Project Description

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This masterclass on regulatory pathways and market access is based on notes taken during a talk by Trilo Das, a regulatory compliance expert who has mentored numerous MIT teams in the past few years. Notes from the talk is augmented by additional articles drawn from the websites of the US Food and Drug Administration (FDA), the European Commission (EC) and other organizations.

Why do medical device startups need a regulatory strategy?

For healthcare ventures, innovation is key – but you must also think ahead of time about your paying customer, who is oftentimes not the consumer. For ventures that are creating solutions that will be paid for by insurance companies via a reimbursement strategy, you will likely need regulatory approval for market access. This helps the startup become successful in today’s value-based, payer-dominent healthcare environment.  (Value-based programs reward health care providers with incentive payments for the quality of care they give to people with Medicare. These programs are part of our larger quality strategy to reform how health care is delivered and paid for.) 

If you don’t have regulatory approval, you will not be able to sell your product in the market (aka have market access) – and you will not be able to survive. Conversely, with market access, you will be able to generate revenue through sales of your product or service.

There is a clear return-on-investment (ROI) on creating a regulatory strategy from the get go, very early in the product development cycle and not at the design finalization phase.

A successful regulatory strategy requires an understanding of regulations, intended use, technology, patient needs, pricing, and reimbursement.

Critical components

There are two critical components to a regulatory strategy:

  • Regulatory approval: It permits the medical device to be sold in a country (such as the USA) or a geographical region (Such as the European Union) or to the rest of the world (ROW). Different agencies are involved in each region – the FDA is the agency in the US, and the EU Commission is the one responsible in the European Union.)
  • Product reimbursement: This is the payment that a third party public or private insurer (e.g. Medicare/Medicaid, Blue Cross Blue Shield) makes to a health care provider (e.g. a hospital, a doctor) for costs or fees that the provider incurred while using the medical device.

For the second component, this involves understanding reimbursement codes and learning how to work with insurance companies, which is out of scope for this masterclass. The remainder of this masterclass will be focused on regulatory approval for different countries or regions.

Selecting a “market” – aka a country or geographical region

While any startup should be hyper focused in selecting a focused beachhead market, it is critical that medical device startups consider geography at the very beginning of their go to market strategy. 

In particular, there will be technologies that the medical device relies on. If there is already a similar technology or medical device that has been approved in a particular country or region, that should be taken into consideration because going to that geographic market first will be much faster than going to another market. 

What this means is the following. If all things are equal from a total addressable market and prevalence of disease and other business considerations standpoint, and you are equally able to set up a business and recruit talent to sell your product in the markets you are considering, you may use the regulatory landscape to be a tie breaker in picking a country or region. 

For example: If there is a similar approval for the technology in your device, say, in the EU, but none in the US, you should seriously consider setting up shop in EU for a quick approval so you can begin selling devices and get experience with end users. 

Deep dive on the US and the FDA

US regulatory approval is administered by the US Food and Drug Administration (FDA), which oversees medical device regulations and assigns a medical device class. 

Medical Device Classification in the US

According to the Regulatory Controls section of the FDA website (Current as of July 2020):

Federal law (Federal Food, Drug, and Cosmetic Act, section 513), established the risk-based device classification system for medical devices. Each device is assigned to one of three regulatory classes: Class I, Class II or Class III, based on the level of control necessary to provide reasonable assurance of its safety and effectiveness. For information related to device classification, please refer to “Classify Your Medical Device.”

As device class increases from Class I, to Class II to Class III, the regulatory controls also increase, with Class I devices subject to the least regulatory control, and Class III devices subject to the most stringent regulatory control.

The regulatory controls for each device class include:

 

  • Class I (low to moderate risk): general controls
  • Class II (moderate to high risk): general controls and Special Controls
  • Class III (high risk): general controls and Premarket Approval (PMA)

 

Visit the FDA website to learn more about what general controls, special controls and premarket approval (PMA) mean respectively.

 

Intended use

“Intended use” is simply what you say on the label that the device is supposed to be used for. This becomes a deciding factor for the classification of your device. The same device with different intended uses will be classified differently.

For instance, if a scalpel’s intended use is to cut flesh (in general terms), it will be a Class I device. BUT: If the intended use is specifically to be used on an eyeball, it will be a Class III device. 

510(k) Premarket approval

Within the realm of general controls, special controls and premarket approval, you need to understand what is 510(k) Premarket approval. According to the FDA website:

Section 510(k) of the Food, Drug and Cosmetic Act requires device manufacturers who must register, to notify FDA of their intent to market a medical device at least 90 days in advance. This is known as Premarket Notification – also called PMN or 510(k). This allows FDA to determine whether the device is equivalent to a device already placed into one of the three classification categories. Thus, “new” devices (not in commercial distribution prior to May 28, 1976) that have not been classified can be properly identified. Specifically, medical device manufacturers are required to submit a premarket notification if they intend to introduce a device into commercial distribution for the first time or reintroduce a device that will be significantly changed or modified to the extent that its safety or effectiveness could be affected. Such change or modification could relate to the design, material, chemical composition, energy source, manufacturing process, or intended use.

 

Quality management system

In addition to all this, all devices must implement and maintain a Quality Management System (QMS). Read the section on quality systems on the FDA website to learn more.

How the classification affects whether a device needs to go through the 510(k) process

Class I devices are mostly 510(k) exempt – BUT there are a few that require it.

Class II devices may be 510(k) exempt, but most will require a 510(k) submission and clearance from the FDA. The submission needs to show substantialequivalence to another legally marketed device, often called a “predicate device” with regards to safety and efficacy.

Class III devices require a premarket approval application (PMA). A clinical trial will have to be completed which the FDA will use to determine the device is safe and effective. Only then can it get market access.

The De Novo Pathway

There is a new option that is gaining popularity amongst device makers. It is the De Novo Pathway, especially for medical devices using Artificial Intelligence (AI).

The De Novo Pathway is taken when:

  • There is no predicate device
  • Your device is Class I or II
  • Your device is considered “novel” – and also regarded as low and moderate risk 

Engaging with the FDA: Pre-Sub Q-Sub Meetings

In developing a regulatory strategy, companies should take advantage of the FDA’s accessibility and engage in “pre-submission” discussions with the agency. This helps clarify and finalize the classification of the device. 

Deep Dive on the European Union (EU)

In the EU, approval is indicated by the CE mark which stands for Conformitè Europëenne.

The CE Mark

Conformitè Europëenne (CE) indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area (EEA). The mark is accepted by 27 countries that make up the EU and Norway, Iceland, Liechtenstein, and Switzerland.

The Notified Body

The CE mark is issued by a “notified body”. According to the website of the European Commission:

A notified body is an organisation designated by an EU country to assess the conformity of certain products before being placed on the market. These bodies carry out tasks related to conformity assessment procedures set out in the applicable legislation, when a third party is required. The European Commission publishes a list of such notified bodies.

Notified Bodies are companies who help you with testing your product and getting approval. 

The website cemarking.net has a much more comprehensible description of what this all means.

Medical Device Classification in the European Union (EU)

The regulatory market access requirements are outlined in the European Commission Regulation No. 2017/745, more commonly known as the Medical Device Regulation (MDR).

There are four classes of medical device outlined in the MDR:

  • Class l (low/medium risk)
  • Class lla (medium risk)
  • Class llb (medium/high risk)
  • Class lll (high risk)

Just like in the US, the device classification helps determine what is needed to get market access for the device.

Quality Management System

All devices must implement and maintain a Quality Management System (QMS).

Documentation requirements

For Class I and Class II devices, the project documentation must be maintained in a Technical File, and for Class III medical device in a Design Dossier.

According to Wikipedia:

A technical file is a set of documents that describes a product and can prove that the product was designed and according to the requirements of a quality management system.

All products that have a CE mark must have a technical file which must contain the information that proves that the product conforms with the EU directives for CE-marked products. EU enforcement authorities may demand a copy of the technical file for many years after the last product was made. Customers do not usually have access to the technical file.

Rest of World (ROW)

Generally, if you have regulatory approval in the US and EU, the regulators from ROW accept these market access approvals along with required local regulatory approval documentation.

Every primary market in the world has its own set of regulatory requirements and therefore varies in each region. Important variations to consider:

  • Classification categories
  • Licensing or specific registrations
  • Clinical data
  • Physical representation through a local agent or authorized representative

There are some markets in the ROW that are particularly difficult to work with:L

  • Russia and China are the most difficult markets to get regulatory approval. They require type testing, which means your device is tested in their labs and depending on their results you will get approval along with all other required regulatory documents.
  • Korea and Japan are slowly following the Chinese and Russian path of type testing as part of their regulatory approval process.

Implications for medical device entrepreneurs

What does that meanPend for a medical device entrepreneur? Basically, two things.

  • You need to work with a highly experienced advisor for regulatory strategy  to navigate these waters. Learning this on your own is way too slow and can result in costly mistakes. This is not a good place to economize.
  • You will need a longer runway and more capital to build your device compared with an ordinary consumer electronic device, because you must be far more disciplined about documentation, testing and quality control. There is no such thing as shipping a concierge MVP if the MVP has not yet received regulatory approval. It can be done but you need to plan for it.

Additional Resources

Information about Software as a Medical Device (SaMD) from the FDA

Definition of SaMD from the International Medical Devices Regulators Forum (IMDRF)

Guidance for SaMD from the FDA

Information about Quality system regulation from the FDA