Medical Innovation in an Age of Overregulation

By Jacob Andra
January 9, 2017


• Categories: 04-Product Design & Development, 05-Quality/Regulatory, Market Access, RC - Medtech Regulatory Resource Center

Approximately 6,500 medical device companies operate in the United States, according to Select USA, with R&D investment in the U.S. medical device sector estimated at “more than twice the average for all U.S. manufacturers.” The medical device manufacturing sector employs about 85,000 people and generates $42 billion in revenue. Under this rosy exterior, however, several factors—the so-called innovation plateau, skittish venture capital, and a lapsed R&D tax credit, to name but three—place a drag on the industry’s momentum.

Costly Compliance

Not least among these barriers (and in large part a contributor to the others) is the bloated regulatory environment, according to Rick Gallisa. On a corporate blog for Apriso (now Dassault Systemes), he laments how the “compliance quagmire” impedes “innovation and new product introduction.” Gallisa states that regulatory compliance makes up “25-35% of the cost of [medical device] goods.”

The National Association of Manufacturers agrees. In its 2014 report, “The Cost of Federal Regulation to the U.S. Economy, Manufacturing, and Small Business,” the organization indicts “unnecessarily costly rules, duplicative mandates, impediments to innovation and barriers to our international competitiveness.” In fact, the report places the 2012 total cost of federal regulations at $2.208 trillion.

Some Regulation Is a Good Thing

Nobody wants a Wild West scenario of patients dying by the dozens from unsafe technologies. Even industry insiders such as Gallisa concede that “when people’s lives are on the line, the proper checks and balances need to be in place.” If some regulations are good, even necessary, it follows that there must be some ideal balance, some point at which medical device manufacturers are sufficiently regulated to protect the public good, yet not burdened too far beyond. Most medical device professionals will tell you, however, that that ship sailed long ago.

A Burden on Innovation

A 2015 research paper from the Mercatus Center at George Mason University offers some of the harshest criticism of the FDA’s “antiquated system of…oversight.”¹ The authors say, “today’s regulatory system discourages choice and innovation,” slamming the FDA as being “stuck in the 20th century” and having a “precautionary decision-making” process that “does not square with a patient-centric approach.”

In other words, regulators have a disincentive to approve devices. The game theory logic is simple: if I’m a regulator and I deny approval for a device, nothing happens. If I grant approval and the device winds up harming someone, I could be implicated.

Patient-Centered Approach

The Mercatus authors recommend a more limited FDA involvement and an increase in patient feedback. While their patient-centered approach at face value seems almost childishly idealistic, it highlights an important point—one that is incidentally often buried in the existing bureaucratic tangle, which is, patients themselves may often gladly take on the risk of a new, unproven technology if it offers them a significant treatment option beyond anything currently available.

Instead of patients having the choice to use such a technology, the FDA, “making decisions for everyone,” drives up mortality rates via “excess precaution.” If this is so, then the irony bears emphasizing: An agency designed to keep us safe is causing harm by withholding potentially lifesaving innovations from patients who need them. “There have been countless studies of drug approval delays, and deaths resulting in such delays,” the report claims, adding that “just speeding up reviews could benefit patients by a ratio of more than three to one.”

OK: The patient-centric mentality sounds great as a guiding principle, but how would one implement these principles as policy? Keep a catalogue of the unapproved backlog for patients to peruse, then have them sign liability waivers when they spot the one for which they want to serve the human guinea pig role? The logistics alone defy the imagination. And that’s before we ever open a Pandora’s box of ethical and moral issues.

What to Do?

Given that there is some appropriate (more limited than its current) oversight role for the FDA or equivalent organization, what can be done to take the brakes off the regulatory approval process? If regulators have an incentive to stop devices from coming to market—or cause their approval to happen excruciatingly slowly—the answer would not seem to be any sort of financial incentive to grant approval. The latter seems a recipe for risky devices to be released on an unsuspecting public.

I have no answers to this dilemma. Perhaps regulators could be shielded from certain types of liability resulting from faulty medical devices that they have approved. Perhaps the FDA should incorporate more actual physicians into its medical device division. If it were up to me, I’d probably appoint a panel of physicians, biomedical engineers and public health experts to go through the reams of regulations, decide which parts were necessary for public safety, and recommend a much leaner, meaner, and all around streamlined “patient-centric” set of processes for medical device approval.

And Then There’s Trump

A Donald Trump presidency, of course, is the wild card for medical development. As with so many other aspects of his nascent administration, Trump stymies prognosticators of all stripes. Will he attack regulations with a vengeance? Do nothing? Approve additional regulations? All we can say is—wait and see.

References

1. Williams, R., Graboyes, R., and Thierer, A. (October 2015). US Medical Devices: Choices and Consequences. Mercatus Cetner, George Mason University. Accessed January 4, 2017. Retrieved from https://www.mercatus.org/system/files/Williams-Medical-Devices.pdf