PALO ALTO, Calif. – Medical electronics companies face increasing hurdles getting funding and regulatory approval to bring new technologies to market, according to executives at a medical device event here.
"We're in a bit of a perfect storm right now with some of the worst things I've seen in 30 years," said Eamonn Hobbs, chief executive of DelCath Systems and chairman of the Medical Device Manufacturers Association (MDMA), host of the event.
As many as three-quarters of venture capitalists are exiting the health care field as the total pool of venture capital decreases and regulatory hurdles increase, said Kevin Wasserstein, managing director of Versant Ventures (Menlo Park, Calif.) which focuses on health care.
"Even entrepreneurs have started to retreat from pursing big ideas [in health care], and we risk as an industry evolving to incrementalism and safer projects," said Wasserstein.
Some of the about 100 medical devices executives gathered here complained about what they said was an increasingly conservative and slow-moving U.S. Food and Drug Administration. The chief executive of one medical device company said his product is approved for sale in Europe, but is still waiting on an FDA OK to begin clinical trials.
"The conversation in the hallways is about how we are off-shoring our medical innovation," said one attendee in a Q&A session with FDA principal deputy commissioner Joshua Sharfstein.
"We have people traveling to Europe for care, and some companies we work with aren’t even planning a U.S. market entry," said another attendee.
The German government is providing matching funds for health care projects, Ireland recently launched a $5 billion investment program and China had more health care companies go public than the U.S. last year, said Hobbs. "But the biggest market is still the U.S.," he said.
A third attendee said the implant sector is "in a tizzy" over new classifications under consideration for devices. "This puts us in a difficult position to raise funds or bring new products to market," he said.
"It's no secret the medical device program I inherited raised some concerns from industry, and some companies were caught in a real Kafka-esque experience," said Scharfstein, an Obama administration appointee to the FDA, speaking in a keynote talk.
Sharfstein rejected criticism the FDA is risk averse, but he did admit the agency's decisions can be inconsistent.
"We've done tests of reviewers where half said yes and half said no to the same application," he said. "That uncovers some real weakness--you don’t see many regulatory programs that look at themselves this honestly," he added.
The FDA aims to expand its technical resources and provide more proactive guidance. It is also in the middle of an effort to revise the so-called 510K process used by the vast majority of medical devices.
Scharfstein sketched out broad ideas in each area but provided few specifics in a talk here. "He said all the right things but it could take more than a year before we see any substantial changes," said Hobbs of the MDMA.
The FDA wants to create a scientific council of outside experts its reviewers can tap. It also is working with the National Institutes of Hesalth to develop grants to fund work improving so-called regulatory science.
"The FDA wants a network to rely on so its decisions wouldn't be a single person's opinion," Scharfstein said.
The agency also wants to provide more guidance documents to let industry pro-actively understand its thinking. However, it lacks funding to pull reviewers away from ther work to write such guidelines.
"That’s a big challenge for us," said Scharfstein.
Meanwhile the FDA has put out for public review reports with a wide range of recommendations for revising the 510K approval process used by more than 3,000 devices a year, according to some estimates.
"I understand people are very anxious about the changes we are considering," Scharfstein said. "The device program does have flaws but we are not throwing everything out," he said.
Hobbs and others called on medical device executives to lobby for changes in regulatory practices and health care policies.
"You have to go yourself as a CEO and press the flesh in Washington," Hobbs said. "If you don’t show up, things will happen you won’t feel happy about," he said.