What FDA’s MDDT Pilot Program May Mean for Diagnostics Business Leaders

September 30th, 2014
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Recently, FDA announced a pilot program to solicit proposals from companies interested in participating in its voluntary Medical Device Development Tool (MDDT) initiative. This FDA pilot initiative will allow the development of certain standardized tools (e.g., biomarker detection test, methods of measuring clinical endpoints or outcomes, or in vitro animal, human or computer models) to help FDA and device manufacturers assess the safety, performance and effectiveness of devices. In FDA’s view, a validated development tool that has been reviewed by FDA and made broadly available could potentially be used to reduce time and resources needed to develop products, and possibly reduce the number of rejections by the agency.


One of the proposed requirements of the MDDT initiative is that the tools be made freely available to the public, an element that has caused industry to balk. Both AdvaMed and Boston Scientific have offered suggestions to make the program more palatable to industry, one of which includes having the tool(s) still reside in the hands of the companies that develop them, but made available to other entities via licensing. In this way, the developing companies can protect their IP while sharing FDA’s interest in seeing the tools disseminated. It remains to be seen if FDA will incorporate these suggestions into the final guidance, which will be issued while the pilot program is underway. This MDDT initiative is yet another of FDA’s well-intentioned efforts to be seen as a collaborative partner in advancing innovation in the healthcare space, and the agency is to be commended for doing this.


However, before we look at this from the industry perspective, let’s consider the environment in which diagnostics companies operate.


  • Today, bringing a new diagnostic to the market can cost $5-10M per year and require 2 to 3 years or more for a turnkey run-of-the-mill diagnostic. However, the costs can be significantly higher if platform development is required concurrently – potentially $20-80M more – or if one is pursuing a companion diagnostic test, which would entail longer clinical trials (potentially 2+ years more at greater expense if the cost of a pharma clinical trial is baked in).
  • In the case of a companion diagnostic, attrition of the drug itself may collapse a future diagnostic revenue stream, independent of performance of the diagnostic.
  • Layered on top of this, the industry has also faced recent global reimbursement reductions that create future pricing uncertainty.
  • And most importantly, a slew of recent U.S. Supreme Court decisions, most notably in re: Bilski, AMP v Myriad, and Mayo v Prometheus (and other cases yet to have been heard), create risks to protection of IP that companies had previously relied upon for a competitive position.


To create and retain customers once the investments are underway, diagnostic companies must remain laser-focused on the bases of competition that will determine their advantage in the market. This means delivering on one or more values: cost to the customer, service to the customer, and innovating quickly for the customer. Further, retaining the gained customers requires taking the long view, and this means product life-cycle. Thus, diagnostic companies – if they wish to remain relevant – must manage a lot of complexity and, on an ongoing basis, wisely allocate time and resource to present and future mission-critical tasks of creating and retaining customers.


As diagnostic companies assess which investments are critical, it is hard to understand the case for making the investment to get an MDDT tool approved. For one, approval will require diversion of precious internal technical and regulatory resources. Further, approval does not appreciably change the work to be done, because the company will still have to apply the tool and/or validate their product with it. Importantly, many methods or tools can be found in competitive package inserts (such as limit of detection for a PCR test, for example), so it is unclear whether there is any significant unmet need that compels the MDDT tool.


Further, if a company finds such a need, its best option is to speak and negotiate a path directly with the FDA. This provides a confidential solution that in turn provides a time-to-market advantage. Indeed, companies can secure an advantage through trade secret/know-how or issued IP that is quite meaningful if only they – and not their competitors – have access to it. And finally, even if AdvaMed’s suggestions are incorporated and companies are able to outlicense access to proprietary tools, it is unlikely to result in any significant revenues for the licensing companies:


  • IP workarounds could be pursued, rendering the tool value-less. Potential licensees would be incentivized to do this if licensing terms were too onerous.
  • If licensed, the financial return to the licensor would be small because the license fees would likely be based on the brief period of time that the tool is used (development phase), and because the number of potential licensees would be a small subset of specialized companies.


The FDA would certainly benefit from a bigger toolbox to evaluate proposed diagnostic and other medical devices. But the MDDT initiative, while well-intentioned, would be unlikely to attract time and resource investment from the diagnostics industry because it provides no support for the primary mission of business (in diagnostics or any other): to create and retain customers.


Diagnostics companies interested in learning more about how this and other regulatory agency actions can impact their business strategy should contact Mike Little at Popper and Co.

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About the Author:

I became a senior advisor for Popper and Company in July 2014 following a long tenure in senior executive roles in the in vitro diagnostic (IVD) and companion diagnostic (CDx) industries. I bring to the team not only strong technical experience and a track record in developing and launching products in both industries, but I also have significant experience in building technical organizations, developing leaders in technical organizations, and, when required, facilitating turn-arounds of these organizations. Send me an email.