Land of the Free? Not for Device Firms, Study Claims

Forget Land of the Free. America has turned into the Land of Expensive Delays—at least for medical device firms, anyway.

The regulatory process in the United States is considerably more convoluted, costly and unpredictable than the system in Europe, and the difference has caused device professionals to lose confidence in the U.S. Food and Drug Administration (FDA) as well as doubt the nation’s ability to lead the world in medical technology, a Stanford University report has concluded.

“Under current FDA processes, millions of U.S. patients are being denied or delayed access to leading medical devices that are first (or exclusively) brought to market in other countries,” states the report, conducted by Josh Makower, M.D., a consulting professor of medicine at Stanford University in Palo Alto, Calif., and CEO of ExploraMed Development, LLC, a medical device incubator based in Mountain View, Calif. “Fewer medical device start-ups are being launched in the United States as investment capital in the industry continues to move to other sectors. And, innovators and medical device companies are relocating to other countries in greater numbers, taking valuable jobs and tax revenue with them.”

Part of the reason for this migration to foreign countries, Makower claims, is the overall efficiency and ease of the regulatory process outside the United States. One of the most revealing conclusions of Makower’s 44-page report is the lag that reportedly exists between product approvals in the United States and Europe: On average, American patients have to wait two years for devices and technology that have been approved in Europe to cross the Atlantic. In some cases, however, that lag is as long as six years, the report contends.

That lag is exacerbated by an expensive and time-consuming product approval process in the United States, asserts the study, “FDA Impact on U.S. Medical Technology Innovation.” Companies spent an average $31 million to get a product cleared through the FDA’s 510(k) process (reserved specifically for devices that are similar to a product already on the market), with $24 million of that total spent on FDA-dependent or related activities. Manufacturers required to go through the pre-market approval (PMA) process (where clinical trials are involved) spent three times as much—$94 million—with $75 million devoted to FDA-related activities.

Delays can be pricey as well. A stalled 510(k) clearance process costs device manufacturers more than $520,000 per month, while setbacks in the PMA process costs firms more than $740,000 every 30 days, according to the report. Investigational device exemptions (IDEs) don’t come cheap, either: Delays in obtaining an IDE (which allows an investigational device to be used in a clinical study) for a 510(k) submission to the FDA can cost manufacturing firms nearly $400,000 per month, while setbacks with a PMA application cost firms more than $750,000 per month.

“These high expenditure levels may help drive higher prices for medical technologies when they finally reach the market,” the report stated. “Thus, FDA-related delays directly contribute to increased healthcare costs in the United States.”

To make matters worse, the high cost of regulation in the United States is coupled with an unpredictable review process, according to the report. Nearly half of the study’s 204 participating companies reported reviewer-related delays during the regulatory process, including turnover in key FDA personnel. As a result, product approvals take much longer in the U.S. than in Europe. The average 510(k) application takes about 10 months to process, from first filing to clearance (31 months from first communication to clearance for companies that spoke to the FDA about conducting a study before submitting an application), but in Europe that process takes only seven months, the study concluded. The standard, more rigorous PMA application works through the FDA’s system in 54 months, while in Europe it breezes through in about 11 months, the report found.

Besides being faster granting device approvals, regulatory authorities in the European Union (EU) are more knowledgeable and predictable, the report claimed. Participants in the study found 88 percent of European regulatory reviewers to be highly or mostly competent clinically compared with 47 percent of FDA reviewers. Similarly, companies considered 91 percent of EU regulatory authorities to be highly or mostly proficient in engineering knowledge compared with 52 percent of FDA reviewers. And, 79 percent of EU authorities were considered highly or mostly competent in statistics versus 60 percent of their American counterparts.

The FDA received significantly lower marks than the EU for its lack of predictability and transparency as well as its affinity for being unreasonable. Eighty-five percent of the study’s participants considered EU regulatory authorities to be highly or mostly predictable. Only 22 percent of companies felt that way about the FDA. Nine out of 10 respondents said EU reviewers are more reasonable and 85 percent found the processes and decisions of European authorities to be highly or mostly transparent. By comparison, only 25 percent of companies believe FDA reviewers are reasonable and 27 percent consider the FDA’s decisions transparent.

“The most important thing that we forget, and I really think that this is a big difference, is that in Europe…physicians are the ultimate regulator of a product,” Makower said during a recent conference call to discuss the report’s conclusions. “They decide what’s best for their patients. They understand what risks and benefits that particular product may have for an individual patient.”

While device industry groups such as the Advanced Medical Technology Association and the Medical Device Manufacturers’ Association laud Makower’s report for spotlighting flaws in the FDA’s review process, officials at the agency have criticized the study for “comparing apples to oranges” as well as its low response rate. The report was based on a survey of 204 public and venture-backed medical device firms out of a possible 1,023 companies in the domestic medical device industry, according to its authors.

“That’s well below the quality of a good study,” Center for Devices and Radiological Health Director Jeffrey Shuren, M.D., told the Massachusetts Medical Devices Journal (MassDevice). He said the low response rates magnified negative opinions about the FDA’s device approval process, and claimed the study would have been more influential with a 30 to 40 percent response rate.

Shuren, however, was most troubled by Makower’s cost estimates for product approvals. He said the report unfairly penalized the FDA for communicating with device designers and manufacturers early in the process. “The cost issue was based on the first time the company talked to the FDA through the time it went to market,” he explained to MassDevice. “But we talk to companies when the product is under development, which you don’t get in the European Union. We got dinged for talking to companies early.”

His solution? Stop communicating so early in the process. “But I don’t think anybody wants that,” he said.

Certainly not. Makower, though, claims the FDA’s convoluted regulatory process forces the agency to talk to companies early in the process. “The issue isn’t that the FDA is being ‘dinged’ for speaking to companies early,” he said. “It’s that the IDE process has become exceptionally difficult, whereas in Europe the process is exceptionally straightforward.”