August 10, 2011
VC Dispatch/Wall Street Journal
VCs Ramp Up Pressure On FDA Over Medical Device Approvals
Venture capitalists are taking exception to recent comments by Food and Drug Administration Commissioner Margaret Hamburg, who said in an Aug. 1 Wall Street Journal guest column that the agency’s cautious approach to approving new medical treatments boosts consumer confidence in products on the market, and stimulates economic growth.
Investors in emerging medical technologies, who say that a number of start-up companies have either gone out of business or moved overseas because of delays and uncertainty at the FDA, say the agency’s caution has given way to overzealousness, and that it is now next to impossible to get new devices or drugs approved in a timely manner.
Jobs are evaporating or moving to Europe or Asia “for fear of getting lost in a FDA quagmire, a money pit that has driven many small companies to bankruptcy,” said Kenneth Abramowitz, a managing general partner at New York-based NGN Capital, in a letter in today’s Wall Street Journal responding to Hamburg’s comments.
Hamburg pointed out that the FDA is faster than comparable regulators in Europe when it comes to approving new cancer medicines, having approved 32 new pharmaceuticals over the past seven years.
But John Freund, a general partner with Palo Alto-based pharmaceutical investor Skyline Ventures, said in another letter in today’s Wall Street Journal that proposed therapies for obesity diabetes and cardiovascular diseases move through the agency at a snail’s pace, and that investors are now beginning to turn away from funding such treatments.
The investors responding to Hamburg’s statements are echoing the sentiments of the Medical Device Venture Council, a group of investors from nine prominent venture firms with active life sciences portfolios.
Members of the council say that a lack of consistency and clarity at the FDA — caused in part by staff turnover and leadership changes — is throwing a wrench into new medical technologies and treatments that could be improving the country’s health. VentureWire previously reported on the council’s concerns.
While the FDA acknowledges that it needs to do some housekeeping, it puts some of the blame for costly delays on industry, saying that many applications it receives are botched or incomplete.