While the medical devices and IVD regulation proposals trickle through the legislative process and people concentrate on details like I have done on this blog as well, it might be nice to have a higher level picture. So that’s what my UK colleague Alex Denoon and I prepared for a recent webinar, and what we thought would be interesting to share with a bigger audience.
This presentation gives an overview of what we consider the hot topics in medical devices and IVDs today:
- General Data Protection Regulation proposal (more background here)
- Medical Devices Regulation proposal (background here, here and here)
- IVD Regulation proposal (background here, here and here)
- Developments in transparency of clinical data for market access purposes and alignment of medical devices law with pharmaceuticals law on clinical concepts (background here)
The presentation contains a lot of useful practical tips on how to prepare for the changes that are underway – you can view it here.
How about SMEs?
As you can see we’re not that optimistic about what this will do for the medical devices and IVD markets in the EU. It will definitely impact on companies’ cost structures and some clients of ours are already abandoning products because of the costs with the increased regulatory burden. these companies are not in the game to make bad or unsafe products but with the rules as they will likely turn out it is just not cost effective anymore. These are usually mid-size companies. But how about the SMEs?
The discussion has so far not not addressed the ‘long tail’ of medical devices – the small and medium sized undertakings (SMEs). There are almost 25,000 medical devices companies in Europe alone, of which almost 95% are SMEs, of which the majority is not even medium sized but small and micro-sized. 80% of the EU’s medical devices companies employ 250 persons or less. These companies represent an enormous share of the EU’s innovative capabilities in medical technology.
The discussion in the Parliament’s ENVI committee has so far focused on what the patient is assumed to be benefited by and on calling the industry liars. It has been surprisingly little about whether the regulations planned are actually smart with respect to the businesses that have to make everything possible. This is surprising, especially because the European Council once again confirmed recently that regulatory systems that do work against SMEs are bad regulatory systems that EU does’t want. This was recently confirmed in the Council Conclusions on Smart Regulation. The often fact free politics that are rife in this legislative project fly in the face of the principles of evidence-based legislation that the Council advocates.
If the big manufacturers are already worrying about how they can ever ensure compliance with the rules in the direction that they seem to be going, you can only imagine how the innovative SMEs will be hit.
Funding of SMEs
SMEs are hit in other ways too. SMEs depend on external funding to raise funds to develop products and navigate the wild regulatory seas to arrive at the shores of a CE marked device. You can only image what the investment climate will be like for companies that are faced with radically changed and innovation hostile rules with very uncertain outcome. Indeed, investors will be problematic to find, and may decide to forego this hot potato – just like happened in the area of advanced therapy medicinal products. We are looking at a lost generation of SMEs that will be the first to have to battle the new system to iron out the kinks, with no investor wanting to be the first to have his investment be subjected to this. And then – don’t forget – the ATMP system has a lot of SME friendly instruments incorporated, which the wise Mrs Roth-Behrendt never even bothered to propose when coming up with centralized market access procedures.
If SMEs lack the funding to see the product through market access, SMEs will have to pursue an R&D strategy that is not aimed at producing actual finalised innovative products that will benefit patients. Rather, SMEs must focus on a strategy of selling technology to other companies or being acquired by bigger companies, who in turn may or may not decide to invest in an unpredictable and overly complex market access procedure. In both of these cases it is by no means sure that the technology that was in development by the SME concerned will ever be deployed for the benefit of patients. As a result patients in the EU will increasingly be denied innovations that may reach markets elsewhere, quicker or even reach the market at all. My colleagues and I already see the first signs of this development happening in the market.
Don’t lose the 3, and the SME
Eucomed has been active in the revision dossier for medical devices with its campaign of “Don’t Lose The 3“, showing that the the proposed revisions will not help patients at all. While we risk losing the 3 advantages of the EU system that benefit patients, we risk shooting European innovation in medical devices in the knee – with less options to have an innovative joint replacement entering the market soon. And in the end this is all politics.
So, nothing to look forward to in Europe in devices, especially not if you’re an SME. I believe that the rules discussed will put a serious dent in the business cases of many SMEs in Europe and of those seeking to enter the European market. We hear companies say they’re already considering abandonig their initially thought out EU first strategy, just because it is mostly not predictable where the EU is going with ist regulation of the devices sector. The parts that are predictable point to regulatory hurdles that will be a prohibitive burden for SMEs. Way to go Europe, with your long tail of SMEs in medical devices. You risk losing the 3, and also the SME. That’s not smart at all.