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Michael Causey

FDA Compliance

Medical Device Industry Endures Tough 2013

2014 prospects aren’t much better

Published: Wednesday, March 26, 2014 - 15:35

It’s March 2014, but you could forgive medical device company leaders if they’re still smarting a bit from a generally tough 2013. Several new studies indicate a low level of mergers and financing occurred last year, which could slow product innovation down the line.

Also there was a drop in 2013 product approvals. And we get mixed reports on how that medical device excise tax thing is affecting initiatives.

Let’s start with taxes. Studies from the Emergo Group, reports from AdvaMed, and comments from the Medical Imaging & Technology Alliance (MITA) paint slightly different pictures; although none say the tax is good for the industry, the reaction has ranged from sort of bad to really bad.

Emergo’s survey, which has been criticized by MITA but endorsed by AdvaMed, says the medical device excise tax effects weren’t good, but weren’t as bad as predicted. In a 2013 Emergo survey, 75 percent of respondents said the tax would result in major (read: bad) changes in their business. But fewer than half said it had actually gone down that way in a similar Emergo study this year.

AdvaMed, which has applauded some recent efforts to repeal the device tax, saw a bleaker picture. Nearly 40 member companies reported that the tax forced 14,000 layoffs, and big reductions in R&D and startup company investment.

That last bit is troubling and may be with us for awhile.

A recent survey by EP Vantage found 2013 to be one of the worst years in a decade in terms of mergers and financing activity, which “could contribute to a lack of innovative devices in future.” The recent past doesn’t look so hot, either. Last year, the FDA approved just 23 devices; that’s down 44 percent from 2012.

“The increasingly stringent FDA approval process means that devices tend to gain European approval around three to five years before they reach the U.S. market,” reports EP Vantage. But wait, the bad news gets worse. Proposed changes in the European Union approval system might throw a spanner in the works there, too, warns EP Vantage.

Still, there’s a potential silver lining: If EU approval gets significantly tougher, it could put pressure on the FDA to continue efforts to speed things up in the 50 states. “To its credit, FDA is aware of this [potential EU approval slowdown] and is weighing options to combat it [including] the new de novo pathway, a swifter review process for low-risk devices intended for unmet needs.”

The FDA weighing some changes is good news for the device industry. Until then, it’s the medical device industry struggling under the increasingly heavy burden.

First published March 20, 2014, on the AssurX blog.

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About The Author

Michael Causey’s picture

Michael Causey

James Michael Causey’s been a journalist since he started his own neighborhood newspaper in the 1970s. In addition to quizzing FDA officials for the past 10+ years, he’s also interviewed political satirist Art Buchwald, FCC Chairman Reed Hundt, SEC Chairwoman Mary Schapiro, and is the past president of the Washington Independent Writers. Causey is the editor and publisher of eDataIntegrityReport.com and is a contributing writer on the AssurXblog.