As the global leader in the development and commercialisation of medical devices, the US is at a crossroads. A new regulatory environment is afoot, and the agency responsible for devices, the Food and Drug Administration (FDA), has become less predictable, less timely and less transparent.
The innovation ecosystem - the collaboration of inventors, physicians and entrepreneurs - is gradually shifting medical device commercialisation away from the US towards the European Union and emerging markets. At the centre of this storm is the FDA's current assessment of the 510(k) clearance process.
An innovation ecosystem
Over the past 30 years, the medical device indusftry has experienced unprecedented growth in the US. Devices are available to treat and diagnose ailments in methods unimaginable even 20 years ago. As a result, patients have more accurate and timelier treatment for countless medical conditions.
Moreover, the medical device industry is one of the fastest-growing and healthiest industries in the country. Medical technology development in the US has a positive trajectory because a favourable ecosystem exists that fosters innovation of technological solutions to healthcare problems.
The ecosystem encompasses two general dynamics. First, there has traditionally been a favourable, albeit challenging, regulatory framework in place, which has encouraged entrepreneurs to take risks and develop new technologies. Secondly, the investment paradigm in which companies are funded has been overwhelmingly favourable towards the industry. It is an environment where inventors work side-by-side with venture capitalists to fund the next breakthrough technology.
Device companies seeking regulatory approval in the US must demonstrate to the authorities that their particular device is effective and safe for patient use. In addition, the public also expects that it should have access to medical technologies in a reasonable time period. The FDA is the government regulatory agency responsible for ensuring that these standards are met.
In 1976, the foundational laws and regulations governing medical device approvals were created. In the years following, however, the FDA became a target for criticism by many patient groups because it was viewed as allowing too much time to pass between products being developed and actually reaching patient populations.
To address this, Congress and the FDA eventually established performance goals for the agency to reach. For instance, a device seeking approval under the 510(k) process was expected to be reviewed and approved - or not - within a static time period. When these goals were established, patients began to notice an improvement in the time available to have access to these technologies.
With more assurance that products were being reviewed in a timely manner, more inventors and companies were willing to take the risk of bringing their ideas to the market. The model in which device companies were funded and eventually commercialised also matured and became more sophisticated, primarily during the mid-to-late 1990s. Venture capital firms began to take notice of the trends developing in medical technology and other life science areas in this time period.
It was a high-risk, yet high-reward environment that many investors found attractive. As more venture capitalists moved into the life science arena, more inventors with innovative ideas and products successfully sought funding. This funding model ultimately helped to drive the innovative products we see today.
New direction at the FDA
Medical device companies of all sizes have observed significant delays at the FDA over the past few years, most notably those products under 510(k) review. In general, there has been a greater tendency for FDA reviewers to overanalyse the clinical data presented and compel companies to conduct additional studies. For instance, there have been several cases where FDA reviewers have required companies to conduct additional studies for component products that have been deemed safe and effective for decades and already have a body of post-market data to confirm such benchmarks.
The agency has come under criticism in the past few years from members of Congress and other groups concerning the approval of a small number of devices. These criticisms are focused on the internal FDA process associated with the device approval, and not the ultimate safety or effectiveness of the product itself. Nevertheless, the increased scrutiny has likely caused the agency to move in a very conservative manner. Reviewers are seemingly more likely to second-guess their initial decisions and require additional data points from device companies.
The FDA, for its part, is actively engaged with a revamp of the way device approvals are handled. In general, the agency believes that there are systemic problems ranging from internal management to the way the new science is adapted in reviewing medical devices.
To address these problems, the FDA has moved forward with a plan and set of recommendations that will greatly affect medical device companies. In particular, the FDA has taken steps to address perceived problems in the 510(k) system.
This effort was in direct response to issues involving an orthopaedic device. While the product was ultimately determined to be safe and no safety problems have occurred since, the agency believed that there was inappropriate political influence within the actual approval. The FDA eventually reversed its position on that approval, but it became a reason for the agency to initiate a broad-based review.
One of the first steps taken by the FDA to address the 510(k) system was to establish an internal working group that would eventually make recommendations on ways to improve the clearance process for medical devices. Some of the issues the working group was tasked with addressing included how to review products where there was no substantially equivalent products and how to address cleared products when new science or clinical data were presented.
Ultimately, the broad questions the internal working group was tasked to answer was whether the agency was performing its duty to ensure the safety and effectiveness of the medical devices, and whether there was a favourable environment to foster innovation. From the working group, the FDA contracted with the Institutes of Medicine to issue a report to Congress. The purpose of the report is to provide an exhaustive overview from an outside party, and it is expected to be issued in the summer of 2011. Meanwhile, an internal FDA working group has moved forward with its own examination.
In August 2010, the FDA internal working group issued two preliminary reports addressing the 510(k) clearance process. The first report was broad in scope and examined how the agency treats medical devices when new science is discovered in the clinical process. The second preliminary report provided specific recommendations by the FDA to modify the current 510(k) clearance process.
Among the most controversial recommendations that do not have industry support is the creation of a new Class IIb category. The FDA's rationale for this recommendation is that there will be greater clarity for a small subset of devices for which FDA staff requested clinical information midway through a review but, where the submitter had no advance notice, such information would be needed as part of its 510(k).
The industry, however, believes that the proposal includes generic characteristics such as whether a device is implantable. This has the potential to impose automatic requirements based on classification rather than the specific risk profile of the product.
The industry also believes that the FDA already has the ability to address potential problems in the area as it maintains the authority to issue special controls for products deemed to have a patient safety issue. The most notable example of this authority is the FDA's recent issuance of special controls for infusion pumps.
The proposed creation of a Class IIb category is only one example of the direction the FDA is heading and how it may add to further uncertainty in the process. As the agency moves forward, innovators are feeling the effects, and it threatens the global medical device industry.
Innovators speak out
Against this mounting uncertainty and unpredictability, the medical device industry is beginning efforts to quantify the level of frustration it has been experiencing in the past few years.
These concerns are being voiced primarily by manufacturers, venture capitalists, physician inventors and, most importantly, patients. A recent survey, prepared by a physician inventor from Stanford University, with the support of various organisations, highlighted the severity of problems manufacturers are currently facing at the FDA.
The survey includes responses from 204 unique medical device companies in the US. This survey sample represents approximately 20% of all public and venture-backed medical device manufacturers. The companies are diverse in their indications for use, ranging from the treatment of hypertension to obesity.
Companies were asked about their direct experiences in working with FDA staff on 510(k) applications as well as pre-market approval (PMA) applications, and about their experiences with the FDA and European regulatory authorities. The purpose of asking about multiple regulatory agency experiences was to provide a comparison of the two dominant regulatory systems for medical devices.
The results of the survey are alarming and quantify what many in the industry have already experienced. A consistent conclusion by most companies is that the current US regulatory processes for medical devices are unpredictable and plagued by disruptions and delays.
One example is that 44% of participants said that there were changes in key personnel halfway through the review process. This included changes in lead reviewers and branch chiefs ultimately responsible for the device's clearance. In addition, 34% of participants declared that key regulatory officials were not present at critical meetings between the company and the agency.
Device manufacturers also reported significant delays in the clearance process for 510(k) products. For instance, according to respondents, 510(k) products took an average of ten months to clear from the time the first filing occurred. Low- to moderate- risk products, where clinical studies were required, took an average of 31 months from the time of first communication with the FDA to clearance. In comparing this data for companies with products in the EU, respondents reported an average of seven months from first filing to approval by European agencies.
While delays and unpredictability are problematic for device manufacturers, the costs associated with these problems are also substantial. Respondents reported that, on average, it took approximately $31 million to take a 510(k) product from concept to clearance, with $24 million spent on FDA-related expenses. For higher risk PMA products, the costs were even more substantial. On average, the cost for a PMA product from concept to approval was $94 million, with $75 million spent on expenses related to the FDA.
The most troubling aspect of all the data collected in the survey was the impact on patient care. Due to delays at the FDA, companies reported that their products were available to US patients at least two years later on average than patients in other countries. In several cases, this lag reached nearly six years.
So what can device manufacturers expect from the FDA in the near future? That answer remains unclear. The agency has been proactive in its dialogue with industry during its reassessment of the 510(k) programme. It has held several town-hall style meetings, various stakeholder meetings at the FDA and in other venues. However, based on the recommendations issued by the internal working groups, there could be trouble ahead for the industry. For instance, the creation of a new category IIb would be problematic for many manufacturers.
The final recommendations from the reports are due at the end of 2010. While the FDA will likely try to achieve as much as they can within their own regulatory authority, there are many changes that would require a change in the related device laws. Whatever the future holds for the industry, most simply hope that the process becomes more predictable, transparent and reasonable so that innovation can continue to flourish.