One of the more hotly discussed topics at the recent Neurotech Leaders Forum was the impact of FDA approval cycles on commercialization of neurotechnology devices and investment in neurotech startups. During a panel session devoted to the investment outlook for neurotechnology, venture capital professionals reiterated that it was very difficult for them to invest in devices that require a premarket approval path through the FDA. Kevin Wasserstein, managing director of Versant Ventures, summed up the feelings of many investors, “If you’re waiting for the FDA or CMS to make a decision, that is out of your control. We like to do things we can control.”
As we’ve reported in the past, FDA tardiness in approving new devices not only impacts investment in neurotech startups, it also results in exporting healthcare industry jobs and technology to Europe, since many U.S. firms have made the purposeful decision to pursue approval of new devices in Europe first. This is in large part because CE Mark approval of medical devices is based on safety and not efficacy. As a result, consumers and patients in Europe have access to new medical technology much sooner than Americans do—including technology paid for by American taxpayers.
We continue to believe that the ultimate solution is to redefine the role of the FDA as ensuring the safety of medical devices, while leaving the issue of efficacy to CMS and private health insurers. Let’s be clear, making this type of change would not be easy and would probably require a legislative mandate. But we think a powerful argument could be made to liberals and conservatives, to deficit hawks and social progressives, to opponents and supporters of Obama’s healthcare reform.
Conservatives understand the benefits of loosening regulations on business. But liberals would appreciate a device industry initiative that calls for tighter scrutiny of medical device safety, which would undoubtedly result from freeing FDA personnel from efficacy decision making. CMS personnel already evaluate efficacy in its coverage decisions, and a renewed emphasis on comparative effectiveness will help that agency make decisions that save taxpayers money and restore the long-term viability of Medicare and Medicaid.
Make no mistake, this change would not be a panacea for either established medical device firms or startups. Though they might get products to market sooner and generate a small amount of revenue in advance of reimbursement, it will be incumbent on them to make a strong economic case for their device at the outset. And they may have to pursue agreements with private insurers or exchanges early on in order to share the wealth produced by cost savings. But in the end, this would be a benefit for them, for taxpayers, and for medical consumers.
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