According to a recent survey published by the National Venture Capital Association (NVCA), it is. The survey found that venture capital firms have been investing less in life sciences over the past three years. According to the NVCA press release “The survey of more than 150 venture capital firms identified Food and Drug Administration (FDA) regulatory challenges as the most significant factor driving away investment from startup companies that are bringing critical therapies to market.” Respondents to the study felt that regulatory challenges were primarily related to an imbalance in risk/benefit assessment and unpredictability at FDA. As a result investment is being moved from companies in the United States to companies in Europe and Asia. “While many factors are at work in driving away investment from U.S. medical innovation, it is the FDA approval process and the cost, time, and unpredictability that it adds to the development of innovative products that weighs most heavily on investors,” said Dr. Jonathan Root, general partner at U.S. Venture Partners and MedIC Steering Committee member.

This survey may have come as a surprise to many, but probably not to those who have ever tried to get a drug, stem Cell Therapy or medical device approved by the Food and Drug Administration (FDA). The biotechnology industry understands that the approval process is costly, lengthy and not always clearly defined. The FDA has stated publicly that they are looking at industry concerns and Commissioner Margaret Hamburg said in a recent statement that the agency plans to streamline regulations and speed up the approval process for some drugs, among other changes. What kind of changes could be made to improve the system and ensure patient safety while providing a reasonable regulatory approval process?

The regulatory process was briefly discussed earlier this week on the Cell Culture Dish in a blog titled “Is Medical Progress and Innovation in Jeopardy?” What prompted this blog was a very interesting discussion by the Stem Cell Research Group on LinkedIn. The group had posted the survey and members were discussing the balance between risk and benefit, innovation and patient safety, and ultimately what the FDA’s role should be in the approval process – exactly the same questions that investors are asking.

Where is the balance in the approval process and who is best qualified to review these products? It seems clear that with novel treatments for disease being discovered daily there is a tremendous risk that technology and innovation will outpace the regulators. In addition, Cell Therapy regulations are evolving and as a result it is difficult for companies to ensure that they are following the correct regulatory pathway. One example of this occurred in August 2010 when the FDA halted the work of Regenexx, a Denver based company, which collects patient’s bone marrow cells, expands them in the patient’s own blood, and injects them back into patient’s damaged joints. About 500 patients received this treatment with positive results. One of the issues cited by the FDA in stopping treatment was that there was not enough effort made to prevent the spread of disease and that a patient’s own stem cells should be regulated as if they were being used on another human being.

There is much debate about how stem cells and Cell Therapy should be regulated particularly in the area of autologous therapy, a treatment consisting of collecting cells from the patient, culturing these cells outside of their body, and then delivering the cells back to the patient. Should these therapies be held to the same rigorous regulatory process as drug therapies?

The culturing of cells outside the body seems to be the critical point for FDA. If you look at bone marrow transplant or cord blood therapy, the FDA has minimal involvement. In the case of bone marrow, once a match is found, safety tests are conducted to be sure that the donor does not have risk factors or communicable diseases such as HIV or Hepatitis. Once the donor is cleared of these risks, bone marrow is collected from the donor and injected into the recipient. While the FDA regulates bone marrow collection, storage methods and distribution, the bone marrow transplant itself is not regulated and there is no approval process for the treatment. The same is true for delivering cord blood cells to patients. While many people might not think of these procedures as stem cell therapies, that is exactly what they are. There are about 20,000 bone marrow transplants done in the United States every year and over the years these transplants have saved countless lives. This type of therapy and its success could be an example of how a system can work to cost-effectively improve therapy and patient access without burdening these treatments and the healthcare system with excessive regulatory burdens.

How can the FDA be expected to be experts in every field with different types of medical treatments and innovative new therapies being discovered daily? Should the FDA utilize expert panels more and expand their area of expertise by relying on the advice of those identified as experts? It seems that researchers at the National Institutes of Health, leading Universities, the Centers for Disease Control, and Medical Research Institutes should be consulted for expertise in these areas. Wouldn’t the strategic use of expert panels be a way to streamline the approval process, particularly in fields that are completely new?

These ideas may not be the answer, but it is critical that we find the answer soon. Investor confidence needs to be restored and the approval process, particularly in new technology, should be streamlined if the US is going to lead medical innovation in the future. If these things do not happen we risk losing our medical innovation, our best research minds, and our brightest start up biotechnology companies overseas where the approval process is “predictable.”