Medical Device Startups and the FDA

The FDA is often the largest hurdle faced by startups in the medical space, whether it be medical devices and software, or drugs and pharmaceuticals. Without prior expertise and experience in the space, it can seem daunting and impossible to decipher the extensive regulations and guidelines involved in receiving approval.

As the leader of the Treyetech team, our team recently had our pre-submission meeting with the FDA regarding our device’s 510(k) pathway (we’ll get into what that means), and I want to share my experience with entrepreneurs and venture capitalists alike. Treyetech is a medical device startup founded by Johns Hopkins students, building a device to facilitate an advanced corneal surgery known as Descemet’s Membrane Endothelial Keratoplasty (DMEK). DMEK is a partial-thickness corneal transplant that involves removing and replacing the patient’s corneal endothelium and Descemet’s Membrane with donor tissue. As such, this piece will cover FDA regulations of medical devices.

The Rules

Medical device clearance is broken into three tiers, aptly named Class One, Two and Three:

• Class I devices are in the realm of bandaids, dental floss, cotton swabs, and other things you probably didn’t realize the FDA dealt with, or would even be considered medical devices at all. 95% of these are exempt from the regulatory process.
• Class II devices are simple devices that are used for a slightly longer period of time and could present a moderate risk to the patient/user. These include powered wheelchairs, simple surgical devices, condoms, and pregnancy testing kits.
• Class III devices are more complex devices that present a significant risk to the patient/user; many support or sustain life, or are implanted. Examples include pacemakers and breast implants. 10% of all FDA regulated devices fall under this category.

Each class has their own (increasingly stringent) approval process. Some Class I and all Class II devices require a Premarket Notification, known as a 510(k), while Class III devices require a Premarket Approval, which is much more involved. In a 510(k), you can point to a predicate device already cleared by the FDA and prove that your device is “substantially equivalent.” This is the regulatory equivalent of the transitive property (to jog your memory: if a=b and b=c, then a=c), meaning if you can prove your device is no worse than an already FDA-approved device, it will also be approved. This is not as simple as it sounds and still requires extensive planning and testing. Treyetech has recently kicked off this process and had our pre-submission meeting for our 510(k) Premarket Notification.

The Exceptions

However, as with all rules made by governmental organizations with an acronym, there are exceptions. There are Class I and Class II exemptions, as well as “Off-Label” use of devices. As stated by the FDA,

“If physicians use a product for an indication not in the approved labeling, they have the responsibility to be well informed about the product, to base its use on firm scientific rationale and on sound medical evidence, and to maintain records of the product’s use and effects.”

This means that at the end of the day, the FDA cannot and does not aim to control the decisions of individual physicians. Rather, they seek to regulate the labeling and claims of medical devices. A surgeon can use your device however they like, within reason, but you cannot claim your device solves a problem unless it is validated and approved by the FDA. Thus, some devices are branded as one thing and most often used completely differently by doctors. For example, the Jones Tube is commonly used to transport and deliver corneal grafts in DSEK and DMEK. However, a quick Google search will show that the Jones Tube is described as a “lacrimal stent,” or an artificial drainage tube for your tear ducts.

The Point

Understanding what class your device falls into and the regulations that apply is crucial for any early-stage medical device startup. As a founder, this should be on your mind before you prototype your first devices. As an investor, this should be one of the first questions you ask those who pitch to you. For both parties, this gives a sense of the timeline and costs associated with going to market. After meeting with the FDA the first time, I realized the intimidation and fear felt by many in this space is unfounded. Their goal is to protect consumers, not mercilessly drive your company into the ground.

The FDA is often a major deterrent for investors. It is seen as the “trial-by-fire” that VCs want to see completed before they feel comfortable investing in a company. However, medical device startups often seek capital in order to fund their FDA approval pathway, creating a potentially venture-ending Catch-22. Compound this with the fact that medical device startups can’t generate any real revenue until approval, and it seems to be a near-insurmountable hurdle. As a founder, this can be alleviated in three major ways:

1. Dive in headfirst. Google all your questions until you find answers that create new questions, and then google those. Dig through the official FDA website, decode their language to the best of your abilities. Become the specialist; be ready to answer the hard questions investors are bound to ask.
2. Find someone who knows more than you with strong past experience dealing with the FDA and recruit them to work with you. This will be a huge asset to your team give you legitimacy in the eyes of investors.
3. Seek outside help in the form of consultants or contractors. These people specialize in helping companies like yours figure out problems like these (for a price). If you can afford it, this is the safest way to go — as long as you find a trustworthy, experienced specialist.

Proving that you’re knowledgeable and planning for FDA approval will legitimize you at an early stage in the eyes of investors.

Investors, if you ask a founder about their approval process and they haven’t done at least one of the three of the above, that should be an immediate red flag. A medical device startup without a strong understanding of their FDA pathway has no real concept of their timeline, expenses, or barriers to market entry. An investor without a strong understanding of a company’s regulatory pathway similarly cannot make an informed decision about an investment.

The FDA can be tricky to navigate, largely as a result of what seems like almost intentionally cryptic and vague language. Compared to the rapid pace of development at medical technology startups, it appears to move in slow motion. While it is important to weed out potentially harmful new technology, the submission process is unnecessarily confusing, frustrating, and slow, preventing useful new technology from reaching patients and users. At Treyetech, our application for a pre-submission meeting was lost three times and needed to be resent over and over again before we were given the opportunity to schedule a meeting for several months later. To give perspective, we sent our application to the FDA in December 2019 and finally had our pre-submission meeting in September 2020. As more and more medical technology is created by fast-moving small-scale startups, the FDA will need to alter their methodology to keep up with this pace of innovation.