FDA, After Taking Heat, Offers Up Reforms to Support Pharma, Biotech & Device Innovation

10/5/11Follow @xconomy

The FDA has spent decades talking about how its job is to make sure all kinds of U.S. medical products are safe to use, and effective. Now it’s coming out with a new strategic outline on how it intends to do all that same stuff, while also spurring the development of more innovative drugs and devices that will help the U.S. hold onto its competitive advantage in the life sciences.

The FDA commissioner, Margaret Hamburg, today is releasing the 40-page overview with a decidedly non-adversarial title of “Driving Biomedical Innovation: Initiatives for Improving Products for Patients.”

While the full report has some defensive notes in it about how the FDA has already been trying to stir innovation for years through its 2004 Critical Path Initiative and other vehicles, it acknowledged a number of complaints that entrepreneurs, big companies, and investors have leveled against the agency for years. It cites the common beefs about how the agency can be unpredictable; not so good at helping small businesses navigate its processes; not exactly on the technological cutting edge; and inefficient. The FDA now says, after hearing input from various outside groups for months, that it wants to reform by improving its outreach to small businesses; creating a fast approval pathway for certain targeted therapies; improved data sharing; scientific training; and streamlining of processes and regulations.

It cites the familiar refrain to all industry observers about how the government and industry is pouring $95 billion a year into biomedical R&D, and getting fewer returns in the form of novel new products to help patients.

There’s a political backdrop to all of this, of course, as the President and the Congress are deeply worried about the stubbornly high jobless rate. Pharmaceuticals, biotech, and medical devices are three industries in which the U.S. is the undisputed world leader—yet there’s almost universal scorn for an FDA that has become so cautious and bureaucratic that it is stifling those industries and sending much of the U.S. competitive advantage overseas. Some prominent venture capitalists, and industry trade groups, have been pressuring people in the White House and in Congress for months to shake up the FDA, which I wrote about here back in April.

FDA commissioner Margaret Hamburg

The FDA talks like it has been listening. Hamburg wrote in the report that the agency “is working to position itself not only as a positive driving force in the ecosystem as a regulator, but also to facilitate medical product innovation.”

And Kathleen Sebelius, the U.S. Secretary of Health and Services of which the FDA is a part, added in a statement that: “The Obama Administration is committed to encouraging the entrepreneurs and businesses that are modernizing and strengthening our health care system. The innovation blueprint is another part of our effort to help businesses grow and keep Americans healthy.”

The blueprint is fairly vague in parts, and Hamburg notes in her introduction that it is an ongoing initiative and that it will be expanded.

One venture capitalist, Bob Nelsen of Arch Venture Partners, said he’ll need more assurance the FDA reforms are meaningful.

“It is a positive step that the FDA in recognizing that innovation matters. The verdict is out as to whether they will really change, so I will look for data. The FDA is under bipartisan pressure to re-think their policies that are leading the US to lose its huge advantage in medical devices to Europe, and [prompt] biotech investors like me to start investing in China,” Nelsen said in an e-mail.

“We no longer can justify investing in huge public health priorities like diabetes and Alzheimers, that cry for innovation investment, as a direct result of FDA policies that are muddled, unclear and don’t take patients into account. There is a dialog, and that is certainly a good thing, but as recently as two weeks ago Margaret Hamburg blamed the slow pace of drug approval on the lack of good science, not the FDA, which was a fall out of your chair moment, so we have a long way to go,” Nelsen said.

Still, the FDA document states repeatedly that the agency wants to be more supportive, and cites some of President Obama’s more business-friendly initiatives, such as the “Startup America” program which seeks to encourage high tech entrepreneurship as well as the “Strategy for American Innovation.”

Here’s the quick rundown on some of the programs the FDA has sketched out in its report, which it says should help spur more biomedical innovation:

—The FDA plans to establish a Small Business Liaison program staffed with people who have experience starting and running biomedical companies that have been able to navigate the FDA regulatory process to develop new products. These same people will help train the FDA on how to better understand and work with the small business people who are seeking various FDA approvals.

—Young entrepreneurs from university business schools will be recruited into fellowship programs at the FDA. That part of the program will help provide “first-hand access to information about regulatory review and what it takes to move a product through the FDA approval process. This knowledge base will enhance their effectiveness as future business partners, founders of companies, or investors,” the FDA said.

—The agency is working to find ways to incorporate new technologies like whole genome sequencing and biomarkers that are supposed to help pave the way for more personalized medicine, rather than prescribing drugs through trial and error to see what works for an individual—which is usually how it works today. Much of the science to support personalized medicine is “underdeveloped” and falls across multiple centers within the FDA, the agency said. To improve the scientific understanding and encourage more co-development of diagnostics to help properly select patients for personalized medicines, the FDA says it plans to increase its investment in “regulatory science”. It defines this field as “the knowledge, tools, standards, and approaches necessary to assess the safety, efficacy, quality, and performance of FDA-regulated products, will play an important part in addressing the challenges presented by personalized medicine.”

(Incidentally, UC San Francisco Chancellor Susan Desmond-Hellmann, the former president of product development at Genentech, recently told me in an interview that while some people don’t appreciate it on campus, she wants to put greater emphasis on “regulatory science” at UCSF as a way to help basic science become translated into new products for patients. The FDA said it plans to support regulatory science through collaboration with other government agencies, academic institutions, and public/private partnerships.)

—To improve coordination among the various divisions within FDA, the commissioner said she appointed a deputy commissioner for medical products to oversee drugs, biologic drugs, and devices.

—The FDA cites some willingness in the report to move more quickly on reviewing treatments with what it calls “exceptional promise.” It cited the history from the early 1990s, when AIDS activists pushed the FDA to make experimental treatments available more quickly for people who had a life-threatening illness at the time. One of the ideas FDA is working on is in regard to helping select the patients most likely to benefit in clinical trials, as a way of making the trials much more efficient than in the past.

—For medical devices, the FDA is talking about a new regulatory pathway besides the PMA path for groundbreaking new devices (which many entrepreneurs consider too time-consuming and costly) and the 510k pathway for relatively modest iterations on existing technologies. The new pathway will be the “Innovation Pathway” and will be faster than the PMA route, the FDA said. The agency will commit time and resources for better understanding of these innovative products early in the development process so “”so scientific issues and regulatory hurdles can be identified early on and unnecessary delays can be avoided.” It is also developing a “Network of Experts” to help the agency better understand the new technology.

Hamburg plans to discuss the report later today in Washington DC at the Washington Ideas Forum. I’m curious to hear your reaction to the FDA’s Innovation Initiative—what you like or dislike about it; what’s missing; and what effect you think this might have on company formation and investment in biomedical R&D. As always, you can leave a comment in the space at the bottom of this story.

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  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Here are some short responses to three questions I sent to Tom Clement, the founder of Kirkland, WA-based Pathway Medical Technologies and the chairman of the Washington Biotechnology & Biomedical Association:

    1. What do you think of this initiative?

    It is important that we have an initiative. The way things have evolved these last years have left entrepreneurs and their funding sources very nervous. As noted in the document there has been inconsistency at the agency. So overall, I’m glad to see something. How it is implemented will of course demonstrate real progress or lack thereof.

    2. What are the parts in the report you like/dislike?

    From my medical device perspective: I definitely like the concept of “reduce product review times and increase consistency”. Again, how will it be implemented? I like the concept and feel it is critical to provide “additional training” to the agency staff. I’ve witnessed that when someone gets “good” at reviewing submissions they get hired into industry or leave the agency to consult with industry. So the agency often ends up with young, willing, smart, but inexperienced people. That is where I think the training is needed. But how about an effort to retain the more experienced folks? Is it all about salary? I also thought the Small Business Liaison (SBL) program sounded promising. It would be good if they can get qualified folks in the role. Several of the initiatives I didn’t understand, or wonder why they can’t be found elsewhere in government: For example, why should the FDA train entrepreneurs? Seems like that is done at business schools – but there might be a role for the entrepreneurs they train at the SBL program (referenced above) if they would be mentored by people with good industry experience. Similarly creating a tech transfer function. I know that the agency will have IP / inventions, but why not use the NIH’s TT functions, or other agencies TT functions?

    3. How might this effect medical device startups and VC investment in the space?

    If the emphasis is placed on truly making the process predictably more consistent and quicker – I think it would go a long way towards helping startups and investors. Providing a better collaborative environment (which I think the SBL program sounds like it could do) would also help.

  • MIMEDICAL

    Sure, maybe the FDA could improve. We all could improve. But, the fundamental argument here…that regulation is bad for the regulated industries’ world competitive position…is fundamentally not just wrong, but intentionally wrong.

    Investors and others want faster and easier returns on investment. That’s a fine goal, but not if we throw out the baby with the bathwater.

    Plenty of regulated-product makers worldwide offer doctors products for which claims of great performance are made…yet doctors strongly prefer to buy US products. Why’s that? **Because of the FDA.**

    The more hard-nosed and difficult the FDA is, the more they challenge product makers who’d prefer to skate past the regulations, the stronger our export position is.

    My company exports about 50% of production. We’re not short-term oriented…we care a lot about sustained export performance into the future. We *don’t* want an easier FDA. To the contrary, we want the world press filled with stories about the FDA being the toughest, most difficult regulatory enforcers in the known universe. We’ve run the studies…that’s what our doctor-customers care about, because they know that’s why US products are the most safe and effective.

    As far as I’m concerned, the FDA is our strategic partner, and those misguided folks who are arguing for a weakened FDA are out to kill our export sales.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    MIMedical—this is a great point, and one that doesn’t get aired enough. The FDA’s rigorous approval process has been a boon to the fortunes of U.S. pharma, biotech, and device cos. Some of the more radical folks in politically ideological circles would like to do away with the FDA altogether, or at least turn it into a paper tiger. Many of the saner voices in industry realize that might boost stocks and investment in the short term, but would be a long term disaster as physician and patient confidence would erode as more and more new medical products would look like snake oil.

    That said, the FDA, like all government agencies, needs to be scrutinized and held accountable by numerous outside parties. If it is sitting on applications for truly important medicines and delaying them because of some bureaucratic miscommunication, incompetence, or excessive fear/caution about future unknowns, that’s not good either. The FDA, at least from what I see, has been moving more quickly lately on approving groundbreaking medicines like Xalkori, Adcetris, Zelboraf. But getting the balance right at FDA is tricky stuff, and this report is still light on the details of how it will balance safety, efficacy, and innovation. I’ll keep watching.

  • http://humanosphere.org Tom Paulson (@tompaulson)

    Hi Luke,

    I cover how the drug and medical device industry responds to the health needs of the developing world, so perhaps my perspective is a bit off. But I found this statement in your story interesting:

    “Pharmaceuticals, biotech, and medical devices are three industries in which the U.S. is the undisputed world leader—yet there’s almost universal scorn for an FDA that has become so cautious and bureaucratic that it is stifling those industries and sending much of the U.S. competitive advantage overseas.”

    I wondered how the U.S. drug/biomedical community could claim to have been so stifled by the FDA yet still remain the “undisputed” world leader in this industry.

    Maybe the FDA should regulate the media so we could be similarly stifled into a massive profit-making industry (as opposed to a shrinking, limping industry).

    Just kidding. Like everybody, I prefer to remain as independent, unaccountable and as little regulated as possible.

    The problem here is that we still have drugs getting approved that turn out to be unsafe or not as effective as advertised. Unlike many European countries, we don’t require “Phase IV” monitoring of drugs so once these babies get approved, it can be difficult to identify problems of safety and efficacy.

    Finally, I think it’s a bit parochial to think of the drug/biomedical industry as if it needs protection from overseas competition. These companies are already global. Many poor people around the world lack access to even the most basic drugs. Our innovations often don’t make their way out to those who need them most. Some in the industry are working to correct that. The goal for the FDA should not be primarily aimed at improving the U.S.-based drug/biomedical industry’s prospects so much as it should be aimed at ensuring safety, efficacy and the greatest social benefit.

    Regulators (as we discovered to our huge dismay and financial loss re the financial industry) need to keep industry accountable. Nobody likes that. So if the FDA is doing its job well, it will almost always suffer scorn from industry.

    Cheers
    Tom

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Tom—I agree the FDA has a huge problem with being unable to track adverse events of widely marketed pharmaceuticals, which turn out to have dangerous effects that weren’t seen in smaller clinical trials. We’ve all seen that with Vioxx, Avandia, et al. Even so, FDA haven’t had the political will behind them or internal competence to really get this serious about adverse event tracking, in my view. Here’s a post I wrote recently on an IT startup company seeking to make a business out of adverse event tracking. (Which probably ought to be the FDA’s job).

    http://www.xconomy.com/san-francisco/2011/09/27/adverseevents-com-seeks-to-keep-track-of-drug-side-effects-the-way-the-fda-never-could/

    All that said, just because industry is critical of FDA doesn’t mean that FDA is automatically doing a good job of being a tough regulator. If you worked for 5 years with the FDA, and spent millions of dollars based on a trial design that said “shrink tumors XX percent and you’ll get approved” only to come to FDA after those five years and have the goalpost moved to say “We need 10 more years of data from 20,000 patients that says it doesn’t cause heart attacks” you’d be upset too. Could it be possible for FDA to foresee these kinds of snags early in the process, and provide clear advice to companies so they don’t waste so much time and money heading into ultimate dead ends? That’s bad for the companies, and bad for patients that are counting on new medicines to get developed in their lifetimes.

    Ultimately, I agree it is FDA’s job to protect safety and ensure efficacy. They could be heading down a very slippery slope by saying they also need to promote innovation. What they really should be saying is they want to do a superbly efficient and professional job of regulating medical products, and guiding industry on the rules of the road. If they do that, industry will still complain about the too-tough FDA, but the complaints will be more hollow.

  • http://humanosphere.org Tom Paulson (@tompaulson)

    Thanks Luke,

    I think our failure in the country to do post-approval adverse tracking (or so-called Phase IV monitoring) is perhaps more critical for the public good than industry “innovation” — especially since much of that innovation is aimed at treating erectile dysfunction, baldness or fear of shopping malls.

    I agree that industry criticism does not mean the FDA is doing a good job. But missing from your piece is mention of the budget and staffing cuts suffered over the last 10 years at the FDA (huge!). Congress is again looking to cut the FDA budget by more than 10 percent.

    This is the Catch-22 here, which some (though not all) in the drug/biomedical industry have helped engineer — lobbying in favor of these cuts and then complaining that the agency is not up to the job.

    Again, the drug/biomedical industry in the U.S. is today one of the healthiest and most robust industries we have. If industry truly wants to see FDA improve — and support innovation, whatever that really means — perhaps industry will need to lobby for increasing the FDA’s budget and restoring its staff levels to meet the challenge.

    Cheers
    Tom

  • Michelle

    @ Tom Paulson, so well articulated! That’s exactly what I wanted to say!

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