FDA: A Must-to-Know for Healthcare Entrepreneurs


In early 1900’s, the healthcare scenario in the US was chaotic with the new drugs coming into the market without proper clinical trials leading to many drug-related disasters. To control the situation, the U.S. Food and Drug Administration (FDA) agency was established. But with changing times accompanying the increased needs for new innovative and efficient treatment, the health and security concern has also increased. The control the increasing demand for drugs, and also the market pressure the FDA has implemented new quick approval methods. The bottom line of this piece is to highlight the fact that both the health entrepreneurs and FDA should work together for the betterment of the situation.


Clinical trial; Drug approval process; Fast track approval; Breakthrough therapy; Accelerated approval; Priority Review

At a Glance

  1. Introduction
  2. Origin of FDA
  3. FDA network
  4. FDA and drug approval process
  5. FDA and healthcare issues
  6. FDA oriented issues
  7. Significance of FDA in Healthcare
  8. Implication of FDA in Medical Device Industry
  9. Implication of FDA in the Biopharmaceutical Industry
  10. FDA actions
  11. Summary


Can you imagine yourself having or using commodities that can make you seriously “sick”?  What happen if you do not know the whereabouts of the ingredients used to make your food or medicines? All these situations are scary, right? But without the U.S. Food and Drug Administration (FDA) surveilling over our food and drugs quality, the scenario will be terrifying. Our food and drug safety will be under big question mark.

The FDA enacted under 1906 Federal Food and Drugs Act, is responsible for the safety and security of food and drugs accounting for more than $1.5 trillion. The FDA not only safeguards the health of common people but also prevents fraudulence by manufacturers to provide market security for the moralistic and ethical entrepreneurs. The FDA monitors more than 16,000 facilities by time to time inspection at the global level.

The FDA agency is involved in safekeeping the safety and efficacy standards of drugs, medical devices, cosmetics, biologics, and food products. Some of the recent action taken by FDA includes:

  • Warned consumers in Manila, to avoid peanuts and peanut-based products after reports of aflatoxin contamination
  • Warned consumer to avoid raw oysters harvested from Hood Canal, in Washington.
  • Approved, small pox vaccine ACAM2000
  • Banned prosthetic hair fibers
  •  Issued warning letters to Swill Hill Farm after illegal drug residue was reported

The FDA regularity authority covers six important domains including:

Origin of FDA

The genesis of FDA dates back to1848 when the US Patent Office appointed Lewis Caleb Beck for analyzing the chemical composition of agricultural products. However, the disastrous “Elixir Sulfanilamide Poisoning” created the urgency for the strengthening of the Federal Food and Drug Act. So, in the year 1938, the authorization power of FDA was elevated to ensure the security of consumers.

FDA Networks

The FDA agency is the amalgam of three different offices.

  • The Office of the Commissioner (OC) –coordinates the overall functioning of the agency
  • The Office of Chief Counsel–deals with all the agency related legal issues
  • The Office of Regularity Affairs (ORA) – deals with implementation and investigation of regularity activities

The product-oriented regulatory affairs are handled by five different centers:

  • Center for Biologics Evaluation and Research (CBER)
  • Center for Devices and Radiological Health (CDRH)
  • Center for Drug Evaluation and Research (CDER)
  • Center for Food Safety and Applied Nutrition (CFSAN)
  • Center for Veterinary Medicine (CVM)

 Apart from these five centers, one more center the National Center for Toxicological Research (NCTR) is involved in the execution of scientific research and training related to regularity affairs. The reviewing of combo products like drug-biologics, drug-device are executed by product-oriented center under the supervision of the Office of combination products.

FDA Drug Approval Process

FDA and Healthcare Issues

1. Healthcare protection

The healthcare system is governed by three aspects i.e. quality, availability, and expenditure. The regulation of the healthcare products affects all these aspects as the healthcare products count for more than 15% of healthcare expenditure. FDA examines the safety and efficacy of the healthcare products and ensures the availability of high-quality products in the market. However, implication of FDA regulation and approval makes the availability of drugs delayed and also causes a hike in the price of product.

The healthcare product development pathway is driven by several government agencies. Each agency plays a different role like:

  • Funding by National Institute of Health (NIH), depending upon the safety and efficacy standards.
  • Patent protection by the Patent and Trademark Office depending upon the novelty and innovation level.
  • Add-on funding from the Centers for Medicare and Medicaid Services, depending the usability and necessity of products.

2. Market globalization

With the new cutting-edge technology, the development of healthcare and food market has increased tremendously. The importing of medical and healthcare products raised several issues regarding the safety and quality of products. However to handle these issues, proper implementation of safety and inspection rules and regulations will ensure the quality of the imported products. The teamwork between the FDA, U.S. Customs and Borders Protection Agency, State and local federal agencies, and international agencies will help in betterment of the situation.

Still to fully overcome this problem, FDA is opening agencies on global basis in foreign land that directly collaborates with the local government agencies to ensure the safety and quality of products.

FDA- Oriented issues

1. Funds

For proper running of FDA, funds are the most vital resource. The biggest challenge faced by the US government regarding FDA funding is the allocation of appropriate budget for the smooth functioning and execution of responsibilities while addressing other national needs. The main debatable question associated with FDA funding is, what amount of money should be contributed by the FDA regulated companies for activities like inspection and premarket reviews.

2. Premarket  Approval by FDA

The market launch of the medical and healthcare oriented products in U.S. requires FDA Premarket Approval (PMA). The premarket approval by FDA is dependent upon the information related to safety and efficacy of the product. The approval process varies for each product and once the approval is submitted by FDA to the FFDCA, the marketing of the product is permitted.

Premarket approval, in general is a lengthy process and is quite bothersome in case of lethal diseases with no existent treatment. However, with the growing problems, FDA is also upgrading the approval process. The “Fast Track Approval” program is part of the upgradation that facilitates the brisk approval of products with potential to be a “Pain Killer”.

Example:  One of the most recent cases of FDA Fast Track approval is the DPX- Survivac Vaccine that is an immunovaccine for the treatment of ovarian cancer in newly diagnosed patients.

3. Post Marketing Surveillance

The role of FDA in the safety and security of food and drugs is not limited only to the product marketing. Rather the most important role of quality assurance comes under the post market surveillance, to follow up and investigate the product efficiency and safety. For enforcing the post market surveillance, the FDA has specific regulatory forces for different types of products like infant formulation, medical devices, and certain drugs.

However, post market monitoring of products like tobacco and food require collaboration of FDA with other agencies. Sometimes, this leads to certain disparity in the regularity enforcement of such product, creating an issue for the FDA.

Significance of FDA in Healthcare

With the growth of US healthcare market, the role of FDA is becoming more significant. FDA is playing the role of “Watchgaurd” by securing the entry of healthcare products with high safety and quality standards. It is important for the healthcare entrepreneurs to abide by the FDA approval process for competing in the US healthcare market.

The prime concern of FDA is safeguarding public health by ensuring the product attributes before approving it. In recent years, the increase of innovation in healthcare sector has led to the demand in upgradation of the evaluation procedures. To deal with the situation, FDA is collaborating with several research institutes to upgrade the product evaluation procedures.

Ensuring the quality and standard of healthcare products requires elaborate evaluation. But, elaborate evaluation of the products makes the product approval a time consuming and tedious process that is affecting the healthcare industry.  However, the FDA is trying to make the approval process fast atleast for the orphan and life saving drugs.

Implication of FDA in Medical Device Industry

After the implementation of “Affordable Care Act” in the year 2010, an excise tax of 2.3% has been imposed on the medical devices. The medical device entrepreneurs are facing problems due to increase in expenditure to streamline the medical device to the market and delayed FDA approval. However, FDA is not solely responsible for the delay as other institutions are also involved in the medical device approval process. As for the entrepreneur’s part, it is important that the entrepreneurs work together with the third party entities to sponsor the clinical trials for brisk outcomes.

Funding in the medical device industry

The delay in the market launching of “high potential Class 3” medical devices are making the medical device market funding bit risky for the investors. According to market research, a steep decrease of around 13 % in the medical device market funding has taken place. This is forcing the medical device companies to hunt for opportunities to launch their product in other countries instead of domestic launch.

Though the medical device industry might look risky to investors but the probability of reaping high profits on investments are also there as market size for medical device industry is growing. So, to invest in medical device industry, the investors should identify and avoid the risks.

Important tips for investing in medical device

  • Level headed approach to spot companies to invest: It is advisable not to investin companies with poor clinical trial infrastructure or “not so good” clinical trial reports.
  • Consider investment scope in established companies: Investors mainly hunt for the new companies with the potential of becoming the “Next Market Buzz.” However, investing in established companies is a secure option to avoid market risks.
  • It’s good to be judgmental: Before making any investment plan, the investors shouldhave detailed information about the company including issues related to clinical trials.
  • Invest Smartly: Investing in companies specialized in single product development increases the market risk as the FDA rejection will lead to high losses.

“Backup plan” by medical device industry

Instead of complaining about the difficulties, the medical device entrepreneurs in U.S. are finding ways to overcome it.

  • The Medical Device Innovation Consortium established by Life Science Alley, a body of medical device entrepreneurs including Medtronic Inc., is a step to meet with ways to evaluate the efficiency of the medical devices even before submission for FDA approval in a cost friendly manner.
  • To reduce the animal laboratory trial costing, the entrepreneurs with different organ testing needs are teaming up to divide the trial expenditure.
  • Fundings from the medical innovation support groups like Johnson & Johnson’s, Synovex and lifeImage, etc. are working as “bliss” for the medical device startups.

Howbeit, to field the market problem the FDA has announced fast track approval of certain medical devices. All these efforts by FDA and entrepreneurs may lead to overcoming the current issues.

Implication of FDA in the Biopharmaceutical Industry

The US healthcare market has reached a grossing amount of $6.5 trillion. As the biopharmaceutical industry is thriving, the regulation of the industry is very important to ensure the safety of public health. The role of FDA in the market is to regulate the chain of demand and supply by providing equal benefits to both the public and supplier. However, one of the big challenges faced by FDA in providing regulatory services is funding. Reviewing the security of foods and drugs accounting for $1.5 trillion the annual budget for FDA is $12 million. To overcome this problem the government has allowed FDA to collect permissible fees from the industry under the Prescription Drug User Fee Act (PUDFA).

Concerns with the approval process

The availability of safe novel biopharmaceutical products is very beneficial for the public. But with so many regulations the biopharmaceutical industry is facing certain complications. In general, the market for any product depends upon the demand and supply chain. But, with the prolonging approval process, the demand and supply equilibrium are disbalanced and with the less availability of high quality approved products the hike in product cost is taking place.

The other conjoined problem is, FDA being the only Federal regulatory service provider for quality assurance and with the growing demand, it is becoming difficult for the FDA to review all the applications in a short time frame that is slowing down the process. As a result, the market is believed to be undergoing loss.

Market Facts

The pharmaceutical industry is believed to be undergoing losses due to the prolonged approval process. But according to market statistics, the profitability of the pharmaceutical industry is around 19% in terms of Return of Investment (ROI) that is way higher than the general profitability bar of 10 % ROI. The forecasted market size in the pharmaceutical sector may reach a best ever amount of $250 billion by the year 2020. With this note, it can be concluded that the despite the prolonged approval process and other complication the pharmaceutical industry is growing and has a bright future.

FDA Actions

With all the raising doubts and criticism about the prolonged product approval process, the FDA has implied certain actions to overcome the flaws and problems. This includes:

1. Fast Track Approval

In a press release the CDRH director, Jeffrey Shuren announced, the “Fast Track approval program” for the high risk medical devices and life saving drugs. 

Fast track approval process was devised to facilitate the review of life saving drugs in a speedy a manner. The fast track drug includes drugs for diseases like AIDS, cancer; Alzheimer’s and even epilepsy and diabetes.

The eligibility of drugs for the fast track approval is dependent upon the drug attributes like:

  • Answer for effective treatment
  • Seriousness of the disease to be treated
  • Addresses the emerging health issues

Figure 1: FDA fast track approval report

                                                                                                                                      Source: Fda.gov

2. Breakthrough Therapy

The Breakthrough Therapy is a drug approval process that is devised to make the drug review and approval process fast on the basis of substantial clinical proof of the better treatment by the drug in comparison to the current treatment available. According to FDA data, around 22% of the newly approved drug in the year 2014 was designated under breakthrough therapy.

Table 1: Recent Breakthrough Therapy designated drugs approved by FDA

Drug NameTreatmentApplicantApproval Date
IMBRUVICATreats Mantle cell lymphoma (MCL) and chronic lymphocytic leukemiaPHARMACYCLICS INC29-Jan-2015
IBRANCETreats Metastatic Breast Cancer in post menopausal womenPFIZER INC03-Feb-2015
LUCENTISTreats macular degenerationGENENTECH, INC.06-Feb-2015
KALYDECOTreats Cystic Fibrosis in patients with specific gene mutationVERTEX PHARMACEUTICALS INC.17-Mar-2015
EYLEATreats macular degeneration and retinal vein occulsionREGENERON PHARMACEUTICALS, INC25-Mar-2015
RAPAMUNETreats lymphangioleiomyomatosis (LAM)PF PRISM CV28-May-2015
TECHNIVIETreats Hepatitis C infectionsABBVIE INC.24-Jul-2015
XURIDENTreats hereditary orotic aciduriaWELLSTAT THERAPEUTICS04-Sep-2015

                                                                                                                                                               Source: fda.gov

3. Accelerated Approval

The FDA established Accelerated Approval regulations to accelerate the drug approval process for certain drugs used in treatment of life-threatening diseases. According to the Accelerated Approval Regulations, any drug that resolves the inadequacy treatment scenario for a life threatening disease should be approved fast. The basis for accelerated drug approval is the presence of alternate clinical evidence like X-ray report, lab reports, etc.

4. Priority Review

Under the Prescription Drug User Fee Act (PUDFA), the FDA included the Priority review regulation. The Priority Review designation is used for the fast approval of the drug i.e. within six months. The approval is dependent upon the substantial data indicating the efficacy and efficiency of the new drug over the existent drugs.

According to the FDA official site, the total number of new drugs approved in the year 2014 is around 41.

Figure 2: New Drug Approval Report in year 2014

                                                                                                        Source: Fda.gov


The Food and Drug Administration was enforced for ensuring the safety and quality of food and healthcare products. But, with the increasing industrial progress and globalization, the workload of FDA is increasing. Ensuring the product safety and efficiency is prolonged process that makes the product approval process slow, causing hamper to the market. However, with the time FDA has come up with several expedited drug approval methods. The healthcare market is projected to be skyrocketing in future. So, it is the responsibility of both FDA and healthcare entrepreneurs to team up and make the projection a reality!


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2.       Ball R et al. (2015), FDA’s Sentinel Initiative – A Comprehensive Approach to Medical Product Surveillance. Clinical Pharmacology & Therapeutics
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10.   http://www.eyeonfda.com/eye_on_fda/2015/01/fda-press-releases-2014-what-they-said-and-how-they-said-it.

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