As recent public and private initiatives have sought to increase the transparency of physician-industry financial relationships (including calls for restricting collaboration), it is important to understand the extent of physicians’ contributions to new medical devices. We quantify the contribution of information from physician-founded startup companies to 170 premarket approval (PMA) applications filed by 4 large incumbent medical device manufacturers over the period 1978–2007. We ask: Are incumbents more likely to incorporate information from physician-founded firms than nonphysician-founded firms?
We matched the text in 4 incumbent medical device firms’ PMAs (Medtronic, Johnson & Johnson, Boston Scientific, and Guidant) to the text in patent applications of 118 startup companies that received investment from these incumbents between 1978 and 2007. We use a text-matching algorithm to quantify the information contribution from physician and nonphysician-founded startups to incumbent firms’ PMAs. We analyze correlates of backward citations and degree of overlap between incumbents’ PMAs and startups’ patents using negative binomial and tobit regressions.
On average, physician-founded companies account for 11% of the information in PMAs, compared with 4% from nonphysician-founded companies. Regression results show that incumbents are significantly more likely to cite physician-founded companies’ patents and to incorporate them into new devices.
Physicians are an important source of medical device innovation. The results suggest that restrictions on financial relationships between providers and industry, while potentially improving patients’ trust, may result in reduced medical innovation if physicians found fewer startups or if incumbent firms reduce investments in physician-founded startups.