Administration making drugs cheap:
Boon for device and drug startups
THOMAS LEE
Over the past few years, medical device and drug startups have privately and not so privately painted the Food and Drug Administration as a graveyard for innovation. The agency, critics say, makes it nearly impossible for new products and therapies to reach patients because bureaucratic regulators often take years to justify their existence.
But unbeknownst to many, the FDA has recently done something that could transform the relationship between startups and the government. Without much fanfare, the agency rolled out a system that allows anyone to quickly find and access millions of redacted patient records through a Google-like search called openFDA.
The FDA is starting with 3 million records that cover medication errors and side effects from 2004 to 2013 but will eventually expand to product recalls and labeling problems. In the past, people wishing to see the data had to file time-consuming Freedom of Information Act requests.
In short, openFDA is a gold mine for medical startups. Before wasting precious time and money on therapies that might never see the light of day, the startups can learn from the work of others, either by improving an existing technology or avoiding mistakes that doomed past efforts. Perhaps most importantly, openFDA could act like Regulation 101, a place where startups can learn to navigate the long and complicated path to FDA approval.
“OpenFDA is an amazing idea,” said Michael Niaki, founder of InfiniGene, a diagnostics startup at StartX incubator in Palo Alto. “People will be able to pull out data that would have been almost impossible to find. And this is high-quality, evidence-based clinical data that has been put to the test. We can always learn from the past.”
In addition, the data can help inexperienced startups anticipate how the FDA will react to submissions, allowing them to avoid delays that could sink a project, Niaki said.
How the FDA chooses to classify a device ultimately determines how long it will take to review it. For example, an MIT study in 2009 found that new devices classified as orthopedic often take the most time for review. So a startup could theoretically use openFDA data to determine if other companies had developed similar technology that the FDA classified as orthopedic. The startup could either try to convince the FDA to not classify its product as orthopedic, or at least plan accordingly if the agency ultimately does.
“Elucidating factors that predict review times will be of benefit to medical device executives and entrepreneurs,” the study said. “If, for example, one has a high level of confidence that a review will be long, one can defer spending large sums of money. (This) will help entrepreneurs plan for and time fundraising efforts.”
For drug startups, openFDA could provide valuable information about potential side effects. If a startup knew that a competitor had created a similar therapy that caused patients to feel nausea and joint pain, that company could modify its drug to avoid or limit those side effects.
“I think (openFDA) would be very helpful,” said Mark Kroll, a longtime medical technology entrepreneur. “It would be an incredible source of information for a startup, especially in learning from your competitor’s problems.”
For that reason, not all startups are pleased with openFDA. Although one can’t patent experience, lessons learned can be rightly called intellectual property, said Milt McColl, CEO of Gauss Surgical in Los Altos.
“We have a lot of information learned in development that we wouldn’t want our competitors to know about,” McColl said. “OpenFDA makes it easy. So what it took us two years to learn could take our competitor one day to figure out.”
Still, if openFDA can help medical device and drug companies move faster, that could benefit the entire industry.
Investors have often been reluctant to fund these startups because it takes too long for the companies to win FDA approval.
Last year, biotech and medical device firms attracted only 22.4 percent of the $29.4 billion dished out to startups by venture capitalists, according to the MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association. Medical device dollars alone fell 17 percent, compared with2012.
Meanwhile, software and Internet-related companies captured 62 percent of the pie, partly because investors know these startups can introduce products quickly without needing government approval.
In a broader sense, openFDA represents an entire new way of looking at government. We often complain that the feds hamper entrepreneurs and stifle innovation with regulations.
But perhaps government can give us something other than red tape, specifically piles of valuable data just ready for an investor and entrepreneur to exploit and save a few lives in the process.
Thomas Lee is a San Francisco Chronicle columnist. E-mail: tlee@? sfchronicle.com ? Twitter: @ByTomLee
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