Regulatory Requirements, Cost Contributing to Decline of U.S. Medical Device Startups, Survey Finds

A survey of medical technology companies and venture capital firms with a presence in the life sciences field revealed that the U.S. is at risk of losing its global leadership position in medtech innovation because of unpredictable, inefficient, and expensive regulatory processes within the Food and Drug Administration (FDA). Further, survey data indicate that innovators and medical device companies are relocating to other countries in greater numbers to take advantage of more streamlined regulatory processes and lower costs.

The study, FDA Impact on U.S. Medical Technology Innovation, was designed to acquire data that could be used to evaluate the impact of U.S. medical device regulation on innovation and patients, identify where the greatest deterrents to innovation exist within U.S. premarket regulatory processes, and assess the costs these issues place on medtech companies. The current regulatory environment is particularly challenging for startup companies because of their limited financial resources, the study finds. As a result, regulatory submissions for innovative new medical devices have declined in the U.S. over the last several years.

Results of the survey are summarized into four categories: (1) efficiency of U.S. regulatory processes and how they compare to the European Union (EU), (2) perceptions of FDA performance relative to European regulatory authorities, (3) cost to medtech companies, and (4) cost to U.S. patients. Highlighted below are some of the findings:

• Respondents reported that their medical technology devices were available to U.S. citizens an average of two full years later than to patients in other countries, and in some cases, this device lag reached up to six years.
• For higher risk devices seeking premarket approval, responding companies indicated that it took an average 54 months to work with the FDA from first communication to being approved to market the device. In Europe, it took an average 11 months from first communication to approval.
• Forty-four percent of participants indicated that part way through the regulatory process they experienced untimely changes in key personnel, including the lead reviewer or branch chief responsible for the product's evaluation.
• When asked about the knowledge of reviewers, survey participants found 88 percent of EU reviewers to be highly or mostly competent in their clinical competence compared to 47 percent of U.S. reviewers.
• Ninety-three percent of participants agreed or strongly agreed that FDA has become more risk-averse toward new products in the last decade.

Additionally, fewer medical device startups are being launched in the U.S. as the investment capital industry continues to move to other sectors, according to the study. Supporting this statement, data from the National Venture Capital Association (NVCA) indicate that after 2008, annual medtech investment is down $1 billion.

The report, which received support from NVCA and the Medical Device Manufacturers Association, is available at: http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=668&Itemid=93.