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Parallel Review Evolves: FDA Expands from Pilot to Considering Private Payers

Parallel Review Evolves: FDA Expands from Pilot to Considering Private Payers
FDA interest in involving public and private payers early in the review process may be very beneficial to medical device makers.

FDA interest in involving public and private payers early in the review process may be very beneficial to medical device makers.

Yarmela Pavlovic and Beth Halpern 

In 2010 FDA and CMS first announced an innovative program designed to decrease the time between FDA’s approval of new medical technology and a national coverage determination (NCD) by CMS. That pilot program, which currently is scheduled to terminate at the end of 2015, sought to permit both agencies to review clinical data in parallel, allowing for CMS to complete its NCD process much sooner after FDA approval. 

Although only one product has successfully completed the Parallel Review process to date, the program has received a great deal of attention from industry, investors, and policy advocates. As the agencies consider what comes next for the innovative pilot program, FDA has announced increased efforts to involve payers, both public and private, early in the FDA review process. In a time when obtaining reimbursement has become increasingly important for new technologies, these agency initiatives may provide substantial benefit to companies.

The Parallel Review pilot was designed to accommodate innovative technologies that met the following criteria:

1.     Technology is the subject of a formal Pre-Submission interaction (under FDA’s Pre-Submission Program), or an approved Investigational Device Exemption (IDE) application;

2.     Technology would require Premarket Approval (PMA) or a de novo petition; and

3.     Technology falls within the scope of a Part A or Part B Medicare benefit category and is not already subject of a national coverage decision (NCD).

Also important to the pilot program was CMS involvement in clinical trial design discussions between FDA and participating companies. 

Although it is not known publicly how many products have been accepted into the pilot program, in August 2014, Exact Sciences’ Cologuard test became the first product to successfully complete the program, obtaining PMA approval from FDA and a draft NCD from CMS on the same day. According to publicly available information, Cologuard was accepted into the program in October 2011. The company has spoken publicly on a number of occasions, praising the program and crediting it with a faster overall timeline to final NCD, which was issued in October 2014.

[Learn more about potential changes coming to the FDA-CMS Parallel Review pilot program at the MD&M Minneapolis conference, Nov. 4-5.]

Since Cologuard’s approval, FDA and CMS have been collecting feedback on the pilot program and are reportedly developing the next iteration of the initiative. The agencies appear dedicated to continuing the collaboration begun with the pilot program, though whether substantial changes will be made remains to be seen. Some reports suggest that the agencies may be considering an approach focused on device types, rather than individual products. Reportedly, new proposals are forthcoming in December 2015. Potentially paving the way for these proposals, in June 2015 the agencies extended their memorandum of understanding that allows them to share data indefinitely.

In the meantime, however, the most notable outcome of the pilot program is an interest and commitment on the part of FDA to involve payers, both public and private, early in FDA’s process. One of the key hurdles that companies face when developing clinical trials to support device approval is ensuring that they will also meet the needs of payers when seeking reimbursement. Payers, including CMS, often seek different evidence or ask different questions than what FDA requires to approve a product for marketing.

FDA reviews the available evidence to determine whether a device is safe and effective for the particular intended use. In contrast, when determining whether to cover an item or service for Medicare beneficiaries, CMS examines the evidence to determine whether an item or service is “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” In particular, CMS looks for information on the health benefits of the product in the Medicare population, which is primarily composed of individuals ages 65 and older. Often this population might not have been well-represented in studies used for FDA approval. Private payers similarly may look for evidence that the item or service is medically necessary and not experimental or investigational for particular groups of patients, regardless of FDA’s approval.

In order to facilitate FDA and payer collaboration, the agency established a Payer Communication Task Force (PCTF). The PCTF is charged with identifying ways to shorten the time from FDA approval to coverage by payers. In keeping with that goal, FDA is advocating involvement of payers in early clinical trial discussions between the agency and companies. This may present opportunities for companies that would not have qualified for the Parallel Review pilot, or otherwise did not wish to participate, to obtain some of the benefits of payer involvement, including achieving clinical studies intended to address both approval and reimbursement. Specifically, a company may invite payer stakeholders, whether public or private, to attend the company’s pre-submission meetings with FDA. FDA’s hope is that allowing for collaborative input from these other entities will help companies to design clinical trials that meet a variety of business objectives, including regulatory, coverage, and payment decisions.

Of course a company could also choose to engage with Payer organizations separately and potentially achieve the same goals. In addition, although multiple clinical trials are never desirable, where funding is limited and FDA approval may be achievable based on more limited data than would be needed for coverage determinations, companies may decide not to seek Payer input at early stages. A company also may choose to forgo the opportunity to use the Parallel Review program if involvement would not address their most critical needs when launching a new product. Many technologies do not require an NCD from CMS because they can be covered by Medicare’s regional contractors without action by CMS at the national level or are used in patient populations not covered by Medicare. 

It is also important to understand that the Parallel Review process does not affect coding and reimbursement, both of which may be much more pressing for a technology that can be otherwise covered by a Medicare regional contractor. For example, where a new product is not identified by a Healthcare Common Procedure Coding System (HCPCS) code (for devices) or Current Procedural Terminology (CPT) code (for procedures), new codes may be required. Issuing such codes involves a lengthy process and a finding that the new technology or procedure is considered to be sufficiently different and is used by enough providers to merit a new code. This process happens entirely outside the scope of the Parallel Review process. In addition, the Parallel Review process does not affect Medicare reimbursement rates. Regardless of whether it participates in the Parallel Review program, a company would need to pursue the process for obtaining an appropriate reimbursement rate for its technology, including applying special new technology payments under the Medicare hospital outpatient and inpatient prospective payment systems. 

Thus, the Parallel Review process does not address the entire universe of coverage, coding, and reimbursement issues for a new technology and, therefore, may not be desirable for all new products. Nonetheless, FDA’s recent commitment to payer involvement opens the door for companies hoping to address coverage issues in close proximity to FDA approval. The Parallel Review program remains officially open until December 2015 and is still accepting applications. 

Yarmela Pavlovic is a partner in Hogan Lovells’s San Francisco office. Her practice focuses primarily on FDA regulation of medical devices. 

Beth Halpern is a partner in Hogan Lovells's Washington, D.C. office. She practices healthcare law, focusing on drug, device, and healthcare services reimbursement.

Want to learn more? Pavlovic will be presenting "What's Next for the FDA-CMS Parallel Review Pilot?" on Nov. 4 at the MD&M Minneapolis conference.

[Image courtesy of STUART MILES/FREEDIGITALPHOTOS.NET]

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