Posted by: Audrey Erbes | July 19, 2011

Medical Product Innovation Status Impacts Jobs

Innovation is at the center of lots of discussions and pronouncements in the life science industry. Everyone is in favor of innovation but its status and what to do to improve  it depends on the source.

As international pharmaceutical companies downsize their workforce and physical operations in the U.S., they are building a greater presence in the BRIC countries with the saved money. They loudly claim they are fully supportive of innovation… but their actions indicate it’s where it can be done at the lowest cost and can take advantage of growing markets.

Other threats to innovation are attributed to:

  • Lack of sufficient VC financing of early stage companies
  • Regulatory approval delays despite company paid user fees to provide more resources to the FDA (65% of FDA budget for reviewing pharmaceuticals comes from user fees while 45% for medtech is predicted to come from these fees)
  • Republican-controlled House under W. Bush and now under Obama’s administration not providing sufficient resources for FDA to fulfill its growing responsibilities domestically and globally
  • FDA’s increasingly more costly, lengthy regulatory process which creates unpredictability for companies
  • Europe is recognizing that there’s big economic benefit to making it easier to get medical products approved quickly and to be the first to launch new products—overcome their earlier product approval lag
  • Anti-science conservatives blocking funds for NIH research under W. Bush and now after increases under Obama, Senate Republicans blocking increases in research grants to the industry through SBIR, for example
  • Investment risks associated with regulatory process placing U.S. at competitive economic disadvantage
  • Lack of repatriation of overseas medical company profits due to high taxes
  • Flight of U.S. medical technology to European Union
  • Inability of foreign-born entrepreneurs schooled and trained in the U.S. to get visa to stay in U.S. as follow up to 911 policies on immigration—producing reverse “brain drain”
  • It’s the economy!

So how does one tackle this myriad “can of worms” to kick start our innovation engine? Is there a way to solve all these threats with one sound solution?

CHI Research on Innovation Cycle

One attempt has been made in an extremely interesting report released earlier this year by the California Healthcare Institute entitled “Competitiveness and Regulation: The FDA and the Future of America’s Biomedical Industry” (download full report at

The intent of the CHI report is to address the need for renewal of the public private partnership critical to the return of the U.S.’s competitiveness status in biopharmaceutical and medical technology. There are a lot of excellent charts laying the major responsibility at the FDA’s doorstep for changes needed to correct the consequences of a slow regulatory process on the innovation cycle shown in chart on page 5.

The CHI report researched by the Boston Consulting Group claims that “Industry is committed to strengthening its partnership with Congress and the Agency” and predicts that “Positive policy and operational improvements at the FDA, along with constructive legislation, will encourage biopharmaceutical
and device innovation.”

FDA Response to Criticism

The FDA has been listening to the entreaties from industry visitors to Washington, DC as well as the White House and Congress’ criticism.

An article in July 16th issue of The Plain Dealer entitled “FDA announces new initiative to promote U.S. medical innovation.” Food and Drug Administration Commissioner Margaret A. Hamburg announced in Cleveland the previous day that her agency will launch an “innovation initiative” that will make it easier for domestic companies to develop and receive approval for new medical products.

Hamburg noted that the agency has competing roles: “to thoroughly ensure the safety of new products and medications before they are released to the public, and to provide Americans timely access to effective, new products that improve quality of life.” She acknowledged the FDA’s role in the national decline in innovation and much of the criticism of the FDA was “deserved,” but reminded the audience that Americans depended on them to protect the citizenry from unsafe medical products.

“Hamburg called on pharmaceutical companies, biotech firms and small business to develop tools to help the FDA become more efficient at assessing the safety, quality and performance of FDA-regulated products. For its part, Hamburg said the FDA would work on streamlining the regulatory process, including the development of an Entrepreneur in Residence program to provide technical support to small businesses that may lack the expertise to navigate the approval process.”

See future blog for continuing discussion of this extensive topic.

Meanwhile, see this week’s  listing of jobs with contacts identified in Jobs That Crossed My Desk Through July 18. Right click on bolded title and open pdf file in new window.



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