Over the past decade, the continued loss of middle-class jobs has stoked anxiety and shattered dreams of many Americans. Factors largely outside of policymakers’ control — like globalization’s spread and technology-based efficiency gains — contribute to some of today’s anemic employment conditions.
But there’s more. Overzealous and burdensome regulations — produced right here at home — also play a role in our stubbornly high unemployment rate and lackluster business growth.
The U.S. manufacturing sector has been buffeted particularly hard by this combination of forces over the past 10 years, resulting in our current jobs drought.
America’s medical device companies are a case in point. The U.S. currently dominates this $350 billion global industry. Directly and indirectly, these businesses — led by great American companies like Stryker, which is from my home state of Michigan— employ about 2 million Americans in good-paying domestic jobs. These future-oriented, research-driven, innovation-producing enterprises promise economic growth, employment and better healthcare in the years ahead.
But our country’s leadership in this critical field is in jeopardy. And if this industry stumbles, it will further handicap our economic future, hobbling another strategic piece of America’s business infrastructure.
A recent survey of medical technology companies by AdvaMed — the industry’s trade group — found 87.5 percent of these businesses foresee greater employment growth outside of the U.S in the future. Using U.S. Commerce Department data, the same group also reports a declining balance of trade in medical technology, with imports rising relative to exports over the past decade. These are flashing amber lights, suggesting policymakers change course.
What’s producing these potholes for this critical domestic industry? An inhospitable regulatory environment caused by the Food and Drug Administration is a primary culprit. Our own country’s rules are even more problematic when compared to those produced by European governments, which increasingly offer a more efficient, predictable, consistent and speedy approval process for medical devices.
A recent study by the California Healthcare Institute and The Boston Consulting Group found that in 2004, the European Union approved applications for new medical devices on average about 14.2 months sooner than the United States — a gap policymakers should have aimed to close. But in the last six years, the difference in approval time only grew worse. By 2010, the E.U. process was 46.8 months faster than ours.
Numbers like these encourage medical device manufacturers to move their investments, research and development to places more hospitable to bringing breakthrough technologies to market. Like finding an alternative route on a congested highway, these companies are learning that foreign countries are the fast lane for bringing cutting-edge technology to market.
Obviously speed should not trump safety, but we also need to keep in mind how these delays at FDA affect American patients in need of these life-improving, life-sustaining devices. In July, my committee heard testimony from American patients who need medical devices currently available in Europe — devices they cannot access in the U.S. One of these patients, Marti Conger, had to travel to England to get access to a device made by a company located 40 miles from her home in California.
Over the next year, Congress will address the issue of device approval by reauthorizing parts of the FDA. We will have an opportunity to realign incentives and reward companies that develop breakthrough medical technologies here in the United States by speeding up the approval process. Our goal will be to close the approval gap between our country and the European countries, which will help American patients and create American jobs.
We will soon introduce and advance legislation in Congress that substantially improves the business climate for the medical device industry. Building greater transparency and accountability into the approval and clearance processes by requiring FDA to track important milestones and response times for each device submission is one of the first steps in our job-creating agenda. We also plan to streamline the de novo classification process to provide an efficient clearance pathway for innovative devices. Finally, we intend to reform the FDA guidance process to improve regulatory predictability and consistency by enabling and requiring greater public input in the guidance development process.
We need to send a strong signal to leaders and entrepreneurs in this critical industry. The kind of anti-business rhetoric we’ve heard from some in Washington in recent years is misguided and counterproductive. As policymakers, we need to agree on a fundamental economic truth: a strong business environment produces jobs, period. Global businesses have choices about where to invest and grow. Over-regulating and over-taxing job creators — and bludgeoning them with class-warfare rhetoric — will drive more manufacturing overseas and produce a lost decade of sub-par growth.
Rep. Fred Upton is the U.S. Representative for Michigan’s 6th congressional district. He is the chairman of the Committee on Energy and Commerce.