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Report

The Innovation Imperative: Crossing the Valley of Death

Social Science Research Network

February 5, 2025

Millions of Americans face diseases that lack treatment options, while many more face impairments in independence as a result of inadequately treated medical conditions. Innovation in the life sciences offers the opportunity to cure debilitating illnesses as well as to promote independence and increased convenience of care delivery. However, pharmaceutical and medical device innovation each face a combination of scientific, engineering, clinical, and subsequent regulatory risks prior to entry into clinical practice.

Regulatory risk lies within the core Food and Drug Administration (FDA) review approval and the Centers for Medicare and Medicaid Services’ (CMS) technology assessment and coverage analysis processes, the latter a requirement for innovators to receive Medicare payment. The FDA and CMS have different missions and, consequently, differing standards which has created an economically disastrous regulatory gap between FDA approval and CMS coverage determination forebodingly called the “Valley of Death.”

Critics have raised concerns about attempts to realign these disparate regulatory processes, often describing them either as lowering the evidentiary standard or as corporate handouts. An alternate approach of separate but coordinated regulatory reforms presents a viable path to both expand access to and decrease the cost of innovation. In turn, driving revolutionary product innovation to disrupt existing care delivery paradigms would lower costs, transform care delivery, and expand access to care. Dr. Brian J. Miller, a practicing physician at Johns Hopkins and policy analyst at the American Enterprise Institute, and Dr. Ted Cho of the University of California, San Francisco (UCSF) lay out a series of reforms including:

  • Modernizing drug and device product review through transformation of the role of the FDA product reviewer from an adversary into a guide. Automate and routinize analytical tasks in what is currently an artisanal review process, permitting reviewers to function at a higher level and guide product developers to better incorporate patient-reported outcomes, promote flexibility in outcomes assessment, and utilize novel clinical trial designs.
  • Reorganize and eliminate FDA middle management in order to both expand and support front line staff. FDA product review centers have multiple layers of middle management who are highly trained and technically skilled physicians and scientists that should be retasked to the core FDA regulatory mission of product review.
  • Improve the predictability and process of CMS coverage decisions. CMS should utilize existing external technical expertise in the Medicare Evidence Development and Coverage Advisory Committee to assist with coverage decisions, promulgate clear timelines and clinical measurement milestones for coverage with evidence development programs, and improve the local coverage decision process—amongst other reforms.

These and other proposals for organization structural change, business process improvement, and policy change are examined. A collaborative policy effort on the parts of political leadership, the civil service, industry, and Congress will be required in order to support America’s innovation ecosystem and achieve a better tomorrow. Policymakers must not forget that facilitating clinical innovation remains both an economic and moral imperative; the human cost of disease is real, as every patient is someone’s spouse, child, or friend.

Read The Full Report Here.