Report on FDA Highlights Impediments to Investment, U.S. Competitiveness and Innovation

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California Healthcare Institute (CHI)

Feb 17, 2011, 09:00 ET

Data quantifies drug and device review slowdown across FDA as compared to Europe

WASHINGTON, Feb. 17, 2011 /PRNewswire-USNewswire/ -- The California Healthcare Institute (CHI) and The Boston Consulting Group (BCG) this morning released a report highlighting the critical role of the U.S. Food and Drug Administration (FDA) in today's biomedical research and innovation ecosystem, and the need for a strong, science-based agency and an efficient, consistent and transparent regulatory process. The report revealed that an increasingly unpredictable approval process at the FDA has negatively impacted public health, the economy, job creation, American competitiveness and innovation.

The report, titled "Competitiveness and Regulation: The FDA and the Future of America's Biomedical Industry," comes as the House Committee on Energy and Commerce's Subcommittee on Health holds its hearing today, "Impact of Medical Device Regulation on Jobs and Patients." This report represents the first study to quantify approval timelines and trends over the past decade across both pharmaceuticals and medical devices using FDA and other data.

Mounting criticism and pressure from Congress, the media and consumer advocates have resulted in an FDA that is hindered by a growing focus on potential risks of new products – as opposed to benefits. According to the study's findings, when comparing the most recent year with the average for 2003-2007, review times for drugs and biologics have increased by 28 percent; while for medical devices, 510(k) clearances have slowed by 43 percent and PMA approval times have lengthened by 75 percent.

"Patients here in the United States ultimately suffer when there are delays in bringing new medical discoveries to the market," said David Gollaher, Ph.D., president and CEO of CHI. "With foreign regulatory agencies, such as the European Medicines Agency (EMA), focused on enhancing the competitiveness of their industry as well as the safety of new drugs and devices, inefficiency at the FDA has resulted in American inventions being made available to patients and physicians in other countries first."

The report found that in recent years there has been wholesale movement of clinical trials abroad as well as new product launches targeting Europe years before the U.S. This shift has pushed jobs and revenues offshore, helping other nations gain experience in building infrastructure and scaling up new biopharmaceutical and medical technology products.

The report also cites the financial crisis of recent years as a contributor to the worsening biomedical innovation environment. Combined with regulatory uncertainty at the FDA, companies' ability to secure necessary investment capital has been sharply reduced.

"The FDA's expanded data requirements, changing clinical trials protocol, and lack of consistency all lead to high levels of regulatory uncertainty. While this may have been uncomfortable in good economic times, it has become intolerable after the crash," said Simon Goodall, a partner in BCG's Health Care Practice. "The business risk posed by regulatory uncertainty has increased sharply since 2007. With less capital available, the risk of FDA unpredictability and delays is only compounded, especially when European approval often offers a faster and more predictable pathway to commercialization."

Twenty years ago, Congress recognized that there was a "drug lag" between the U.S. and Europe and worked with the biomedical industry to reinvigorate the FDA. This was the genesis of industry user fees through the Prescription Drug User Fee Act (PDUFA) and subsequent Medical Device User Fee and Modernization Act (MDUFMA). However, due to today's complex competitive landscape, the implications of FDA inefficiency are far greater.

"Over the years, Congress has enlarged the FDA's scope and added responsibilities and requirements over drugs and medical devices, while at the same time appropriations have largely failed to keep up," said Goodall. "This is an equation that doesn't add up for patients or businesses. It is important that Congress restore, support and sustain a strong and efficient agency and review processes to ensure safe and innovative treatments, technologies and therapies for patients in need."

The report's authors suggest recommendations for consideration with the pending PDUFA/MDUFMA authorizations. Among them are supporting reauthorized PDUFA/MDUFMA legislation that appropriately focuses resources on application review times and overall efficiency; establishing more transparency, consistency, predictability throughout the application and review processes; and re-establishing an appropriate balance between benefit and risk.

"Positive policy, managerial and operational improvements at the FDA, along with constructive legislation and congressional oversight, will encourage biopharmaceutical and device innovation," said Gollaher. "And working together, Congress, the Agency, industry and other stakeholders can maintain the high standards of safety and effectiveness that doctors, patients and their families expect while also strengthening the biomedical sector's ability to attract the investment essential to secure U.S. global leadership in the life sciences into the future."

About California Healthcare Institute

CHI represents more than 275 leading biotechnology, medical device, diagnostics, and pharmaceutical companies, and public and private academic biomedical research organizations. CHI's mission is to advance responsible public policies that foster medical innovation and promote scientific discovery. For more information, please visit our website at www.chi.org. Follow us on Twitter @calhealthcare and Facebook.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 71 offices in 41 countries. For more information, please visit www.bcg.com.

SOURCE California Healthcare Institute (CHI)