Innovation and the FDA

Innovation and the FDA

Walking the line between the frontier of medicine and responsible regulation

By Patrick Kenney

The U.S. Food and Drug Administration (FDA) plays a major role in all of our lives. Every day, you consume products that have been scrutinized by the FDA, the safety and efficacy of which they have endorsed. It’s a big job, with literal life and death consequences.

The FDA works to make sure your spinach doesn’t give you E. coli, while also ensuring that if you do get E. coli, the drugs the doctors use to treat you will not only work, but are safe, too. The organization has an expansive influence across dozens of industries. An influence that most of us largely ignore. But when you work in one of the many industries under the watchful eye of the FDA, their influence does not go unnoticed. For Chris Velis, the FDA acts as gatekeeper, wielding significant power over where, when and how Velis can spend his money.

Velis is chairman and CEO of MedCap Advisors, LLC, a venture capital firm focused on biotechnology, located in Cambridge, Massachusetts, “which I like to think of, perhaps narcissistically, as the center of medical technology and science,” Velis says.

In addition to representing major investors and negotiating merger transactions in the medical technology industry, MedCap seeks to fund and start companies driven by technological innovation at top universities.

“We invest in [the technology], bring management teams around [it] and try to take university technologies that have really cool clinical applications; that will help reduce healthcare costs, help reduce patient suffering and save lives—make them real, and bring them to market,” Velis says.

And this is where Velis and the FDA butt heads. In order to bring these new technologies to market, Velis has to have the approval of the FDA. And in Velis’ opinion, what it takes to get the agency’s approval, is not at all clear. “Why would I put the money in if I don’t know what the FDA is going to say?” he asks.

“As you may know, the FDA is not in a position to provide advice to potential investors,” writes Morgan Liscinsky, a press officer at the FDA’s Center for Drug Evaluation and Research, in an email to Chicago Health.

“At any time, we’re working with 20 or more advanced [medical] technology companies,” says Velis. “We get feedback on a daily basis from the CEOs of these companies, the boards of directors—we’re very close with surgeons in hospitals and constantly talking to them about what they think would advance the standard of care.”

Understanding the market in which the firm does its work is paramount to MedCap’s success, and Velis stresses the market influence of a supportive regulatory system, without which, innovator and investor cannot move forward.

“The impression that my clients share, and that I share, is that in some areas, especially the areas around stem cells, nanotechnology [and] combined devices [combining a biologic and a medical device], the FDA is not particularly good at giving growing companies guidance on [which] path they need to take to get approval.” Velis argues that this is a roadblock for U.S. leadership in the global biotech industry. “You actually have to, for the most part, start [these] companies [and] invest millions and millions of dollars [in them], before you have enough information to even have a discussion with the FDA about what the approval process may or may not be.”

Liscinsky points out that there can never be an approval guarantee for any drug or biologic product submitted to the FDA. She writes that “the agency bases its review on the merits of the data submitted that demonstrate that the product is safe and effective. To help ensure that sponsors generate and submit adequate information and data, the FDA strongly encourages meeting with the agency very early on in the development process, and then as often as necessary to discuss the agency’s expectations.”

But Velis argues that policies at the FDA are not clearly communicated, and suggests that it isn’t so easy to meet with the agency early enough in the development process. “Investors, especially venture [capitalists], [who] for years have been funding this industry, really abhor risk,” Velis says. “By creating that uncertainty, [the FDA leaves] an investor [with] no way of knowing ‘is it going to cost me a million and a half dollars to get this to market, ten million dollars or one hundred million dollars?’”

It can’t be said that the FDA does not attempt to communicate its policies. Liscinsky provided Chicago Health (see TABLE) with a variety of policy information, communicated in a number of formats. But Velis would like to see the process clarified and simplified.

“Stem-cell–based therapies are an emerging field,” writes Liscinsky. “This is not a unique situation, however, [since] many currently approved products [once represented emerging fields]. The agency continuously meets the challenges that these emerging fields represent, and cellular therapies are no exception. The FDA looks forward to working with the industry as this field accelerates and will maintain the scientific expertise to meet the demand.”

But the relationship between industry and government is of concern to Velis as well. And in fact, events over the last several years suggest that his concern is not without merit. In December 2008, the FDA approved Menaflex, a medical device used for repairing damaged knees, manufactured by ReGen Biologics. The device went into the market and began being used in procedures. Then the FDA changed its mind, citing a departure from procedure and concern over safety and efficacy of the device.

In September 2009, The New York Times reported that “after receiving what an F.D.A. report described as “extreme,” “unusual” and persistent pressure from four Democrats from New Jersey — Senators Robert Menendez and Frank R. Lautenberg and Representatives Frank Pallone Jr. and Steven R. Rothman — agency managers overruled the scientists and approved the device for sale in December [2008].” Former FDA commissioner, Dr. Andrew C. von Eschenbach, was implicated in unduly influencing the approval of Menaflex. The Times reported that “the agency [FDA] has never before publicly questioned the process behind one of its approvals, never admitted that a regulatory decision was influenced by politics, and never accused a former commissioner of questionable conduct.”

“Perhaps it follows that [there are] political lobbies that represent major interests that would like to maintain the status quo in the standard of care,” Velis speculates. “[Which ones] would be damaged by major innovations in healthcare? They are the parties that would benefit from the cost of innovation going up; big companies that are increasingly not doing research themselves and are growing through acquisition; [they would ] absolutely benefit from products that are currently in market, in use and accepted by physicians [that are] not being displaced by new technologies. So I have an underlying fear that this is driving this decision-making process.”

Velis admits that there are many factors beyond the FDA’s control that contribute to the uncertainty in the biotech market, and he says he doesn’t know exactly how much any one factor affects the global market. But he fears that America is losing ground to overseas competitors with friendlier regulatory systems, and [we’re] footing the bill.

“The same hip replacement or knee replacement that you get here costs six or seven times what that same exact product from that same exact company would cost in Europe,” Velis says. “So while technology innovation shifts overseas, we’re actually paying for it. We’re paying for those technologies to be developed and innovated elsewhere because we’re paying more per procedure than anybody else in the world, and that money is getting plowed into development elsewhere, not here.”

Velis would like to see clearer pathways to FDA approval of emerging medical technologies, arguing that this would help the United States be more competitive in the global market. The FDA has a vested interest in clarifying those pathways, doing whatever it can to promote public health. But the one thing that Velis would perhaps value most is the one thing the regulatory agency will never provide; certainty. [spacer style=”2″]


Table A.

Stem cells are regulated by the Center for Biologics Evaluation and Research (CBER) as human cells, tissues and cellular and tissue-based products (HCT/Ps). The FDA has a risk based approach to the regulation of HCTP/s. Under the authority of Section 361 of the Public Health Service (PHS) Act, FDA established regulations for all HCT/Ps to prevent the transmission of communicable disease. These can be found in Title 21 of the Code of Federal Regulations (21 CFR Part 1271).

The regulations in 21 CFR Part 1271 identify the criteria for regulation solely under Section 361. HCT/Ps that meet all of the criteria in 21 CFR Section 1271.10(a) are regulated solely under Section 361 of the PHS Act. If all of the criteria in 21 CFR Section 1271.10 are met then no pre-market review (application to FDA) is required. To satisfy these criteria, an HCT/P must be: No more than minimally manipulated (relates to the nature and degree of processing); intended for homologous use only (the product performs the same basic function in the donor as in the recipient); not combined with another article (with some limited exceptions); and the HCT/P does not have a systemic effect and is not dependent on the metabolic activity of living cells for its primary function, or if it does, the HCT/P is intended for autologous use or use by a first-or second-degree blood relative.

HCT/Ps that do not meet all of the criteria of 21 CFR Section 1271.10 are also regulated under Section 351 of the PHS Act and/or the Federal Food, Drug and Cosmetic Act as drugs, devices and/or biological products and would require pre-market approval .

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Stem cell products have many different sources and potential biological activities and therefore need to be evaluated individually with respect to the 21 CFR Section 1271.10(a) criteria. Many experimental stem cell therapies do not meet at least one of these criteria. For a stem cell product that does not meet the criteria for regulation solely under Section 361, a Biologics License Application (BLA) would need to be approved before commercial marketing.

The approval process for stem cell-based products follows the same basic path as other biologics. Overviews of those regulatory pathways.

Guidance documents related to stem cell-based products. The documents are issued to assist sponsors with the submissions process and meeting regulatory requirements.

CBER’s Standard Operating Procedure and Policy on scheduling and conducting regulatory meetings gives an overview of the types of meetings that can be requested by sponsors to discuss issues relating to product development.

In order to further assist regulated industry in understanding the specific requirements, the Office of Cellular, Tissue and Gene Therapies hosts a series of webinars on a variety of related topics.