Medical Device Regulation Revisited
Changes in regulation are casting shadows over the medical device industry.
A little over a year ago, we wrote about several independent, grassroots forces that were agitating for more stringent Food and Drug Administration oversight in the medical device industry. Now that some of those potential changes have started to take shape, we wanted to revisit the topic and provide some perspective on the key issues that have gained momentum over the last year.
Standard Geographical Strategy May Change
The geographical strategy that device makers have historically relied upon may change now that we're seeing greater regulatory convergence among the three major markets for device makers: the European Union, the United States, and Japan. In the past, device manufacturers have aimed to roll their new products out first in the EU, where the regulatory pathway was less rigorous (compared with the U.S.). Roughly 1.5-2.5 years later, the new device would receive FDA approval and roll out domestically, followed by launch in Japan approximately three years after the U.S. introduction. However, last spring the regulatory hurdles in the EU became substantially higher, and we now expect device makers will face a longer clinical process and higher development costs in that geographical area. Starting this year, device makers must demonstrate the risk/benefit ratio of devices based on clinical data. Previously, the manufacturers only had to show the safety of the device at the time of implant and there were no requirements on effectiveness. Postmarketing registries to track patients are also now mandatory. With the newly raised regulatory bar, we think it could take longer to get devices on the European market, and this could lessen the incentive to head for Europe first.
Debbie Wang does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.