May 25, 2011
Medical device venture capitalists challenging approval times
Medical device venture capitalists came to Washington Wednesday with a clear message: The FDA is nearly driving us out of business.
Leaders from the Medical Device Venture Council, a consortium of investment firms, flew in early this week for meetings across the city. They spent Wednesday morning on the Hill, meeting with both Senate and House staff, and were headed downtown to speak with the White House Office of Science and Technology Policy as well as the Council of Economic Advisors.
They’re armed with data that suggests American regulations have driven both medical device development and investment overseas, largely to Asia and Europe.
“I’ve been in this business for 25 years, and each year health care venture capital has grown year over year,” says Mark Wan, a general partner at Three Arch Partners. “This last year, it shrank.”
The venture capitalists tell POLITICO that, while they have no specific legislative ask at this point, they are using their meetings to push for changes — either legislative or regulatory — to speed up the approval process for medical devices in the United States, as well as make the process more “predictable.”
“We want to drive the FDA to more consistent reviews,” says Wan. “If this is driven by science, it should be consistent and predictable.”
Medical device makers and investors alike have long bemoaned the FDA process for approving devices, largely 510(k) and Premarket Approval Application (PMA) processes. They contend the system has driven business overseas with its lengthy timelines and uncertain outcomes.
“It’s a big challenge to get capital from investors right now,” says Michael Carusi, another member of the council and general partner at Advanced Technology Ventures, a Palo Alto-based firm. “It’s very difficult with all the uncertainty of the review process.”
HHS Secretary Kathleen Sebelius has defended the FDA review process, recently rebutting the widely held belief that the European drug and device approval process moves faster than that of the United States.
“We had a briefing with the president lately,” Sebelius said at a recent Washington breakfast with the Sacramento Chamber of Commerce. “In fact, that is just not accurate in terms of drug approvals, [or] in terms of device approvals, if they are measuring the same level of drug approvals.”
Data from the FDA, previously provided to POLITICO by HHS to back up the secretary’s statement, say that of the 57 novel drugs approved between 2006 and 2010, 43 were approved first in the U.S. For priority drugs, the FDA’s median approval time was 183 days, more than twice as fast as the European approval process.
But data from the council suggest Europe is actually faster than the United States. Council officials presented POLITICO with data showing that that the average 501(k) clearance process takes 31 months in the United States, from first communication to final clearance, compared to 7 months in Europe.
“It’s simply not true,” Wan said of Sebelius’s recent remarks.
Wan noted that Asia, too, had become encroaching on the medical device market. Still, he remained optimistic about the White House meetings.
“They’re encouraging of innovation and want us to be a sector leader as it relates to maintaining our preeminent position in the medical device space,” Wan said. “We want to understand their priorities and try to find things we have in common."