I came across a nice blog by Hiram Chipperfield recently comparing the regulatory fees for IVDs in different markets. Hiram analysed these both in absolute terms (FDA PMA fees at $US 251k/$AU 330k are the outright highest) but also in terms of the relative market size . Hiram’s data were in Australian dollars. Here’s the same numbers in US dollars.
When expressed in terms of market size that hefty PMA fee starts to look cheap and the Australian fee becomes pricey.
This is not the first time this analysis has been done. Some years ago Michael Gropp presented to GHTF/IMDRF a similar analysis for devices – with similar results. Where the cost of smaller markets start to look pricey.
But these analyses are, well – two dimensional. Of course there’s a lot more to this.
Hiram’s review focussed on the highest risk example (HIV tests are Class IV IVDs in Australia and similarly classified in most markets). These comparisons can break down when the whole range of risk classes are considered.
Not only is the US PMA fee high, the expectations of the regulator are far more robust than in most places – so the actual costs of generating the clinical trial and preclinical data are going to be much higher for US market entry. Much, much higher.
And then there’s the opportunity cost of delay to market arising from a slower system like that in the US. We have all heard anecdotes about the so-called device lag between the US and Europe where reviews are generally faster. Add to the up–front regulatory fee the lost sales for each month of review time.
Harmonisation = Cheaper
Up front regulatory fees can be high for small markets if the assessment is being done completely by the local regulator. Agencies such as Australia’s TGA and Singapore’s HSA are small. They don’t have the resources or the economies of scale enjoyed by the US FDA so it’s not surprising that things cost more. Also TGA is fully cost recovered. The fee paid reflects the full cost of the review. That’s not the case in most other places.
But harmonisation can change all that.
In Australia, most medical devices are approved by TGA based on acceptance of CE certification. TGA charges range from around $1,000 to $6,500 AUD ($US 760 – 4,950) depending on the need for Application Audit – a desktop review of summary technical documentation required for higher risk devices. Most lower risk devices are approved based on the certificate alone.
Similarly Singapore’s HSA abridges its process and charges lower fees for devices already approved in US, Europe or Australia.
This reliance on existing approvals is commonplace in emerging markets. Did you know for example that Taiwan exempts medium risk devices from clinical and preclinical data review if a device is already approved in the US and Europe.
These are the real fruits of the harmonisation process – abridged local reviews leading to faster cheaper approvals based on existing approvals in “sophisticated” jurisdictions.
What about Pricing and Reimbursement
The value of a market is not just in the number of patients but in the price paid for the device or IVD. In a presentation at the Asia Pacific Device Summit in San Diego last month, Sarah Griffin pointed out that although the reimbursement process for prosthesis listing of implants in Australia is challenging, time consuming and expensive, there’s no shortage of applicants. It’s worth it because successful listing brings predictable long term national pricing in private hospitals.
By the way – we liked Sarah’s presentation so much we have invited her to give a guest webinar on Australian reimbursement later this month. Click here to sign up – we’re sure it will be well worth your time. And no need to worry about costs here – it’s completely free.
Confused? You are not alone. Strategic decisions around market entry are complex. The regulator fees are only a small part of the picture. You need to think about market size, the opportunity costs of review timelines, the costs of generating the regulator data and of course most important of all – the pricing achievable in the market.
Need help with regulatory strategy and questions of market entry. Contact us for an initial consultation. (it’s free too).