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Biosensors highlights concerns over the time and costs of approving devices in the US

Jeffrey Jump, the recently appointed CEO of Biosensors is a frustrated man. His company – a Singapore-based stent manufacturer – has grown increasingly exasperated with the regulatory climate that exists in the US and he wants everybody to know just how difficult it is getting a device approved by the FDA.

Concerns over the lengthy and demanding regulatory process in the US are not new. For years, many of the groundbreaking devices to emerge in the healthcare market – not just in cardiovascular devices – have made their debut in markets outside of the US first. Indeed, many US companies have found themselves marketing their technology in Europe long before the clearance process in the US has been negotiated. Europe’s gain has been the US’s loss but there are fears the gap is widening. In its defence, the FDA’s supporters will argue that its processes are there to protect the American people and if that means a more strenuous approval process then so be it. However, as Mr Jump suggests, it seems as if this regulatory gap is getting worse and the issue has to be addressed.

Worldwide, the approval process continues to take less time and, more importantly, costs less to fund. It takes a device manufacturer three to five years to get a medical device approved in Japan and China, at cost of US$3 million or less in each market. In Europe, the time can range from six months to two years and cost just US$2 million. In contrast, getting approval in the US for a medical device can take between two and seven years and cost between US$50 to US$100 million.

This discrepancy in time and costs is raising a few questions that Mr Jump and other CEOs increasingly feel need to be answered as a business. Most importantly, is it really worth spending that much time, effort and money on securing FDA clearance? It’s an issue that doesn’t just trouble the smaller companies, even the bigger ones are weighing up the options. According to Mr Jump, major medical device companies could be facing bills in the region of US$200 million just to get approval for their next-generation stent technology in the US and, as a direct result, may seriously consider abandoning the US market for this important technology.

With the global economic downturn very much in the memory of CEOs, the stringent and lengthy requirements needed to accommodate the FDA have also seen innovative companies bite the dust as they get bogged down in the regulatory steps imposed by the FDA. For Biosensors this brings opportunities to acquire technology at much lower prices because these companies simply run out of cash and time.

Already, Mr Jump has snapped up CardioMind, a US company which has developed a drug-eluting stent (DES) for the treatment of small vessel lesions, and plans to complete the acquisition of another undisclosed device company shortly. Paying for such high quality assets at knockdown prices is possible for Biosensors because it looks to gain its market share from markets outside of the US, which ultimately place considerably less strain on its cashflow. How long will it be before other companies choose a similar path?

Whilst Abbott will probably find the prospect of not marketing its bioreabsorbable vascular scaffold (BVS) platform in its home country ultimately unpalatable, and you could say it’s big enough to handle the costs, the debate is unlikely to go away. China is set to become the largest market for medical device by 2016, so why go through the trials and tribulations of the US when there are richer pickings to be had elsewhere? Biosensors has already closed its R&D operations in the US and transferred its activities back to Singapore and its R&D centre in Morges, Switzerland – also a centre for R&D for Medtronic and Edwards Lifesciences – because the costs of manufacturing and marketing medical devices in the US do not justify the potential returns.

The FDA is unlikely to be too concerned at the comments made by Biosensors, even if they are shared by the CEOs of some of the largest US medical device companies.  But that could change in the future as there is a real possibility that advanced technology – and US-developed technology in particular – could find itself not available in the US, or at least be available several years behind the global market. This has potential ramifications not only for the US healthcare system but also for the skills base in the US. Will the US be able to keep hold of its expertise if companies are increasingly outsourcing such facilities internationally?

For Biosensors, the die has been cast. The company is committed to marketing its BioMatrix Flex abluminal biodegradable polymer DES in markets outside of the US, and it doesn’t market or manufacture any interventional cardiology products in the US. That’s not say the Biosensors is totally excluded from the US market – it also sells bare metal stents and balloon dilation catheters, as well as a sizeable business that includes critical care catheter systems, haemodynamic monitoring and related devices used during heart surgery procedures and intensive care treatment. It is also handily placed should Abbott market its BVS device in the US as it also incorporates royalty earning Biosensors technology. But, despite all of these points, you can’t help share Mr Jump’s disappointment that the US market is rapidly becoming out of bounds to innovation.

This post was brought to you by Lawrence Miller, Espicom Business Intelligence’s medical news team leader.

Espicom Business Intelligence

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