In the early 2000s, medical technology companies turned to Europe when they had new devices they wanted to push through the regulatory process and bring to market.
But over the last decade, companies have taken a shine to regulators in the U.S., a dramatic shift in industry sentiment, according to a report published in March by consultants and researchers at Boston Consulting Group and the University of California, Los Angeles.
“Most companies now actually find the U.S. regulation not just convenient but more in line with driving innovation faster and going to market faster,” Gunnar Trommer, a partner at BCG and one of the report’s authors said in a Zoom interview.
However, the picture is not entirely rosy, according to the 48-page report. Titled “Interstates and Autobahns: Global Medtech Innovation and Regulation in the Digital Age,” it is based on a survey of 104 company leaders.
While the regulatory process has improved in the U.S., executives see the country’s reimbursement policies as a new obstacle to innovation. They are also concerned about regulators’ ability to keep up with the explosion in medtech products that incorporate artificial intelligence and machine learning.
Still, the report paints a portrait of a U.S. Food and Drug Administration that has become more open to digital and technological innovation through a series of changes in policy and programs. Nearly four in five of those surveyed, or 79%, agree that the FDA is “responding well to advances in medical technology,” according to the report. And 89% said they would prioritize U.S. regulatory approval over that of other countries.
“The FDA has clearly outperformed its international peers, and intriguing data from this study suggests that the US has emerged as the most hospitable market for the burgeoning field of digital health offerings,” the report noted.
The finding contrasts a 2010 study that showed Europe was the preferred regulatory pathway between 1999 and 2009, according to the BCG/UCLA report.
The improved view of the FDA stems from several policy and program changes. They include the 2007 reauthorization of the Medical Device User Fee and Modernization Act, which boosted funding for the agency and setting stricter timelines on decisions. Executives in the survey also cited the FDA program expediting review of so-called breakthrough devices, as well as guidelines for devices incorporating AI and machine learning.
“Those are all initiatives that the FDA has put forth in the last few years that have significantly streamlined and, I would say, made more predictable how to bring digital and more of these innovative products to market,” Meghna Eichelberger, a partner with BCG and report co-author, said in a Zoom interview.
Nonetheless, startups with less cash to burn remain relatively frustrated with the U.S. regulatory process, according to the report. “With typically only months of cash on hand, smaller companies still face tremendous challenges when dealing with FDA officials whose time horizons too often do not comport with their own,” the report’s authors wrote.
Advances in the U.S. contrast with complicating factors in Europe. Executives were most critical of the continent’s new Medical Device Regulation, or MDR. They used the words “cumbersome and uncertain.” to characterize the MDR registration and approval process.
“Smaller companies expressed these sentiments most strongly, while some executives from multinational medtech companies were more circumspect, speculating that MDR may indeed elevate the average quality of products on the market in the EU by reducing the number of undercapitalized new entrants,” the report noted.
Executives also cited new complications stemming from Brexit, which severed one of Europe’s largest markets — the United Kingdom — from the European Union. Slightly more than half, or 52%, of executives surveyed said their companies would deprioritize European approval due to the market’s risks and rewards, according to the report.
The chief concern now for the industry in the U.S. is reimbursement policy. Executives see it as failing to keep pace. They cited, for example, the Biden Administration’s decision to cut the tie between breakthrough device designation and reimbursement from the Centers for Medicare & Medicaid Services, which oversees government health insurance programs for senior citizens, low-income people and people with disabilities.
Nearly two-thirds, or 63%, of surveyed executives view the path to reimbursement for digital medical products as unpredictable in the U.S., compared to 45% for traditional products, according to the report.
“Leaders broadly called for greater coordination between regulatory and reimbursement agencies and for the creation of a separate reimbursement classification for digital products,” the report’s authors wrote.
Photo: Waldemarus, Getty Images
