How do medical devices get approved? INN breaks down the FDA’s intricate process for classifying and regulating these products in the US.
Life science investors are familiar with the arduous path new drugs must go through to reach the market. But what about medical devices? The same rigorous testing and inspection are required from different regulatory agencies.
The US Food and Drug Administration (FDA) is the agency tasked with reviewing new devices and making amendments to already approved devices. More specifically, medical device approval is done through the FDA’s Center for Devices and Radiological Health (CDRH). CDRH looks after the entire regulation process for companies that manufacture, repackage, relabel and import devices to the US.
Below, INN examines how the FDA classifies, regulates and approves medical devices to help better answer how medical devices get approved. This determines how everything from pacemakers to dental floss get on American shelves. It’s critical to understand this system, since sending a to market is key for company profits and therefore your returns.
Classifying medical devices
The FDA divides medical devices into three categories based on their perceived potential to do harm. Class I medical devices are designated low risk. These are things that don’t seem all that dangerous and generally are well established, such as enema kits, elastic bandages and manual stethoscopes. Nearly half of all medical devices are considered Class I at 47 percent.
As such, they are subject to the least restrictive regulatory requirements. Most, for example, do not require a Premarket Notification 510(k) — that is, the manufacturers do not need to prove that their device is “substantially equivalent” to one already on the market.
When it comes to Class II medical devices, a Premarket Notification 510(k) is one of the requirements. That’s because they’re potentially more harmful than Class I products and therefore need to demonstrate safety. This division includes things like hand-held surgical instruments and infusion pumps. These types of medical devices are 43 percent of the market.
Then there are Class III devices, or those products deemed the highest risk. Class III devices only make up 10 percent of all medical devices. Generally speaking, you need a whole lot more than a 510(k) to get these to market.
Replacement heart valves, denture adhesives, aspirators and breast implants: these products, and others like them, all require Premarket Approval before receiving clearance — that is, a more comprehensive and thorough review of the device.
Medical device regulation
The procedures and regulations for Class II and Class III medical device approvals are different.
In filing a Premarket Notification 510(k), manufacturers have to prove that their product is as safe and has the same effectiveness as a “predicate” — that is, a similar device that’s already been regulated and commercialized.
The predicate and its substantially equivalent product must have the same intended use. If the latter uses different technology, additional information needs to be submitted to be considered for clearance, showing that no patient safety concerns appear with the new device.
According to the FDA, it takes approximately 90 days to determine substantial equivalency. Only once its been cleared can a company bring its product to market.
On the other hand, Class III medical devices, as well as those not found to be substantially equivalent in the 510(k) process, must receive a Premarket Approval. In this instance, companies need to submit clinical data for the FDA to evaluate, and it takes time to first acquire those findings.
In order to collect clinical data, companies need to submit still another application to the FDA. An Investigational Device Exemption allows medical device manufacturers to use their product candidates in clinical trials.
Once the studies have been completed and the Premarket Approval application filed, the review process takes a minimum of 180 days. The decision is then posted publicly on the FDA’s website and anyone can petition the agency to ask them to reconsider their approval or rejection. This public review window lasts 30 days.
Similar to other industries within the health care sector, costs are extremely high when it comes to research and development. This means innovation in the space may leave some companies wary, but, as technology continues to evolve and advance, it is becoming increasingly difficult to ignore the impact it will — and already does — have on devices.
Technology disrupting the space as of 2019 include smart inhalers, robotic surgery, wireless brain sensors, 3D printing, artificial organs and health wearables.
In short, there is plenty of evidence to show the demand for this market is second-to-none thanks to an increasing demand from hospitals and surgical centers. However, the FDA has made changes to the medical device approval process, which has slowed down the number of devices approved. In 2018, 35 devices were approved, which is a significant drop off from 50 the year before.
A report from Evaluate says that the US government shutdown in early 2019 did not impact the agency’s “attempt to liberalise the medical device approval processes.” As a result, approvals and clearances in 2019 remain on par with 2018. In late 2018, the FDA set forth a proposal to change device regulation so that companies would be required to use recently approved devices as predicate; however, those changes have not yet come into play.
Despite some of the potential roadblocks, according to a Research and Markets medical device market report, the firm estimates the industry will reach US$409.5 billion by 2023, growing at a compound annual growth rate (CAGR) of 4.5 percent during the period of 2018 to 2023. Fueling that growth will be health care spending, technology developments, the aging patient population and chronic diseases.
This is an updated version of an article first published in 2017.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.