Is the FDA Too Tough on Medical Device Makers?

Many people believe that excessive regulation by the FDA makes it too hard for medical device manufacturers to get new products approved, and makes the process take too long, depriving patients of treatments that might benefit them. Others make the counter-argument is that the FDA is actually too lax, and lets potentially dangerous devices go on the market without adequate review.

In a new paper, “Regulating Innovation with Uncertain Quality: Information, Risk, and Access in Medical Devices,” Wharton health care management professors Matthew Grennan and Robert Town shed light on the question: Are the FDA’s medical device regulations too hard, too soft, or just right? Town recently sat down with Knowledge@Wharton to discuss their findings.

An edited transcript of the conversation appears below.

The Right Amount of Regulation

In this paper, we’re examining the approach that the FDA takes to medical device regulation and asking the question: Is it optimal, or how close to optimal is it? There’s a raging debate about whether the FDA is too difficult on medical device regulation, whether it’s too hard for device manufactures to get their device through the regulatory process, or whether [the agency is] too lax and lets too many potentially harmful devices through the process.

“That’s the one takeaway, that there’s a lot to be gained from increasing post-market surveillance of medical devices.”

Our research asks the question: How much information does the FDA regulatory process generate for the market to use in deciding what device to use for a given patient? And should it require more information or less information?

The Control Group — the E.U.

What we did was compare the behavior of devices in the U.S., which has a much more difficult and rigorous regulatory standard than the European Union. The E.U. has fewer informational requirements to get devices through their approval process. Then, we compared the devices that were common in both markets, and how their market shares evolved over time. And finally, we compared that to devices that were only offered in the E.U. There are typically many more devices available for any purpose in the E.U., since that market is much easier to enter. We used that information to make inferences about the information that was being generated by the regulatory process, and then translate that into real consumer welfare measures.

Key Findings:

What we found is that the U.S. FDA regulatory process for the devices we looked at, which were second-generation cardiac stents, was pretty close to optimal Twitter . And the E.U., which has very lax regulatory standards, was actually too lax. If [the E.U.] were to implement more rigorous informational requirements for getting devices through to the market, they would improve consumer welfare. That surprised us — that the U.S. was so close to optimal, given the calls for reforms at the FDA. We kind of expected the FDA to be too difficult to get through.

“The E.U., which has very lax regulatory standards, was too lax.”

Weighing Costs vs. Benefits

The trade-off the regulator has to make is this: If you require more information, you delay the introduction of the device and make it more difficult for devices to enter the market. You raise the entry cost. On the benefit side, you have the increased informational content of increasing clinical trials, for example. The cost is that you delay entry. And that’s a real cost. You have less access to devices. So there’s a real access vs. information trade-off here.

Key Takeaways

One of the things we looked at is, how could we improve the process? What we found is, if we could make the post-market information-generation process more informative, that would generate a lot of welfare, because then we could relax the premarket requirements more, and then more devices would get to market quicker. That’s the one takeaway, that there’s a lot to be gained from increasing post-market surveillance of medical devices.

The ‘Goldilocks’ Zone

Hopefully, this research will dispel the notion that the FDA is way too difficult for, particularly, second-generation devices. I think our research, in my view, pretty convincingly shows they actually may be close to doing the right thing.

“The trade-off the regulator has to make is this: If you require more information, you delay the introduction of the device …. And that’s a real cost.”

One of a Kind

There really is no other kind of similar analysis out there that’s been able to credibly identify the causal relationship between regulatory regimes and this information content, and the benefits that patients get from these devices. So we think our research is kind of one of a kind. There’s some older research that’s related to what we did, but we think ours is pretty unique in that sense.

What’s Next

We want to see what market forces are at play that would cause medical device manufacturers to run their own clinical trials and provide this information to the market on their own, and not through the requirements of the FDA.

Citing Knowledge@Wharton


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