Ontario moves to dismantle systemic barriers to health innovation with $20-million tech fund

By Debbie Lawes

Ontario has taken steps to fix a fragmented and price-driven procurement system that stifles healthcare innovation and makes it difficult for health institutions to adopt technologies that can reduce wait times and costs over the long-term. The government announced May 7 that it would accept all six recommendations from an Ontario Health Innovation Council's (OHIC) report, including the establishment of a new $20-million Health Technology Innovation Evaluation Fund (HTIEF) to de-risk and speed the adoption of made-in-Ontario technologies. It is among $82.2 million in new funding for health innovations included in the province's April 23 budget (see chart).

OHIC, which includes experts from the health care, research, industry and not-for-profit sectors, presented its recommendations to the Wynne government in a December 19 report, The Catalyst: Towards an Ontario Health Innovation Strategy. The report stressed the need for early stage financing that would enable companies to develop a prototype or proof of concept, test it in a healthcare setting and then use that evidence to attract follow-on investment.

The fund will be managed by a new Office of the Chief Health Innovation Strategist, working with six "innovation brokers" who will connect health technology entrepreneurs with Ontario's large and complex innovation ecosystem.

This new approach will also see the province shift to what OHIC describes as a "strategic, value-based procurement health system" that focuses on outcomes, provides incentives for healthcare institutions to innovate, and streamlines adoption of health care innovations across the province.

"Procurement in health care organizations has typically focused on generating short-term savings in meeting day-to-day needs," states the Catalyst report. "A more strategic, value-based approach considers not only price but also other measures of value such as reduced service utilization (e.g., fewer hospital readmissions), increased quality of life, and economic benefits."

The changes are supported by several organizations in Ontario's health and research communities, including Life Sciences Ontario. "This is the first time we're seeing some recognition around procurement policies that look more at value-based outcomes than strictly pricing," says Dr Jason Field, LSO's president and CEO. "Hospitals are struggling to manage their budgets and it's really hard for them because the system isn't designed to reward decisions that result in them spending now to save a lot later."

Field stresses, however, that additional incentives are still needed to make it easier for companies to raise capital on public markets. He points out that Canada's life sciences firms have consistently outperformed mining companies on the Toronto Stock Exchange, yet they remain at the "bottom of the barrel" when it comes to attracting investors, making it nearly impossible to grow global biotech and life sciences companies.

In response, the sector has long advocated to allow life sciences companies to offer flow through shares, which would shift the tax deduction from the company doing the R&D to the purchasers of these shares (R$, March 13/2015). A similar regime has been in place for Canadian mining firms for over 25 years.

"The federal government has pretty much told us in no uncertain terms that it isn't going to happen," says Field. "But we're getting a sense this could change…Federal politicians are rethinking this a bit. It's one of those things where it's going to change by necessity."

R$