(348b) Risk Management in the Development of Novel Biomedical Devices and Vaccines
This paper investigates the effect of uncertainty on the risk and profitability of new medical devices and vaccines. The focus of the paper is on modeling the FDA approval process so that the effect of early decisions can be assessed. The method is illustrated using a novel procedure that involves implanting poly(propylene fumurate) blends with chondrocytes and mesenchymal stem cells into damaged cartilage to repair defects as well as in the development of new carbohydrate-based vaccines for tuberculosis. Several decision variables were determined to affect the overall risk of the project. First stage decision variables considered were the number of experiments to conduct prior to FDA testing and the number of lab technicians working both before and during the FDA process. Second stage variables include time of facility construction, advertising and training budget, and the price at which to sell the product. The effect of prior experimentation and the number of lab workers was modeled and risk curves were developed based on success and failure throughout the FDA process and the accompanying costs. A model was also developed to determine the price and demand for each investment cost by considering competing technologies. Methods for reducing risk are discussed. The methodology can be used to balance potential profits vs. probabilities of successfully pass FDA.