Chinese standards for domestic medical devices are far more stringent than those for exported devices. Let's hope that changes now. UPDATE: The agreement has officially been signed.
Chinese standards for domestic medical devices are far more stringent than those for exported devices. Let's hope that changes now. UPDATE: The agreement has officially been signed.
A subcommittee of the Science Board, an FDA advisory panel, issued a report that says what FDA observers have probably gathered for a while: that FDA lacks enough funds to perform its mission, and American lives are at risk as a result. The report says the agency suffers "serious scientific deficiencies," reports Bloomberg News. It says the agency needs more money, better computer systems, and a restructuring at the top to include a scientific leader. One place to start would be to move FDA's appropriation out of the Agriculture group and into where the group that covers the rest of the Department of Health and Human Services. This archaic structure dates back to the earliest days of food and drug regulation, when HHS didn't exist and the office that became FDA operated out of the Agriculture Department. But under the current system, the members of Congress who have oversight of the agency are not the ones who decide its appropriation. This results in a lot of saber-rattling about the agency's deficiencies, but not a lot of action when it comes to budgeting to fix them.
FDA is experiencing a serious challenge in the face of a wave of imported product recalls, especially those coming from China. "We have to get a handle on it," said Gail Costello, acting director of FDA's New England District Office. Costello, who spoke at MassMEDIC's annual FDA Update event on Friday, implied that resources have been part of the issue when dealing with imported products. About 28% of FDA-regulated imports are medical devices and radiological health products. Product recalls, including those beyond medical devices, put a strain on FDA district offices. For example, there are normally about 5000 consumer complaints per year. During the pet recall last summer, FDA received 19,000 complaintsÂ in a three month period. More than half of the New England district staffÂ had to work on the recall, thus pulling resources away from other areas. According to Costello, part of the government's efforts to address the problemÂ is to "prevent, intervene, and respond." The Import Safety Plan consists of an interagency working group that is roadmapping an action plan to improve the safety of imported products. Costello says this plan is a major focus of FDA's Office of Regulatory Affairs in both the short and long term.
2007 MEDTECH SNAPSHOT
Last year, MD&DI used preliminary reports from MDUFMA to generate findings for its 2006 December issue. The MDUFMA reports released for FY 2006 confirmed those preliminary numbers and are reprinted in this section. CDRH did release its FY 2006 annual report, and therefore, data from that report regarding the Third-Party Review Program have been updated.
For premarket approvals (PMAs), cycle goals apply to 75% of submissions received in FY 2005, 80% of those received in 2006, and 90% of submissions in 2007. FDA's goals state that it will make decisions on 80% of PMAs received in FY 2006 and 90% in FY 2007. FDA has said it will have a decision for 75% of submissions received in FY 2005 and FY 2006. For FY 2005, FDA plans to apply these goals to 70% of the submissions. In 2006, it will include 80% of those submissions, and in 2007 the goals will apply to 90%.
Click images and tables to enlarge:
FDA actions on premarket approval applications and panel-track supplements. Source: FY 2006 MDFUMA Performance Report to Congress.
It was also the first full year with a permanent commissioner at FDA since 2003, as Andrew von Eschenbach took charge and aimed to break the policy inertia that had settled over the agency. He repeatedly asserted a commitment to greater transparency, but progress was slow due to competing demands and scarce resources.
His public pronouncements on medical device issues were few, since unrelated controversies—such as contaminated imports and improper employee bonuses—seemed to engulf the agency. The problems were often propelled by the Bush administration's foes on Capitol Hill.
Von Eschenbach's only public utterances before a device audience were via satellite in March, when he addressed the AdvaMed annual meeting in Phoenix. His main focus then was the incubating reauthorization of user-fee legislation, which ultimately came to pass six months later when President Bush signed the FDA Amendments Act into law.
New User Fees
The new law set low, predictable user fees that increase the agency's total take but reduce the fee for each individual application. It introduced a periodic report filing fee of $6475 and annual establishment fees of $1706. FDA predicts it will get 31% more in revenues while significantly reducing application fees. For example, a premarket approval (PMA) or biological license application will cost $185,000 each, which is a 34% reduction from the 2007 rate. A 510(k) will cost $3404, down 18%.
FDA accepted “aggressive performance goals” under the agreement. It promised to reach a decision on 50% of expedited PMA and supplement applications that go before an FDA advisory committee within 180 days, and to decide on 90% of the expedited applications within 280 days. FDA committed to reach a decision on 60% of conventional PMA and supplement applications that go before an advisory committee within 180 days, and 90% within 295 days. The agency also agreed to decide on 90% of 510(k) applications within 90 days, and 98% of the applications within 150 days.
Businesses with $100 million or less in annual sales or receipts had their fees reduced from 80% of the full fee in the first device user-fee program to 50% for 510(k) applications, and from 38% to 25% for PMA and related supplement fees.
The new law requires medical device companies to add their clinical trials to a public registry, as drug companies already do. It also incorporates the Pediatric Medical Device Safety and Improvement Act that requires device sponsors to include a description of pediatric populations in their product marketing applications to FDA.
A sleeper provision in the new law establishes the Reagan-Udall Foundation, a little-discussed private foundation within FDA. Its objectives include the “identification of unmet needs in the development, manufacture, and evaluation (including postmarket evaluation) of the safety and effectiveness of FDA-regulated products, and the establishment of scientific and other projects and programs to meet those needs.”
The foundation, which is to be directed by a 14-member board with four members drawn from regulated industry, quickly came under attack from liberal and consumer-oriented interests. For example, Center for Science in the Public Interest's Merrill Goozner, declared that “the last thing you want is an industry-run board in which they create a science-sounding rationale
before they put the FDA rubber stamp of approval on something that hasn't been proven.” If industry gains too much influence on the foundation's board, he said, the criteria that FDA establishes for evaluating products could be too industry-friendly for patients' good.
Capitol Hill Oversight
Senator Grassley worked diligently to revive oversight of FDA.
Numerous investigations of FDA were initiated, notably under John Dingell (D–MI), who was restored to chairmanship of the House Energy and Commerce Committee. Dingell and his subordinate Oversight and Investigations Subcommittee, chaired by Bart Stupak (D–MI), tackled several device issues. These included whether FDA had gone too easy on Johnson & Johnson's Cordis Corp. in 2004, when the agency found serious adulteration issues with its Cypher stents.
The minority staff of the subcommittee, energized by a new bipartisanship, challenged the fairness of FDA's legal tactics concerning TMJ Implants (Golden, CO). FDA came under fire for demanding civil monetary penalties from the small device firm before dealing with the company's appeal to the FDA commissioner on its failure to file 17 medical device reports (MDRs). At press time, the subcommittee's efforts had yielded little.
Most of the increased attention to FDA on Capitol Hill involved issues not specific to medical devices, although there was some overlap. One topic was the disclosure to Dingell's committee, which is investigating allegedly improper bonuses paid to FDA managers, that three CDRH managers had received large bonuses in 2006. The CDRH officials are former CDRH deputy director Linda Kahan ($34,000), compliance director Tim Ulatowski ($21,000), and senior associate director Lillian Gill ($20,000).
While FDA asserted civil money penalties against two senior TMJ Implants executives, FDA was apparently adopting a new standard of not holding senior executives personally accountable for regulatory violations.
In October, New Jersey U.S. Attorney Christopher Christie announced that five medical device companies with involvement in hip- and knee-replacement products had signed settlement agreements that called for them to pay $310 million in penalties. Christie also announced that four of the companies—Zimmer Holdings Inc., Johnson & Johnson's DePuy
Orthopaedics, Biomet Inc., and Smith & Nephew plc—were subjected to deferred prosecution agreements that will expire in 18 months. The fifth company, Stryker Corp., was not named in a criminal complaint because it was the first to cooperate.
Significantly, no individuals were named in any of the complaints. This has surprised experienced FDAinterested attorneys, who have long known that FDA's normal practice has been to name responsible individuals in proposed legal actions.
The Washington Post recently reported that the Department of Justice has shifted its focus to immigration and terrorist matters and away from white-collar crimes, which may be an indication that there will be fewer actions against FDA-regulated companies and their top executives.
The shifted focus was apparently not in effect in May, when TMJ Implants' CEO Robert Christensen and regulatory affairs director Maureen Mooney were personally ordered to pay $510,000 in civil money penalties. FDA administrative law judge Daniel Davidson fined them for their roles in the nonreporting of 17 MDRs. Evidently the tide is turning, but too late to save this company.
In January, before FDA shifted focus, it secured a consent decree from GE OEC Medical Systems Inc. and its parent company GE Healthcare. Signed by GE senior executives Joseph Hogan and Peter McCabe, the decree was spurred by manufacturing defects in GE OEC Medical Systems's x-ray surgical imaging systems manufactured in Salt Lake City and in Lawrence, MA. The executives aren't being pressed for money, just commitments to compliance.
Also before the turn, NuMed Inc. (Hopkinton, NY) and its founder and president, Allen Tower, pled guilty in Wilmington, DE, federal court to four misdemeanor charges in July. Tower and the device firm were sentenced to pay $4.5 million in fines, with half the money going to a clinical trial. Federal officials said the plea agreement ended a three-year probe into allegations that NuMed sold unapproved medical devices to doctors treating children with heart problems.
Another CDRH enforcement maverick, Shelhigh Inc. of Union, NJ, decided to fight FDA on the seizure of all its tissue-based devices over alleged sterility concerns. Within months, however, it yielded in a consent decree that required it to retain independent expert consultants to inspect its facility and certify to FDA that corrections had been made. FDA vowed to continue to monitor Shelhigh's progress through periodic inspections.
In early 2007, FDA entered into a federal court consent decree that held another senior executive accountable. Custom Ultrasonics (Ivyland, PA) and its president, Frank Weber, agreed to stop manufacturing and distributing the firm's System 83 Plus Washer/Disinfector and System Plus 83 Mini-flex Washer/Disinfector until the company complied with CGMP requirements. The devices are used to clean and disinfect endoscopes.
Other News in 2007
Von Eschenbach stressed that FDA exists to serve the public.
He vigorously denied politicians' charges that “FDA is broken,” and perhaps most surprising, he championed the right of FDA employees to disagree publicly with the agency—a right he had earlier been accused of trampling in his notorious “locker room” speech to drug reviewers.
Electronic MDRs. CDRH introduced a new online mechanism for device manufacturers, hospitals, physicians, and other healthcare providers to use for filing MDRs electronically. The center receives about 200,000 such reports annually—a volume that a succession of CDRH directors have complained resulted in them feeling literally snowed under with paper.
Of course, there are those who question what CDRH has done with MDR reports, especially since the agency was apparently unable to use them to foresee the cracking lead-wire crisis with Medtronic's Sprint Fidelis defibrillators in October.
Former FDA chief counsel Daniel Troy promoted FDA preemption of state tort cases.
Minnesota federal judge Donovan Frank believes that state torts complement FDA's efforts.
Unique Device Identification. In May, CDRH science and engineering laboratories director Larry Kessler, who is chair of FDA's Global Harmonization Task Force, told the Medical Device Manufacturers Association that a major contribution to improving postmarket surveillance may lie in the development of a unique device identification (UDI) system for all medical devices.
“We believe unique identifiers can facilitate more-effective device recalls by allowing us to identify and locate recalled devices in a more timely fashion,” he said.
Kessler indicated that the use of UDIs may also result in fewer device-related medical errors by helping to highlight compatibility and interoperability issues. This might mean matching the right accessory for the right device, or selecting the right device for the right patient—avoiding problems such as latex allergies, for example, that may be injurious to individual patients. There is growing support on Capitol Hill for this initiative, so expect it to happen soon.
Ombudsman Effectiveness. CDRH ombudsman Les Weinstein reported in August that he doubled his effectiveness in 2006, resolving 81% of the complaints, disputes, and other contacts he received that year. This included cases that were carried over from previous years. He reported only a 41% resolution rate in 2005, which was 10% better than 2004's 31%.
Weinstein attributed the improvement mainly to a cluster of cases that were just faster to resolve, others that were less complex than the norm from prior years, and the coincidence of many carryover cases from prior years coming to resolution in 2006.
Click images and tables to enlarge:
Highest-paid CEOs in the device industry for 2007. Figures represent total compensation for the latest fiscal year. Source: Forbes.
|Cleveland Clinic's selections include many innovations derived from medical device technology. Here are the top five.
Adapted from Cleveland Clinic's Top 10 Medical Innovations for 2008.
Device firms with the best codes of conduct. Adapted from Ethisphere's “50 Codes of Conduct Benchmarked,” from Q3 2007.
Fastest-growing device and diagnostic companies according to Business 2.0. Revenues based on 2006 figures.
ECRI's Lerner: Intelligent decisions.
When the ECRI Institute (Plymouth Meeting, PA) brought suit against then Guidant Corp., now a wholly owned business unit of Boston Scientific Corp. (Natick, MA), many medtech industry observers saw the case as a potential forum on medical device pricing transparency. At issue was ECRI's right to continue publishing the prices paid by hospitals for a number of medtech products, notably, in the dispute with Guidant, cardiac rhythm management devices such as pacemakers and implantable cardioverter-defibrillators (ICDs).
ECRI had been publishing this information in its PriceGuide without incident since 1996. In May 2004, however, Guidant sent a cease-and-desist letter to ECRI, requesting that all pricing information about its products be removed from the PriceGuide database. Guidant asserted that disclosing such information violated its confidentially agreements with the hospitals that were supplying the information. In attempting to comply with Guidant's requests, ECRI initiated a number of actions, including the removal of sample pricing information and directions to PriceGuide users not to disclose any pricing data protected by confidentiality agreements.
When Guidant persisted and maintained that such actions were insufficient for safeguarding the integrity of its confidential pricing agreements, ECRI filed suit on May 3, 2006, in the U.S. District Court for the Eastern District of Pennsylvania. Guidant countersued, alleging that ECRI had interfered with the contracts between the company and its customers and had also misappropriated its trade secrets by obtaining such confidential pricing information.
Meyers: No legal precedent.
The case was scheduled to go to trial on December 3, but several weeks earlier, on November 19, the two parties announced that they had reached a settlement.
Under terms agreed to by ECRI and Boston Scientific, details of the agreement could not be disclosed. However, Jeffrey C. Lerner, PhD, president and CEO of ECRI, said that the firm would continue to publish the PriceGuide, including information about Boston Scientific's Guidant brand of CRM devices.
Lerner says that ECRI will continue to obtain, benchmark, and publish medtech pricing information that is voluntarily supplied, so long as that information does not violate confidentiality agreements between hospitals and medtech manufacturers. Despite the Guidant lawsuit, he says ECRI does not consider its relationship with the medtech manufacturing community to be an adversarial one.
Public Citizen's Levy: Unfair substitution.
“Nothing could be further from the truth,” he says. “ECRI has excellent relationships with the vast majority of medtech manufacturers. But the issue here is one of public policy, specifically whether the customer—in this case, the hospital—has the right to secure the necessary information to make intelligent purchase decisions that are in the best interest of the healthcare facility, and ultimately, the patient.”
Joyce S. Meyers, an attorney with Montgomery, McCracken, Walker & Rhoads LLP (Philadelphia), who represented ECRI in the settlement, said she could not discuss details of the agreement. During her preparation for the case, however, she encountered a number of hospital administrators and purchasing agents who were unaware of the details of the confidentiality clauses in their contracts with Guidant. “From the beginning, this was a very difficult case with no legal precedent,” says Meyers, who heads up her firm's first amendment and media practice group. She says the case raised “a number of important issues, including whether or not a contractual provision can be enforced on a third-party who has no awareness of it.”
According to Paul Allan Levy, an attorney with Public Citizen (Washington, DC), a nonprofit consumer advocacy organization, enforcement by way of a stand-in defendant isn't an appropriate use of the legal system. “If Boston Scientific or any other device manufacturer has an issue with customers allegedly violating the confidentiality clause of their pricing agreements, then they should take it up with their customers—the hospitals,” he says. “But they don't want to risk offending their customers, so they go after third-party ECRI and make them a substitute defendant.”
Specter: Sending a message.
The out-of-court settlement, which was largely unexpected, disappointed many medtech analysts, hospital administrators, and healthcare policymakers. Many such stakeholders viewed the prospect of a trial as providing a more definitive venue for exploring the intricacies of the medical device pricing issue, which continues to gain traction on several fronts. Yet, even a casual perusal of news coverage of the settlement invariably includes linkage to the issue.
Asked to comment on the case, Senator Arlen Specter (R–PA) issued a statement that the ECRI–Boston Scientific dispute was not the impetus for the proposed Transparency in Medical Device Pricing Act , which he cointroduced on October 23 with Senator Charles Grassley (R–IA). If the bill becomes law, it would require medtech manufacturers seeking payment under Medicare and related programs to issue quarterly reports on the average and median sales prices for all of their implantable medical devices used in inpatient and outpatient procedures. Manufacturers that fail to report or misrepresent pricing data would be subject to fines up to $100,000.
In introducing the bill, Specter said it would improve the overall quality and efficiency of the healthcare system. “The legislation sends a message to medical device suppliers that if they want to do business with the federal government, they have to show us their prices,” he said. “By making this important information readily available, in collaboration with similar initiatives in the private sector, we can help control government spending on healthcare.”
Grassley: Bringing transparency.
“Both parties to a transaction need information in order for the free market to properly work,” said Grassley. “If only one party has information, the market does not properly function because you have a one-sided negotiation. The purpose of this legislation is to bring transparency to medical device pricing so that there will be sufficient information available for market forces to truly work.”
Nevertheless, the two leading medtech trade organizations take a dim view of the proposed legislation. Wanda Moebius, vice president for policy communications at AdvaMed (Washington, DC), says that the organization is “extremely concerned with the current proposal. We believe it will not assist patients, interferes with free-market negotiations between device makers and hospitals, and offers no discernible benefit in reducing healthcare costs.”
Mark Leahey, executive director of the Medical Device Manufacturers Association (Washington, DC), says, “Medical devices represent—at most—about 4–6% of healthcare costs. The proposed legislation no doubt has populist appeal, particularly in the upcoming election year, but if the concern is truly about healthcare costs, then we need to look at Medicare and private insurance funding.
MDMA's Leahey: De facto indictment.
“Reimbursement is for procedures—not devices—so we need to take a look at the costs that are being tacked on by the hospitals,” Leahey adds. “To suggest that hospitals do not have enough price information could well be a de facto indictment of some group purchasing organizations that are not adequately representing the best interests of their customers.”Yet medical technology is often cited as a factor in rising healthcare costs, and calls for more government oversight and regulation of the industry are increasing. ECRI's Lerner suggests that medtech manufacturers might want to consider lifting the veil of secrecy regarding pricing information provided to hospitals. “The industry should take the lead on this issue, which is just not going away,” Lerner says. “Manufacturers need to ask themselves if they believe that adopting a position of pricing secrecy is defensible—either in the court of public opinion, or with healthcare policy makers in Washington.”
© 2007 Canon Communications LLC
FROM THE EDITORS
FDA was interested in whether it is possible to assemble advisory committee meetings composed of highly qualified individuals, none of whom require a waiver for potential conflict of interest. FDA commissioned Eastern Research Group (ERG) Inc. of Lexington, MA, to conduct the study. The study had the following four objectives:
The 55-page report, “Measuring Conflict of Interest and Expertise on FDA Advisory Committees,” found that other candidates might exist, but that many of these would also require the waivers granted to existing panel members. The report found that those with waivers tend to have higher levels of expertise than those without waivers.
According to the report, FDA is concerned that by excluding members who require waivers, the agency will lose the most qualified experts, and thus “diminish the quality of scientific advice regarding important public health decisions.”
The report notes that putting together a committee with no financial ties to industry would require starting with a much larger pool of candidates than FDA now uses. Additional screening would certainly take more time and could adversely affect not only the logistics of putting a panel together, but also the panel's ultimate responsiveness. The additional time “could significantly delay committee meetings and related FDA actions on major public health issues,” the report says.
“We conclude that the ability to create a conflict-free panel is speculative, and that, even if possible, recruiting and screening costs would be much higher than current expenditures,” ERG says. “Furthermore, the additional time required to screen candidates could significantly delay FDA decisions on major public health issues.”
The report makes another important point: A conflict of interest is a condition—not a behavior—and does not imply that a person will act in a biased manner. Many in mainstream media are quick to believe that conflicts of interest on FDA panels lead to inherent biases on the part of panel members.
In addition to the report, FDA has issued two new draft guidances and has formalized its operating procedures. These steps will surely help it avoid the appearance of conflict of interest. The report, however, should make the doubters take notice. Conflicts are clearly inevitable. It is up to FDA to ensure that going forward the process is transparent and consistent.
Sherrie Conroy for the Editors
Note: A copy of the report is available at www.fda.gov/oc/advisory/ERGCOIreport.pdf.
In mid December, the Coalition for a Stronger FDA and the FDA Alliance announced plans to merge into a single organization known as the Alliance for a Stronger FDA. Both organizations, which emerged as independent entities in 2006, were founded on the notion that FDA does not have the necessary resources to fulfill its mission of protecting the public health. According to the groups, the merger—which will go into effect at the beginning of January—will create a stronger, more multifaceted organization dedicated to securing a higher level of congressional funding for FDA.
Grossman: Stronger together.
“We have each been successful in educating about the need for more appropriated funds for FDA, and now we'll be able to do an even more effective job,” said Steven Grossman, the executive director of the FDA Alliance, who will serve as deputy executive director for government relations and communications in the merged organization.
Industry associations AdvaMed (Washington, DC) and the Medical Device Manufacturers Association (Washington, DC), in addition to several device companies, will be represented among the merged alliance's members.
“The new organization assures that patients and consumers will be heard, while enjoying the clout derived from having a common cause with other FDA stakeholders, including health professional groups, health voluntary agencies, and industry,” said Diane Dorman, vice president for public policy at the National Organization for Rare Disorders, who will serve on the board of the merged organization. “More voices calling for additional federal appropriations for an abandoned agency cannot be ignored.”
Two weeks prior to announcing the merger, the groups issued a joint press release regarding a new report released by a subcommittee of FDA's science board. The report, titled FDA Science and Mission at Risk, concluded that the nation's food supply is at risk, as are the regulatory systems that oversee the nation's drug and device supplies.1 The report, which was presented to and adopted by the FDA science board, cited the following major findings.
The subcommittee attributed the deficiencies to soaring demands on FDA and the fact that the agency's resources have not increased in proportion to those demands—premises on which the Coalition for a Stronger FDA and the FDA Alliance were founded.
Following the merger, Wayne Pines of the FDA Alliance will serve as president of the group, and Ladd Wiley of the Coalition for a Stronger FDA will serve as executive director.
The merged alliance will have 10 honorary cochairs. They are as follows.
For more information about the Alliance for a Stronger FDA, look for a commentary by the organization in the January/February 2008 issue of MX magazine (www.devicelink.com/mx). The commentary is part of the article “2008 Medtech Public Policy Watch,” in which 10 leading industry organizations outline their policy agendas for the coming year.
1. FDA Science and Mission at Risk: Report of the Subcommittee on Science and Technology (Rockville, MD: FDA, 2007); available from Internet: www.fda.gov/ohrms/dockets/ac/07/briefing/2007-4329b_02_01_FDA%20Report%20on%20Science%20and%20Technology.pdf.
© 2007 Canon Communications LLC
Illustration by GLENN GUSTAFSON/G2 Illustrations Inc.