Healthcare and Regulatory in the US for Medical Devices
Last week I presented on the topic of Healthcare and Regulatory in the US for Medical Devices to the first Nordic Innovation House / Innovation Norway REACH cohort.
It was slightly outside of my wheelhouse which meant I spent two days preparing for the 2 hour presentation and filling in gaps in my knowledge. After 25 years in Life Sciences and 8 years focused on investing in digital, fortunately I wasn’t completely clueless.
While I can’t share the recording from the event, I thought I’d summarize some of the key takeaways for any medical device company looking to expand into the US healthcare market:
— As I told the Estonian founders in Tallinn I met with in 2018, it’s not a single, unified market. The US healthcare market is complex, fragmented, and decentralized, with a diverse population of 340M people.
— Do the research early on who your target market is, who the customer is, who will pay for it, and whether a reimbursement code exists/or is necessary, especially if you are looking to raise $$ in the US. Hire an expert to help you navigate this. Investors are going to ask for this, and will want to know that you can make enough from sales to give them a good return on their investment.
— Many people in the US rely on their employers for health insurance. This archaic structure started after WWII and continues to this day. Others rely on government plans such as Medicare, Medicaid, and CHIP, and others on individual plans through various marketplaces. Again, it’s complicated. Each has their own set of rules regarding what they will and won’t pay for, and how much will be covered.
— Pricing is generally based on cost of R&D, manufacturing costs, marketing costs, cost of regulatory compliance, competition, level of demand, and the bargaining power of healthcare providers and GPOs.
— In the US, FDA regulates the development and sale of new drugs, medical devices, and biologics, as well as the advertising of these products to ensure they are safe and effective for their intended use. Within FDA, CDRH (Center for Drug for Devices and Radiological Health) is the primary agency overseeing medical devices.
— CFRs (code of federal regulations) is a collection of general and permanent rules issued by federal agencies and US departments. Title 21 covers food and drugs and is reserved for rules of FDA. 21 CFR Part 820, Quality System Regulation, establishes good manufacturing practices (GMPs) for medical device manufacturers. 21 CFR Part 11 covers electronic records and electronic signatures (something I know quite a lot about).
— There are three medical device classes with Class I being the lowest risk and Class III being the highest risk. Risk is assessed based on the level of risk to the patient and/or user.
— The medical device class determines the type of premarketing submission / application required for FDA clearance to market. Work with an expert early on in your company / development to determine the appropriate Class and subsequent regulatory pathway. Investors will absolutely ask about this as this will drive the overall investment required to get to market. Class II generally requires a 510(k) and Class III generally requires a PMA (premarket approval).
— FDA has a lot of resources on their website for Medical Device manufacturers / sponsors (more so than for drug and biologics).
— Digital health broadly encompasses all aspects of healthcare that are supported by digital technologies. Digital health includes software as a medical device (SaMD), wearables including smart clothing and textiles, clinical decision support software, and AI/ML (and other areas but these were the areas I focused on during the presentation).
— FDA created the Digital Health Center of Excellence to build partnerships, share knowledge across FDA and with stakeholders, and innovate regulatory approaches. This has resulted in quite a few guidance and policy documents. FDA recognizes the value of AI and ML in healthcare and recently issued a draft guidance document specifically around change control for AI and ML enabled device software functions. I’ve been really impressed with what has come from FDA regarding digital health.
The bottom line is that if you are an early stage medical device company interested in the US “market” consult with experts early on in your process to make sure you are designing / developing a product with a big enough market to provide investors with a decent return on investment, and understand what the regulatory requirements and pathway are, as these too will dictate how much you need and what to focus on.
Best of luck!
About the Author
Terri Hanson Mead, MBA, PMP, is a technology and compliance strategist for biotech, pharma, medical device, diagnostic, and digital health companies. Through her company, Solutions2Projects, she helps life sciences companies align technology roadmaps with corporate objectives and meet IT compliance requirements in a complex and regulated industry. As an expert witness, Terri provides pre-litigation consulting and expert witness services for failed technology projects, including enterprise systems.
