Medical device regulations as a source of industrial leadership : A comparative study of American and European regulatory approaches

Abstract: Medical technology industry which produces the whole range of medical devices from eye droppers to computer tomography scanners is characterized by serious learning problems of industry stakeholders due to its high technological complexity and product diversity. Majority of firms populating the sector are small companies with no revenues, and therefore, depending strongly on venture capital to get their products on the market. At the same time due to technologies which are successfully launched, this industry employs highly qualified staff, promotes jobs and tax revenues. The industry progress is fueled by process of incremental innovation which occasionally produces technological breakthroughs. Medical device regulations, i.e. the mechanism of granting by a state to a manufacturer the rights to market her products in return of proof of their safety and effectiveness/performance, are an important element of innovation ecosystem of medical technology industry. They serve as a tool for decreasing uncertainty of stakeholders’ interactions on the market, ensuring public safety and legitimacy for manufacturers and their products. Supportive medical device regulations improve the investment climate in the industry by reducing related risks, and, hence, contribute to promotion of innovation in the short run and better and cheaper healthcare in the long run. In the regional context, therefore, particular design of medical devise regulations can be a source of competitive advantage of the whole region in the international arena. The present study compares two dominant regulatory frameworks: American and European. It attempts to answer the question: Which specific features of national/regional medical device regulations contribute to sustaining or improvement of a current and future position of a country/region on a world leadership chart? The two approaches are studied at present as well as in dynamics, the parameters determining the regulatory approach success are pointed out and then specific traits of regulatory approaches underpinning success parameters are defined and conjectures are made regarding the future trends of development for each of the two approaches. It has been shown that US and EU regulatory frameworks are likely to ensure similarly high safety level of devices, while European approach seems to be more efficient. Such traits of European framework as use of international performance standards and diversified responsibility among actors involved into regulatory process contribute to its higher efficiency.