Bringing High-Risk Medical Devices to Market: Approval Times, Panel Heterogeneity and Entry Order
Regulation of medical products is a public health and safety issue with substantial economic implications. This project presents the first empirical model of approval regulation for new medical devices. Using a unique dataset of all high-risk device approvals since 1970, I explore the evolution of the FDA’s high-risk device regulatory process as well as differences across specialty areas and disease groups. I document several new facts about the regulation of high-risk medical devices: For novel devices, approval times have mostly decreased over recent decades. However, I identify substantial heterogeneity across regulatory categories. For example, while average review times have fallen for novel cardiovascular devices over the past two decades, they have increased for new radiological devices. Next, I develop an empirical model that predicts approval times for devices in different product categories and in different years. I use this model to show that approval times are decreasing in market entry order. That is, the earliest entrants in a product category can expect significantly longer review times than “me too” market entrants. This entry order gradient is precisely the opposite of what has been documented in the market for new pharmaceuticals. As such, the burden of significantly longer regulatory times poses relative disincentives for medical device innovators to pursue novel innovation vs. follow-on innovation.