Estimated Cost of Developing a Therapeutic Complex Medical Device in the US

IMPORTANCE: The US medical device market is the world’s largest, but estimates of the cost to bring a medical device to market are not available to help inform policy making and regulatory efforts to enhance device safety and innovation. OBJECTIVE: To estimate the mean expected capitalized cost of developing a novel therapeutic complex medical device. DESIGN, SETTING, AND PARTICIPANTS: In this economic evaluation, an analytical model of novel therapeutic complex medical device development using data from public and proprietary sources with coverage from 2000 through 2018 was used to estimate the cost, duration, and phase transition success probability associated with each stage of development. Data analysis was completed in September 2021. EXPOSURES: Conduct of nonclinical and clinical studies; payment of FDA user fees for novel therapeutic complex medical devices. MAIN OUTCOMES AND MEASURES: Mean development cost (in 2018 US dollars) incurred by developers for an FDA-approved novel therapeutic complex medical device, accounting for failures and cost of capital. RESULTS: In this economic analysis, the mean development cost for a novel therapeutic complex medical device was $54 million (95% CI, $25 million-$200 million) excluding any postapproval studies that might be required. After accounting for the cost of failed studies and cost of capital, the mean capitalized cost of bringing a novel therapeutic complex medical device to the US market was $522 million (95% CI, $205 million-$3382 million). The key factors associated with this cost were the phase transition probabilities: 46.9% for nonclinical to feasibility study, 48.0% for feasibility to pivotal study, 75.7% pivotal study to FDA premarket approval submission, and 80.5% for FDA premarket approval submission to approval. The nonclinical development stage constituted the largest portion of overall cost at 85.0% with the FDA review stage with the highest phase transition probability accounting for only a small fraction at 0.5%. CONCLUSIONS AND RELEVANCE: In this economic evaluation study, the cost of therapeutic complex medical device development from proof of concept through postapproval stages was assessed accounting for the cost of failures and the cost of capital. Existing estimates did not account for all stages of development, capitalization, or failure costs, which this study suggests were substantial.