3.1.

1 Medical Device Industry: Regulatory Basics

Module 3.1.1
Medical Device
Regulatory Basics

Stephen T. Parente, Ph.D.

Professor, Department of Finance

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

Government Regulation and

Medical Devices
• The role of government is the most important
difference between marketing non-medical
technologies and medical technologies
• The government agencies determine approval
and payments
• The second most important difference is that
the users of technology generally do not pay
for it—their health insurance company does

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

• Need to understand the process and the

bureaucratic details in order to plan the tech
assessment
• Technology assessment is the gathering and
analyzing of information on the performance of a
technology
• Once a stage in the development / regulatory
processes has passed, the chance to gather
important information may be lost forever.
• An understanding of the whole process of
development and reimbursement is necessary to
prevent this from occurring

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

From Idea to Use--How Does A New

Technology Make It to Market?
• For a new medical device/drug, what is the process by
which you take the technology from idea to the
marketplace?
• Four Key Steps -- these will vary from country to county
and even innovation to innovation

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

Four Important Steps

1. Obtain a Patent
– Recall a patent grants exclusive rights to sell the product for 20 years
2. Regulatory approval from the FDA that the new
device or drug may be marketed
– A very long, multi-stage and expensive process
3. Payers must agree to cover the drug / device /
procedure
– Differing standards by payers
– Medicare-- “reasonable and necessary”
4. Providers must be persuaded to use/proscribe the
innovation

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

Getting a Patent
• It takes from 6 months to 2 years for the patent office to
grant a patent
– “Anyone who invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement thereof,
may obtain a patent”
• The Standard: Novel and non-obvious
• Patent Life is 20 years from application date
• Drugs can get important extensions
– Pediatric testing--6 months

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

FDA Approval -- Medical Devices

• Two common methods to be able to get clearance to market a
device
– Pre-market approval applications (PMAs) for breakthrough technologies
– Pre-market notifications (also known as 510(k)s) for more established
products
• FDA receives about 50 to 70 PMAs and over 4,000 510(k)s per
year
• The agency in the FDA responsible for approval of devices is
Center for Devices and Radiological Health
• One or Two step process--Initial Report

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

What is a Medical Device?

• “An instrument, apparatus, implement, machine, contrivance,
implant, in vitro reagent, or other similar or related article,
including a component part, or accessory which is:
– Recognized in the official National Formulary, or the United States
Pharmacopoeia, or any supplement to them,
– Intended for use in the diagnosis of disease or other conditions, or in the
cure, mitigation, treatment, or prevention of disease, in man or other
animals, or
– Intended to affect the structure or any function of the body of man or
other animals, and which does not achieve any of it's primary intended
purposes through chemical action within or on the body of man or other
animals and which is not dependent upon being metabolized for the
achievement of any of its primary intended purposes.”

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

Medical Device Classes

• Class I (General Controls) products are the lowest risk and most
are not subject to pre-market review.
– Still need to meet other regulations of listing, registering, labeling and
“Good Manufacturing Practices”
• Class II (Special Controls) products pose either a low or
moderate risk
– Usually are cleared via 510(k)
• Class III (Pre-Market Approval) technologies generally are
higher risk, breakthrough products that are not similar to currently
marketed products
– These technologies require a PMA application

© Stephen T. Parente
 3.1.1 Medical Device Industry: Regulatory Basics

Medical Device Classes

• The agency examines extensive data on all but the
very simplest medical products, like tongue
depressors and adhesive strips, before allowing them
on the market.
• Approximately 30% of all medical device types are
placed in Class I, 60% in Class II and 10% in Class
III
• All devices are subject to “General Controls” --
marketing, proper labeling and monitoring its
performance once the device is on the market.
• Radiation emitting devices face additional standards

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 3.1.1 Medical Device Industry: Regulatory Basics

Healthcare Marketplace Specialization

Pharmaceutical and Medical Device Innovations

© Bryana Mayer, 2016 11

© Stephen T. Parente