This week 300 investors and CEO's from 85 different drug and medical device companies are in Cleveland to share advice on the growing field of healthcare start-up companies. One sector that has proven especially enticing for start-ups is managing clinical trials for new health products and medicines, particularly overseas. This form of outsourcing is raising some safety concerns that were addressed at this week's conference. More from ideastream health reporter Lisa Ann Pinkerton.
Among the dozens of investors milling around the coffee station at the Global Healthcare Investing Conference Northeast Ohio is emerging as a place to go when looking for medical start-ups to put money in. Ting Pau Oei is from L Capital Partners in New York.
Ting Pau Oei: I don't think Cleveland is set to be the next silicone valley or Boston area... but it certainly can I think could compete with other important life science centers like the Research Triangle in North Carolina and maybe even San Diego and Southern California.
Oei says to do business in the world today you have to utilize every resource available, whether it's in the United States or abroad. Baju Shaw President of BioEnterprise, the Cleveland company hosting the conference, says often that means testing products overseas. He says in some cases that foreign Clinical trials are 60 to 85 percent cheaper than American ones.
Baju Shaw: In the early phases of development, when you've got a lot of trial and error... it might be of advantage to do it overseas in addition to the work you would traditionally do here in the U.S.
Shaw says these trials may go faster not because of lower quality, but because some counties have higher populations of people willing to play guinea pig.
Baju Shaw: So it's easier to recruit patients and that usually is the hardest part of a clinical study, is the patient recruitment.
But recruiting patients and insuring their protection is where medical ethicists like Stewart Younger have growing concern. A professor of in Case Western Reserve University's School of Medicine, Younger says outside of the United States, its harder to guarantee the patients involved were fully informed about their rights and gave consent, especially in places like China and India.
Stewart Younger: There are many countries that don't demand the same kind of rigor we do. You know we have standards here, that may be violated when we do research here. But at least we have standards and penalties for that.
A 2001 Heath and Human Services report admits the Food and Drug Administration can't insure the same level of protections in foreign trials as it does with domestic ones. While foreign countries do have institutional review boards, it says it can't depend on them to protect patients without U.S. inspections. Some say that leaves the marketplace to maintain quality in the data gleaned for overseas testing.
At the Global Healthcare Investing conference investors like Jim Petrus of the Cleveland firm, Early Stage Investors have a financial and legal stake in seeing that the companies they invest in test their products ethically and effectively.
Jim Petrus: You work with the best you get good results, you get safety. If you don't work with the best you don't. And that's one of the key things of coming to a conference like this, you start to benchmark with other people that have standards of excellence that they've established.
Petrus says with the $44 million of capital he's charged with investing, it doesn't serve him at all to support companies that are less than scrupulous in gathering their data. Because no matter where a product is tested, the United States is still 50 percent of the world healthcare market and if products can't pass through the FDA regulatory process, investors can't make a profit.
Lisa Ann Pinkerton, 90.3.