US Medical Devices: Choices and Consequences

Abstract

The FDA’s system for regulating medical devices has been criticized for retarding innovation because it adds uncertainty and costs to the invention process and delays the approval of devices. Because this system was created 40 years ago, it does not reflect societal changes in information technology, our understanding of safety, and international trade. Recent attempts to improve it by taking patient preferences into account are misguided because patient preferences are individualized: what is needed is a system that caters to individual risk-benefit preferences. We conclude that a new system of medical device approvals is needed—one that grants approval authority to multiple private bodies, allowing them to compete with the FDA and each other on the price, quality, and timeliness of approvals. Such a system would cater to healthcare entities’ and patients’ individual risk-benefit preferences. It would also spur innovation at a much greater rate than does the current institutional arrangement.

Keywords: medical devices, regulation, Food and Drug Administration, innovation, patient preferences

JEL Classification: I1, H51