Statement of the Hon. Nydia M. Velazquez Stifling Innovation: Examining the Impacts of Regulatory Burdens on Small Businesses in Healthcare

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Statement of the Hon. Nydia M. Velazquez dated May 8, 2024, titled Stifling Innovation: Examining the Impacts of Regulatory Burdens on Small Businesses in Healthcare. She says small startups make up an outsized share of new drug discovery, with one study showing the proportion more than doubled between 2009 and 2018. She acknowledges that bringing a drug or device to market is costly and slow, but argues that proving safety and effectiveness is necessary for public trust. She warns that drug companies sometimes use expedited FDA programs to avoid placebo-controlled studies and then delay required follow-up studies.

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Statement of the Hon. Nydia M. Velazquez Stifling Innovation: Examining the Impacts of Regulatory Burdens on Small Businesses in Healthcare

May 8, 2024

We all know that small businesses are the lifeblood of the economy, but that is especially the case in health care, where small companies are at the forefront of technological innovation and are developing many groundbreaking new products.

And their influence is growing each year. According to one study, the proportion of new drugs discovered by small startups more than doubled between 2009 and 2018, and by some accounts now makes up as much as 80 percent of the market.

Yet, despite their outsized role in advancing innovation, small firms encounter significant barriers.

The process of bringing a new drug or device to market can be costly and time consuming, because of the need to prove the safety and efficacy of the product.

The FDA is responsible for protecting us all from potentially harmful substances or defective devices. For most new drugs, manufacturers often must conduct animal testing before obtaining approval to conduct clinical trials on humans, and those clinical trials can take years and cost millions of dollars.

Some will say this process stifles innovation, but ensuring medical products prove their safety and clinical effectiveness prior to going on the market is necessary for public trust, individual safety, and advancing genuine innovation.

With that said, it’s important we recognize FDA’s attempts to balance scientific scrutiny with regulatory flexibility. Congress and FDA have long sought to expedite this process, particularly for rare disease treatments.

Expedited programs at the FDA help bring potentially lifesaving treatments to the market much quicker – bringing hope to many patients and their families.

Unfortunately, that does not come without potential for abuse. Occasionally, drug companies use expedited programs to circumvent placebo-controlled studies, then drag their feet on conducting the required follow-up studies.

As a result, companies are able to garner millions of dollars in sales without proving clinical effectiveness. And while I have full faith in the FDA’s decision-making process, there must be safeguards in place to prevent drug companies from taking advantage of regulatory flexibility.

Our regulatory system in health care is essential for keeping patients safe and delivering genuine innovation to the market, but that can’t be done without strict scientific standards.

I hope today that we can discuss ways to support small businesses and their role in saving lives with new innovation while also recognizing the need to prove these products are safe and effective for human use and consumption.

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