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Small Firms Upset over Large User-Fee Hike

    Originally Published MDDI October 2003 WASHINGTON WRAP-UP  

Originally Published MDDI October 2003

WASHINGTON WRAP-UP

MDMA is concerned that the unanticipated 35% user-fee increase for FY 2004 will seriously hurt innovation. Should the fee-hike trend continue, the group fears its members will be marginalized the way small drug companies have been for years.

James G. Dickinson

CDRH Promises More Meetings, Faster PMAs | Stair-Climbing Wheelchair Earns Approval | ‘Serious' GMP Violations Don't Stop 510(k)s | Reprocessing Guidance Answers Questions | Cochlear Implants Present Meningitis Risk | FDA Cautions for Microarray Makers | FDA Guidance on Pediatric Devices

When industry signed off on the Medical Device User Fee and Modernization Act of 2002 (MDUFMA), it was aware that user fees could increase each year of the program. But it may not have anticipated the rate at which they are now rising, and it appears that smaller companies aren't happy with the 34.9% hike for FY 2004. 

Increases that steep could hurt innovation, said the Medical Device Manufacturers Association (MDMA; Washington, DC), which primarily represents smaller device companies. In fact, the organization said, if the trend continues, it could marginalize small companies, as has been the case for years in the drug industry. “The burden that these increased fees place on small medical device manufacturing companies serves to emphasize our concern over the way MDUFMA was originally structured, and further justifies our original opposition to certain provisions of the legislation,” said Mark Leahey, MDMA's executive director. “Those provisions were primarily supported by large device manufacturers and promoted by their trade association. I only hope that these increases will not have a permanent effect on innovation as we move forward with MDUFMA.”

The group also said it is concerned that device user fees could follow the same path as prescription drug user fees, which have jumped from $100,000 per new drug application (NDA) in 1992 to the current level of $573,000, a nearly sixfold increase over 11 years. “If MDUFMA fees follow suit, the application fee for a PMA will climb to $871,000 within 12 years, and 510(k) fees will escalate to $12,500,” MDMA said. 

“There is a stark difference between the device industry and the drug industry,” Leahey continued. “Very few devices have the revenue potential of a blockbuster drug. In addition, unlike drugs, the majority of device innovation comes from smaller companies. In fact, small companies [those with less than 500 employees] represent well over 90% of the device industry.”

Additionally, MDMA members are concerned that the Bush administration and Congress are not appropriating adequate resources to implement MDUFMA, Leahey said. Echoing concerns also expressed by the Advanced Medical Technology Association (AdvaMed; Washington, DC), he explained that there is a $30 million shortfall in CDRH's appropriations accumulated during the past two years' budgets, and by FY 2005 this will grow to more than $50 million. Without the necessary resources, CDRH will have trouble meeting its planned performance enhancements. (For more on this topic, see “CDRH Promises More Meetings, Faster PMAs.”)

User fees are increasing primarily because of lower-than-expected revenues in their first (partial) year of implementation. The agency projects user-fee revenues will fall $5.5 million short of the FY 2003 target, chiefly because it received 30% fewer PMA applications than expected. FDA plans to make up the difference by adding that amount to the FY 2004 revenue projections. The rest of the jump is coming from inflationary adjustments and expected revenue increases not related to the FY 2003 shortfall.

Rates for FY 2004 will go up 59.1% for 510(k)s (27.3% for businesses with less than $30 million in annual revenues) and 34% for all types of PMAs. (For additional figures, see the News Trends column of the September 2003 MD&DI.)

Industry has agreed to annual user-fee increases in lieu of fees for product listing and establishment registration, which are applied under the drug user-fee program. “Unlike user fees, these other fees would not have been tied to performance and provided no benefit to companies,” AdvaMed explained in a statement.

CDRH Promises More Meetings, Faster PMAs

CDRH expects more presubmission meetings with sponsors, internal quality and consistency evaluations after reviews are completed, and better use of outside experts to help it reduce PMA review times by 18% (30 days) on those applications that reach approval. These PMA review goals were announced in July.

First gains won't be felt in the marketplace until FY 2005. CDRH's plan to cut PMA approval times will also focus on reducing unnecessary review cycles by “encouraging and supporting higher-quality applications and more-efficient resolution of outstanding issues.” FDA explained that this should allow it to focus more effort on applications that can be reviewed quickly.

CDRH's review improvements will result from additional resources added to the center under MDUFMA, the agency said. Device user fees are expected to contribute $29 million to CDRH's activities next fiscal year, according to recent FDA budget documents. These new revenues will pay for an additional 143 employees who are expected to be added through FY 2004 to handle reviews, support services, and meetings with industry.
On conducting more presubmission meetings, CDRH said it will use these “interactions with sponsors to clarify requirements and improve the quality of applications so that there are fewer cases where FDA needs to stop the review clock and go back to sponsors to ask for more information.”

It will also use outside experts, both in and out of government, to assist in developing better guidance documents for “important and emerging areas of device development, such as treatments for diabetes and cancer, and novel drug-delivery systems and tissue therapies.” After a review is completed, FDA said, it will internally evaluate the quality and the scientific consistency of the review process and the review decision.

Device review improvements could not come at a better time. Average review times in 2002 for approved original PMAs lengthened by 24%—from 129 days in FY 2001 to 160 days in FY 2002. The non-FDA component of review time increased from 43 days in FY 2001 to 53 days last fiscal year. These data show that the total average approval time increased to 213 days from 172 days.

For both expedited and traditional PMAs, FDA says it will strive to cut review times by 30 days for the “fastest 50% of those applications approved for FYs 2005 through 2007.” Its baseline for measuring this goal will be the three-year average review times for the fastest 50% of approved PMAs filed during FY 1999–2001. The agency explains that analysis of the fastest 50% of PMAs approved over a period will give it an early performance measure without waiting for every PMA to complete the review process.

“The steps that will reduce approval times for the fastest 50% of applications are expected to reduce approval times for all ultimately acceptable applications,” FDA said, while recognizing that many applications may not ultimately meet standards for safety and effectiveness and that performance measures based on all applications will take more time to observe.

Promises for faster review times were cautiously received by AdvaMed. While welcoming FDA's announcement, it urged the agency to give equal focus to those PMA applications that fall outside of the fastest 50%. Additionally, the group complained that the Bush administration and appropriations committee lawmakers have not lived up to the user-fee agreement, which called for additional CDRH funding outside of industry-paid user fees.

Stair-Climbing Wheelchair Earns Approval

FDA in August approved a battery-operated wheelchair that can navigate indoor and outdoor stairs as well as uneven surfaces. (See the February 2003 issue of MD&DI for a previous story on the device.) The Independence iBot 3000 Mobility System, made by Independence Technology, a Johnson & Johnson subsidiary, was given expedited review, and was described by FDA as a “breakthrough in wheelchair technology.” The chair uses a computerized system of sensors, gyroscopes, and electric motors to convert itself from a standard four-wheeled chair to an elevated chair balanced on only two wheels. The elevated two-wheel operation allows a user to reach high objects or maintain eye-level contact for conversation. 
Its four-wheel operation allows the user to “traverse rough terrain, travel over gravel or sand, go up slopes, and climb 4-in. curbs,” FDA said. For use on stairs, there are two sets of drive wheels that rotate up and over each other to climb up or down, one step at a time. “Because of its unique balancing mechanism, the wheelchair remains stable and the seat stays level during all these maneuvers,” the agency added.

FDA said that users cannot weigh more than 250 pounds and must have the use of at least one arm to operate the wheelchair. They should also exercise good judgment to determine which “obstacles, slopes, and stairs to avoid in order to prevent serious falls.”

FDA has classified the iBot as a restricted device, requiring healthcare professionals to undergo special training in order to prescribe it. The chair must also be calibrated to a patient's weight, and “patients have to be trained in its use and pass physical, cognitive, and perception tests to prove they can operate it safely,” FDA said.

FDA based its approval decision on a pivotal clinical study involving 18 patients, most with spinal cord injuries, who test-drove the chair for two weeks. FDA said 12 patients could climb up and down stairs alone with the iBOT, while the other six used an assistant. Three patients fell out of the iBOT, and two fell out of their own standard wheelchairs, FDA noted, adding that none of the falls occurred on stairs. “As a condition for approval, the manufacturer has agreed to provide periodic reports to FDA to document the chair's usage, functioning, and any patient injuries,” FDA said.

‘Serious' GMP Violations Don't Stop 510(k)s

Even if you've committed violations of FDA's GMPs or quality system regulation (QSR) that are serious enough for the agency to take you to court, you need not fear your new 510(k) submissions will be blocked.

That was the strong—but probably misleading—implication of a federal court consent decree FDA signed in Texas with Lubbock-based Adven Medical, a reprocessor, in August.

While the agency's right arm was investigating the company's long history (since 1999) of GMP violations and preparing its court action, its left was clearing 13 different 510(k)s for the company. FDA did this, CDRH compliance director Tim Ulatowski told MD&DI, because section 206 of the 1997 FDA Modernization Act provides that the agency may not withhold a 510(k) decision due to a GMP violation unless there is a substantial likelihood that the violation would potentially present a serious risk to human health. “In this case we obviously did not invoke the substantial likelihood clause,” Ulatowski observed.

The consent decree forbids the company from reprocessing and shipping those same products until it “corrects its manufacturing problems,” an FDA news release said. It said Adven's noncompliance dated back to June 1999, when the Texas Department of Health inspected the firm under an FDA contract. “Many of the problems observed in that inspection recurred, along with new problems, in later FDA inspections,” FDA's news release said, adding “Adven failed to correct these problems.”

The agency's nine-page complaint for injunction reported four inspections after the June 1999 one, which found 15 violations. In March 2000, FDA found eight of those 15 uncorrected. Six months later, it went back and found 12 violations, and two months after that, 19. Finally, in June 2002, FDA found 26 violations.

On January 16, 2001, the agency's Dallas district office issued a five-page warning letter to Adven, citing numerous EtO sterilization GMP violations, including inadequate validation, failure to review and evaluate process deviations, inadequate employee training, failure to revalidate reprocessed devices, routine deviations from EtO sterilizations, failure to establish and maintain production and process controls, failure to adequately handle complaints, and more. The violations were observed during a November 28–December 8, 2000, FDA inspection, to which the warning letter said the firm had responded “incompletely.”

FDA's Web site records a December 13, 2000, 12-lot, Class II recall by Adven of its reprocessed bone shaver because “metal shavings may come off the device into the patient during surgery.”

Adven Medical maintains a Web site on which it emphasizes the regulatory status of its reprocessed products. The site, which has a link to CDRH's home page, says Adven “offers the fastest turnaround time available”—two to four weeks.

As for its validation problems cited by FDA, the site says the company “performs product-specific validation tests on all products reprocessed.” Cleaning solution and EtO degradation tests are performed internally at Adven. Bioburden testing, pyrogenicity testing, sterility testing, and EtO residual testing also are performed, depending on the indicated use of the device. These tests are done by a well-recognized outside test lab not associated with Adven.

“Other process type testing is also performed,” the site explains. “For example, if [Adven] were to modify a protocol step on a device, that step must be validated before the change 
is implemented. Another example would be sterilization validation. [Adven] has performed sterility tests guaranteeing a sterility assurance level of 10–6.

“Validation testing at [Adven] is an ongoing process,” the site continues. “In 1999 alone, [the company] performed more than 60 validation and bench tests on the products it reprocesses.”

CEO Mark Aldana told MD&DI his company is already in full compliance with the consent decree and is awaiting FDA reinspection. He said he expected the facility to remain closed for four to six weeks.

A final cautionary word on this tale emerges from the text of a little-noticed petition response last February from FDA associate commissioner for policy and planning William K. Hubbard to industry consultant and former CDRH official Charles H. Kyper. In the reply, Hubbard agreed to revoke Compliance Program 7383.003, providing for preclearance inspections for Class III devices subject to 510(k)s, because of the FDAMA prohibition on delaying or blocking such submissions for GMP reasons.

However, he denied another Kyper request that FDA also discontinue all 510(k) preclearance inspections for Class III devices. “FDA will continue to conduct inspections as authorized under sections 520(f) and 704 of the Act,” Hubbard wrote. “FDA is entitled to conduct such an inspection regardless of the classification of the device. Some of these inspections may occur while a 510(k) submission is pending before FDA.”

Additionally, Hubbard told Kyper, FDA will withhold a classification for a device if it determines that “there is a substantial likelihood that the failure to comply with the QSR or current GMP requirements for the device potentially presents a serious risk to human health. FDA will use this authority when it makes the requisite finding for a specific device.”

Reprocessing Guidance Answers Questions

CDRH says medical device manufacturers who make single-use devices and reprocess them for reuse should have their establishments registered for both operations. These manufacturers should also update all related device listing information to reflect their original equipment manufacturer and reprocessor status, according to a just-released guidance titled Frequently-Asked-Questions about the Reprocessing and Reuse of Single-Use Devices by Third-Party and Hospital Reprocessors; Three Additional Questions. The current guidance is a supplement to an earlier document: Frequently-Asked-Questions about the Reprocessing and Reuse of Single-Use Devices by Third Party and Hospital Reprocessors; Final Guidance for Industry and FDA Staff. To view the new guidance, visit www.fda.gov/cdrh/ohip/guidance/1427.html

Cochlear Implants Present Meningitis Risk

A recent study found that children with cochlear implants are at a greater risk of developing bacterial meningitis caused by Streptococcus pneumoniae than children in the general population, CDRH announced at the end of July. Published in the then-latest issue of the New England Journal of Medicine, the study reviewed the medical records of 4264 children who were under the age of six at the time of implantation. “The focus of the investigation was young children,” CDRH said, “because they account for the majority of known meningitis cases and represent the population that will receive the most cochlear implants in the future.” Of the patients studied, 26 were found to have meningitis.

Because the number of meningitis cases is small, CDRH said it is “limited” in its ability to determine the risk for developing the disease associated with various cochlear implant models. However, the center added, the study did show that “cochlear implants with electrode positioners were associated with a greater risk of developing meningitis” than those without.

To reduce the risk of meningitis in cochlear implant recipients, CDRH has issued five recommendations. They are: Follow the CDC's vaccination recommendations, check the patient's vaccination record, recognize the signs of meningitis early, diagnose and treat middle-ear infections promptly, and consider prophylactic antibiotics.

FDA Cautions for Microarray Makers

There are two triggers for FDA concern regarding current marketing approaches for pharmacogenomic microarray diagnostic screening tests that claim to be analyte-specific reagents (ASRs). The first is whether the ASRs are intended to screen for serious medical conditions. The second is whether they are presented as kits. In these cases, CDRH director of in vitro diagnostic devices Steven I. Gutman tells MD&DI, developers would be well advised to consult with his office before going to market.

“It's my view that in certain niches, some companies with multiplex assays in particular have moved them across the threshold of when it's a legitimate ASR, and into a kit configuration,” Gutman said. In mid-summer, Gutman had met with Roche Molecular Diagnostics about FDA's objections to its marketing of AmpliChip CYP450 as “the world's first pharmacogenomic microarray for clinical applications.” These applications include cardiovascular disease, high blood pressure, depression, and attention deficit with hyperactivity disorder (ADHD). Although he declined to comment on the meeting, Gutman said that while FDA was still discussing exactly how to define “high-risk” ASR products, examples for consideration might include tests for SARS, asymptomatic testing that's predictive in nature for brain cancer, and diagnostics which might be used on a stand-alone basis for determining either important medical interventions during pregnancy or after birth, or for information that would lead to a decision to perform an abortion. If companies move toward kit configuration or suspect that FDA might view their product that way, “they are certainly welcome to call me or [associate director] Joe Hackett, and we would be happy to discuss it,” Gutman said. CDRH is currently working on concept papers for revising the ASR rule, but Gutman can't predict when they will be made public. “It's much harder than I thought,” he said. “I never make timelines for agency work, but for us it's on a fast track, which probably means months.”

When ready, the revision will be put out as a notice of proposed rule making. “A lot of people are very worried we'll do something arbitrary and abrupt, and that couldn't be further from the truth. We're very anxious to have both industry and labs comment and, frankly, collaborate on this,” Gutman said. There may also be a public workshop on the proposal.

FDA's concerns about the marketing of Roche Molecular Diagnostics' device were expressed in a July 8 letter to the firm, in which Gutman said AmpliChip could not be marketed as a premarket-review-exempt Class I ASR because of the sweeping diagnostic claims being made for it.

He cited a June 25 Roche Molecular news release in which the company described AmpliChip as enabling clinical diagnostic laboratories to identify polymorphisms in the CYP2D6 and CYP2C19 genes, which “play a major role in drug metabolism, thereby helping physicians select the best drug and set the right dose for the patient sooner, as well as avoid drugs that may cause the patient to suffer serious adverse reactions.” The release named cardiovascular disease, high blood pressure, depression, ADHD, “and more” as conditions that AmpliChip could help.

Roche said it expects AmpliChip to generate annual revenues of more than $100 million by 2008. The firm's head of clinical genomics, Greg Heath, issued this statement on July 18: “Roche has initiated conversations with FDA. We look forward to continuing to work with FDA to set the appropriate standards for products in this new field.”

FDA Guidance on Pediatric Devices

FDA has released a draft guidance titled Premarket Assessment of Pediatric Medical Devices. Its purpose is three-fold. First, it was written “to help define the pediatric population and pediatric use for medical devices and device clinical trials.” Second, it aims “to help identify the types of information needed to provide reasonable assurance of the safety and effectiveness of medical devices intended for use in the pediatric population.” Finally, it will “help define the protections sponsors should consider for pediatric subjects in device clinical trials.” 

FDA does not believe, according to the draft, that clinical data will be necessary to demonstrate safety and effectiveness for all devices intended for pediatric populations. In certain cases, it says, “well-designed bench and animal testing will be sufficient to evaluate the device.” In other instances, however, clinical data may be necessary. FDA believes clinical data are “appropriate” when any of the following apply: 

• Supporting information from sources such as preclinical bench or animal testing, literature, or adult clinical trials are inadequate to establish safety and effectiveness for the pediatric indication.
• Adult data are inadequate to predict pediatric risks and adverse events.
• Pediatric data are needed for validation of design modifications.
• Pediatric data are needed to develop an age-appropriate treatment regimen.
To view the draft guidance, visit www.fda.gov/cdrh/mdufma/guidance/1220.html.   

Copyright ©2003 Medical Device & Diagnostic Industry

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