Tenacity and planning can help you conquer the FDA maze.

By Carol Tice

Amar Sawhney attributes most of the gray hairs on his head to the FDA. Sawhney's medical-device company, Confluent Surgical Inc., in Waltham, Massachusetts, won FDA approval in April 2005 for a product called DuraSeal. The spray-on sealant keeps spinal fluid from leaking after brain surgeries.

The product's arduous five-year journey went from scientific experimentation and creation in a lab, through animal testing, to human trials in Europe, to a U.S. trial, and finally to FDA approval. Sawhney estimates the process cost roughly $40 million.

In the end, an FDA panel spent nearly a year reviewing data from the company's human-trial study of more than 100 patients before recommending approval, which the FDA later granted. Hanging in the balance was a product that Sawhney says has the potential for roughly $500 million in annual sales.

"We could have done all this work and had it come to zero if they didn't agree [with our findings]," says Sawhney, 39. "It's not for the faint-hearted. The pressure is tremendous." 

For Your Approval
The FDA approval process may be time-consuming, costly and nerve-racking, but for many entrepreneurs, an FDA greenlight is the only way to sell their invention in the U.S. The 100-year-old federal agency regulates products that represent nearly one-fourth of the U.S. economy. Product types that require FDA oversight include drugs for humans and animals, animal feed, cosmetics, medical devices, radiation-emitting devices, food additives and some food packaging. The steps to approval vary depending on who at the FDA oversees that particular proposal, the type of product for which you seek approval and its similarity to existing products.

Say you've invented a nicotine patch similar to existing patches, but it has been improved to last longer. You'll jump through fewer hoops than if you were presenting the agency with a major breakthrough.

"The words FDA and typical can't exist together in the same sentence," says Peter Pitts, a former FDA associate commissioner who's now director of the Center for Medicine in the Public Interest. "The FDA approval process is different every time."

It's different and, in recent years, has become increasingly expensive. Figures from Tufts Center for the Study of Drug Development show the average cost of developing a new drug hit $802 million in 2000-more than triple the cost of development in 1987.

For an entrepreneur who has a new invention, the price tag for shepherding a product through the FDA process to market isn't quite on par with drug and medical-device costs. But it's not peanuts, either.

For instance, Safeguard Medical Technologies LLC found the cost of earning FDA approval for a hypodermic needle-destruction device topped $1 million. The costly three-year process was successful, but financial pressures led the owners to dissolve their partnership this past spring.

Safeguard's former president, 50-year-old Joe Adkins, was a newcomer to the FDA process when he began seeking approval for the Berlin Center, Ohio-based company's product in 2000. At first, he didn't think his Disintegrator unit even needed FDA approval.

But the FDA classified the $80 device, which quickly melts down and seals hypodermic needles for safe disposal, as an infection prevention agent, a category under FDA oversight. Because Safeguard's technology was new, the product needed to go through an exhaustive approval process. "[The Disintegrator] is like a plastic garbage liner that prevents infection," says Adkins. "To them, it was an absolutely new product." Though bumps on the FDA-approval road are common, experts say the journey can be smoothed by following a few steps.

Get help. Both Sawhney and Adkins worked with consultants to help guide their products through the process. Sawhney brought in a big-gun law firm he'd used at a previous employer, and Adkins chose a retired FDA commissioner who proved a more affordable sounding board.

Sawhney had several people on Confluent's 50-person staff involved in the FDA process, but he also brought in a team led by Hogan & Hartson LLP attorney Jonathan Kahan. Kahan's division of the Washington, DC-based law firm specializes in FDA approval and employs doctors, clinicians and biomedical engineers to provide services from helping design trials to creating approval proposals. Using a high-powered firm that does a lot of FDA work also meant Confluent was kept up-to-date as FDA policy evolved.

"I'm at the FDA [offices] every eight to 10 days, trying to present a client's best case to get the product through," Kahan says.

Adkins says that with help from his consultant, Charles Kyper of Kyper & Associates in Durham, North Carolina, he was able to wade through the FDA's regulations and learn how to craft his proposal, accomplishing most of the work with a staff that ranged from 20 people down to five at various times. By only going to Kyper for occasional advice, Adkins says he was able to keep his bill down. Safeguard had obtained cost estimates from bigger consulting firms that ranged from $10 million to $12 million for start-to-finish assistance. Using a consultant can help a company present its proposal to the FDA more confidently, says Kahan. "We take the position [that] you shouldn't ever ask the FDA what to do," he says. "You should tell them what you're going to do."

Meet with the FDA early and often.  FDA officials famously don't like surprises. However, managers are willing to arrange preliminary meetings to discuss prospective FDA applications-that's an offer you should jump on, says Pitts. "The earlier you have meetings with the FDA, the more expeditiously your application is reviewed."

Those early meetings can help ensure your application is done right. Adkins learned at an early meeting that the FDA didn't agree with how he planned to classify his device. That information saved precious months and prevented Adkins from submitting a proposal that would have been rejected outright, likely getting Safeguard off on the wrong foot with the FDA.

Budget carefully. The cost of FDA approval for a particular product is difficult to estimate. After greenlighting a study of a product's safety and effectiveness, the FDA might review the data and grant product approval, or ask for another study conducted in a slightly different way. But companies should realize they'll need cash to begin selling their product when the process ends.

At Safeguard, the process cost more than estimated, eating into the company's marketing budget, Adkins says. After product approval was won, Safeguard ran into additional difficulties getting Medicare to reimburse patients for the Disintegrator device, so sales never took off. Company revenue in 2005 was $350,000, Adkins says-not enough to sustain the business.

Make sure your product is ready. If you need to go back to the FDA after an initial approval because your product needs modifications, it's going to cost you. Adkins notes that for small businesses, the initial application fee is often waived for the Investigational Device Exemption-something Safeguard needed to conduct project tests-but a second application can cost up to $50,000.

Prepare for a long haul. Like most federal agencies, the FDA moves slowly. It's permitted to take up to a year to review study data. For Safeguard's single product, delays meant limping along for three years. The company survived on $1.75 million in venture capital, supplemented with some contract engineering work for other firms and a smattering of sales of the Disintegrator overseas, where it had already been approved.

"The biggest problem is the amount of time between each step," Adkins says. "You're sitting there with a monthly nut to crack, but you're not allowed to sell your product. It's a constant cash drain."

Sometimes products get stymied at some point in the process. That's what happened with another medical device Sawhney had hoped to get approved before DuraSeal. Although the neurology section at the FDA was receptive to Confluent's new sealant technology, the OBGYN department was hesitant about a spray gel Confluent designed to prevent scars after abdominal surgery, Sawhney says. It was difficult to design human trials because the study would require a second surgery to see if the sealant was, in fact, preventing internal scarring. Promising results were seen in a human trial overseas- the product won approval from the European Union's certifying body, European Conformity, a step that had helped ease the way for DuraSeal's FDA approval. But Sawhney says the spray gel has made only slow progress since a 2002 trial in the U.S.

If you're planning to start manufacturing your own product once it's approved, as Safeguard and Confluent both did, be aware that the plant will need to go through its own FDA approval process. In some cases, including Safeguard's, that plant-certifying process can't begin until after the product has its FDA approval finalized. Adkins says the time lag caused by having to work through two different approval processes one after the other contributed to Safeguard's cash flow problems.

Keep a good attitude. No matter how frustrated you are with FDA officials, keep the dialogue going, says Pitts. Keep conducting informational meetings to learn what you can about how to improve your application. Many entrepreneurs plan to submit additional products for FDA approval in the future, or to apply for approval of their product for additional uses. You might be back, so relationships built with FDA officials on one go-round could be useful later.

Of course, a good attitude only takes you so far. As Adkins' experience at Safeguard shows, without the funding to manufacture and market an FDA approved product, a company can go into a stall. Adkins says some former Safeguard investors are forming a new company to continue marketing the Disintegrator and are seeking congressional approval for Medicare reimbursement.

Confluent, which raised $60 million in venture capital, has fared better. In its first year on the market, Confluent's $500 DuraSeal kit has been used in 30,000 surgeries, and 2005 sales were $10 million. 

Though sales are just beginning to ramp up, Sawhney takes heart from knowing his product can help reduce the mortality and complication rates for brain surgery patients. Because about 150,000 brain surgeries are performed in the U.S. annually, Sawhney is hoping to see sales grow as the device is marketed to more doctors and hospitals in future years. Major complications can cost $30,000 or more to address, making the product's cost worthwhile as a preventive measure, he adds.

Confluent also plans to seek FDA approval of DuraSeal for other procedures, such as spinal surgeries. If it's cleared for additional uses, that will add to DuraSeal's revenue. But Sawhney knows that with the FDA, there are no guarantees. "We march forward," he says, "keep our team focused and pray a lot." 

Carol Tice is a Seattle business writer whose work has appeared in Entrepreneur magazine, Puget Sound Business Journal and The Seattle Times.