The FDA felt the heat in the 1990s when AIDS activists marched in the streets, shouting about how bureaucratic foot-dragging meant that patients died while waiting for approvals of experimental drugs. The FDA listened. It started clearing more new drugs for sale, and completing safety and effectiveness reviews faster than before.
Now it’s venture capitalists, and their industry friends on Capitol Hill, who are on the move, applying pressure behind the scenes to try to get the same result. Done right, this could be a healthy way to keep the FDA on its toes and allowing valuable new products on the market while protecting public health. But if the lobbyists and their allies in Congress overreach, I worry that this could hobble the agency and turn the pharmaceutical and medical device industry into a lightly-regulated Wild West (remember how that turned out for financial services in 2008?).
The effort to shake up the FDA is still in its early days, and it’s way too soon to say how it will turn out. But it is progressing, and this time the central battleground is in medical devices, and the rallying cry is for saving U.S. jobs.
The argument from the National Venture Capital Association and medical device trade groups is that the FDA, stung by high-profile safety controversies in recent years (think cardiac stents, Vioxx, Avandia), has become so fixated on risks of new products that it is stifling innovation in an industry where the U.S. has a competitive edge. FDA reviews of new medical device applications in particular, the VCs say, have become maddeningly slow, expensive, opaque, and unpredictable. The situation has gotten so bad that U.S. investment in medical technology is declining, companies have been testing and marketing their products in Europe first, and now jobs and operations are moving to Europe.
None of these arguments are new, but for the first time in a long time, I’m picking up signs that VCs and industry groups might get their way at the FDA.
“I do think the pendulum is going to swing back for us,” says Ross Jaffe, a managing director at Versant Ventures in Menlo Park, CA. “Back in the ’90s, the FDA got bogged down and it took pressure from AIDS activists and Congress to go back toward a middle-of-the-road path. Now it’s become too risk-averse. It will take pressure from industry and Congress to get it back to a middle ground.”
Both Democrats and Republicans in Congress, as well as the White House, are paying attention, Jaffe says. Leaders in the biotech drug business are making similar arguments, too, he says. “Congress is getting interested because there’s a sense that innovation is moving overseas. And there are implications for jobs.”
Most of the industry’s self-serving arguments about the need to reform FDA regulation have gone nowhere in the past, partly because they were based on anecdotal horror stories. This time, the industry has been offering more data to back up its claims. It appears to be working.
Back in November, prominent medical device entrepreneur Josh Makower released an industry-supported survey of 204 medical device companies that has become frequently cited. About 85 percent of respondents said European regulators were predictable, compared with 22 percent who said that about the FDA. Companies that spoke to the FDA about running a clinical study for a low-to-moderate risk medical device, through what is known as the 510(k) regulatory pathway, said it took an average of 31 months to get their device approved in the U.S., compared with seven months for comparable applications in Europe. For higher-risk devices, it took 54 months here, and 11 months in Europe. It now costs about $31 million to take a low-to-moderate risk medical device application through the FDA approval process, and $94 million for a higher-risk application with more novel products.
The time, expense, and risk of medical device product development no longer justifies investment in an industry where half of all reported exits are worth less than $100 million, according to the Makower report.
Two months later, PricewaterhouseCoopers weighed in with another report, which said the U.S. is still No. 1 in medical devices, but that the nation’s leadership is eroding.
The FDA appears to be listening. In February, Jeffrey Shuren, who heads the FDA center for review of medical devices, announced the agency proposed an “innovation initiative” to speed up reviews of new medical technology to enable safe and effective innovations to reach the market faster.
Shuren’s explained the need for this initiative in terms that are quite friendly to the industry.
“We must assure that our oversight doesn’t stifle innovation—but rather, encourages innovation while maintaining a commitment to safety and effectiveness upon which Americans rely and that other countries follow,” Shuren said on Feb. 8 in remarks which are posted on the FDA website. “We must turn what has long been considered the Valley of Death into the Pathway to Success.”
Earlier this month, Versant Ventures’ Beckie Robertson, a veteran medical device investor, told a group of med device entrepreneurs in Bothell, WA, that she’s hopeful change will come to the agency. The FDA, she said, “is a political body, and as political winds shift, so will the FDA.”
There’s certainly a lot of angst on Capitol Hill about the unemployment rate remaining stubbornly high at 8.8 percent nationwide, and nobody in either party wants to be seen as making the problem worse. Jobs, Robertson told med device entrepreneurs, “can and may have some influence” in changing the way FDA regulates the device industry.
Makower, who testified before the House Energy and Commerce Health Subcommittee on Feb. 17, isn’t quite as confident that the latest bout of activism is destined to succeed. Yesterday, he told me, “at this point from my perspective nothing has yet improved at FDA, so there is no evidence available yet to be optimistic. The mindset and approach through the ranks continues be focused more heavily on risk aversion rather than risk/benefit balance.” He adds: “Since nothing legislatively has changed to get us here, nothing other than leadership, management and vision is required to fix this situation.”
This issue isn’t making headline news just yet, but if it advances further it will generate attention, and it will attract extremists from both sides. Some on the left will accuse the FDA of being industry’s lapdog, and putting public safety in jeopardy, if it moves an inch toward streamlined processes that allow more innovative products on the market. On the right, there are those (like Newt Gingrich in 1995) who would like to abolish or gut the FDA, as if doctors, patients, and insurers in the free market can sort out what’s safe and effective.
Both of those extreme views strike me as wrong and dangerous. I know it’s been said a million times already, and it sounds Pollyannish, but it’s a shame that we live in such a hyper-polarized world that adults can’t debate drug regulation rationally in public. It’s an important issue that deserves more light than heat. Patients have a lot on the line. If we hashed out these issues more in the open, we could hold important agencies like the FDA more accountable, and avoid the extreme rebalancing act the FDA goes through at least once every generation.
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