Medical Devices: Venture Capitalists Lobby to Change FDA Approval Process

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Complaints from the health-care industry that the FDA is too slow in approving new drugs and devices are not rare. Now it appears that venture capitalists are putting their money toward streamlining how the FDA approves medical devices, reports the New York Times.

Minnesota representative Erik Paulsen is currently sponsoring a bill to smooth the FDA's approval process of devices, making the process less uncertain. He argues that the current system is stifling investment that will cost states 400,000 jobs.

The bill seems to have the backing of industry lobbyists. The New York Times reports, "Mr. Paulsen's campaign committee took in $74,000 from people with a stake in device regulation, much of it from executives affiliated with venture capital funds and their spouses."

The device industry is lobbying for change because they argue the FDA experiences high personnel turnover, cumbersome bureaucracy, and a system that requires start-up firms to run new and costly tests that often duplicate past efforts.

One lobbying group, National Venture Capital Association, has donated about $350,000 in 2010 for devices, drugs, and health care, according to data from the nonpartisan Center for Responsive Politics.

Congress must reauthorize a law that requires medical device makers to pay fees to the FDA for their operating costs, and this upcoming year is an opportunity for a regulatory change. Paulsen's bill is not alone. House Republicans have introduced 10 bills just this October to speed up the FDA's approval process of devices.

If one of the bills is successful, it could be a boon to many device makers. For a closer look at the firms, we list the 10 largest firms involved with medical devices.

Do you think these firms stand to benefit from new regulations?

List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)

1. Johnson & Johnson (NYS: JNJ) : Engages in the research and development, manufacture, and sale of various products in the health-care field worldwide. Market cap of $176.73B.

2. Abbott Laboratories (NYS: ABT) : Engages in the discovery, development, manufacture, and sale of health-care products worldwide. Market cap of $83.51B.

3. Medtronic (NYS: MDT) : Manufactures and sells device-based medical therapies worldwide. Market cap of $35.85B.

4. Allergan (NYS: AGN) : Operates as a multi-specialty health-care company primarily in the United States, Europe, Latin America, and the Asia Pacific. Market cap of $25.75B.

5. Covidien (NYS: COV) : Develops, manufactures, and sells health-care products for use in clinical and home settings in the United States and internationally. Market cap of $22.09B.

6. Becton, Dickinson and Company (NYS: BDX) : Develops, manufactures, and sells medical devices, instrument systems, and reagents worldwide. Market cap of $16.68B.

7. St. Jude Medical (NYS: STJ) : Develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. Market cap of $13.35B.

8. Quest Diagnostics (NYS: DGX) : Provides diagnostic testing, information, and services in the United States and internationally. Market cap of $8.88B.

9. Boston Scientific (NYS: BSX) : Develops, manufactures, and markets medical devices used in various interventional medical specialties worldwide. Market cap of $8.36B.

10. Smith & Nephew (NYS: SNN) : Develops, manufactures, markets, and sells medical devices in the orthopaedics, endoscopy, and advanced wound management sectors worldwide. Market cap of $8.12B.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Alexander Crawford does not own any of the shares mentioned above.

At the time this article was published The Motley Fool owns shares of Abbott Laboratories, St. Jude Medical, Johnson & Johnson, and Medtronic. Motley Fool newsletter services have recommended buying shares of Abbott Laboratories, Johnson & Johnson, Covidien, Smith & Nephew, Quest Diagnostics, and Becton. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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