Should You Pick a Fight with the FDA?

The U.S. Food and Drug Administration plays a huge role in what Anne DeGheest, co-founder and managing director of HealthTech Capital, calls “a perfect storm against the medical venture industry.”

“The FDA has been absolutely unpredictable,” DeGheest said at Rock Health‘s Health Innovation Summit in San Francisco last week.

She explained that the FDA has said it would regulate anything to do with medical claims related to disease. This not only includes medical devices, but their accessories like mobile health devices and health-related software. The topic of FDA regulations turned out to be a recurring theme on the summit’s CEO day because crowd members, mostly health startup CEOs and even one member of the FDA, had questions. The questions got handed off to Linda Avey, founder of 23andMe, who dealt with regulators extensively during that company’s early stages. 23andMe is a retail DNA testing service that genotypes customer DNA and then allows users to explore the results on an online personal portal. The service is controversial partly because it involves sensitive health data, which 23andMe uses for its own research.

“Having a lot of the whip lashes on my back from the Department of Health and California and New York, my advice is just stick to your guns,” Avey said.

Avey’s startup experience is unique compared to what a lot of other CEOs have been through in the past five years. 23andMe had already launched and been through its first few rounds of funding before the FDA came knocking and a series of negotiations ensued.

“We just made the conscious decision that we were not going to change our platform, and we were going to just go and do the hard work of sitting down with all of these people and discussing it,” Avey said.

This was hard then, but not as hard as it is today. Avey was lucky since she already had financial support, giving her a boost of confidence that her idea was a good one. Avey said investors later told her that they wouldn’t have invested in the company given the harsh regulatory climate that developed soon after ― the one that startups now face. So should you power through as she advised or should you mold your idea to fit within the lines that have already been drawn?

We know that entrepreneurs by nature don’t play by the rules, and there are reasons to be glad that they don’t; there’s a lot of unexplored and promising territory beyond the boundaries that regulatory agencies draw. But startups need to carefully consider what their real goals and intentions are, and if they’re worth fighting for.

“At the end of the day, we’re all good people trying to do good work on both sides of this,” Avey said.

But there’s a little more to it than just being well-intentioned. Companies also need to think about the possible consequences, both intended and unintended, of their product. Avey said that the mission of 23andMe is to give patients access to their own data.

It’s a nobel mission, but it could lead to some negatives ends. Dr. James Evans, a Bryson Distinguished Professor of Genetics and Medicine at the University of North Carolina School of Medicine wrote a paper on the potential hazards of citizen DNA research. He said in an interview that unregulated exome sequencing, which 23andMe now offers, and access to the results can cause users anxiety if they discover that they have or are at risk for developing incurable diseases.

I’m not suggesting that 23andMe’s approval should be revoked, but I’m using it as an example of a service that has foreseeable and potentially harmful consequences. Other startups should identify the risks that their products pose to users before taking on the FDA.

Also realize that if you’re looking for support and enthusiasm from potential users before earning FDA approval, you might not get that support. University of California-San Francisco medical student Rebecca Coelius pointed out in a recent post, that one group of end users — doctors — aren’t usually willing to back unapproved devices.

“I realize entrepreneurs and regulations are like oil and water. But ignoring them or expecting us to find the loopholes for you leads to naive business plans,” Coelius said.

It’s difficult for companies to build their plans around a system that’s constantly changing. In the past five years the regulatory waters have gone from manageable, to turbulent, to now ― when times are still tough, but believe it or not, there’s a chance that the FDA could become friendlier to health startups. DeGheest said that the FDA unofficially announced that it will ease its regulations on mobile health and change its regulations on software. So in planning for the years ahead, entrepreneurs can look forward to this. But the FDA just hasn’t yet been clear on when the easing up will take place, except to say it will happen sometime after this year.

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