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The excitement surrounding orthobiologics is tempered by significant barriers to bringing products to market. Orthopedic companies may hesitate to develop new therapies due to a lengthy approval process, the lack of clear clinical evidence and worrisome product failures.
Scott Bruder, M.D., Ph.D., Founder and CEO of Bruder Consulting & Venture Group, helps clients develop and commercialize innovative orthobiologics. Here, he shares his insights on how to capitalize on the tantalizing potential of the market while navigating its many pitfalls.
How do you define orthobiologics? What are the primary applications specific to orthopedics?
Dr. Bruder: Orthobiologics are biologic solutions to musculoskeletal problems. Regenerative medicine refers to technologies capable of regrowing tissue that is injured, diseased or missing through some type of pathology. That’s an important distinction to make.
Last year, the global market for orthobiologic products reached $5.2 billion. The bone repair and regeneration segment comprised a little more than half of the market. Viscosupplementation or hyaluronic acid injections used to manage knee osteoarthritis made up about one-third of the space.
The rest of the market represents opportunities to develop products that repair intervertebral discs or restore knee cartilage, tendons and ligaments. The orthobiologics market is growing at a high-single and low-double-digit rate. Its potential is significant.
The major players have the resources to develop sophisticated cartilage and disc regeneration products. How will that shape the market moving forward, and is there room for innovation among smaller firms?
Dr. Bruder: Companies are using three primary pathways to bring solutions through the pipeline. The first involves human cell and tissue products (HCT/Ps), including the subgroup that is exempt from FDA’s Section 361 Regulations. These products do not require clinical trials or FDA registration with the agency, so revenue opportunities are typically limited as a result of scant scientific or clinical evidence.
The second option is through a 510(k) clearance, which usually requires $5 million to $20 million in investments and three years of development. Products with 510(k) clearance have specific reimbursement codes or are captured within the diagnostic-related group (DRG) of surgical procedures.
The third pathway involves products that demand premarket approval (PMA) or a biologics license application (BLA). These standards require randomized controlled level I clinical trials and an evidentiary basis for reimbursement. Developing products in this category often requires $50 million to $150 million in investments and close to a decade of development. This is the most expensive and riskiest option, but it also leads to the highest reimbursements.
Very few large companies are pursuing PMAs and BLAs because of the expense and development time involved. OEMs that do invest in these products typically wait until smaller companies run successful phase II clinical trials. These smaller companies shoulder the risk by finding non-dilutive grants, venture capital and family office dollars to develop products and secure PMAs or BLAs.
You have suggested that companies work with FDA as a partner instead of an adversary throughout the research and development process. What is the best way to approach this relationship?
Dr. Bruder: Companies interested in creating new products should involve FDA early in the process. The best time to approach the agency is after they’ve identified an indication and the pathology they want to address. Companies should have a well-defined product and the preclinical evidence necessary for approval. The agency won’t design a development pathway for you, but will answer specific questions that companies have about the process.
FDA issued guidance documents that define how companies should engage the agency and accelerate products through the review and development process. Companies that don’t have regulatory professionals in-house should partner with consultants who are experts at writing product submissions and collaborate with the agency in a transparent way. I have found this approach to be extremely helpful.
You believe the creation of orthobiologics begins by understanding unmet clinical needs. What new products would improve patient care?
Dr. Bruder: A minimally invasive injectable that lessens inflammation or slows the degenerative process in intervertebral discs is a big opportunity. That is an untapped, multibillion-dollar market.
Hyaluronic acid injections have been the mainstay for the management of knee osteoarthritis. Third-party payors provide reimbursements even though the American Academy of Orthopaedic Surgeons does not support the treatments. My firm is tracking products in development that are attempting to address disease modification for the treatment of knee osteoarthritis. Any product that’s proven to prevent or delay total knee replacements will generate a large return on investment.
Meniscal and anterior cruciate ligament replacements are also huge opportunities for the development of new orthobiologics. However, very few companies attempt to address this need due to past product failures.
What prevents a chasm of adoption at the clinic from forming between early adopters and laggers?
Dr. Bruder: Achieving buy-in at the frontlines of care requires technical validation, clinical evidence and physician education. Companies should collect health economic data and inform surgeons about the cost benefits of the products.
Surgeons receive a great deal of information about orthobiologics and need help separating the wheat from the chaff. I have seen successful companies hire medical science liaisons who are associated with research and development or medical affairs departments. The liaisons have no connection to sales and marketing teams and talk with physicians about the science and technology of products. They can also discuss off-label uses in response to unsolicited questions. This role is invaluable to the growth of companies in the orthobiologics space.
How should companies make appropriate market assessments in terms of supply costs and profitability before deciding to invest in orthobiologics?
Dr. Bruder: They must spend sufficient time determining the clinical need and interest among physicians. This can be accomplished through quantitative strategic marketing surveys. When planning for growth, companies must consider how scaling will affect the costs of goods and services. They must also prepare for realistic success. Many companies fail to turn a profit during the first few years of selling their products as the market takes shape. That’s a function of the amount of investment needed to bring products through the pipeline.
Why is ethical behavior among companies and providers important as new products come to market and the space continues to evolve?
Dr. Bruder: This is a critical piece of product development, especially as “bad actors” spread disinformation and jeopardize safe patient care. In 2017, FDA began to focus on the development and oversight of regenerative medicine products and novel cellular therapies. FDA informed companies acting outside of regulatory policies that they had three years to become compliant. The agency has since issued hundreds of warning letters to companies involved in the selling of unapproved products and the exaggeration of approval claims.
Bad actors create troublesome environments, and one bad apple can spoil the bunch. Clinicians and companies need to hold themselves accountable. Insurers don’t often reimburse for orthobiologic products that come under scrutiny, and some physicians are lured by cash incentive compensation.
I am aware of companies that have received multiple FDA warning letters and continue to promote and make these products available. The government has revoked medical licenses and shut down product manufacturers. Multimillion-dollar judgments have been levied against clinicians and companies for illegal actions related to the promotion or simple use of orthobiologics. The consequences for failing to act ethically or legally are very real.
How do you see orthobiologics evolving in the near future?
Dr. Bruder: New, impactful products that require PMAs or BLAs will enter the market in three to five years. That’s when we’ll see whether they’re embraced by physicians and insurance companies. If that happens, the products will have an opportunity for significant growth over the next decade. A virtuous cycle of innovation will occur when physicians adopt disease-modifying biologic solutions and insurers reimburse them for enhanced clinical impact.
