countries
- Less than 1/5 people reach 70 and more than 1/3 people die before 15
- Mostly die from infectious diseases
95
5 challenges implementing medical technology in underdeveloped countries
1. Weak economy
2. Limited healthcare personnel
3. Lack of technology
4. Infrastructure and cultural differences
5. Unknown regulatory
96
Medical DRUG approval process in Europe
1. European Parliament - legislative body
2. European Commission - executive body
3. European Medicine Agency
4. National Competent Authorities
5. Court of Justice - judicial branch
97
2 types of laws under European Parliament
1. Regulations (member states)
2. Directives (require national implementation)
98
EU drug authorization pathways (2)
1. Centralized: Authorized through European Medicines Agency. Newest, most advanced drugs.
2. De-centralized: Authorized through National Competent Authorities. Most drugs.
99
Responsibilities of Competent Authorities (NCA)
- Drug authorization in member state
- Pricing and reimbursement
- Supervision of manufacturing sites
- Supervision of clinical trials
- Importation of drugs to Member Country
100
Responsibilities of European Medicines Agency (EMA)
- Centralized drug authorization in EU
- Guidelines for all member states
- Database of all manufacturing sites
- Safety monitoring of all drug in EU
- Manufacturing site inspections
- Marketing drugs outside EU
101
Medical Device Approval Process in Europe
1. European Parliament
2. European Commission
3. National Competent Authorities
4. Notified Bodies: 3rd party
5. Person Responsible for Regulatory Compliance
6. EU Authorized Representative: must be physically located in Europe
102
Class I Approval Process in Europe
1. Declaration of Conformity
2. CE Mark, market access, renewed every 5 years
103
Class IIa/b Approval Process in Europe
1. Prepare File
2. Conformity Assessment
3. CE Mark, market access, renewed every 5 years
104
Class III Approval Process in Europe
1. Prepare file
2. Conformity Assessment
3. Additional aspects of CAP
4. CE Mark, market access, renewed every 5 years
105
Medical Device Regulations (MDR)
- Current law in EU
- Replaced Medical Device Directives
106
Clinical Evaluation Requirements in Europe
- Required regardless of Class
- Critical evaluation of scientific literature or clinical investigations or both
107
Key Changes under Medical Device Regulations (MDR)
1. Expanded device definition
2. Implements Quality Management System with ISO 13485
3. Unique device identification (UDI)
4. More rigorous clinical evidence for Class III
5. Clinical evaluation of Class IIa and Class IIb devices. No grandfathering.
108
Mutual Recognition Agreement (MRA)
- CE mark != FDA and visa versa
- Works between US and EU to set Conformity Assessment Bodies in US and sends to EU CAB
- Does not apply to Class III devices
109
Medical Device Single Audit Program (MDSAP)
- Set forth by International Medical Device Regulators Forum
- Includes US, Canada, Brazil, Australia, and Japan
- Creates single audit of device
- Regulatory Authorities > Auditing Organizations > Compare Competent Authorities and Notified Bodies
110
Primary processes of MDSAP
1. Management
2. Measurement, Analysis, Improvement
3. Design and development
4. Production and service controls
111
Supporting processes of the MDSAP
1. Purchasing
2. Device Marketing Authorization and facility regulation
3. Medical device events and advisory notices reporting
112
Standards of MDSAP
1. ISO 13485: International requirements for quality management
2. cGMP: Current good manufacturing processes
113
International Council for Harmonization (ICH)
- Develops guides for Rx industry
- Guidelines for quality, efficacy, safety
114
Mission Statement
Short statement of why an organization exists
115
SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
116
Internal Factors
Strengths/weaknesses
117
External Factors
Opportunities/Threats
118
Personal Conflicts (3)
1. Conflict of Interest
2. Conflict of Commitment
3. Conflict of Conscience
119
Conflict of Interest
- Financial or other interests in an outside entity that interfere or appear to interfere with individuals ability to objectively carry out responsibilities
- Does not imply wrongdoing or misconduct, needs management
120
Conflict of Commitment
- Situation which individual's outside activities interfere or seem to interfere with duties and responsivities
121
Fair Labor Standards Act (FLSA)
- Regulates overtime hours
- Covered: entitled to overtime (>40hr/wk), 1.5x regular pay
- Exempt: virtually no rights, make < $23600 per year, paid salary basis
- Excluded: Agricultural/railroad workers
122
Conflict of Conscience
Personal beliefs or convictions interfere with ability to carry out responsibilities
123
Types of Employment
1. Employment Agreement
2. "At-will"
3. Employment Contract
4. Right-to-work (28 states)
124
What goes into Employment Agreement?
1. Terms of employment
2. Responsibilities
3. Benefits
4. Incentives
5. Various clauses: NDA, IP/rights, employment opportunity, dispute resolution
125
Types of Termination
1. Resignation: By employee, no unemployment benefits
2. Layoff: Lack of work, "no cause", eligible for unemployment benefits
3. Dismissal: Poor performance, "just cause", "willful misconduct", impacts unemployment
126
Wrongful termination
Dismissal as result of discrimination, retaliation, violation of laws
127
Constructive discharge
Resignation forced by a hostile workplace environment
128
Mass Layoffs
- Regulated by Worker Adjustment and Retraining Notifications (WARN) Act
- 50 or more employees, 1/3 of workforce
- Requires 60 day notice
- Federal and state rules vary
129
Severance Package
- Legal agreement between terminated employee and company
- May include NDA, non-compete agreements
