tephen Marsh fully intends to get FDA clearance for his latest invention: a disposable medical device to treat sleep apnea.
But that’s expected to take many months. He needs cash now.
So his Massachusetts company, Airing, is raising money on the crowdfunding website Indiegogo by marketing the device as “a breakthrough technology,” even before developing a prototype. This summer, hundreds of customers have paid between $70 and $270 for a future supply of the device — which they won’t receive until July 2017. If it comes at all. No refunds. No guarantees.
Marsh is among a small but growing number of entrepreneurs rushing to peddle all manner of experimental medical devices on crowdfunding sites, a strategy more typically used to raise money for creative projects. Hawking “early-bird” discounts, these companies are quietly lining up hundreds of customers — and raking in hundreds of thousands of dollars — even though their products are still months or even years away from being reviewed by regulators at the Food and Drug Administration.
The practice often falls in a legal gray area and has caught federal regulators flat-footed. It has also alarmed consumer advocates.
“There are always risks and benefits to a product — that’s what the FDA usually assesses,” said Paul Brown, government relations manager for the National Center for Health Research, a think tank that advocates for patients. “If the FDA is not given a chance to even assess it, then all that risk falls onto the consumer or the patient.”
Entrepreneurs say crowdfunding allows them to raise the money and visibility they need to get potentially life-changing technologies to patients more quickly. Customers often respond enthusiastically: Airing, of Burlington, has raised more than $1 million from 10,000 donors and customers eager for a sleep apnea device designed without an unsightly mask or hose.
It’s a haul that “speaks to how badly people want to try these,” Marsh said.
An analysis by Stat found at least 16 crowdfunded campaigns have been launched over the past few years by entrepreneurs who essentially took advance orders for medical devices that they said they planned to get OK’d by the FDA — at some point in the future.
One campaign, for a sleek wristband designed to detect signs of an oncoming seizure, caught the eye of 36-year-old Heather Jenkins of Virginia. She lives in fear of having an epileptic seizure in an unsafe place, so she spent $199 to pre-order the device on Indiegogo.
“That would be awesome to have that extra warning,” Jenkins said.
The device, advertised as a “a gorgeous watch designed to save lives,” was supposed to arrive at her doorstep in July. But it’s been delayed twice. The developer, Empatica, which has offices in Cambridge, now projects it will ship in December. So far this summer, Jenkins has had two seizures — one at home, the other in the hospital — and worries about where she’ll be when the next one hits. Still, she remains excited about the device and has no plans to ask for a refund.
Other crowdfunding customers can be less forgiving.
Last year, the Seoul-based company Charmcare used Indiegogo to raise $50,000, some of which came from American buyers, on the promise it would ship the “first wearable blood pressure monitor” by June. Then the company went silent for several months. It resurfaced in May to apologize to its alarmed customers: “Thank you very much for not suing us with a greatest kind of patience I have ever witnessed.”
It did not announce a new shipment date.
Medical devices fall into several categories. The most complex, such as pacemakers, require rigorous FDA review. The least risky, such as bedpans, can essentially skip the regulatory process. Most devices promoted on crowdfunding sites fall in the middle. The FDA requires the makers to prove they’re as safe and effective as similar products already on the market before they can be advertised or sold as “medical devices” — with a few exceptions, such as research studies and trade shows.
Although the vast majority are ultimately cleared for sale, the process can take months, cost thousands of dollars, require design changes, and delay the revenue a company needs to stay afloat — not insignificant roadblocks for entrepreneurs. Crowdfunding helps them raise the capital they need to get through that process.
Regulators have taken no action to halt the practice.
William Maisel, acting director of the FDA’s Office of Device Evaluation, said through a spokesman that medical device companies must follow the agency’s marketing and advertising regulations, regardless of how they raise funds. The FDA didn’t respond to questions about the legality of specific crowdfunding practices.
Lawyers and agency observers say it’s unlikely the FDA will devote its limited resources to regulating the practice unless it appears patients are being harmed.
For their part, entrepreneurs are finding creative ways to stay within the law, often by carefully wording their ads or by labeling their customers as research subjects.
Empatica, which is developing the wristwatch device that Jenkins is awaiting, has opted to market it as a “medical quality device” for now, making limited claims about what it can do. Only after the company gets FDA permission — which could be months after the first customers receive it — will it start marketing the product as a “medical device” and making specific claims about the kind of seizures it can detect.
“We need to toe the line between saying what’s accurate and true . . . and getting this out there as quickly as possible,” said Rosalind Picard, an MIT professor and Empatica’s chief scientist “So you’ll see us use all this careful language.”
Some crowdfunding sites, such as Kickstarter, won’t let companies market products to treat or prevent a medical condition. That rule was developed partly out of concern that such product claims “could have harmful consequences,” Kickstarter spokesman David Gallagher said.
Indiegogo is more lax. The site screens for fraud and prohibits fund-raisers from raising money for illegal or harmful projects or rewarding donors with, say, alcohol. But just about every other kind of project and reward is on the table.
Indiegogo Inc. did not respond to questions about why the site allows medical device crowdfunding or whether it polices the practice. Instead, the company released a statement saying it promotes innovation that helps “people improve their lives.”
Indiegogo even sometimes solicits campaigns; the site contacted Airing and encouraged the company to use its platform to raise money for its sleep apnea technology.
That came as a welcome proposition to Airing executives, who were frustrated that traditional funding sources, including venture capital firms, seemed unwilling to take risks.
With crowdfunding, “you can go directly to the people who are in need and let them vote,” Airing chairman Phil Huyck said in a video posted on the company’s Indiegogo page.
Huyck also took the opportunity to make his pitch:
Patients, he said, “want to see this product. Their life and health and comfort depend on it.”