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September 15, 2011 (Vol. 31, No. 16)

FDA Thumps Industry, Patients Feel the Pain

As the Agency's Demands Escalate, Fewer Drugs and Devices Will Make It to Market

  • Medical Devices

    Medical devices are something of an orphan sister to the glamour of drugs, but they include some of the genuine miracles of modern medicine: pacemakers, artificial joints, cardiac stents, scanners, and radiotherapy machines. For decades many devices have been approved via a fast-track pathway called 510(k), which is designed for products that are similar to earlier products, known as predicate devices.

    Although the link between the new product and the predicate device can sometimes be tenuous, about 3,500 devices are approved annually via this mechanism, with very few problems. The FDA has made it clear that qualifying for the 510(k) pathway is about to become more difficult and that more data will need to be obtained and submitted to regulators for the standard pathway.

    These new requirements threaten innovation across the industry, especially at a time when financing is hard to obtain. Unlike the drugs sector, many device makers are small and financially fragile.

    Echoing the Orexigen example, medical device companies also are voting with their feet. They have begun to move R&D and manufacturing abroad and even to write off the U.S. market for certain products that are so overregulated that financing for their testing is unobtainable. Companies prefer to create jobs in Europe or Asia “for fear of getting lost in an FDA quagmire, a money pit that has driven many small companies to bankruptcy,” according to Kenneth Abramowitz, a managing general partner at NGN Capital.

    According to a recent analysis by PricewaterhouseCoopers, the United States’ lead in medical device development (a $120 billion industry) is eroding. In 2010 total venture capital investing across all sectors increased 19%, while investment in medical devices fell 9%.

    Its many warts notwithstanding, FDA is quite pleased with itself. According to agency head Margaret Hamburg, “preliminary results of reviews completed during FY 2010 indicate that FDA has the potential to meet or exceed almost all (11 of 12) FY 2010 review performance goals.” Reminds me of the old unfunny quip that the operation was a success but the patient died.

    The president and his minions are going to learn some lessons the hard way. First, that policies have consequences. In his study of the 1,000 years of the world’s economic growth, the late British economist Angus Maddison observed that the “golden age” for worldwide growth was from 1950 to 1973, with per-capita GDP increasing 3% per year. In 1973 growth slowed in Western Europe and Japan: “Some slowdown in these countries was warranted, but policy failings made it bigger than it need have been.”

    Second, as my mother used to say, actions speak louder than words. Merely saying that you’re not hostile to business doesn’t make it so.

    And although redistribution of income might satisfy liberals’ desire for “social justice,” it doesn’t stimulate the economy or create private-sector jobs.

Posted 9/15/2011 by P. Driscoll

The FDA needs revamped processes to ensure the timely review of potentially life-saving medical products, but also with an eye to recognizing the inherent risk in accelerated reviews for drugs and 510(k) process for devices.  The tone of Dr. Miller's commentary would have one believe that advocates for simply eliminating the FDA.  A little more candid recognition of the FDA's challenge would lend more credibility to the drug and device industries' concerns.


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