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Opinion: The Tijuana Connection, a Template for Growth

January 26, 2013 by Leave a Comment

IN November I quit my job as the editor of Wired to run 3D Robotics, the San Diego-based drone company I started with a partner as a side project three years ago. We make autopilot technology and small aircraft — both planes and multirotor copters — that can fly by themselves. The drones, which sell for a few hundred bucks, are for civilians: they don’t shoot anything but photographs and videos. And they’re incredibly fun to build (which we do with the ample help of robots). It wasn’t a hard decision to give up publishing for this.

But my company, like many manufacturers, is faced with a familiar challenge: its main competitors are Chinese companies that have the dual advantages of cheap labor and top-notch engineering. So, naturally, when we were raising a round of investment financing last year, venture capitalists demanded a plausible explanation for how our little start-up could beat its Chinese rivals. The answer was as much a surprise to the investors as it had been to me a few years earlier: Mexico. In particular, Tijuana.

Like many Americans, until recently, when I heard “Tijuana” I thought only of drug cartels and cheap tequila. “TJ,” though, is a city of more than two million people (larger than neighboring San Diego), and it has become North America’s electronics assembly hot spot: most of the flat-screen TVs sold in the United States, from companies like Samsung and Sony, are made there, along with everything from medical devices to aerospace parts. Jordi Muñoz, the smart young guy who had taught me about drones and then started 3D Robotics with me, is from TJ — and he persuaded me to build a second factory there to supplement the work we were doing in San Diego.

Shuttling between the two factories — in San Diego, where we engineer our drones, and in TJ, where we assemble them — I’m reminded of a similar experience I had a decade earlier. In the late 1990s and early 2000s, I lived in Hong Kong (working for The Economist) and saw how that city was paired with the “special economic zone” of Shenzhen across the border on the Chinese mainland in Guangdong Province. Together, the two created a world-beating manufacturing hub: business, design and finance in Hong Kong, manufacturing in Shenzhen. The clear division of labor between the two became a model for modern China.

Today, what Shenzhen is to Hong Kong, Tijuana is becoming to San Diego. You can drive from our San Diego engineering center to our Tijuana factory in 20 minutes, no passport required. (A passport is needed to come back, but there are fast-track lanes for business people.) Some of our employees commute across the border each day; good doctors are cheaper and easier to find in TJ, as are private schools, although it’s generally nicer to live in San Diego. In some ways, the border feels more like the notional borders of the European Union than a divide between the developed and developing worlds.

And it’s not just TJ. To the east, in Juárez, Dell computers are built by Foxconn, the company that manufactures more than 40 percent of the world’s electronics (including Apple’s iPhone and iPad). To the south, in Querétaro, a factory builds the transmissions that General Motors installs in its Corvettes. The design of General Electric’s GEnx turbine jet engine and the production of interior elements of Boeing’s 787 Dreamliner also happen in Mexico. Manufactured goods are the country’s chief export, with private investment in this sector among the highest in the world.

The notion that Mexico offers only cheap labor is just plain off the mark. Mexico graduates some 115,000 engineering students per year — roughly three times as many as the U.S. on a per-capita basis. One result is that some machine specialists are typically easier to find in TJ than in many big American cities. So, for that matter, are accountants experienced in production economics and other highly skilled workers.

What all these pieces add up to is a model — one that might hold the long-sought answer for how American manufacturers can compete with those in China, India and the next generation of economic powerhouses. That’s because the TJ template isn’t so much about outsourcing as it is quicksourcing. And that’s also the way to create thousands of good jobs in the United States.

As any entrepreneur can tell you, the shorter and more nimble a supply chain is, the better.

First, a shorter supply chain means that a company can make things when it wants to, instead of solely when it has to. Strange as it may seem, many small manufacturers don’t have that option. When we started 3D, we produced everything in China and needed to order in units of thousands to get good pricing. That meant that we had to write big checks to make big batches of goods — money we wouldn’t see again until all those products sold, sometimes a year or more later. Now that we carry out our production locally, we’re able to make only what we need that week.

Chris Anderson is the former editor of Wired and the author of “Makers: The New Industrial Revolution.”

Article source: http://www.nytimes.com/2013/01/27/opinion/sunday/the-tijuana-connection-a-template-for-growth.html?partner=rss&emc=rss

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F.D.A. to Tighten Regulation of All-Metal Hip Implants

January 16, 2013 by Leave a Comment

Under the proposal, which the agency is expected to announce on Thursday, makers of artificial hips with all-metal components would have to prove the devices were safe and effective before they could continue selling existing ones or obtain approval for new all-metal designs.

Currently, companies have to show only that their devices resemble ones already on the market, and they are not required to conduct clinical studies before selling them.

The F.D.A. action is intended to close a loophole in the 1976 federal law under which medical devices were first regulated. It is the agency’s first use of powers that Congress granted to it last year to deal with medical devices, like all-metal hips, that have been in regulatory limbo for decades.

The move comes amid one of the biggest device-related failures in decades. Just a few years ago, all-metal hips — implants in which the ball and cup component is made from a metallic alloy — were used in one of every three joint replacement procedures performed annually in the United States.

Traditional hip replacements, which are made of materials like plastic and metal, typically last 15 years before wearing out. But the all-metal hips, which companies rarely tested in patients before aggressively marketing them, are failing at high rates not long after implantation.

As a result, thousands of patients have been forced to undergo painful and costly operations to replace the devices. In addition, tiny particles of metallic debris released as the artificial joints move have caused severe tissue and bone damage in hundreds of patients, leaving some of them disabled.

Dr. William H. Maisel, deputy director for science at the F.D.A., said the agency’s proposal would require makers of all-metal hips to produce clinical data to justify their use because of the “large number of patients who received these products and the numbers of adverse events associated with them.”

The use of all-metal implants has plummeted, with the devices now accounting for about 5 percent of hip implants. For some of those devices, which are used in a procedure called resurfacing that is an alternative to total hip replacement, the F.D.A. already requires clinical trials before granting approval.

The impact of the proposal on manufacturers of traditional all-metal hips will not be immediate, and industry lobbyists may oppose its adoption or seek to modify it. Agency officials said it would most likely take a year for the rules to be finalized; after that, producers will have 90 days to submit clinical data to support a device’s safety and effectiveness.

In 2011, the F.D.A. ordered manufacturers of all-metal hips to conduct post-marketing studies to determine, among other things, whether the implants were shedding high levels of metallic debris. Dr. Maisel said he expected that device makers might try to use data from those studies to satisfy the proposed requirements.

If a company decided not to submit clinical data or if the information failed to meet agency standards, it would have to stop selling the implant.

The regulatory limbo involving all-metal hips resulted from the Medical Device Amendments of 1976. The law set differing test requirements for various devices, depending on the perceived risk of using them or the role they played in sustaining a patient’s life and health.

Producers of devices considered high risk, like implanted heart defibrillators, had to perform clinical trials to obtain F.D.A. approval for new products. But makers of devices considered less risky, like hospital pumps, had to show only that a new product resembled one already on the market.

However, at the time the legislation was passed, several types of medical devices, including all-metal hips, were already on the market. So lawmakers crafted what was supposed to be a temporary solution: regulators would treat potentially high-risk products like the hips as moderate-risk products until officially determining how to classify them.

But in the case of all-metal hips, the final classification never happened. Over the years, the F.D.A. started procedures to classify the implants but never completed them. Implant companies also lobbied the agency to classify all-metal hips as moderate-risk products rather than high-risk ones.

The result was that device makers like Johnson Johnson and Zimmer Holdings were able to start selling a new generation of all-metal hips a decade ago without running clinical tests.

Under the Food and Drug Administration Safety and Innovation Act of 2012, the agency now has a more streamlined way of classifying older devices. It no longer has to seek an economic review of a decision’s impact, a process that can take years, said Nancy K. Stade, the F.D.A.’s deputy director for policy.

About 20 types of older medical devices still await reclassification.

In recent weeks, the first of thousands of patient lawsuits involving the most troubled all-metal device, an implant once sold by the DePuy division of Johnson Johnson, have started to come to trial. Some plaintiffs’ lawyers say it may cost Johnson Johnson billions of dollars to resolve the litigation, which involves an implant called the Articular Surface Replacement.

On Thursday, the F.D.A. also expects to issue new guidance to doctors monitoring patients who have received all-metal hips.

For the first time, the agency will recommend that patients who are experiencing pain or other symptoms that indicate possible device failure undergo routine testing to detect levels of metallic ions in their blood.

Dr. Maisel said the agency was not recommending a specific ion level at which doctors should consider replacing an implant. Instead, he said physicians should monitor such tests over time and use that data, along with other information, to make such decisions.

Article source: http://www.nytimes.com/2013/01/17/business/fda-to-tighten-regulation-of-all-metal-hip-implants.html?partner=rss&emc=rss

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Study Calls Approval Process for Medical Devices Flawed

July 29, 2011 by Leave a Comment

The government’s system for regulating many medical devices should be abandoned and replaced because it fails to examine their safety and effectiveness before sale, according to one of the nation’s top scientific groups.

In a report, released Friday, a panel of the Institute of Medicine found that the existing rules were never intended to provide safeguards for screening out dangerous or ineffective products. The panel urged the Food and Drug Administration to devise a new regulatory system for the so-called moderate risk devices — a category that now includes artificial hips, external heart defibrillators and hospital pumps — because the current system was not fixable.

“If you want to make sure that a product is safe and effective, you have to start by asking the question whether it is safe and effective,” said William Vodra, a member of the 12-person panel assembled by Institute of Medicine and a lawyer who has worked closely with device producers.

The report, which was commissioned by the F.D.A., follows a number of recalls of medical devices, like one involving so-called metal-on-metal artificial hips that have failed in thousands of patients, crippling some of them. Those implants received little, if any, testing in patients prior to being implanted in tens of thousands of people.

The report’s findings are certain to touch off an intense lobbying battle over the shape of any future regulations, as device companies moved quickly to attack the study’s findings. Even before the report’s release, allies of the industry had waged an aggressive campaign to discredit it, and had taken legal steps intended to bar the F.D.A. from adopting its recommendations.

Soon after the study’s release, the country’s biggest trade group, the Advanced Medical Technology Association, which represents such industry giants as Medtronic, Boston Scientific and Johnson Johnson, unequivocally rejected the report, saying it did not deserve “serious consideration” from Congress or the Obama administration.

Abandoning the current approval system “would be a disservice to patients and the public health,” the group’s chief executive, Stephen J. Ubl, said in a prepared statement.

Dr. David Challoner, who served as the panel’s chairman, said that members of the group were stunned when they realized that the current system could not be salvaged. The F.D.A. had asked to panel to examine what modifications to current regulations might be useful.

“We surprised ourselves,” Dr. Challoner said.

Dr. Jeffrey E. Shuren, the director of the F.D.A.’s Center for Devices and Radiological Health, said in a statement that many of the report’s findings “parallel changes already under way at the F.D.A. to improve how we regulate devices.” He said he did not believe the existing regulatory system should be scrapped, adding that any significant changes would have to be approved by Congress. The Institute of Medicine review covered the approval system for a wide range of moderate-risk products, known as the 510(k) clearance process. It did not examine devices that carry the highest risk to patients if they fail, like implanted heart defibrillators. Those products go through a separate regulatory pathway that requires extensive testing before sale.

The big problem, the study found, is that the Congressional law that created the 510(k) pathway, the Medical Device Amendments of 1976, required producers of such products only to show that they were “substantially equivalent,” or similar, to one already on the market.

The standard does not require a producer to show that a new device is safe or effective, or even to provide evidence that an earlier device on which a new application is based works well.

The committee’s report emphasized that its members believed most medical devices in use were safe and beneficial. But it added that the existing regulatory system made it impossible to identify problematic or useless ones.

“The committee concludes that the 510(k) process lacks the legal basis to be a reliable premarket screen of the safety and effectiveness” of moderate-risk devices, the report concluded, adding, “Furthermore, that it cannot be transformed into one.” The panel concluded that the F.D.A. should act quickly to determine whether artificial joints, such as hips, which are currently approved through the 510(k) process, should have to undergo the type of rigorous scrutiny that high-risk devices now go through prior to sale.

A small industry trade group, the Medical Device Manufacturers Association, also issued a release saying it was “concerned about efforts to overhaul a regulatory pathway that would create additional uncertainties and slow patient access to medical therapies.”

Among other recommendations, the report also urged the F.D.A. to quickly tighten the way it tracked the performance of implanted devices and other products once on the market, and said the agency needed to move more quickly to stop the sales of harmful ones.

In many ways, the report is a rebuke to the medical device industry and its allies, who have been waging a campaign over the last year to dispute the need for any new regulations. More recently, they have criticized the Institute of Medicine’s review as biased.

Last month, the Washington Legal Foundation, a pro-business group, filed a petition with the F.D.A. arguing that the agency was statutorily barred from adopting any of the report’s recommendations because of what it claimed was the panel’s bias.

The legal foundation argued that the Institute of Medicine, which is part of the National Academy of Sciences, had failed to balance the panel by including officials from the device industry, the investment community or patients who had benefited from devices. An F.D.A. official said the agency was happy with the panel’s composition, which included doctors, academics and three lawyers, included two who worked closely with the industry.

The report on Friday addressed several complaints by the industry on possible new regulation, including the claim that toughened rules would slow the introduction of innovative products that could benefit patients.

The panel said there was no way of assessing, based on a review of available evidence, whether current regulations were having either a positive or a negative effect on innovation. The group, however, recommended that the F.D.A. assemble a group to review the issue.

Article source: http://feeds.nytimes.com/click.phdo?i=b5b327694b445fde6348fe928f4ffb80

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