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Proceedings Paper

Government regulation's impact on health care technology companies
Author(s): J. Casey McGlynn
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Paper Abstract

Startups in the medical device industry have made major advances to medical technology. Today the ability to fund these companies is being adversely effected by the difficulty in accessing capital. The capital markets had been disrupted by uncertainty about healthcare reform and by changes in the FDA regulatory process. Both of these have adversely effected market valuations for medical device companies. In the area of healthcare reform confusion over the form and impact of these proposals as well as more stringent reimbursement policies have had a significant impact oh who gets funded today. For instance, capital goods and manufacturers with innovative ideas are no longer able to access venture capital. The FDA regulatory process has also had a severe impact on the medical device industry. The lack of clarity over the last several years in administering FDA policy, the increase in clinical data required for regulatory approval and the increase in time and expense associated with regulatory approval have all worked together to make it more difficult for medical device companies to be successful today. There are a number of unpleasant but real stories out there where the FDA has used and abused its powers in a way which has had a significant adverse effect on medical device companies and their shareholders. Some of these stories focus on FDA warning letters, others on the time delay at the FDA to obtain approval. These changes at the FDA have increased the cost to get regulatory approval, slowed the introduction of better medicine and caused a movement of technology, jobs and new companies to Europe. Although there is little that can be done in the short-term to change the policies of the FDA, there are a number of things which can be done by medical device companies to better cope with the world they live in. In the clinical area, these would include bringing in regulatory expertise earlier, making sure that a product's technical performance translates into clinical and economic outcomes and by applying increased scientific rigor to clinical trials. From a management standpoint, companies should not rush to the market or commit too early to infrastructure and they should consider international markets because of the friendlier regulatory environment, lower barriers to entry and tax advantaged legal structures.

Paper Details

Date Published: 6 December 1994
PDF: 18 pages
Proc. SPIE 2307, Health Care Technology Policy I: The Role of Technology in the Cost of Health Care, (6 December 1994); doi: 10.1117/12.195456
Show Author Affiliations
J. Casey McGlynn, Wilson Sonsini Goodrich & Rosati (United States)

Published in SPIE Proceedings Vol. 2307:
Health Care Technology Policy I: The Role of Technology in the Cost of Health Care
Warren S. Grundfest M.D., Editor(s)

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