Building on 25 Years: A Look into the Industry’s Global Future

Originally Published MDDI August 2004

Looking Ahead



GMPs and technological advancements highlighted the last 25 years. The next 25 years? How about a two-system regulatory model and a single global audit?

John Conroy

Don't let the recent 510(k) approval of one of the world's oldest medical tools fool you. The device industry really has progressed in the 25 years since MD&DI was born. FDA's decision in late June permitting Ricarimpex of Eysines, France, to sell medicinal leeches shouldn't obscure the regulatory and technological advances achieved.

Industry experts point to a list of successes that includes the establishment of good manufacturing practices, the use of third-party assessors, and the increasing sophistication of medical devices. They also point to some hurdles, too. These include overregulation, global regulatory harmonization, and difficult reimbursement policies.

Clearly, the future of the $93.8-billion medical device industry is not in the Hirudo medicinalis from France. 

Perhaps, as some suggest, the future holds a two-system regulatory model based on the European and the FDA systems, a single global audit, and clinical trials with the same requirements in most markets. Was there really a time before 1976 when “an engineer would be able to design a heart valve in his garage and, the next day, would be able to insert it in the human body,” as Jeffrey Gren of the U.S. Department of Commerce says?

A Different Climate Back Then

MD&DI began publishing three years after the passage of the Medical Device Amendments in 1976. Gerald Loeb remembers the era well, because the period since 1979 spans the introduction and acceptance of the cochlear implant that he and others developed. For Loeb, now director of the Medical Device Development Facility at the A.E. Mann Institute for Biomedical Engineering at USC, the implant project exemplifies the evolution of regulatory changes. The device began its life in academic research and gradually became “a mature industry product at the same time that all the rules regarding regulations and reimbursement were changing.”

“If you go back to the late 1970s when this all started,” he recalls, “there were no rules regarding devices—certainly not regarding medical device research—no such thing as an investigational device exemption, certainly no design control, and reimbursement was just starting to become an issue.”

Health maintenance organizations were new, and “the role of the federal government as an insurer was being sorted out. The maturation of this product coincides with a huge shift in all of the government issues and policies that affect the industry now.”

Loeb thinks today's regulatory climate would have blocked the path that he and his colleagues traveled in bringing the cochlear device to market. “I suppose the cochlear implant, at least as we developed it, couldn't be done today in the university environment because the regulatory burden is too large.” One big question academicians ask themselves is this, Loeb says: “‘When really new technologies come out for which there's no obvious company to support their development, how are these going to get to patients?'”

Loeb cites Cyberkinetics as an example of a company facing today's rockier development path. The 3-year-old firm in Foxboro, MA, is perfecting a method of using neural signals to manipulate computers and robotics. Called the BrainGate System, the technology is based on more than 10 years of research at Brown University. The start-up company hopes to make a neural device that will enable the severely disabled to operate a computer, for example, with their brain waves.

Cyberkinetics' IP “is fairly well developed for use in animals,” Loeb notes, “and in order to get those technologies to the point that they could benefit humans at all, they have to go to start-up company mechanisms. We didn't have to do that.”

Are the regulations too burdensome? “Regulations exist for a reason: sometimes bad things happen,” Loeb replies. “The question is always cost versus benefit—to what extent our current regulations actually prevent bad things from happening as opposed to discouraging good things from happening.”

Current regulatory requirements and reimbursement policies, though, make it difficult for research to make it from the research lab to the doctor's office, Loeb maintains. “While there is some lip service paid to treating academic researchers differently, in practice that's difficult for the FDA to do, and I think a lot of academic device development has been driven out.” He says his position at the Mann Institute “is an attempt to counteract that problem” and provide “a halfway house” that supports activities appropriate to both the university and the business world.

The Regulatory Path: Past and Future

From the perspective of his 30 years in the regulatory vineyards, Fred Halverson asserts that development of schemes in both the United States and Europe “has basically turned out pretty well.” Halverson, the vice president of corporate regulatory strategy at Medtronic, says the Minneapolis-based device manufacturer worked with FDA from the beginning to develop a “reasonable” regulatory scheme. The process “was very open and transparent,” despite disagreements along the way.

“I think at the moment it's a pretty reasonable process,” Halverson says. “It could be quicker, but it's reasonably fast.” The executive says the European regulatory model, in which the work is done by independent third parties on a contract basis, gets products to market faster than the government-based U.S. scheme. 

“It's a matter of months for a Class III implant device,” says Halverson of the EU scheme. FDA takes up to a year “for similar devices, maybe a little less.” In Japan, regulatory approval “is much longer than either one of them.”

Halverson also praised the quality system regulation, which he says has fundamentally worked well. “We've got an agreement on the same requirements. That's a huge advantage for everyone. The international standard's quality system requirements are almost exactly the same as FDA's.” The device industry is hoping that the Japanese, currently changing their regulatory system, will adopt the same quality requirements, he adds. “Our concern is that they might impose stiffer requirements.”

Halverson says the first regulatory harmonization meetings in 1990 marked the moment when representatives of both the EU and FDA began trying to sing from the same score. “I think the first thing we accomplished was a common approach to quality system requirements.” He calls this accomplishment “a major achievement” and a “huge advantage” for device factories worldwide.

Halverson is active as a member of Study Group 1 in the Global Harmonization Task Force (GHTF). The group is exploring device regulatory systems around the world and separating the elements that suit harmonization schemes from those that don't. The overall task force has four primary areas of interest: premarket issues; adverse-event and postmarket issues; manufacturing standards, or quality systems; and facility inspections. The informal organization has five founding members: the United States, European Union, Japan, Canada, and Australia. 

The device market in China, Halverson notes, is growing rapidly. The Chinese State Food and Drug Administration has held a series of GHTF meetings. Halverson says the Chinese have been “very open about meeting with us.” Beijing is putting quality requirements in place and examining international practices in order to determine how best to proceed.

A Truly Global Market

Harmonization efforts are spreading as well. GHTF has organized regional working parties in Latin American countries, says Jeffrey Gren, director of the Office of Microelectronics, Medical Equipment and Instrumentation, International Trade Administration (ITA), for the United States Department of Commerce (DoC). “These are significant because they provide a mechanism to bring countries with developing regulatory systems into the global community,” he says. DoC has instituted programs to help developing countries with regulatory systems make modifications based on guidance documents and global standards.

The benefits and disadvantages in both the U.S. and EU systems are fairly clear. “I wouldn't say one is inherently better than the other,” Gren asserts. “You have to look at competing risks. There are two risks that medical device regulators have to live with on a day-to-day basis. One is the risk of letting unsafe products on the market, and the other is the risk of not letting safe products on the market.”

Gren says “it's fairly well documented” that because the EU's approval process is shorter than its counterpart in the United States, device manufacturers are able to market their products “on a more expedited basis” in Europe. 

Which system is better? “There is clearly a debate on that. The EU system probably does a better job of getting products to market quicker, and FDA probably does a better job ensuring high-risk devices are safe.” However, Gren notes that some critics question whether the EU system, which uses third-party organizations, “does as good a job as FDA.”

The use of notified bodies also raises questions, Gren says. Approximately 72 notified bodies operate in Europe, and the concern is that not all meet the same quality standards. “Is a review by a notified body in Spain or Greece comparable to a review done by bodies in Germany or the United Kingdom? There are some critics who say there isn't full equivalence,” Gren explains, but he believes no significant safety differences exist.

Unlike the three classifications for medical devices in the United States, Europe has four device classes. The EU is developing a global nomenclature that a number of countries around the world are examining. “Some are adopting global nomenclature, which I see as a positive trend,” says Gren. Regarding the acceptance of guidance documents, the ITA executive says it's much easier for a developing economy to accept a new regulation “from scratch, because it doesn't have a system requiring change.” All of the GHTF founding members have well-established regulatory systems that impede revisions, he maintains.

“Japan probably has the best track record of the five founding members in accepting guidance documents. FDA probably has the worst performance,” Gren notes. “That's not making a comment on our regulatory system. Basically, there is much in the FDA system that's defined by legislation and regulation. Some of it is difficult to change.”

The Reimbursement Saga

Although there are a few bright spots, the reimbursement issue remains contentious. Gren cites several concerns. “You can't sell your product on the market if it isn't approved for sale, and in many markets you can't even sell your product if there's no established reimbursement rate.” In other markets, device manufacturers must sell their products at a loss, he points out.

Every economy or country handles device reimbursement in a unique way, Gren notes. In countries such as South Korea, Taiwan, and Japan, the governments control healthcare, and “it's become a very politically sensitive issue that the healthcare budgets have been running deficits. You have tremendous strains on the health budgets because of rapidly aging populations.” Obviously, one way to balance these books is to hold down costs on medical device outlays, he says.

Products marketed in France need not only a CE mark but also demonstrable proof “that the product provides value and does something unique from products already on the market. Reimbursement really varies tremendously from market to market.”

The United States—with its mix of Medicare, Medicaid, HMOs, and insurance coverage—has “a very complicated system,” Gren says. However, he asserts that the U.S. reimbursement system has at least one big plus: healthcare providers are willing to pay for device innovation. “One [good] thing about the U.S. industry system is that there's a recognition of the value of technology.” Private insurers and the federal government through Medicare and Medicaid have established price points that take into account the technological capabilities of the latest devices.

Technology Trends

Advances in microelectronics and other miniaturization technologies have enabled device manufacturers to make increasingly sophisticated products, notes Robert Mosenkis, president of CITECH, a testing and consulting service based in Plymouth Meeting, PA. “For example, ambulatory insulin pumps that monitor and respond to the patient's blood-sugar levels were simply not possible 25 years ago. Laser robotics and sophisticated laparoscopic devices have revolutionized surgery.”

When microprocessors were fairly new, engineers used them more for the bells and whistles than for practicality, Mosenkis remembers. “Little attention was paid to the utility of these features or their ease of use.” That is no longer the case, of course, he points out. “Today, the industry has matured, and designers are using microelectronics to make devices appear simpler—even though they aren't—and to be much safer. This has been very good.”

Halverson of Medtronic can point to several device developments within his own company that confirm Mosenkis' point of view. Medtronic gradually transformed its pacemaker, which predates the regulations, into a smaller device with a longer life span and greater technological complexity than the original. The development of bovine- and porcine-tissue heart valves, sensor technology, and rhythm-management devices such as the implantable defibrillator “all came from that same basic technology.” 

Additional advances include electronic stimulation devices and insulin-delivery systems, Halverson says. In the next few years, the industry can expect to see “closed-loop systems for implantations so that you'll have a pump with a sensor as an artificial pancreas. The advances have been dramatic for the past 30 years, and they're continuing.”

Progress Leads to Evolution

FDA's guidance documents and its use of third-party assessors are two of the highlights of the past 25 years for Harvey Rudolph of Underwriters Laboratories (UL) in Washington, DC. The global program manager for medical devices at UL says the introduction of guidance documents eliminated “hidden rulemaking by the agency, permitted openness, and provided manufacturers with more input at an earlier stage of development.”

The use of third parties for medical device regulatory work began in Europe with the Active Implantable Medical Device Directive and continued in the United States with the Accredited Persons Program in 1997 and in Canada with CMDCAS in 2000, Rudolph says. In Japan, a pharmaceutical-affairs law will take effect in 2005. The third-party trend “expanded the capabilities of regulatory agencies for efficient and effective oversight of medical devices. This is a big part of global harmonization.”

The trend also had a major effect on UL itself, Rudolph notes. The growing use of third parties around the world coincided with UL expansion “as a global conformity assessment organization. UL was no longer just a U.S. certifier. It had to grow into a full-service provider for medical device companies.”

Like ITA's Jeffrey Gren, Rudolph sees progress on the global harmonization front. Among the “unifying features” is the overall acceptance of ISO 13485:2000 as a single quality system requirement by the EU, Canada, Japan, and Australia. China will soon adopt the standard, and, Rudolph emphasizes, “FDA's quality system requirement (QSR) is very close to [accepting] ISO 13485:2000.”

Two other major industry advances involve risk management and technical-file content, Rudolph says. “The world has agreed that risk management is a basic regulatory requirement, and most regulatory authorities recognize ISO 14971 as the appropriate model. Even the variability in technical-file content is starting to change.”

One Audit to Rule Them All 

CITECH's Mosenkis is unsure whether globalization has been good or bad for the medical device industry. Twenty-five years ago, he notes, most medical devices used in the United States were made by domestic firms. 

Today, three potentially negative trends are converging, Mosenkis argues. “In addition to the trend of manufacturing being sent offshore, medical devices are increasingly made by foreign-owned companies.” An increase in mergers and acquisitions is related to the other two tendencies. “In 1979, the typical medical device company was several dozen employees. Today, it's usually part of a large conglomerate. It's hard to say whether this has reduced the number of innovative devices being developed, but it's hard for a small, young company to get the attention of a hospital purchasing agent—let alone a group purchasing organization.”

Rudolph says the GHTF regulatory model, known as STED for summary technical documentation, “is close to what the EU notified bodies would like to see. Japan has adopted that model, and even the United States is pilot-testing the STED model for certain submissions. There is reason to be optimistic.” Developed by the harmonization task force's Study Group 1, the initiative using this model is limited to certain PMA and 510(k) submissions and does not include IVDs.

FDA's third-party inspection program involves audits of all manufacturing facilities exporting to the United States, ITA's Gren says. The EU's use of third-party organizations for plant inspections is “one area where we're seeing a lot of progress. I'm optimistic that over the next 10 to 20 years, we're going to see much more of it.”

Gazing into his crystal ball, Gren believes the concept of a global audit is the “most feasible of the regulatory improvements. Basically, that means one audit for most markets around the globe.” He says a mutual device recognition agreement between the United States and the European Union is “in the final stages of confidence building.” Expect a single third-party audit to be “accepted virtually in most markets around the world” within the next five years, he says.

The ITA executive also sees increasing commonality in clinical trials, and, importantly, by 2024, he predicts just three basic regulatory models. The EU-based model relying on third-party organizations “will be the predominant global regulatory system,” Gren insists. “I think we'll still see an FDA system where there's strong government involvement, but that's a dying breed and limited to highest-risk devices, and maybe one or two economies around the world that use an FDA-type system with a strong governmental role. And then I think we'll see a number of systems that are basically hybrids.”

In the regulatory area, Medtronic's Halverson forecasts two main trends. “The agencies will need to be able to handle the next generation of products that will be developed over the next 20 years, because,” he says, “you're going to have biotech and you're going to have drug-device 
combinations. The other trend is continuing to ensure that we have reasonable requirements that are harmonized. And if they're not entirely harmonized, at least there will be a common approach to requirements, and transparency in the process.”

UL's Rudolph believes that increased connectivity and integration among devices, hospital information systems, laboratory information systems, and pharmacies will make available “at one's fingertips all the information necessary to treat patients.” The executive also says that “the lines between the products that FDA regulates have already begun to blur, and this will continue. FDA's way of regulating medical products will have to undergo an evolution.” Finally, he foresees a shift away from treating diseases generically toward the development of treatments uniquely tailored for individual patients, “perhaps to the level of individual genes or combinations of genes.”

Mulling over his previous comments, CITECH's Mosenkis sums up the period since 1979 with a bit of wonder. “I realize that just as I could never have imagined the changes that would take place over the past 25 years, I could never guess what issues we might face in 2029. Will it still be a question of how to reduce FDA review time for new device submissions? I'd be foolish to try to answer this.”

When Gren began his DoC job 13 years ago, device makers believed FDA's bedside manner, in a matter of speaking, could have been warmer. “When I started, there was a sort of police mentality between FDA and industry. Industry thought FDA was basically out to find problems and to shut down companies and take products off the market.

“Right now, there's been a real evolution,” Gren concludes. “There's a spirit of cooperation between the FDA and industry—not that industry is enthralled with everything FDA does, but there have been some monumental changes and a real change in attitude.” 

Copyright ©2004 Medical Device & Diagnostic Industry