Cart (0)
business newsHow Potential FDA Changes of Medical Device Rules Could Affect Sector
By
MoneyShow.com Aug 17, 2011 1:45 pm
Changes to the approval process for some medical devices could have big implications for both big and small companies in the sector.
PRINT
 |
|
After delaying decisions last year on its own hot-button recommendations until the Institute of Medicine released its (very controversial) report this summer, the FDA recently made plans to decide on potential 510(k) changes by early October.
If the FDA makes relatively modest changes to the 510(k) process, the regulatory uncertainty weighing on medical device stocks may dissipate, giving medical device shares an upward catalyst.
However, if the FDA decides to create a new moderate risk category with different qualifications for approval, Congress may need to get involved, which could significantly lengthen the timeline and reinforce the uncertainty surrounding potential changes.
Of note, the FDA currently is seeking comments in public meetings where medical device makers, among others, are weighing in on the potential changes.
So what is the 510(k) pathway, and why is it so controversial?
Medical devices can reach the market through two regulatory processes. The most rigorous is the pre-market approval (PMA) process, which requires scientific evidence through clinical trials of safety and effectiveness for a device’s intended use.
Class III devices, which support or sustain human life, including many novel cardiac devices, already are subject to the PMA process. In contrast, a device maker going through the 510(k) process just seeks to prove an investigational device is substantially equivalent, or at least as safe and effective, as another device (a predicate device) that has already been cleared by the FDA.
The 510(k)’s standard of substantial equivalence to a predicate device is much quicker and cheaper for device makers to pursue than the PMA process, and the 510(k) process enables evolutionary changes that are the hallmark of many device niches, including orthopedic implants.
Patient advocacy groups argue that some moderate-risk devices should be subject to more rigorous pre- and post-market requirements than the current 510(k) process enforces.
In fact, in late July one organization that the FDA commissioned to study the device approval process, the Institute of Medicine (IOM), recommended scrapping the 510(k) approval process altogether to enable significantly higher scrutiny of moderate-risk devices.
That recommendation appeared shocking to both us and the FDA, which doesn’t have to follow the IOM’s advice. The agency indicated after receiving the IOM’s report that, while it was still open to new ideas, scrapping the 510(k) system wouldn’t be necessary.
Moderate-risk devices in the FDA’s cross-hairs include orthopedic devices (especially in light of the metal-on-metal hip controversy highlighted by Johnson & Johnson’s (JNJ) recall) and infusion pumps, which have multi-year recalls and remediation projects at both Baxter (BAX) and Hospira (HSP).
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
