The development of the Covid vaccines was one of the major scientific and innovation breakthroughs of recent times. Not only were they developed incredibly successfully, but they were also developed incredibly quickly.

“The main thing we had to manage within government was for them to accept uncertainty and that is what we do in venture [capitalism],” Dame Kate Bingham, Managing Partner at SV Health Investors, who chaired the Vaccine Taskforce (VTF) during the COVID-19 pandemic, told Imperial College London Business School’s annual conference. “I had a very clear mandate for speed, which was helpful, and they [the government] did accept the concept that we were going to take risks and there were going to be losses.

The success of the vaccine program has prompted President Biden to reignite the Cancer Moonshot, with the fresh aim of reducing the death rate from cancer by 50% over the next 25 years. The hope is that some of the lessons learned during the rapid development of the vaccine can be applied to the perennially tricky task of developing reliable cures for cancer.

Another kind of innovation

Given the attention drug development, understandably, gets, we might be forgiven for assuming it’s the only kind of innovation that matters, but research from the Kellogg School reminds us that medical procedure innovation can be just as important, if not more so.

The authors highlight how most of the attention when it comes to medical innovation is from areas such as drugs, biologics, and possibly medical devices. Despite hogging the attention, however, many of the most significant breakthroughs have actually come from procedural innovations, such as joint-replacement surgery, open-heart surgery, and kidney dialysis.

They explain that while the various mechanisms behind drug innovation are fairly well understood, innovation in medical procedures is much more opaque. After attempting to shed light on procedural innovation, they found that the assigning of CPT, or current procedural terminology, played a crucial role.

Procedural innovation

The researchers explain that CPT codes are crucial because without one being assigned, doctors don’t get paid (in the United States at least). It’s a process that is controlled by the American Medical Association (AMA), which owns the copyright to all CPT codes. In other words, it’s the AMA that grants new codes to new procedures. These codes are often broken down into provisional status, which are often not reimbursed by insurers, and fully reimbursed status, which are.

The researchers note that there is often a waiting time for provisional CPT codes to be granted, and this can be comparable to the timeline for new drugs to be approved by the FDA. Whereas drug approvals are relatively transparent, procedure codes are granted by the AMA, which isn’t quite so transparent.

The researchers were able to work with the AMA to try and better understand the process by which CPT codes were assessed and granted. They trawled through meeting minutes and CPT applications from 2008 to 2017, which gave them a glimpse into the process new procedures must go through to gain approval, and the timelines for doing so.

A narrow pipeline

The analysis revealed just how gummed up the pipeline is, with just 29% of new procedures promoted from CPT III to the fully reimbursable CPT I code during the study period. What’s more, the researchers found that this process typically takes around 10 years on average, with many procedures stuck in the pipeline for over 16 years. When procedures did manage to make it to CPT I, it typically resulted in a nine-fold increase in usage.

As a result, achieving such status is hugely important economically, but the lag between achieving CPT III and CPT I represents a considerable economic cost for innovators. The authors explain that the long lag may be a result of the medical devices used in the procedure, which may themselves be patented and therefore in a period of market exclusivity.

It wasn’t clear from the analysis, however, quite why so few procedures made it to CPT I status, but the researchers speculate that a lack of enthusiasm for the marathon effort to get there may play at least a part, with this especially so if the improvement over existing procedures is somewhat marginal.

It’s also possible that the nature of medical procedure innovation often means that the innovators lack any meaningful intellectual property in their innovation, and that this lack of financial stake in the game can diminish their motivation. Often any incentives to get the new procedure approved can be spread across a wide range of stakeholders, which can create something of a free rider effect whereby no one individual or team pushes the procedure through.

This is evidenced by the fact that many applications were filed by medical societies rather than individuals or teams, with this especially likely when the procedures involved medical devices that were nonexclusive, or indeed didn’t involve devices at all. When procedures did involve patented devices, then filings were much more likely to be made by companies, who would therefore appear to have a clear financial incentive.

Sped up

As Bingham explained, the Covid crisis saw concerted efforts to speed up the development of lifesaving vaccines, and there is a clear desire for those lessons to ensure that the cost of drug development is reduced in the post-Covid era. The Kellogg paper reminds us that similar efforts need to be taken in terms of medical procedure innovation.

A good starting point, the researchers suggest, would be for the procedures taken when assessing innovations to be placed under much more scrutiny. After all, it’s hard to improve things that we know little about. The researchers suggest that the approval process for procedures that tackle largely unmet needs could be sped up, while government agencies, such as the Centers for Medicare and Medicaid, could take over the actual coding process itself.

This may be easier said than done, of course, as the AMA derives considerable revenue from their copyrights on CPT codes, so they are likely to be reluctant to cede that control. The authors highlight how the FDA have moved from a process that was previously much like that of the AMA’s to something rather more streamlined today, so there is an example to follow. Whereas the Covid crisis provided every opportunity for the drug approval process to be expedited, however, no such urgency has really been applied to innovation in medical procedures. As such, it seems likely to limp on for some time yet.