A company called Cur is developing a promising new pain-relieving product, according to Mashable, Fast Company, and PC World. Problem is, the company is doing it by launching a $50,000 crowdfunding campaign on its own website prior to filing for the necessary FDA clearance. The move could doom the product before it ever hits the market — or it could point to a glaring loophole in FDA regulations. If funding a product in anticipation of receiving said product doesn't count as a purchase, then the field of medical device regulation is about to get really messy.
"Sounds pretty illegal to me."
"Sounds pretty illegal to me," says Diana Zuckerman, president of the National Center for Health Research, a nonprofit that analyzes medical treatments in order to see how safe and effective they are. "Even if there is some sort of a loophole for crowdfunding of an advanced purchase of an unapproved product, it certainly sounds like it’s a sale — they're saying it's '50 percent off for 30 days' — and they can’t sell it if it’s not approved."
Cur (pronounced "cure") is a transcutaneous electrical nerve stimulation machine — or a TENS machine — that backers can obtain by funding the campaign to the tune of $149. These medical devices use electrical currents to stimulate nerves and muscles in order to relieve pain. They're especially popular with physical therapists who use them for pain management, despite the fact that the data on the effectiveness of TENS machines is sorely lacking. (In fact, the American Academy of Neurology gave them a big thumbs down for treating chronic back pain in 2009.)
But Cur is different from other TENS machines, which often come in the form of a large box with a bunch of dials and wires. For one thing, Cur is completely wireless and regulates itself thanks to sensors that include an accelerometer. Cur is also very small, and can be easily concealed under clothing. This means that a user can wear it at work or during a run without asking for help from a professional, says Cur founder Shaun Rahimi, a biomedical engineer who has worked for companies like Abbott Laboratories and NeuroPace.
"Within 5 seconds, it measures your muscle responses, [meaning] how your muscles are twitching in response to the current that's delivered," he says. "So you put this on, you don't even have to press a button. It’s attached, it starts, it detects how strong it is [compared with] where it should be using the muscle twitches, and then it sets the level that way."
A company can’t promote or advertise a medical device prior to FDA clearance
If it works the way Rahimi says it does, Cur could be extremely popular with chronic pain sufferers. But launching a crowdfunding campaign before receiving FDA clearance for the device is a risky move. After all, the FDA forbids marketing directly to consumers for unapproved medical products. And when crowdfunding functions as a pre-order system, campaigns that sport slick videos and slogans look a lot like marketing.
Cur hasn't filed for clearance yet
The "FDA regulates pre-approval or pre-clearance promotional activities for medical devices," says Ellen Flannery, a lawyer and partner at Covington & Burling LLP who specializes in developing strategic plans for obtaining FDA marketing clearance. A device that lacks marketing clearance is considered "investigational," and a company can’t promote, advertise, or accept orders for a medical device prior to getting FDA clearance, she says. The regulatory agency "considers such activities to be ‘commercialization' of the unapproved device." And although the FDA makes exceptions for trade shows, those exceptions only apply after a company has filed for clearance — a step that Cur has yet to take. "We are close to submitting the package [to the FDA], but we’re still a few months away," Rahimi says.
TENS devices have been been around for a long time. They're "50 times over approved," which means that Cur doesn't have to go through a whole bunch of human testing to gain clearance, Rahimi explains. The company just has to make sure that their validation tests demonstrate that Cur is similar to existing TENS devices and file for "substantial equivalence." "We'll file for the [substantial equivalence] in August, and assuming that three- to four-month pathway continues, that means winter we'll be shipping the product to our early backers on crowdfunding," he says. Cur plans to ship the product after their TENS device gets cleared by the FDA.
The website was customized to "speak to the consumer."
Rahimi explains that the campaign "isn't a pre-order at all." But when he describes what he's doing, it sounds a lot like Cur is marketing directly to consumers. For instance, he says that one of the reasons Cur decided to forgo launching a campaign on well-known crowdfunding websites Kickstarter and Indiegogo is because the Cur website can be customized to "speak to the consumer in a more direct way, with visuals — it's a prettier website." He also admits that he launched the campaign to find out more about Cur's customers. "I think if I have a crowdfunding campaign that shows a little more data about the demand for the product… I think that gives me a lot more leverage with the [venture capital]," he says.
Backing Cur's campaign means "contributing" to the company's efforts rather than buying a product, according to the button at the bottom of the order form. For companies like Cur, crowdfunding isn't a "contract of sale" because these orders sometimes go unfulfilled. And that's the idea that could make enforcing the FDA's rules against taking orders for unapproved medical products difficult. Regardless of whether a product is safe or effective, you're making a "donation" that comes with "a reward" at the end of a certain period. Indeed, Cur's website includes language designed to protect the website from looking like a pre-ordering system:
By making a contribution on or after May 13, 2015 you acknowledge and agree that you are contributing (i.e., making a donation) to a work in progress and not making a direct purchase. Your reward is the number of Cur Devices you contribute towards.
But Rahimi's own statements suggest that Cur's campaign violates certain FDA rules. For example, he told The Verge that the product is finished, which means that the campaign isn't going to fund research. "The product's done. We made sure to have that happen before we started the crowdfunding campaign," he says. But the FDA clearly states that a company that has filed for substantial equivalence can't "take orders, or be prepared to take orders" that could result in "contracts of sale for the device" unless those sales have to do with with research or investigational use.
Looking at the Cur website without thinking that the company is selling a product is pretty hard; you can see the words "get Cur now" right at the top. "What I find fascinating is that nothing about this [campaign] says that you're donating money until you get to this crowdfunding [page]," Zuckerman says. This is the ultimate of 'don’t forget to read the fine print' — everything else about this suggests that you're buying a product."
The website does state that the product has yet to receive FDA clearance thanks to statements like "ships Winter 2015, after FDA approval" below the price tag. But finding out what that means isn't easy. The FAQs on Cur’s website offered no information about the process surrounding the product's FDA clearance at the time of publication.
Backing Cur's campaign means "contributing" to Cur's efforts
It's hard not to wonder why the Cur team couldn't wait a few months to get FDA clearance. When asked, Rahimi explained that the money is necessary to get through the FDA regulatory process. "Right now we have enough money to get through all these processes, but it just helps us move faster," he said. "The money is useful now in terms of building the company. And the FDA processes are not inexpensive." For most startups, this explanation could be considered reasonable. But when dealing with people's health, "going fast" isn't always ideal.
How the FDA will respond to this campaign is unclear; the agency declined to comment on this story. It's still possible that a crowdfunding campaign that targets consumers will be interpreted as "investigational use" geared toward a large, and extremely diverse number of "investors." But scrolling through Cur's website suggests a far murkier outcome. "It’s a pre-order for something that they may never be able to sell," Zuckerman says. "And to me, it's hard to feel confident about the integrity of the product given the lack of integrity of the website. If they have a legitimate product, then the company shouldn't be selling it this way."
Update May 14th, 7:39PM ET: Following the publication of this report, Cur reached out to The Verge to let us know that they changed their website. They also sent us a statement, which can be read in full here.