FDA-CMS Parallel Review – a failed attempt at spurring innovation

Purpose: The purpose of this paper is to analyze the Parallel Review program that offers simultaneous review of the Food and Drug Administration premarket approval submissions and the Centers for Medicare and Medicaid Services (CMS) national coverage determinations (NCDs) of medical devices. Design/methodology/approach: The paper analyzes the impact of Parallel Review on medical device innovation, focusing in particular on the causes for low popularity of the program among medical device manufacturers. Program outcomes are evaluated in the light of its intended goals. Findings: The paper identifies four reasons for the program’s limited impact. First, few devices are eligible to participate. Second, most manufacturers prefer to seek Medicare reimbursement at the local level as less risky than the CMS NCDs. Third, participation in the Parallel Review might actually delay the marketing of the device. Fourth, the program does not address numerous obstacles that device sponsors currently encounter. While giving the appearance of support for the medical device innovation, the policy falls short on its intended goals. Originality/value: This paper elucidates the challenges to internal reform and serves as a reminder to political economists and health care researchers that to make disruptive innovation possible, we must continue to illuminate the otherwise unseen cost of marketing delays and document the ability of emergent market mechanisms to protect consumer safety.