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Some thoughts on valuation, regulation, development, & investment

Some thoughts on proposed changes to the 510(k) regulatory process

While two distinct and largely unrelated legal and regulatory pathways, the process of obtaining legal protection for an invention is a necessary antecedent to a regulatory process resulting in its commercialization and market launch. The following numbers, presented at the WSGR 27th Annual Medical Conference in San Francisco last month (WSGR Medical Device Conference), provides some context with respect to the front end of these pathways that run in series.

From the end of 2000 through May of this year, the US Patent Office allowed 58% of all applications with an average time to issuance of 3 1/2 years, though the number of patents issued between 2012-13 and 2017 declined significantly compared with allowance rates from previous years.  From a peak of about 58 months in 2010, time to allowance declined to about 40 months in 2016 and has been relatively stable the last couple years at around 42 months. There is no clear trend with respect to abandoned applications, though in 2016-17 there was a significant uptick relative to allowances. Data for 2018-19 was not available.

On the regulatory side, the FDA has been responsive for nearly two decades to incentives created by Congress and industry to expedite the device approval process.  In 2012, the device industry agreed to pay to the FDA $595 million over five years to cover its cost of hiring an additional 200 full-time examiners.  The objective of the Medical Device Users Fee Amendments to the FDA Safety and Innovation Act of 2012, which was an extension of two earlier acts of Congress beginning in 2002 with the Medical Device User Fee and Modernization Act, was to sufficiently staff the FDA such that 90% of devices were cleared for marketing within 90 days of 510(k) submission and 98% within 150 days (Medical Device User Fee Amendments). While the FDA continues to fall short of these objectives, total time taken by the FDA to reach an approval decision has decreased steadily since 2009, despite an increase of 32% in review time.

Center for Devices and Radiological Health (CDRH) Director Jeff Shuren has estimated that 20% of current 510(k) applications are cleared based on a predicate device that is older than ten years.  Since the enactment of the Medical Device Amendments in 1976, the CDRH has eliminated the use of 1,758 devices as predicates, 1,477 of which, or 84% having occurred in the last seven years alone, significantly burdening the CDRH as the result of the need to up-classify these safety challenged devices ("FDA Seeks to Overhaul 510(k) Program in Push for Modern Performance Standards").

A modernization of the 510(k) review process based on evolving safety and efficacy standards has the potential to decrease time to market, while lowering costs of approval and increasing overall device safety.  Simply by restricting the predicate device choice to technology that is less than a decade old, much of the time, cost and concern regarding safety associated with device approvals based on older technology will be eliminated.  By disallowing reference to older devices, the up-classification of devices to Class III will occur much less frequently.

If the CDRH is correct in its assessment of the impact of limiting predicate device age to ten years, the result would be a safer industry portfolio, lower burden of regulation, and cost savings to the American taxpayer.

Robert King