Medical Device & Diagnostic Industry MagazineMDDI Article Index Originally Published MDDI November 2005

Erik Swain

November 1, 2005

8 Min Read
Leading the Way for Small Companies

Medical Device & Diagnostic Industry Magazine
MDDI Article Index

Originally Published MDDI November 2005

Q & A

Nancy Briefs, who recently became chair of MDMA, vows to do what she can to make sure patients have access to the latest medical innovations as quickly as possible.

Erik Swain

With more than 25 years of experience as an executive in the medical device industry, Nancy Briefs, founder, president, and CEO of Percardia Inc. (Merrimack, NH), has a strong understanding of how the business and regulatory aspects of the device world intersect. She is now bringing that experience to bear as chair of the Medical Device Manufacturers Association (MDMA), a position she assumed in May. That post positions her as a public advocate for small device companies on a number of issues, from user-fee reform, to changes in Medicare, to making markets more open.

Briefs has spent much time both running device companies and funding them as a venture capitalist. She has helped develop products and raise financing for companies such as Vista Medical Technologies, Stryker Corp., Target Therapeutics, and Edwards Lifesciences. She helped found Percardia in 1998, and in the years since, has raised more than $55 million in equity financing to support device development, feasibility testing, and clinical trials. She spoke to MD&DI East Coast editor Erik Swain in July.

Q: What is the most important issue facing small device companies today?

A: I think it depends on the stage of the company. For early venture-backed companies, it's acquiring capital. For others, it may be navigating the clearance and approval processes at FDA and the Centers for Medicare and Medicaid Services [CMS]. If a firm is already past that stage, it could be the challenge of setting up a distribution channel and getting its product through to the end-user, especially in light of the problems related to certain group purchasing organizations [GPOs].

Q: What are your biggest priorities for MDMA?

A: My goal is to continue to make sure FDA has the resources it needs to make efficient and effective decisions in a timely fashion, which can get products to the consumer as soon as is reasonable and practical.

Q: Speaking of resources for FDA, has the Medical Device User Fee and Modernization Act of 2002 (MDUFMA) user-fee program worked to your satisfaction? If not, what would you change about it?

A: We support getting FDA additional resources, but the program has had a shortfall. The original intent was to initiate user fees from industry, increase congressional appropriations, and have FDA enhance its performance by 25%. But while industry fees have skyrocketed nearly 60% since the program began, Congress has fallen short by more than $30 million. FDA does seem to be improving its performance, but it's not yet been brought up 25%. We are committed to getting additional resources to FDA, but the congressional appropriations have to come up.

Regarding the Medical Device User Fee and Stabilization Act of 2005 (MDUFSA), MDMA is encouraged that Congress and the president recognize the important role that smaller, innovative companies play in this industry. Increasing the small business threshold to $100 million helps smaller companies afford the escalating user fees.

In addition, eliminating the various adjusters that resulted in the dramatic fee increases is something that MDMA has championed since 2002. We are gratified that our efforts have paid off.

Q: In your mind, is Congress committed to adequately funding the CDRH budget? If not, what can be done to convince it to provide the necessary resources?

A: Congress wants to fund it. However, there are so many budget constraints for all industries right now. We are lobbying for increased appropriations. How can we get Congress to do that? It's hard to say. There are a lot of things going on in Congress on the budgetary side.

Q: Does FDA do an adequate job of taking the least-burdensome approach to regulation?

A: Certainly the agency is operating better than it did in the early 1990s. FDA is more transparent and open to a constructive dialogue with industry. Related specifically to the least-burdensome approach, we have heard many examples where the approach has been adopted, but also examples where it has not been.

Q: What is your take on the reforms at CMS?

A: We appreciate the commitment of [CMS administrator] Mark McClellan to reform. He is aware of our feeling that reimbursement is a critical issue to the survival of smaller companies. Although CMS is making efforts to decrease the burden it places on industry, the shift to evidence-based decision making could add burden. MDMA companies do not have unlimited resources to gather extra evidence. This is a very important topic and we are working with CMS to address it. We are very concerned about the effect. We are talking about small companies, and the costs could be prohibitive.

Is there a way to work with CMS and FDA to get them the data they want without conducting additional trials or going over other additional hurdles? Maybe during the PMA process, we could do a single trial that collects the data we need for both FDA and CMS. The issue is that FDA is looking for evidence that the device is safe and effective for the marketplace, while CMS is looking for evidence that the device is part of a reasonable and necessary procedure that warrants coverage. Also, CMS wants the data to be public. I think there might be a middle ground, a way to collect the required data while protecting the confidentiality of our trials. It would still get CMS the data earlier rather than later.

Q: Have the reforms in the GPO industry opened up markets? What remains to be done?

A: We have worked really hard for six years to make sure patients and caregivers have access to our technologies. As a result of the efforts of Senators [Mike] Dewine (R–OH) and [Herbert] Kohl (D–WI) [the chairman and ranking member of the Senate subcommittee on antitrust, competition policy, and consumer rights], progress has been made. However, some GPOs appear to be continuing to exclude cost-effective devices from their member hospitals as a result of the financial arrangements they have with certain dominant manufacturers. This is a direct result of certain GPOs abusing their safe harbor status from the Medicare antikickback statute. Until the issues of administrative fees are addressed, the markets will never be truly opened. Furthermore, the new initiative put forward by GPOs failed to address many of the concerns raised during the Senate hearings. As a result, MDMA believes that legislation is required to ensure that patients and caregivers have access to innovative, cost-effective technologies.

Q: How would you characterize the investment community's attitude toward the device industry right now? What kinds of opportunities are there for emerging companies?

A: Venture capitalists have taken a very strong and significant interest in our sector over the last couple of years. Our business models are well understood, as is the predictability of the regulatory process. There are enormous opportunities right now. A lot of money is being put into early-stage investments. A number of venture capitalists are making strong commitments to the device industry for the future. My impression is that the outlook is positive for innovative new technologies.

Q: What distinguishes a device company that can attract funding from one that can't?

A: In general, potential investors want to invest in a unique, novel technology that's serving a substantive market. Also important is whether you have the right intellectual property protection and the ability to practice in the market. But in my experience, the most important thing is the management team. You need to have a group that has knowledge of the market and, if possible, has led a start-up before.

Q: What other advice would you give to someone who wants to start a device company?

A: There is an incredible amount of resources that can help you. Trade associations like MDMA are particularly helpful to smaller companies. Other CEOs that have experience and expertise in your sector are a good source of advice and counsel.

Q: What would you most like to accomplish before your term as MDMA chair expires?

A: I would like to continue what has been an exemplary record since 1992, enabling CEOs of small companies to advance our mission. I want to advocate for whatever political solutions are needed to improve the quality of patient care. This includes enhancing the FDA review process, improving the coverage and reimbursement environment, and ensuring that the markets are open.

Erik Swain is East Coast editor for MD&DI.

Copyright ©2005 Medical Device & Diagnostic Industry

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