Matt Singer co-wrote this blog post with Sundeep Karnik.
Recently, the FDA announced new steps to modernize its 510(k) regulatory clearance pathway. This is the first major overhaul of a process that has been in place since 1976. The FDA intends to implement three major changes:
- Reduce or eliminate patient injuries and mortality attributed to loopholes in the now dated regulations
- Set the guidelines and framework to evaluate the safety and efficacy of devices with digital and connectivity features
- Streamline the process and requirements so that innovative new medical technologies can get to the market faster
We believe that these regulatory changes could impact medtech companies in three key ways:
- Raise the technical and scientific bar for product approval since the applicant now has to compare itself to fairly recent in-market products to get the same label or indication
- Raise regulatory costs for companies that relied on dated predicates to support new product approvals as a direct result of the higher technical and scientific bar set by the new regulations
- Shorten product approval timelines and reduce administrative costs as a result of streamlined processes and clearer requirements that minimize guesswork and iterations with committees
These potential implications should prompt medtech global marketing portfolio leaders to reexamine their decisions regarding where to play and how to win, including whether they should orient future product and portfolio decisions toward new innovations. It’s also important to determine how this regulatory change will likely impact their current and future portfolio.
Companies that wish to bet on innovation need to reexamine the ROI for their chosen innovations by assessing the benefits of streamlined regulatory requirements (such as reduced costs or time to market), or potential changes in pricing ability. Their actions need to support higher reimbursements or reimbursements for new-technology-related benefits, which are often not supported by existing reimbursements or codes. Companies should also think about whether these changes would make it difficult for products with inferior technology to make claims based on dated predicates. Moreover, how you can leverage that to differentiate your product with customers and key stakeholders?
Alternatively, some companies may choose to strategically de-emphasize innovation and focus on core clinical value and cost benefits. To commit to this path, a company would need to determine how the new regulation could facilitate an approval pathway for generic devices with clearer, simpler, and quicker processes and requirements for FDA approval than innovative and new-technology-intensive devices. The incremental technical and regulatory hurdles and investments in high-tech devices might not be worth the corresponding price or reimbursement for value-added features (such as connectivity or alerts).
The new regulations now shift the spotlight to commercial model innovation. If medtech companies continue to rely solely on reimbursement-based revenue streams, they will not be able to justify continued investments in new technologies. This creates an opening for consumer and digital technology giants to disrupt the industry with their sophisticated knowledge of alternate monetization models, expertise in digital and connected solutions, and deep consumer relationships and reach.
BLOG POST: It's Time for Medtech to Turn Digital