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The Future of Healthcare: “Our healthcare system suffers from an inordinate amount of money spent on treatment of chronic diseases instead of prevention and early intervention.” with Dr. Mike Daley of OrthogenRx

…the U.S. suffers from: 1) access to some of the most innovative and best technology which is also the most expensive, 2) our citizens feel entitled to access to this best technology for their treatments, and 3) the healthcare professionals have been limited in making decisions purely based upon appropriate medical assessments. We also have […]

…the U.S. suffers from: 1) access to some of the most innovative and best technology which is also the most expensive, 2) our citizens feel entitled to access to this best technology for their treatments, and 3) the healthcare professionals have been limited in making decisions purely based upon appropriate medical assessments. We also have a healthcare delivery system that is fraught with parties within our distribution channels that only add cost with no value add (PBM’s, rebates, etc.), often adding 50–75% additional cost. These all significantly contribute to added cost with no or minimal benefit to health outcomes.


Asa part of my interview series with leaders in healthcare, I had the pleasure to interview Mike Daley, founder of OrthogenRx. After a 30 yr career in the biopharmaceutical and device industry, both small emerging to fortune 500 companies, Dr. Daley formed OrthogenRx, a late stage development and commercialization company focused in the orthopedics and sports medicine field, with the vision of optimizing healthcare access by delivering quality healthcare products at an affordable price, balanced with the needs of the healthcare system. He developed efficient regulatory approval and commercial strategies that reduced drug development cost and development and optimized commercial operational efficiencies. The first product, GenVisc® 850, for the treatment of osteoarthritis knee pain, was approved in just 18 months. The industry standard is 6–8 years at a cost ranging from $70 to $100MM. OrthogenRx’s second product, TriVisc®, was the first and only product approved under a unique regulatory pathway that was established under law in 1997.


Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?

Mystory involves both professional and personal influences. It started when I first joined Sanofi-Winthrop Pharmaceuticals, now Sanofi, as a Medical Director. I was given the assignment of overseeing the medical needs to support the first injectable hyaluronic acid (HA) approved in the U.S. to treat osteoarthritis knee pain, called Hyalgan. It was licensed from an Italian Company, Fidia Farmaceutici S.p.A., and because it was a newly launched product, it required that I extensively research the preclinical and clinical science that supported its use. Ironically, at about this same time, several of my earlier knee injuries were now starting to manifest in the early symptoms of knee osteoarthritis. Not only was I the Medical Director for a marketed HA, but I was also a patient who went on to have over 30 injections into both my knees over a 6-year period. I believe in the research and science, and from my personal experience am able to attest to the safety and efficacy of the HA products.

I also became aware of the global dynamics of the market and how these products are approved through regulatory bodies. I learned about the respective regulatory barrier, reimbursement models, and distribution channels. With the significantly lower regulatory barrier to entry in the European Union, there were over 60 marketed HA products compared to 5 in the U.S. There was an inverse correlation with price to the patient or physician, even for the same HA product, and country regulatory barrier to market entry in that the very same US products were priced 3–4 times higher. I saw an opportunity to license ex-US products identical to others already approved in the U.S. and take advantage of a regulatory pathway to obtain approval (similar to the generic drug pathway). This would reduce the cost of development and enable me to more effectively compete in the market with much lower operating margins. This would also allow me to save the healthcare system money and perhaps create greater access to these products for patients at a reduced cost. I obtained regulatory approval for the first product, GenVisc 850, in about 20 months at a cost of approximately $2MM, compared to the industry standard of 6–8 years at a cost of $100MM.

Can you share the most interesting story that happened to you since you began leading your company?

Raising money can be one of the most challenging experiences for any entrepreneur. It is especially difficult for biopharma and medical device companies because of the long runway to success and the large risk involved in bringing a product to market. During a conference with a panel of angel investors and venture capitalists, I asked them to list the three essential characteristics an entrepreneur must have for them to invest. One of the panelists replied, “A well thought out business plan with solid science backing, a committed and experienced management team, and absolute passion and unswerving commitment to the success of the enterprise.” I replied, “Thank you for that. I totally agree with that insight and advice. But now tell me how old generally is that entrepreneur?” The panel conferred and one of them answered, “Generally we like to fund founders and management that are in their late thirties to early forties.” I quickly replied, “With all due respect I think you’re very misguided on that answer. You want an entrepreneur and management team in their early sixties because you know they are committed to and share your exit horizon!” The audience laughed and several applauded. I was 66 at the time.

Can you tell our readers a bit about why you are an authority in the healthcare field?

My 8 years as Medical Director, coupled with my graduate (Ph.D.) and post-doctoral training in experimental pathology, medical science, and molecular biology have provided me with a breadth of experience and a deep knowledge of disease processes that manifest their symptoms. I have also developed a unique ability to integrate science and medicine with a business focus, earning the respect of scientists, clinicians, and business people alike. I also am very proactive in maintaining a current awareness in the field through literature reviews, my own publications, and some academic teaching.

What makes your company stand out? Can you share a story?

For such a small company we have achieved so many firsts in the field despite often being out-leveraged in people and finances by our competitors. We are the first company to obtain an approval for a product and then build a fully integrated commercial team at a significantly reduced cost in one third of the time. This has been quite disruptive, and in 2017 we were cited as the fastest growing company in the HA market. But perhaps our greatest achievement has been being the first and only product approved in 20 years, TriVisc, utilizing a regulatory pathway passed into law back in 1997. We are hoping that this might have wider applications and be able to increase competition, allowing us to continue to contribute to the reduction of healthcare costs.

Can you share with our readers about the innovations that you are bringing to and/or see in the healthcare industry? How do you envision that this might disrupt the status quo? Which “pain point” is this trying to address?

Our business model is disruptive and in the next 2–3 years we believe that our product offering may account for 20–25% of the entire market. We are constantly implementing and exploring processes to optimize the efficiencies of our distribution of products to healthcare professionals. After 20 years, this market, as well as all of healthcare, is quickly evolving and we have to be prepared to stay ahead of these essential changes. The continued increase in healthcare costs is unsustainable, so these changes are good for patients and the country. We also believe that as a relatively small and nimble company, we are uniquely positioned to pivot, adjust, and focus to be successful while at the same time reducing healthcare costs and create wider access for patients.

Are you working on any exciting new projects now? How do you think that will help people?

We recently licensed and are developing a single-use device that will fit on the end of a syringe. It will be able to detect that the needle is properly positioned within the knee space and signal this to the healthcare professional with an LED light. Some studies have shown that approximately 25% of the injections are placed in surrounding soft tissue. Proper placement in the knee space is essential for optimal benefit from many knee injections, particularly for HA injections, and improper placement can also be painful. So proper injection placement should improve the clinical benefit and decrease the adverse reactions. While methods to assure proper placement are available, including ultrasound and fluorography, they can be expensive and are not widely available. This technology may also have applications for other joints as well as the administration of other products such as steroids, biologics, PRP, stem cells, etc.

What are your “5 Things I Wish Someone Told Me Before I Started” and why.

My “Wish I had only known” list is quite extensive but the top five would be:

  1. “Well founded science and a good business plan are necessary but not sufficient to be successful as a start-up.” When you’re trying to craft your story or ’pitch’ for investors or to attract fellow team members, novel innovative ideas that are too complex can be lost in translation. Disruption is only of value when it can be executed on. People respond to what they can easily understand and get behind. So in essence it’s a version of the KISS principle, “Keep It Simple Stupid’. I once sent a business plan to a small venture fund that focused on funding medical devices. I got a response saying.”Thank you for your submission, but we only invest in orthopedic and cardiovascular medical devices.” We’re focused on commercializing orthopedic medical devices, so it was clear my concept was lost in translation.
  2. “Acquiring start-up funding of less than $1,000,000 in many ways is more difficult than raising $20,000,000.” Everyone says that your first source of funding is Family, Friends and Fools. After 9+ months of seeking my initial Seed funding using this principal, I came to the conclusion that most people (Angels) are not fools, and I need to find a new circle of friends, as well as try to get adopted. Even though I was seeking less than $1,000,000 to obtain my first product approval, I had to achieve this through a network of connections and now have over 60 investors with an average investment of less than $50,000. That’s a lot of work!
  3. “The strength and breadth of my personal network allowed me to accomplish things and solve problems that I never anticipated.” I have always been an avid believer in the value of networking, but I never realized the importance of this when starting a company. A successful entrepreneur always has the self-reflection that enables them to identify their strengths and weakness. In recruiting a management team you always want to attract individuals that complement your skill set, but there are always gaps or unanticipated needs. Having an extensive, well-situated network allows one to identify the quality resources to fill that need. The strength of a start-up should be the ability to quickly respond, solve a problem, and pivot. Lacking access to external resources can significantly hamper that ability.
  4. “Early in the evolution and growth of your company never underestimate the value of good legal counsel.” When you’re a start-up, the cost of legal counsel can be quite daunting, if not prohibitive on a nominal budget. However, choices you make early in the formation of the company can have far reaching legal and tax consequences in the future. As you grow you need to anticipate and garner advice on the applicable regulations. Failure to do so at its worst can take down a company, and at the very least can be an incredible distraction trying to fix it. When I was starting the company it was an LLC, then I converted to what I thought was an S-Corporation with a partner which turned out to be a C-corporation because of an improper document filing. The company was dissolved then reformed as a C-corporation. This was all done with an online service, eg. Legal Zoom or Rocket Lawyer to save maybe $1,000. The cost to correct this was probably almost $10,000! My original decision was a poor choice and an unwise investment. A good intellectual property lawyer can also be the difference between creating a valuable asset and worthless technology that is impossible to fund. Early on being ‘Penny Wise’ with respect to seeking good legal counsel from personal experience can lead to being ‘Asset Foolish’!
  5. “When you’re working within a diverse team, the variety of values, motivation, and principles never ceases to amaze me.” People respond to what they can easily understand and their own personal drivers. This applies to investors and fellow team members. One has to identify that motivation to tap into them as a resource. So you have to be flexible and constantly reformatting your message to resonate with the target audience while keeping true to the essence, which can be a delicate balance. The great entrepreneur can feel just as comfortable delivering the message to an audience of investors, scientists, and clinicians, as he would delivering it to a potential candidate for a key role, his employees, or his wife and family.

Let’s jump to the main focus of our interview. According to this studycited by Newsweek, the US healthcare system is ranked as the worst among high income nations. This seems shocking. Can you share with us 3–5 reasons why you think the US is ranked so poorly?

In 2011, the U.S. spent $2.7 trillion on healthcare and was 27th in the world in healthcare. This is more than doubled what was spent in 2000 when we ranked 6th. It is now projected that by 2040, 1 of every 3 dollars will be spent on healthcare, meaning we will be spending 2–3 times more per person than any other developed country, accounting for 17.5% of the gross domestic product. This is simply unsustainable as a country.

However, these statistics are only citing average money spent per person versus health outcomes. It does not consider the fact that the U.S. still leads the world in innovation in drug and medical device development. Accordingly, the U.S. has access to some of the most advanced therapies available and these therapies are also amongst the most expensive. In addition, because we don’t have a single payer system, there is no appropriate allocation of these treatments and every patient feels entitled to the ‘best’ available treatment or diagnostic procedure. Physicians are further faced with the litigious nature of the U.S., which impacts their decisions on diagnostic procedures and treatment options.

So, the U.S. suffers from: 1) access to some of the most innovative and best technology which is also the most expensive, 2) our citizens feel entitled to access to this best technology for their treatments, and 3) the healthcare professionals have been limited in making decisions purely based upon appropriate medical assessments. We also have a healthcare delivery system that is fraught with parties within our distribution channels that only add cost with no value add (PBM’s, rebates, etc.), often adding 50–75% additional cost. These all significantly contribute to added cost with no or minimal benefit to health outcomes. This is further exacerbated by the fact that the weakening of the Affordable Care Act by the Trump administration has caused the rate of uninsured to rise from 10.9% to 13.7%, and approximately 87% of these citizens are between the ages of 18–64 when early healthcare intervention and prevention are the most critical. We fail to recognize that we all pay $1500-$2500 more in annual insurance premiums to cover the added cost to subsidize the healthcare system. We would likely pay half that amount to support a universal healthcare system.

You are a “healthcare insider”. If you had the power to make a change, can you share 5 changes that need to be made to improve the overall US healthcare system? Please share a story or example for each.

From my perspective, I believe the problem is that our healthcare system suffers from an inordinate amount of money spent on treatment of chronic diseases instead of prevention and early intervention. We also spend disproportionately on end-of-care expenses. Key improvements would include 1) switching our focus from treatment to prevention, 2) facing moral dilemmas associated with end-of-life interventions, 3) universal access to quality healthcare, 4) competitive drug pricing for CMS (ability to negotiate drug pricing), 5) eliminating added cost in distribution channels that provide no added value (PBMs, rebates, etc.), and 6) streamlining our regulatory review processes to optimize the review/approval process to make technology available to patients.

Thank you! It’s great to suggest changes, but what specific steps would need to be taken to implement your ideas? What can individuals, corporations, communities and leaders do to help?

Be informed, be proactive, and engage your representatives at the state and federal level. Support universal access to healthcare, as it should be a right not one of privilege. Be your own healthcare advocate and get educated. Don’t be afraid to challenge or query your diagnosis or treatment options. Healthcare is delivered by people and even smart people are not infallible. I’ve had 5 knee replacements and if I was passive and not proactively challenging and questioning my care, I would have died.

What are your favorite books, podcasts, or resources that inspire you to be a better healthcare leader? Can you explain why you like them?

My training is as a scientist and being a better healthcare leader. As such, the book that significantly impacted me early in my career was Arrowsmith by Sinclair Lewis. It told the story of a scientist dedicated to his research and establishing his truth and priorities in life. Sometimes the struggle to discover can have a high price, but the book speaks to the underlying passion that drives the most dedicated scientists in research. My second largest impact is perhaps a series of books related to Quakerism. I have been a Quaker now for over 15 years and the underlying testimonies that form their beliefs of simplicity, peace, stewardship, and particularly integrity, community, and equality as they relate to healthcare are important to me. This speaks to my fundamental commitment to universal healthcare- as I outlined previously, not only is it the right thing to do, but it would improve outcomes and likely reduce overall cost.

How can our readers follow you on social media?

@orthogenrx www.orthogenrx.com

Thank you so much for these insights! This was so inspiring!

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