David Gollaher, president and CEO of the California Healthcare Institute, says the FDA's shift to become more risk-averse, along with the recent economic challenges and slowdown in the U.S. markets, have created an environment that makes it increasingly difficult for companies to pursue FDA approval.
“These factors have come together to change the business conditions for medical device companies,” he says. “There's been an overall shift in the agency to become more and more conservative with respect to the approvals and that has slowed down the process dramatically.”
A Boston Consulting Group report stated that some “high-profile device recalls” have led to an increased focus on the approval process in the U.S. Gollaher says the FDA has become more focused on the direct risk of products and often requires more clinical data now.
As a result, companies are developing strategies to launch their products in Europe first. With that, Gollaher says, goes jobs and manufacturing. Abbott Laboratories' experimental dissolving heart stent and Edwards Lifesciences' larger version of its transcatheter aortic heart valve are two examples of devices that were approved first in Europe this year.
“It's a shifting of innovation,” Gollaher says. “Once you are introduced into a market and people are using your product, a significant part of your attention and your business shifts there.”
Industry advocates say the shift in the FDA's approval process has occurred during the past four to five years, although the effect on U.S. patients is still unclear.
The companies choosing to launch products in Europe also face a number of challenges, including the fact that the market is fractionalized. Along with differences in language, reimbursement policies change country to country.
Mike Alkire, chief operating officer at the Premier healthcare alliance, a quality-improvement and group purchasing organization, says the slowdown in product approvals has stressed the speed in which the organization can incorporate new products into the supply chain.
“The length of time to get product approval has really exacerbated our process for rolling out technologies very, very quickly,” he says. “Our focus is really about getting all that new technology and innovation spread across our membership as quickly as possible.”
He added that approval rates for products likely parallel the recent drug shortages.
“It comes and goes with the issue of shortages,” Alkire says. “Over the past 18 to 24 months, this has become a lot more prevalent in conversations we're having with directors of pharmacy.” The FDA attributes some drug shortages to pharmaceutical consolidation, quality issues and recalls, increased demand and corporate exits for companies that manufactured in less profitable product areas.
In addition, hospitals and health systems could miss out on revenue generated by corporate investments in research and development at their institutions, according to Hobbs.
“Hospitals' competitive advantage is the state-of-the-art healthcare,” he says. “Access to that state-of-the-art healthcare is fundamental in being able to provide it.”
A PricewaterhouseCoopers study published in January predicts that the five “pillars of innovation” will decrease in the U.S. during the next decade. It defines the pillars as powerful financial incentives; leading resources for innovation; a supportive regulatory system; demanding and price-insensitive patients; and a supportive investment community.
“Fledgling medical technology companies already seek regulatory approval of new products outside the U.S. first. By 2020, consumers and clinicians in Europe, Israel, and other countries where the approval process is faster and less complicated increasingly will benefit from new technology before those in the U.S. Investors will lend their support where the ecosystem provides the greatest opportunity for innovative products to succeed,” the PwC authors wrote.