Economic Obstacles in EU MDR and How we are Overcoming them
The medical device regulatory sector is always changing. It has to. In order to keep up with the ever-changing medical devices and tech, regulatory bodies need to develop new laws that apply to new products and new research.
However, the constant changes and upgrades mean it is also a very expensive industry. In this industry, a variety of economic forces are at work, such as shifting reimbursement schemes, inflation, regulatory demand, and growing production and distribution costs.
Recently, medical device manufacturers have been under great economic duress. Although the industry has been in recovery after the COVID shutdown, there are still miles to go.
In this article, we will discuss some of the major causes that are causing economic strain for manufacturers of medical devices and in vitro diagnostic medical devices and what can be done to solve them.
The cost of rising cost
According to a research article published in 2019, academic spinoff is lower in medical device research than other research.1 This means lots of medical device research, despite having great potential, often doesn’t get realized or even move forward to the human trial phase. They concluded the primary reason behind this situation is the high cost. Going through the regulatory hoops hiring expert regulatory consultants at each stage of research is expensive. As a result, the general public is being denied great medical devices.
Researchers also suggested that the cost of medical regulation could be reduced with a framework in place with clear guidance for all stages of research.2 Especially if the devices are comparatively new, researchers and manufacturers benefit from having cost-effective regulatory options.
Plus, the effect of the global medical device industry should also be considered. When regulatory compliance becomes too expensive, small and mid-level medical manufacturers cannot afford to bring devices to the market anymore. This creates a funnel that is often filled with imported devices. However, device importing only drives the prices up for all in the long term.
The problems and progress so far
So, let’s take a look at why things are getting so expensive. Keep in mind that each of these problems is being dealt with in some form or other. However, the cost is still rising. While there are many causes, including inflation, these are the most related to the industry itself:
Reimbursement Models
Adapting to the evolving reimbursement environment in the healthcare sector is one of the biggest issues facing medical device producers. Value-based care reimbursement models are taking over, giving more weight to patient outcomes and cost-effectiveness.
Accordingly, rather than focusing solely on technology, medical device manufacturers now have to show the clinical benefits of their medical devices. In response to this shift, businesses are spending money on studies and clinical trials that demonstrate the effectiveness of their products. Additionally, outcome-based pricing models are being implemented, in which the device’s cost is determined by the results it produces for patients.
Growing Competition
As more businesses enter the market each year, there is intense competition in the medical device sector. This puts pressure on well-known manufacturers to set themselves apart from rivals and hold onto their market share.
To do this, businesses are spending money on R&D to create cutting-edge solutions that address unmet clinical requirements and present distinctive value propositions. In addition, they are actively seeking acquisitions and strategic alliances to broaden their product offerings and penetrate untapped areas. While it might be keeping smaller manufacturers from growing, they now have options of getting larger investors or buyers to take the costlier high risk medical devices off their hands while they focus on the less-costlier ones.
Increasing Manufacturing Costs
A key component of medical device manufacturing companies’ capacity to remain financially viable is their manufacturing costs. The growing costs of labor, materials, and regulatory compliance erode profit margins. To overcome this, manufacturers are investigating novel manufacturing technologies like automation and 3D printing to tackle these cost constraints. Additionally, they are utilizing data analytics to boost productivity and optimize their supply networks. Some businesses are moving their manufacturing activities to less expensive areas to cut expenses even further.
The solution
The solution to the rising cost is not simple and certainly not fast. But changes need to be made. However, the majority of changes will have to be made by the medical device regulation authorities.
For example, one researcher drew parallels between the EU market and the US market in terms of cost as a solution. According to their research, one has to pay about $870,000 to review a new device through a pre-market approval submission but only about $18,200 to review a new device through a 510(k) submission based on equivalency with an already approved device. According to the research, the pre-market approval review process took about 15 months in 2011. However, the 510(k) filing process took only 150 days, which is 5 months.3 The EU, however, doesn’t offer similar benefits, and the process remains long and expensive.
For individual manufacturers, the solution is to simply build an effective team and cut all excess costs. The excess costs could mean unnecessary device transportation costs, faulty device recalls, litigation and settlement expenditures, non-recyclable material costs, etc. Other options, including standardizing processes and materials and investing in energy-efficient machinery, are also effective.
References:
- Scannell P, Cormican K. Spinning out of control? How academic spinoff formation overlooks medical device regulations. J Technol Manag Innov. 2019;14(3):82–92. doi:10.4067/S0718-27242019000300082
- Jogova M, Shaw J, Jamieson T. The regulatory challenge of mobile health: lessons for Canada. Healthc Policy Polit Santé. 2019;14(3):19–28. doi:10.12927/hcpol.2019.25795
- Lennox K. Substantially unequivalent: reforming FDA regulation of medical devices. Univ Ill LAW Rev. 2014;2014(4):1363–1400.
