New research from Harvard Business School finds first mover devices have a regulatory disadvantage at FDA, making it particularly hard for small firms to be first to market. The reasons for delay may surprise you.

Marie Thibault

August 12, 2015

3 Min Read
What's the Real Reason for FDA Device Delays?

New research from Harvard Business School finds first mover devices have a regulatory disadvantage at FDA, making it particularly hard for small firms to be first to market. The reasons for delay may surprise you.

Marie Thibault

You've heard of the first mover advantage, but what about a first mover disadvantage? It appears that new medical devices that are the first of their kind have a slower process through FDA. Since the technology is new, it make some sense that the process at FDA would take longer, right?

But new research from Harvard Business School finds that unfamiliarity with the technology isn't the cause of this delay. Lack of familiarity with protocol is actually what makes the FDA process take longer, assistant professor of business administration Ariel Dora Stern, PhD, finds in her working paper "Innovation under Regulatory Uncertainty: Evidence from Medical Technology."

Stern finds that medical device first entrants between 1977 and 2007 waited, on average, 7.2 months longer for regulatory approval than similar devices that came later, as opposed to the reverse phenomenon reported in drug regulation. Her analysis included 847 different PMA device approvals covered by 249 product codes. This delay represents an opportunity cost of approximately 7% of total R&D expenses, she writes.

Cardiovascular devices were the most popular specialty for device approvals, with 241 of the 847 device approvals falling into that category. Stern drills down into the cardiovascular category to examine reasons for the regulatory delay and finds that approval times aren't significantly impacted by the newness of the technology. She writes that her analysis of approval times for devices within the different product codes within the cardiovascular specialty finds that "Indeed, it seems that the delineation of a new product code itself, rather than the novelty of the technology involved in that product's primary function is the strongest predictor of longer regulatory approval times."

Stern unearths the rather alarming impacts that regulatory delays for first mover devices might be having on small firms. Analyzing small, private, stand-alone medical device companies, she finds that these firms represent only 6.9–17.2% of the novel device entrants, and 14.3–21.7% of the successor devices. Small drug companies again exhibit the opposite phenomenon, representing 36.4–54.5% of first entrant drugs and 11.5–46.9% of successor drugs.

"The results are consistent with the prediction that small firms will be less willing to take on the additional costs of entering new device markets, where the regulatory approval process is likely to be more costly. Specifically, we see a dearth of small firms among pioneer entrants to new device markets but not in new drug markets, where small firms, if anything, are more likely to be pioneers," Stern writes.

So how to combat this delay? Stern finds that after considering the impact of four formal guidance documents for high-risk cardiovascular devices, "the resolution of procedural uncertainty through the publication of formal guidance is associated with a 6.1 month (approximately 185 day) reduction in regulatory approval times."

There may be the good news for industry, if reducing uncertainty can play a role in shortening regulatory delays. In recent years, FDA has placed more emphasis on issuing guidance documents as part of its Transparency Initiative and a recent FDA Voice blog post directs interested parties to search all FDA guidances in one place.   

At the same time, the device industry has witnessed a reduction in approval times. It took just half as long, on average, for FDA to approve a first-time PMA device in 2014 as in 2013. What's more, there were 33 device approvals (PMA and humanitarian device exemptions) in 2014 versus 23 in 2013. 

Enhance your medtech knowledge by attending MEDevice San Diego, September 1–2, 2015, in San Diego.

Marie Thibault is the associate editor at MD+DI. Reach her at [email protected] and on Twitter @medtechmarie


About the Author(s)

Marie Thibault

Marie Thibault is the managing editor for Medical Device and Diagnostic Industry and Qmed. Reach her at [email protected] and on Twitter @MedTechMarie.

Sign up for the QMED & MD+DI Daily newsletter.

You May Also Like