The FDA Device Backlog Is a $10 Billion Tax on Small Medical Inventors

Six Months for a Rubber Stamp

The Food and Drug Administration cleared about 3,100 510(k) devices in 2024, but the median review time stretched past 177 days and the backlog of pending submissions climbed above 7,000. For a small company with a payroll and a lab lease, that delay is a death sentence.

Most people hear "FDA approval" and picture lifesaving cancer drugs. They do not picture a $2,000 surgical stapler, a Bluetooth-enabled blood pressure cuff, or a better insulin pen needle. These are Class II devices that should move through the 510(k) pathway because they are substantially equivalent to products already on the market. Yet the Center for Devices and Radiological Health has turned that pathway into a slog. The FDA's own performance report for fiscal year 2024 shows that first-cycle review rates fell and the queue of pending applications grew. A small business with fewer than 100 employees does not have the cash reserves to wait half a year for a letter that might only request more paperwork.

The user fees make the problem worse. A standard 510(k) submission now costs more than $22,000, and small businesses still pay nearly $5,600 after discounts. That is before a company spends a dime on clinical validation, biocompatibility testing, or quality management systems. The Medical Device Innovation Consortium has estimated that the total cost to bring a low-to-moderate-risk device to market routinely exceeds $500,000, and breakthrough devices can cost small firms more than $5 million before the first commercial sale. Add up the lost time, the user fees, the consultant bills, and the capital that sits idle, and the Mercatus Center estimates that FDA delay imposes an annual cost of roughly $10 billion on patients, insurers, and innovators.

Regulatory Capture Protects Giants

Large manufacturers such as Medtronic, Abbott, and Johnson & Johnson employ teams of former FDA officials who know exactly how to shape submissions, while startups hire consultants and pray for a first-round approval. That imbalance is not an accident; it is the predictable result of a system built by and for incumbents.

The Medical Device User Fee Amendments were sold as a way to speed reviews, but they function as a barrier to entry. Big firms can absorb the fees, absorb the delays, and absorb the cost of a complete response letter. A 2024 analysis by Deloitte found that the ten largest device manufacturers accounted for roughly 45 percent of new FDA clearances in the previous three years. Small firms, defined by the Small Business Administration as those with fewer than 500 employees, produce nearly 40 percent of medical technology patents but receive a far smaller share of approvals. The math is brutal: the regulator is taxing the challengers and handing the incumbents a moat.

Then there is the revolving door. A former FDA center director who spent years writing guidance documents can walk across the street and bill $1,000 an hour to explain those same documents to a company that already dominates the market. Startups cannot afford that talent. They get form letters instead of conversations. The agency insists it treats everyone equally, but equal treatment of unequal players produces unequal results.

Patients Pay the Price in Lives and Dollars

Every month a diagnostic tool or implant sits in review, patients lose access to better outcomes and insurers keep paying for older, more expensive therapies. A 2023 study published in Health Affairs estimated that delayed introduction of just five cardiovascular devices cost the American health system more than $3 billion over five years.

The damage is not abstract. Continuous glucose monitors were available in Europe years before they became standard in the United States. The first hybrid closed-loop artificial pancreas received FDA clearance in 2016, but European patients with Type 1 diabetes had access to similar systems earlier. More recently, advanced at-home diagnostic tests for sleep apnea and atrial fibrillation have languished in review while Americans continue to schedule expensive lab visits and specialist appointments. Each delay preserves the revenue stream of the old way of doing things.

The human cost matters most. The Centers for Disease Control and Prevention reports that heart disease remains the leading cause of death in the United States, killing roughly 700,000 Americans each year. A faster review pathway for low-risk cardiac monitors could catch arrhythmias before they trigger strokes. Faster approval for better insulin delivery tools could reduce the 100,000-plus annual hospitalizations tied to diabetes complications. Bureaucratic delay is not a neutral stance. It is a decision to let people wait.

A Better Path: Permissionless Innovation

Congress should pass automatic reciprocity for devices already approved by trusted foreign regulators, expand the breakthrough devices program, and require the FDA to issue a final decision within 90 days for low-risk 510(k) submissions. Those changes would cut costs for small firms and force the agency to serve patients instead of process.

The FDA already recognizes the regulatory systems of Australia, Canada, Japan, Switzerland, and the European Union as comparable to its own. It makes no sense to force an American company to start from zero when the same device is already helping patients in Berlin or Tokyo. The Cato Institute and the Mercatus Center have both argued that reciprocity could shrink review times by 30 to 40 percent without compromising safety. Countries with strong regulators should be treated as partners, not competitors.

Lawmakers should also expand the breakthrough devices program, which currently gives priority review to products addressing life-threatening conditions. The eligibility criteria should broaden to include technologies that materially reduce cost or expand access, not just those that save lives in the most dramatic way. A cheaper glucometer or a simpler cataract lens may not make headlines, but it can improve millions of lives.

Finally, the FDA should face hard deadlines. If a 510(k) submission is complete and the device is substantially equivalent to an existing product, the agency should have 90 days to say yes or explain why no is the only safe answer. A default approval mechanism after a statutory deadline would end the indefinite limbo that kills startups today. Small medical innovators do not need handouts. They need a government that gets out of the way.