The recent political shift in the United States, marked by Donald Trump’s new appointments is focalising the attention of the world as entire industries and nations hold their breath to see if there will be changes in the way they currently trade with the world’s economic superpower. An overt agenda to cut red tape and reduce departmental spending suggest that deregulation is on the cards domestically. In the medical sector in particular, the nomination of Robert F. Kennedy Jr., sets the stage for a restructure of the Food and Drug Administration (FDA), which oversees the medical devices industry. 

Specifically, both Donald Trump and Robert F. Kennedy Jr, have named the FDA as a target of particular interest for deregulation efforts. While the outlook remains in flux, there has been indication that cost cutting in the department and increasing competition will be key drivers. In addition, more data transparency, less corporate influence, and a focus on preventing chronic conditions will be top of the agenda.

The proposed measures aim to foster innovation, increase competition, enhance transparency, and prioritize preventive healthcare, but they also bring concerns about resource constraints and international trade implications. This article examines the potential outcomes for the medical devices sector under the prospective deregulatory framework.

Less Red Tape

One of the most touted benefits of deregulation in the medical devices sector is the promise of a more streamlined approval processes. By reducing bureaucratic red tape, the FDA could potentially expedite the time-to-market for new products.  For manufacturers, this means faster access to revenue streams and a shorter development-to-commercialization cycle, which is critical in an industry where technological advancements evolve rapidly.

The 510(k) pathway, already a relatively expedited route for device clearance, could see further enhancements. However, it is crucial to note that deregulation must never become synonymous with deregulation of safety. While the administration has emphasized cutting costs and increasing efficiency, it has also indicated a focus on transparency and reducing corporate influence in regulatory decisions. This dual emphasis could balance the need for speed with the imperative to maintain public trust and patient safety.

Impact of Tariffs

Trump’s proposed tariffs could affect 75% of all available U.S.-marketed medical devices with negative trickledown effects. As manufacturers raise prices to protect tight margins, access to critical devices for sufferers may become more scarce and expensive.

In addition to this, continued high tariffs on certain Chinese medical devices, will create more opportunity for US local manufacturers. Reducing dependence on China could lead to a more diversified supply chain and greater competition with more opportunities. Domestic manufacturers will, however, need to ramp up production capacity and maintain competitive pricing to seize these fully. This will require significant investment by manufacturers and potential inventory issues as the supply chain restructures with impacts on patients further along the line.

AI: Running Before It Can Walk

AI in healthcare presents a very contemporary and real issue. At the time of writing, FDA have not yet approved Large Language Models (LLMs) for use in healthcare and neither has any other regulator anywhere in the world, yet its application in healthcare is being debated, trialled and investigated with zeal. One example is provided by Elon Musk who recently asked the industry to submit medical images to xAI’s chatbot Grok (in itself this constitutes illegal practice in marketing nonregulated AI models).¹ As the regulatory debate internationally continues, this sets dangerous precedent.

As faulty use of AI in healthcare could cause significant patient harm, this technology will need stringent regulatory controls. The success rates and accuracy of AI in healthcare are currently far too unreliable and too many companies are already promoting their AI-based diagnostic tools without appropriate regulatory scrutiny. In addition to this, some of these tools are being picked up and utilised by early adopting clinicians who can perceive the power and benefit of these disruptive tools, but without appropriate regulation in place, this leaves patients thoroughly exposed to risk. It is worrying for the industry that deregulation comes at a time when these tools are most in need of through regulatory frameworks and a period of Sandbox testing.

Data Transparency and AI

The need to meet more stringent data transparency requirements, while reducing costs seems to shift the onus even more significantly onto device manufacturers who may be required to submit more data. Similarly, the shift towards industry self-governance in AI to reduce government regulations, will certainly stimulate the industry to develop ethical guidelines, but will also require significant investment in developing the checks and balances required. Without expert assistance from regulatory specialists, businesses may struggle to come up with effective procedures.

Potential Resource Constraints

While the ambition to streamline processes is commendable, it is accompanied by proposed cost-cutting measures within the FDA. A leaner budget might hinder the agency’s ability to keep pace with the increasing volume of device applications, particularly for high-risk Class III devices that require intensive review. Resource limitations could lead to bottlenecks, negating some of the intended benefits of deregulation.

Moreover, less funding might impact the FDA’s ability to hire and retain skilled personnel, invest in advanced evaluation tools, and conduct post-market surveillance. This could inadvertently shift some of the burden of safety and efficacy validation onto manufacturers, who may need to enhance their in-house testing capabilities and post-market vigilance systems.

Impact on Competition and Market Dynamics

A central theme is fostering competition. This includes opening the market to a broader range of players by lowering regulatory barriers to entry. For small and medium-sized enterprises (SMEs) and startups, more streamlined regulatory hurdles can lower operational costs, encouraging innovation and diversity in product offerings.

However, this increased competition might not be equally distributed. Established players with extensive regulatory experience may adapt more quickly to any procedural changes, consolidating their market position. Conversely, smaller firms could struggle with the unpredictability of a transitioning regulatory environment, where policy shifts might lead to unexpected compliance requirements without specialist guidance.

In addition, the administration’s emphasis on transparency and reducing corporate influence aims to level the playing field. Greater visibility into regulatory processes and decision-making criteria could help smaller firms better understand and navigate the system, mitigating some of the challenges posed by deregulation.

Focus on Preventing Chronic Conditions

Kennedy’s emphasis on addressing chronic diseases aligns with global healthcare trends toward preventive care and value-based models. Among the diseases in Kennedy’s sights are autism, attention-deficit/hyperactivity disorder, sleep disorders, infertility rates, diabetes, and obesity, which he claims have worsened due to federal inaction. This shift creates opportunities for manufacturers of diagnostic devices, wearables, and remote monitoring systems designed to manage chronic conditions like diabetes, cardiovascular diseases, and respiratory illnesses.

A supportive regulatory environment that prioritizes preventive care could spur growth in these segments. For instance, wearable technologies and digital health platforms that enable continuous patient monitoring might benefit from expedited approvals and favourable reimbursement policies. This focus also has the potential to drive cross-industry collaboration, with medical device companies partnering with technology firms to develop integrated healthcare solutions.

Conclusion

Streamlined approval processes and a focus on competition and preventive care are likely to drive innovation and market growth, particularly for startups and companies specializing in chronic disease management. However, resource constraints and the complexities of a transitioning regulatory framework pose significant hurdles and risks allowing unregulated tools onto the general market. In particular an overconfidence and reliance of AI tools, which do not yet have the ability to match the dynamic and nuanced understanding and experience of clinicians, to make medical diagnoses could put patients seriously at risk.

Additionally, international trade dynamics threaten the stability of access to devices for patients, risk pushing up process and may generally create an unfavourable economic climate for the sector.

Ultimately, the impact of deregulation will depend on the administration’s ability to implement balanced policies that protect public health while fostering economic growth. Stakeholders in the medical devices sector must stay attuned to regulatory changes, engage proactively with policymakers and with regulatory experts to grasp the opportunities provided by a landscape in transformation.

Reference:

¹ Radiology Business, Elon Musk urges users to submit X-ray, PET and MR images to xAI chatbot Grok, 30^th October 2024,  https://radiologybusiness.com/topics/artificial-intelligence/elon-musk-urges-users-submit-x-ray-pet-and-mr-images-xai-chatbot-grok