After spending millions of dollars to develop a medical device, entrepreneurs want to hear anything about the U.S. Food and Drug Administration besides that it is “uncertain,” “expensive” and “time-consuming.”
Yet, that’s exactly the reputation the agency has gained both nationally and locally. And it’s why some Indiana companies are joining with peers elsewhere in the nation in rolling out innovations in Europe instead of the United States.
While taking products overseas might make sense economically for companies and investors, the upshot is that consumers might never get the benefit of products invented right in their back yards.
David Johnson, founder and CEO of BioCrossroads, an Indianapolis-based not-for-profit supporting the life sciences industry, said the conflict lies in weighing Congress’ and the public’s desire for multiple studies on new drugs and devices and the expense of that process.
“There’s a balance there between something being absolutely 100-percent safe and documented with multiple studies, which takes many years and may be prohibitively expensive, [and] taking something into the marketplace to make a difference in human health,” Johnson said.
Take Joe Muldoon’s FAST Diagnostics, for example. The Indianapolis company, which is developing a device to monitor kidney function and total plasma volume, will decide this summer whether to market the product in the United States, Europe or both.
Since an initial meeting with the FDA in 2009, Muldoon has found the process of bringing a product to market time- and capital-intensive.
“For us to succeed, we need to execute on what we told our shareholders we would do, and raise more capital to take the next step,” Muldoon said. “When uncertainty starts swirling around the U.S. process, it’s harder to get funded. Businesses have to gravitate toward, ‘Where is my path most predictable?’”
The FDA has reportedly approved 20 new drugs this year, putting it on pace to approve more drugs in 2011 than in the past few years. The agency approved 21 new drugs in 2010.
Colleen Hittle, whose Indianapolis-based Anson Group helps medical-device and pharmaceutical companies navigate the FDA, said for a medical device, the FDA approval typically takes one to three years. For a drug, 10 to 14 years are required.
The first step, she said, is demonstrating the new product is safe, which might include an animal study, or using the product in a simulated environment or in human clinical trials with the assistance of a physician. A company would also be required to describe the product and its manufacturing processes technically, and to describe the company’s organization, procedures and infrastructure. The process is subject to inspection by the government, and fees apply to each step.
Hittle said the most concerning aspect of the issue is not the time involved, nor the expense, but the process.
“As manufacturers, we pay user fees to the government to approve or review these applications,” Hittle said. “One would like to think those dollars are being spent on providing a process that is more transparent. When it’s uncertain, it’s not a good message for manufacturers.”
A “slowdown” of bioscience innovation began in the late 1990s, said Michael Mandel, a former BusinessWeek chief economist now serving as a senior fellow at the Mack Center for Technological Innovation at the University of Pennsylvania’s Wharton School and chief economic strategist at the liberal-leaning Progressive Policy Institute. While the regulatory process may have contributed to sluggish progress, a variety of other factors exist, including companies’ pursuing “the wrong strategies,” he said. And the economic implications were vast.
“Innovation drives growth, and part of the reason we’ve had such a terrible decade is that we spent an enormous amount of money on bioscience innovation, and the payoff has been much less than expected,” he said.
Mandel published a public policy brief in June called “How the FDA Impedes Innovation: A Case Study in Overregulation,” in which he detailed the FDA regulatory process of MelaFind, a handheld computer vision system designed to help dermatologists decide whether skin lesions should be biopsied for potential melanoma.
While the device company claims it passed the FDA’s agreed-upon test, FDA staff said the device was “not approvable,” Mandel’s report says. The company then asked a panel of dermatologists, statisticians and other medical experts to review the device, which they “voted narrowly to recommend approving.” The device has not been approved by the FDA, and the final decision is in process.
Mandel said the example shows FDA “overregulation,” especially since the computer device is not implantable and therefore could presumably not cause harmful side effects to patients.
“I think this was a case of a device that had an awful lot of promise and very little downside,” Mandel said. “It was clear to me that the FDA was really kind of being too stringent in its approval process. It’s a very difficult thing the FDA has to do, but they have to be open to the idea certain things can be put out on the market and improved on the market rather than looking for perfection right away.”
In February, California Healthcare Institute and The Boston Consulting Group published a study calling the FDA a “bureaucracy whose communications are neither consistent nor predictable.” The study, called “Competitiveness and Regulation: the FDA and the Future of America’s Biomedical Industry,” analyzed data provided directly by the FDA and suggested that, due to the economic downturn, the “environment for medical innovation has deteriorated.”
The report also states that it is crucial this year, more than ever, for Congress and the Obama administration to consider the FDA’s performance. During the next 18 months, the report says, “Congress will consider reauthorization of the user fee programs for biopharmaceuticals and medical devices.”
The purpose of the report was to analyze trends occurring in FDA approval, and examine them with a macroeconomic, “international competitiveness” perspective, said Todd Gillenwater, senior vice president of public policy for CHI.
“The economy slowed down and the financial market crisis happened, and we were witnessing this trend in the regulatory environment of the slower approval process, and increasingly unpredictable, inefficient regulatory process,” Gillenwater said. “Our report, we believe, highlights the consequence.”
Gillenwater said while the report does not suggest the U.S. regulatory system should change to be more like Europe’s (he said the systems are “apples and oranges”), research has shown why companies might take their business abroad.
“When you have a slowdown and uncertainty and unpredictability, that sends signals not only to the companies looking to develop products but also to investors,” he said. “Fifteen or 20 years ago, when the economy was growing solidly and the FDA was the unquestioned global leader in terms of regulatory science and professionalism and the FDA was truly the gold standard in the world, the United States was where everyone wanted to be.”
Yet Gillenwater said that may no longer be the case.
“We are living in a truly global economy,” he said. “If the signal the FDA sends to companies and investors is a big question mark, the money and companies will go where there is more certainty, efficiency and predictability, and increasingly that is overseas in Europe.”
Hittle has worked with at least one company that pursued the European market in lieu of completing the FDA process. The Indiana company, which she declined to name, developed an implantable technology but determined the “pathway to U.S. approval was too uncertain and too risky.”
“They may never launch the product in the U.S.,” Hittle said, “because they know the FDA has some requirements for commercializing that product in the U.S. that are expensive and perhaps uncertain.”
What could possibly be worse, Gillenwater said, is that some leading companies are becoming dissuaded by the FDA process and fleeing health care areas such as diabetes, cardiovascular disease and obesity, which are three of the most concerning health problems the United States faces.
Gillenwater agreed with Hittle’s explanation of why the FDA’s process is unpredictable. He said the issue begins at the earliest stages of interaction and involvement with the FDA, during the “pre-submission” of a product, when the FDA expresses what type of data it expects and issues “guidance documents.” Gillenwater said these documents are often not finalized or are out of date.
“That’s one area we think the agency itself has acknowledged: the need to have the guidance documents updated, and not only up-to-date but improved communications in the industry, if the agency is evolving in its expectations.”
He said evidence suggests evolving expectations, or changes in what types of trials might be required, are not currently clear.
“Where they are seemingly made clear, when it is suggested to a company this type of data is required or this type of clinical trial is required, there are too many instances after a company has spent significant time and resources, that the FDA moves the goal post midstream,” he said. “If the money is flowing, and you go out to the investors and say, ‘We need more data,’ … that’s fine. But the money is no longer available, especially for these small companies.”
Several key differences make the European process more “transparent,” “straightforward” and “less political, for lack of a better word,” Hittle said.
“The difference in Europe is, in some cases you’re allowed to make promise statements,” she said. “You describe the product, how it’s made and you keep this technical information at your place of business. They could come and audit you periodically, but you’re allowed to bring the product to market in some cases without a pre-review,” she said.
Johnson said some benefits to completing the FDA process should not be overlooked.
“One of the things that makes this country great as a biotechnology system is that we have the FDA and it insists upon rigorous standards of safety,” Johnson said. “You know when you buy a U.S. medication or device, it’s safe. That is not true of a lot of devices made and manufactured in other parts of the world.”
For this reason, Johnson said, companies are not merely “looking to cut corners.”
“Nobody thinks the process ought to be easier,” he said. “People do wish the rules were a little clearer and the activities were more energetic and faster.”•