regulatory strategy for medical device start-ups
DESCRIPTION
If you are a medical device entrepreneur thinking how to take regulatory requirements into account when creating your business plan, you might find this presentation useful. This presentation was given at a TTC round table event in Maastricht, NL.TRANSCRIPT
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9/23/2012 www.RadBee.com Contact: [email protected]
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9/23/2012 www.RadBee.com Contact: [email protected]
Email: [email protected]
Website: www.radbee.com
Blog: www.meddevonice.com
http://www.linkedin.com/in/rinanir
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The presentation relates to medical device start-ups which are aiming to
bring to the market significant innovation. If the innovation is not significant
we believe that bigger companies are better equipped to bring them to the
market.
We focused on regulatory strategy in regards to western economies, more
precisely on the USA and EU markets. This focus allows us to keep the
presentation within the 30’’ limit. It is not suggesting that start-ups should
necessarily have this market focus.
The presentation is focused on how the regulatory situation should be taken
into account when defining the business plan, or business strategy. It is not
concerned with the execution of the regulatory strategy.
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The single most important message we want to convey is that the regulatory
environment will have huge impact on every aspect of the business: budget,
staff and organization, timelines etc. Therefor you should take the time to
make a proper assessment of your regulatory situation and to define your
strategy.
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Preparing yourself is important especially because building a medical-device
company is not comparable to a “walk in the park”.
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It also cannot be thought of as a regular rock climbing.
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Starting-up a medical device company is as tough and adventurous as Alpine
mountain climbing, and therefore should entail the same level of preparation.
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Surviving and even thriving as a medical device start-up is possible, provided
you are well prepared and have the right gear and the right mind-set.
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The following reference gives a good overview of both CE and FDA processes,
and compares between them:
Daniel B. Kramer et al. Regulation of Medical Devices in the United States and
the European Union .NEJM 366:9 (March 1,2012 )
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In contrast with the CE approval process, FDA is focused both on safety and
efficacy. The need to demonstrate efficacy typically involves the need to
submit clinical evidence.
In recent years, primarily since the Obama administration, FDA are reviewing
and re-evaluating their review criteria’s, which leads to longer reviewing
processed and less predictable outcomes.
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The New England Journal of Medicine has published recently a perspective
article by Saptrashi Basu and John C. Hassenplug from the FDA, comparing
European and US review process for medical devices. The article is a reaction
to recent scrutiny of the FDA approval processes who accused the FDA process
of being too slow, and in it the authors claim that “the time it takes to bring
innovative, high-risk devices to patients in the United States is similar to or
shorter than that in the top four European markets”. Its main argument is the
fact that to compare correctly the time it takes for patients to access
innovative medical devices between countries it is not enough to compare the
approval process between the countries, but one should also take into account
the time for reimbursement of the device by the main health insurances.
Indeed, when taking the both factors into account and counting the time from
premarket file submission to reimbursement approval, the US process for high-
risk devices is quite comparable to British and Italian processes, and
significantly shorter than the processes in France and Germany.
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Reading the article may cause someone to wonder why, if bringing devices
to the US market is as quick as it is in Europe, are so many companies choosing
to go to Europe first.
There are few elements which the article does not account for and are still
important to the patient, who may benefit from earlier access to the medical
device, and even more critically to medical device companies:
1. The article does not account for the time it takes to prepare the
regulatory dossier itself. Preparing a PMA submission (these are the
submissions the article is mainly referring to) may literally take years
longer than preparing a CE submission.
2. Despite the long reimbursement process in Europe, patients may pay for
the device and actually have access to it much earlier. The article ignores
this “pay by patient” period unjustifiably. When the use of the device is
perceived positively by the patient, he may very often opt to pay for its
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usage. In the US patients may not access a device during the PMA review
besides in the limited context of clinical studies.
3. Reimbursement itself, as important as it is, does not guarantee market
penetration. The major market awareness and sales processes of
medical devices may start only after regulatory approval. This means
that in Europe, once reimbursement is granted, the device manufacturer
may be closer to having a higher market adoption then in the US. This
fact is critically important for medical startups, which rely on investment
funds to survive until they reach the break-even point.
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Therefore, from the point of view of medical devices companies, and
especially of young and small medical device companies, doing a first
regulatory submission in Europe is still very interesting. It can actually
create the opportunity for early innovators to adopt the device and for the
company not only to demonstrate early revenues but also to learn how to
position its device in the marketplace. It also stimulates the company to
learn how to build the distribution pathways and organize itself so that is
able to deliver to the main market. We realize that main stream market
adoption can be achieved only after reimbursement, but the advantages of
accessing the early market sooner are nonetheless invaluable.
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Together with the decision regarding FDA and CE submissions, the phrasing
of the device indication for use will have a crucial influence on your regulatory
status. When phrasing the indication for use you need to balance between
what you want to tell the market about your device and how big is the effort to
actually proof to the authorities that it does what you claim it does. Obviously,
tuned down indication for use can result in an easier submission.
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The summaries of regulatory files that where approved by the FDA can be
found on the FDA web site. This example was found there. In this case Philips,
the device manufacturer, had selected to emphasize the fact that the
algorithms and interpretations done by the device do not replace the doctor’s
judgment. Doing so likely reduced the burden of efficacy proof for the device.
However, when Philips promote the device in the US market they need to be
careful not to represent the interpretation done by the device in a way that
surpasses the claim in the indication for use.
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Mapping the various standards and quality assurance (QA) requirements is
important, because although they typically do not represent a strategic risk but
are rather more “work that needs to be done”. Understanding those
requirements will lead to more realistic assessment of budget and the type of
organization you need to build.
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A medical device development plan may easily be imapcted by few dozens of
standards. Those standards will influence the way you need to work practically
in every domain: from your risk assessment, your clinical trials, your
manufacturing setup and so on. Compliance with these requirements will also
have to be rigorously documented.
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It is important to understand that the various standards are being updated
regularily. So you have to stay tuned and make sure that when you release the
device it is compliant with the current standards.
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When summarizing your regulatory status and your strategy, it is important
to also evaluate the risk that your assessment is not correct. For example- how
likely is it that FDA position in regards to your type of device will change in the
foreseeable future?
Some more background on understand FDA internal trends can be found here:
http://www.meddevonice.com/2012/07/the-other-side-of-the-fda.html
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The regulatory environment, as well as some other domain specific factors
(reimbursement etc) drives the cost of creating innovative medical devices up.
Fortunately, investing in medical device start-up still makes good business
sense for VCs. The following graphs rely on data found in the following two
publications:
Sillicon Valley Bank, Continued Rebound: Trends in Life Science M&A, July
2012, http://www.svb.com/blogs/jnorris/ma-analysis-2012/
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Bruce L. Booth, In defense of life science venture investing, Nature
Biothechnology 29, (11 July 2011) .
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