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How to obtain FDA buy-in and unlock more funding for your health tech startup

Many years ago, oil from Chinese water snakes was successfully used to treat joint pain until peddlers made “snake oil” synonymous with fraud. Times have changed, but the medical industry continues to walk a fine line between optical illusions and real solutions.

Now, as venture capital funding within health tech has fallen 41.2% compared to the same time last year, it’s even more important for emerging technologies to present more than promises.

By reaching for the highest standards and obtaining regulatory certification from institutions like the U.S. Food and Drug Administration (FDA), startups can show investors and clients that they’ve gone through the necessary checks for safe use in healthcare, creating more opportunity to drive long-term success.

FDA breakthrough device designation

The influx of artificial intelligence in healthcare is exciting but often met with skepticism from the public, and rightfully so. The stakes for a poorly designed digital health product are higher than any other industry, and the costs of failure much more serious.

There are many regulatory organizations that offer credibility and validation to incoming healthcare solutions, but the FDA is the best place to start. Why? The large U.S. market and its reputation for a rigorous framework around approvals will make it easier to expand down the road. Also, the FDA is one of the few agencies that has created a distinct path for software as a medical device (SaMD) to gain approval.

Startups should view privacy, safety and clinical validation not as nice-to-haves but as key components of the user persona they are building for.

The FDA’s breakthrough device program focuses on technology that will meaningfully help an overly taxed system. It’s an increasingly well-supported pathway that makes it easier for innovators to bring products to market faster, and it’s one of the best examples across the world of how regulators are responding to and working with innovators.

Devices must meet two criteria to be eligible for breakthrough device designation. First, the device must provide effective treatment or diagnosis of a life-threatening or irreversibly debilitating human disease or condition. Second, the device must meet at least one of the following: The device represents breakthrough technology; no approved or cleared alternatives exist; the device offers significant advantages over existing approved or cleared alternatives; and the device availability is in the best interest of patients.

While the FDA will give you an opportunity, it is up to your startup to test rigorously for efficacy and meet the highest standards when the time comes. The first criteria will be the most difficult bar to clear, as you must show clinical efficacy. The breakthrough device designation program is based on pilot studies done on the technology.

How to prove clinical efficacy

Recently, the Journal of Medical Internet Research analyzed over 224 venture-backed digital health startups that have raised more than $2 million in funding. The study rated each company on a scale of 0 to 10 for “clinical robustness,” 10 being the highest possible score. Of all the startups, 43.8% scored a zero. It’s no wonder venture capitalists are pulling back.

Startups hoping to secure regulatory buy-in from the FDA must test to ensure the device is more effective at treatment or diagnosis for a serious illness. This means testing not just for a device’s efficacy but conducting studies that compare it to existing, approved treatments.

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