In 1969, UCLA professor Harold Demsetz explained that, in public policy economics, an ideal norm is frequently compared with “an existing ‘imperfect situation.'” The tendency to compare the economic situation on the ground with an idealized hypothetical solution was eventually dubbed the “nirvana fallacy.”

September 21, 2011

2 Min Read
The Nirvana Fallacy and 510(k) Reform

Demsetz.jpg

Harold Demsetz

In 1969, UCLA professor Harold Demsetz explained that, in public policy economics, an ideal norm is frequently compared with “an existing ‘imperfect situation.'” The tendency to compare a real situation with an idealized hypothetical solution was eventually dubbed the “nirvana fallacy.”

In a recent MD+DI article, Jim Dickinson explains that the Institute of Medicine (IOM) report, “attempts to measure FDA’s 510(k) program against the ‘ideal’ medical device regulatory system, an artifact it created for the purpose of the argument.” Sounds like an example of the nirvana fallacy to me. Dickinson goes on: The ideal system should be “self-sustaining and self-improving, support innovation that improves public health, and ensure safety and effectiveness via the appropriate and relevant authorities.”

 

It's probably a stretch for a scheme to guarantee (or nearly guarantee) the safety of medical devices while promoting innovation. But, then again, maybe "guarantee" is too strong of a word. What the IOM's report advocated was something like an elaborate risk-managment program. But what happens if FDA becomes more cautious in its approvals—even if FDA doesn't follow IOM's suggestions to scrap the 510(k) (which, the agency has reported, will likely not happen)? Many who work in the industry now believe that the FDA is already killing innovation. It's common knowledge that newer technology is made available in places like Europe months or even years before it is available in the United States.  

 

The agency’s hard-to-predict approval times is already leading to device lag in the United States. And some venture capital firms are hesitant to lend money to medical device firms; one of the main reasons for this is FDA’s irregular approval times. Uncertainty, it seems, is often the enemy of innovation.

 

Dickinson's assertion in the aforemetioned article is that the industry and the FDA are playing a political game. Over twitter, I asked Wanda Moebius, the vice-president of AdvaMed to weigh in on the article. She replied "I think all agree the 510(k) is too important to patients and jobs for anyone to play 'games' with it." 

 

Of course, neither side is purposely playing a "game"— even if it looks that way from the outside. And FDA didn't expect the IOM to recommend doing away with the 510(k) process entirely. In 2009, Jeffrey Shuren, M.D., then acting director of CDRH, explained that “Our working group and the IOM’s independent evaluation will help us determine how the 510(k) process can be improved to better support FDA’s mission to protect and promote the public health."

 

The importance of saving and transforming people's lives seems to be the one thing that both sides agree on. As for how to do that, that's a different matter entirely. 

 

Brian Buntz

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