Just like teenagers complain that their parents don’t let them be, it’s expected that medical device and other biomedical companies will complain that the U.S. Food and Drug Administration (FDA) slows them down. But it may be more serious than that. Timothy Hay reports in the Venture Capital Dispatch blog of The Wall Street Journal that a group of venture capitalists accuse the FDA and its inability to act in a timely fashion of causing fledgling startup businesses to fail.
Hay writes:
Medical technology start-up are going out of business as they wait for FDA guidance that sometimes takes years, if it comes at all, alleges the Medical Device Venture Council, made up of nine prominent venture firms that focus on medical technology. And many emerging companies that do stay in business are looking to launch in Europe, as the approval process in the U.S. is fraught with too many delays and difficulties, the council says.
VentureWire has exclusively reviewed a detailed 35-page report written by the council that highlights a dozen case studies of companies that have had problems with the FDA, including at least four that the council says have shut down as a direct result.
Officials at the FDA have said that the increasing sophistication and complexity of medical devices requires the agency to spend more time scrutinizing them. This is particularly the case when new information comes out about the safety of these cutting-edge technologies. They also say that their process gets bogged down when they have to sort through incomplete applications or ones that clearly appear to be thrown together at the last minute by the companies.
But venture capitalists say the FDA’s responses are no excuse and that the agency is just trying to cover up its inability to perform. Investors say that the FDA is causing U.S. innovation to stifle and forcing treatments and jobs to go outside of the U.S.
The Medical Device Venture Council is not the first to worry about the U.S. losing its innovation steam. Advanced Medical Technology Association recently called on the White House to come up with an innovations office.
Jeffrey Shuren, director of the FDA’s Center for Devices and Radiological Health, recently testified before the U.S. House of Representatives’ Committee on Oversight and Government Reform. He noted that the FDA has contributed to some of the frustrations felt by applicants by not being sufficiently clear, consistent, and predictable.
But Shuren said that the workload at his center has recently ballooned. Applications for new medical devices have more than doubled in the past few years. The applications are usually for technically sophisticated devices that require more time and scrutiny.
In the full report on the VentureWire Lifescience blog, Hay writes that some industry analysts say that the FDA isn’t completely to blame:
‘The FDA has become more risk-averse, but to blame them for company shutdowns, to me, doesn’t quite ring true,’ said Les Funtleyder, portfolio manager at brokerage firm Miller Tabak, who has health-care companies in his portfolio. ‘I wonder if some of these people just don’t have the goods…Yes, there are problems at the FDA. But to pin everything on a slow FDA seems a little far-fetched to me.’
Source: “Is FDA Dysfunction Linked To Failed Start-Ups?,” The Wall Street Journal, 06/23/11
Source: “‘FDA Medical Device Approval: Is There a Better Way?’ Part 1,” YouTube, 06/02/11
Rajendrani "Raj" Mukhopadhyay is a science writer and editor who contributes news stories and feature articles on scientific advances to a variety of magazines. Raj holds Ph.D. in biophysics from Johns Hopkins University.
