In previous editions of the SME Medical Manufacturing Yearbook, P&M Corporate Finance has provided commentary on a variety of market forces impacting medi- cal device manufacturers, such as regulatory considerations, reimbursement, M&A and venture capital activity. Tis year’s article will touch on several of those same dynamics, with a focus on the 510(k) approval process and the 2.3% medical device tax, which went into effect on January 1, 2013.
A macro view of an evolving industry.
Among the most significant dynamics affecting the medical device community
in recent years has been the changing nature of the FDA’s 510(k) review process. In 2010, the FDA began holding town hall meetings to address concerns from industry participants that the 510(k) clearance process had become unpredictable, inconsistent, and opaque. Yet other critics of the process complained of a lack of stringency. For example, a 2011 study published in the Archives of Internal Medicine noted that 98% of devices recalled from 2005 to 2009 were the allegedly less-risky Class I devices. As a result of these and other criticisms, the FDA has become broadly more
stringent over the past decade, oſten requiring additional information from com- panies in order to prove substantial equivalence (SE). Te percentage of first-round 510(k) submissions requiring additional information increased from 36% in 2002 to 74% in 2012. Although still near the 2010 high of 77%, the percentage of 510(k) applications garnering Additional Information (AI) requests appears to be leveling off, likely due to feedback received in the town hall meetings. Tis high rate of AI
Bryan Hughes Director and Head, Medical Technology