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Articles from 1996 In February


SOFTWARE Implementing an Automated Traceability Mechanism for Medical Device Software

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

Carlos F. Vicens

To comply with FDA requirements and various U.S. and international standards, medical device manufacturers must be able to trace device software capabilities from a requirements specification through test and release. In sections on testing and documentation, FDA's "Reviewer Guidance for Computer-Controlled Medical Devices Undergoing 510(k) Review" explicitly states, "Testing requirements should be traceable to the system/software requirements and design" and "reviewers may expect that system and software requirements can be traced though the documents applicable to each of these software development tasks."1 The Institute of Electrical and Electronics Engineers (IEEE) gives similar guidelines when defining a functional audit in its standard for software quality assurance (QA) plans: "[An] audit is held prior to software delivery to verify that all requirements specified in the Software Requirement Specification have been met."2 On the international level, the design control section in the ISO 9001 standard states, "The supplier shall establish and maintain documented procedures to control and verify the design of the product in order to ensure that the specified requirements are met."3 In other words, it is not enough for a company to have documents showing its design and other documents covering its test procedures and results. It must also provide a way to trace each item from requirement to test. Such traceability is especially critical for Class III devices and Class II devices presenting significant risks.

There are other advantages to traceability beyond meeting regulatory needs. Having a comprehensive traceability mechanism makes it easier to complete related testing and documentation tasks.

* Whenever a design or test phase is completed, a verification exercise should be conducted to ensure that all requirements have been considered; traceability to specification and design documents enables this task to be done efficiently. * When software changes occur, traceability makes it relatively easy to evaluate the impact the changes may have on other parts of the development process. The traceability mechanism not only highlights tests that might have to be updated or repeated, it also points out documents--hazard analyses, specifications, and user manuals, for example--that may have to be reviewed.

* Traceability can also facilitate the compilation of data for completeness and coverage metrics. These data often go unused because the product development process is so complex and dynamic.

Unfortunately, with a few exceptions, not much has been published showing how to implement a practical traceability mechanism.4,5 Most systems are based on the meticulous maintenance of yet another manually compiled document called a traceability matrix. Although straightforward in concept and useful in theory, this matrix itself can become a source of error when it gets very complex, and must be continually revised. Because keeping track of software changes manually is difficult and time-consuming, it is not uncommon for a company to delay updating the matrix until after the work is done or until just before auditors arrive. An automated traceability mechanism could overcome such problems.

The implementation method proposed in this article works in conjunction with automated software test tools to eliminate the need for maintaining a traceability matrix manually. The technique is based on defining standard reporting functions and embedding them in the automated test cases. The embedded functions then send traceability data to a machine-readable file that can be accessed to generate a variety of useful reports.

WHAT IS TRACEABILITY?

As defined in the IEEE standard for software QA plans, there are two types of traceability.2 The first, forward traceability, enables users to trace how a requirement is (or will be) implemented or tested. Another IEEE standard, which covers software requirement specifications, states that each requirement must have a unique iden- tifier.6 Forward traceability exists if this identifier can be used to trace a feature through all related documents from concept to completion.

In contrast, backward traceability is the ability to tell where a requirement originated. In other words, all requirements documents, design documents, code, and test scripts must point to their source. Backward traceability is important because no development project is static--requirements, specifications, code, and test scripts may change at any time. Backward traceability exists if previous levels of documentation can be easily found and updated.

The kind of traceability mechanism needed by a development group or team depends on many factors, including product complexity and criticality, the documentation structure, the company's organizational culture, the product development environment and test tools, and regulatory requirements.

TRACEABILITY MATRICES

A traceability matrix is a table showing the relationships between items to be traced. In the example of a simple matrix shown as Table I, a naming convention was used to indicate the one-to-one relationship between each requirement and its test procedure. The test for the requirement in paragraph 3.1.1.1 of the software requirement specification (SRS) is TPR_3111, the test for the requirement in SRS 3.1.1.2 is TPR_3112, and so forth. In the real world, the situation is usually more complex, so that a simple naming convention is inadequate. For the matrix shown as Table II, the tester has decided that feature 3.1.1.1, the tachy detect algorithm alpha, requires two test modules, one for nominal conditions (TPR_024) and another for testing responses to error conditions (TPR_027), but that a single test module (TPR_052) can be used to perform load stress testing on two different features (tachy detect algorithms beta and gamma). This level of complexity is not too difficult to maintain manually, assuming the documentation process is initiated at the start of the project and becomes part of standard operating procedures. However, things are never quite that simple. A third level of complexity is almost always introduced by the large number of design and test documents that must be accommodated.

The goal of maintaining a matrix is to be able to trace requirements, but those requirements may be spread across many different documents. The SRS and the hazard analysis are the starting point. The tester may find additional requirements in related specifications, user documentation, or other peripheral documents. Not all of these requirements have to be targeted for testing, but all should be identified and reviewed. Of course, when these new requirements are identified, the SRS must be updated, and, to maintain traceability, each of the new testable requirements must be given a unique identifier. One way to simplify this naming procedure is to create a three-letter identifier for each source document based on its contents, as illustrated in Table III.

If a document has been carefully written and contains one requirement per paragraph, the paragraph number can be used along with the document ID as the identifier for the requirement. If paragraphs contain multiple requirements, which is more likely, each requirement can be assigned a "handle," such as those in Table IV, which lists requirements from several documents along with their identifiers for use in the traceability scheme. Requirement DET:Tachy_ Det_Alg_Gamma, for example, is the unique identifier for the tachycardia detection algorithm requirement described in SRS 3100-3204. Once a traceability matrix reaches the complexity level shown in Table IV (which doesn't even include the test procedures), it becomes difficult to maintain manually; an automated way of keeping it updated becomes very useful.

IMPLEMENTING AN AUTOMATED TRACEABILITY MECHANISM

The military and aerospace industries have dealt with the challenges of implementing a traceability mechanism for a long time, and most of the available tools reflect this heritage.7 Many support only the Ada software language or run on UNIX workstations, while medical devices are more likely to be built around PCs or embedded microprocessors.

Fortunately, a way to automate a traceability matrix is a hidden, or unrealized, feature of many automated software test tools, ranging from simple "shareware" debugging aids to systems that offer complete unit, integration, and system-level testing.8 The method described here can be implemented on any automated test tool with a test script language that can be programmed to create and update an output file.9 The critical feature is a good scripting capability. Scripts implement test cases and record test results; if the tool has a versatile script-writing facility, it can be programmed to generate and maintain a traceability matrix. The following programming tips will make the process work smoothly:

* Write modular scripts. A library of small test script modules is almost always easier to use and maintain than a complicated, monolithic, multifunction script.

* Include only one requirement, or a very limited number of related requirements, in each test script module.

* Use a batch file or top-level function to call and run a test set composed of a series of discrete modules.

Figure 1 presents a sample function and lists some of the data it could report. Depending on the test tool used, some of the items--such as the test script and log file names--can be queried from the system itself, eliminating the possibility of human error. Once the function is created, it can be called from each test module to generate a traceability table whenever the test set is run. The file it creates becomes the automatically generated and maintained raw data for subsequent traceability reports. Figure 2 shows a sample traceability report generated by the test procedures listed in Table II.

Once test set traceability data are captured, they can be used in conjunction with other sources of data to generate a variety of reports. The data in the traceability report file can be stored in various formats, depending on the capabilities of the test sys-tem used. At a bare minimum, the file can be formatted as a comma-delimited text file, which can be imported easily into any spreadsheet or database program. An example of a possible tabular report is shown as Table V. In this report the data from Table IV and Figure 2 have been combined to show the percentage of requirements already tested.

CONCLUSION

While manual methods of maintaining a traceability matrix are error-prone and time-consuming, automated methods can generate accurate, useful output with minimal effort. For example, when test scripts are modified to include a traceability function for use with each test batch, a regression report can be used to indicate the test coverage provided by the batch. Maintenance of traceability is transferred to the test-script level, eliminating stand-alone traceability documents.

REFERENCES

1. "Reviewer Guidance for Computer-Con- trolled Medical Devices Undergoing 510(k) Review," Rockville, MD, FDA, Center for Devices and Radiological Health, Office of Device Evaluation, sects 3.1.2 and 3.1.3, 1991.

2. "IEEE Standard for Software Quality Assurance Plans," ANSI/IEEE Std 730-1981, New York, The Institute of Electrical and Electronics Engineers, sect 3.6.2.5, 1981.

3. "Quality Systems--Model for Quality Assurance in Design/Development, Production, Installation, and Servicing," ISO 9001:1994E, Geneva, Switzerland, International Organization for Standardization, sect 4.4.1, 1994.

4. Cardie ML, and Tucker NG, "How to Validate a Computer System," Drug Information Journal, 29:187­199, 1995.

5. Wiegers KE, "Effective Quality Practices in a Small Software Group," Software QA Quarterly, 1(2):7­13, 1994.

6. "IEEE Guide to Software Requirement Specifications," ANSI/IEEE Std 830-1984, New York, The Institute of Electrical and Electronics Engineers, sect 4.3.6, p 13, 1984.

7. Kay RL, "The Systems Engineering Approach to Quality Software," Med Dev Diag Indust, 16(6):34­36, 1994.

8. Johnson M, "Dr. Boris Beizer on Software Testing: An Interview. Part I," Software QA Quarterly, 1(2):7­13, 1994.

9. Pressman R, Software Engineering: A Practical Approach, New York, McGraw-Hill, pp 728­738, 1992.

Carlos F. Vicens is director of testing and support at B-Tree Verification Systems (Minnetonka, MN).

A Personal Appreciation of Medical Electronics

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

In focusing the cover story of this issue on medical electronics, I originally considered its value only from the point of view of our readers. Then I read the article produced by contributing editor Greg Freiherr, "Medical Electronics: Advanced Technologies Benefit Point-of-Care Devices," beginning on page 62. When I finished, I realized that his article concerned a topic vital to my own life.

One of the underlying trends in medical electronics that Greg covers is the continuing miniaturization and computerization of medical products. Most of us have heard the line from the computer industry about how the laptops people use today are more powerful than the computers of the 1960s that took up entire rooms. The same benefits of microelectronics have extended to the medical device industry. Thanks to advances in electronics, medical products have become significantly smaller, more versatile, and less expensive. This in turn drives continuing advances in diagnosis and treatment.

My best evidence for this is personal. Eight years ago, when my wife, Cheryl, was diagnosed as having insulin-dependent diabetes, I suddenly became aware of blood glucose meters. I did not initially appreciate their value or understand how critical they are to the treatment of this disease.

As Cheryl studied books and articles about her disease and took control of managing it, however, I began to see that her meter was a key tool. With its help, she stands an excellent chance of avoiding the neuropathy, retinopathy, kidney failure, circulatory disorders, and other complications that are almost inevitable with poorly controlled diabetes.

As demonstrated by the landmark Diabetes Control and Complications Trial, tight control of blood glucose levels yields dramatic benefits. Concluded in 1993, this 10-year study involved more than 1400 subjects with insulin-dependent diabetes. Half of the subjects used traditional "loose control," taking one or two shots of insulin a day. The other half used tight control, each day measuring their blood sugar levels at least four times, and correcting as necessary by using insulin pumps or by taking three or four shots. The risks of complications for the latter group were cut substantially.

The key to these benefits is frequent monitoring. Without convenient and accurate blood glucose tests, tight control would be virtually impossible to achieve. It is medical electronics that make these tests possible, and continuing advances in electronics technologies that make them ever more convenient. I've seen, for instance, how the biosensor-based, credit-card-sized meter that Cheryl carries in her purse makes it far more convenient for her to test in the car or in a restaurant. This, in turn, makes it that much easier to maintain tight control.

Coming advances will make the attainment of tight control even easier. The noninvasive blood glucose sensors now close to commercialization will relieve users of the need to prick their fingers for a drop of blood, allowing more-frequent monitoring. These units will probably start out relatively bulky, inconvenient, and costly, but as they are further developed, and the electronics are refined, they will undoubtedly shrink in size and price.

Continuous monitoring with a wristwatch-type device may one day be a reality. Conceivably, the right technology could be combined with insulin pumps to enable constant microadjustments of the insulin dose in response to blood sugar, mimicking the self-regulation of the body itself.

We may never see a true cure for diabetes. But if advances in electronics and related technologies continue at their current pace, we will likely see treatment regimens that are so accurate and convenient as to offer a virtual cure. I can hardly wait.

John Bethune

Litigation Reform Opens Door to Freer Investor Information

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

Investments

Medical device companies may be speaking more openly about their future prospects --and the factors that might keep them from reaching their goals--because of a new law that limits the right of stockholders to sue them. The law requires that before a class action suit is filed, there must be a real basis for believing that fraud has occurred.

"Now, if you can't plead more than bad news and a stock drop, you are not going to stay in court very long," says Bruce Vanyo, chairman of the litigation department and head of the securities litigation group at Wilson, Sonsini, Goodrich, and Rosati (Palo Alto, CA).

The main feature of the new law, which took effect December 22, 1995, and applies to any case filed after that date, is to provide a safe harbor for companies making forward-looking statements. "If the statement is accompanied by meaningful cautionary statements about why the prediction might not come true, then the company will be immune from liability if it doesn't come true," Vanyo explains. "I think that will encourage a lot of companies to go out and talk about the future, so there will be a lot more information on which investors can base intelligent decisions."

Medical device companies were hit hard several years ago by class action suits that surfaced in the wake of health-care reform efforts. At the time it was common for device companies to be predicting growth of the kind that had sent their stocks skyrocketing in previous years, only to have those stocks lose half or three-quarters of their value virtually overnight as the market went south.

The stocks of companies in the technology and medical device field, Vanyo says, are especially volatile, prone to move several points on the slightest bit of good or bad news. "A lot of frivolous cases brought in the past were based on a company's predictions not coming true. If a company makes a financial projection or some other prediction and it doesn't come true, that causes disappointment in the marketplace, and the next thing you know you have a securities class action."

The new law goes a long way toward preventing such class action suits from being filed from now on. But for a time late last year, it looked like this protection would elude companies. President Clinton vetoed the Private Securities Litigation Reform Act of 1995. But on December 20, the House of Representatives voted to override the veto and two days later the Senate followed with its own override, turning the proposed legislation into law.

"In this bipartisan measure, Congress has struck a fair balance," says David Gollaher, president of the California Health Care Institute (La Jolla), an association that represents the interests of some 90 biotechnology, medical device, and pharmaceutical companies. "Shareholders' rights to sue companies that commit real fraud are fully protected. But companies will no longer be penalized for taking the risks needed to discover and develop tomorrow's medical breakthroughs. What Congress has done will help biotech and medical device firms devote precious capital resources to R&D instead of to settlements with opportunistic trial lawyers."

There are other advantages, as well. The risk of class action suits has made venture capital firms nervous about backing companies with new ideas. "In the past, some of these firms were getting sued just because they had people on the board of a company that had a bad news announcement," Vanyo notes. The protection afforded by this new law should take away some of the worry that venture capital firms have.

The new law is especially important for venture capital firms and small companies for another reason, says Dave Cleary, president of Cleary & Oxford Associates (Alexandria, VA). "Start-up companies have fewer resources in terms of legal infrastructure--in-house counsel, PR firms, and so on--and venture capital firms have a much greater share of the equity. They might own 20 to 30% of the company and, therefore, have a lot of risk," says Cleary, whose company specializes in mergers and acquisitions in the health-care industry.

But the companies most frequently victimized by class action suits have been large companies, because they have had the deepest pockets. Now, the new law promises to dramatically reduce the likelihood that such victimization will continue. "These companies have the systems in place to make sure that if they are going to make a predictive statement, they will accompany it with ample warnings and therefore satisfy the statute," Vanyo explains.--Greg Freiherr

FDA Urges Company Policy on Web Use

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

Regulatory Affairs

FDA is monitoring the Internet. At present there is no unifying agency policy on this activity, nor is there any formal or concerted effort across the various centers to routinely monitor what company employees say electronically. "But FDA has access to the Internet the same as anyone else," says Byron Tart, director of the promotion and advertising policy staff in the device center's Office of Compliance, "and we do monitor advertising and promotional transmissions. People in the Office of Compliance look at them, and sometimes come over and say, 'I picked this up on the Internet; what do you think?'"

Concerns regarding labeling and promotion are specific to Tart and his staff, but other parts of the device center are also monitoring the Internet, bringing their own concerns to bear. And there is movement toward the development of a comprehensive FDA policy. "We are going to look at this as an agencywide issue, not necessarily center by center," Tart says. In the meantime, he advises device companies to establish a policy about what their employees are permitted to say and do with the Internet.

At present, even medical device com- panies that are oriented toward electronic data transfer--such as telemedicine leader Cemax-Icon (Fremont, CA)--have not yet developed a specific policy for employees using the Internet. "We pretty much use the same level of caution as we do on any written communication," says Oran Muduroglu, Cemax-Icon's vice president for sales and marketing.

However, some companies, such as Becton Dickinson (Franklin Lakes, NJ), are developing policies specific to the Internet. One policy that the company has already approved for use establishes "what information is permitted and what is not permitted to go over E-mail," says Al Battaglia, group president and chief information officer. Becton Dickinson is also in the process of installing a "fire wall" between the Internet and the company. This fire wall, says Battaglia, is a computer-based security system that "acts as a filter, monitoring both incoming and outgoing information traffic."

According to Tart, FDA is treating the Internet just as it would any other source of information. From his perspective as director of promotion and advertising policy staff, a company's use of the Internet to promote an off-label use for a medical device "would be no different than promoting it in a newspaper, magazine, or letter," he explains.

But there are differences between the Internet and other forms of communication--a fact that is not lost on Tart. First, the electronic nature of the Internet raises the issue of whether an electronic posting is labeling. Tart notes only that it "has the potential to be labeling, since it can be downloaded and printed."

Second, the Internet is diverse, interactive, and multidirectional. Information flows to and among people in ways that are unlike those of other media. "There are a lot of home pages and there is a lot of activity by third parties," Tart says. Home pages sponsored by companies are indisputably the responsibility of those companies and subject to FDA regulation.

Despite these differences, making the regulatory jump from paper to web site should not be that difficult, says Tim Mackay, a programmer, analyst, and webmaster of the home page put up by Marquette Electronics (Milwaukee). "A lot of what you see on our web site was printed paper in a former life--it's just been enhanced to fit the medium," he says. "The printed pages went through regulatory affairs for approval like all good advertising material should do."

Cemax-Icon looks on its web page in much the same way. "In effect, our web page document is a repackaged product data sheet, so it inherits all of our usual caution with respect to advertising," Muduroglu says.

And not all home pages are subject to FDA authority. Tart notes that the agency only regulates companies. "The only time we get involved is if there is some connection back to the company and it results in the company promoting the device for an off-label use. Then the page would be subject to FDA regulation," he says.

But the American judicial system has recently added another twist. Court rulings have held that companies are responsible for the contents of their web sites and user forums, even if the information is provided by parties outside the company. Marquette Electronics, for example, offers web access to biomedical organizations that want to publish their newsletters electronically. "Most of these organizations are nonprofit, and coming up with a web server is a fairly big investment for them," Mackay says. "So they E-mail me their newsletters, and I put them up.

"There is a certain amount of trust, a presumption of innocence, in the use of the Internet," Mackay adds. "For the most part users are very responsible, but if people began stepping over the bounds of what is reasonable the sponsoring company would have to step in and stop it. Coming up with ways to do that--such as banishing certain users or placing disclaimers at the end of each communication--is an evolutionary process, because many of these forms of communication are without precedent."

For instance, E-mail presents yet another facet of the problem. An offhand conversation between two friends could be construed by FDA as promotion. Unlike voice conversations that leave no record, or letters that can be destroyed after being read, E-mail is open for anyone to examine.

The unsecured nature and the amplifier potential of the Internet are significant in terms of the damage that a single transmission can do. But these concerns are really nothing new and there are technologies that can at least reduce the hazard. "The security of E-mail--or lack thereof--is something to be concerned about, but if you worry about your E-mail being tapped, you should be likewise worried about your phone," Mackay says. "There are few media that can be considered truly secure for interpersonal communications. If that is a concern with E-mail, a company can do a little research and learn how to encrypt its messages."

Similarly, the sophistication of the Internet is no reason for users to be confused about what can or should be said. "From a regulatory point of view, all of the basic regulations still apply," says Tart.

Applying common sense should keep companies out of hot water, whether or not they have a formal policy. "Employees at Marquette Electronics are trusted to act responsibly," says Mackay, who notes that before sending an E-mail message he looks it over "just as I would any letter. I'd guess most folks can figure out where the ethical bounds lie without too much trouble, and that, I guess, is what FDA is aiming at." --G. F.

FDA to Form Committee on Design Control Inspections

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

GMP Update

Inspectional strategies for design control will be the focus of an ad hoc industry committee to be appointed by FDA later this year, according to Kimberly Trautman, acting director of the Cardiovascular/Neurology Branch in the Office of Compliance at the agency's Center for Devices and Radiological Health.

Many in industry have voiced concern that agency inspectors might use the design control requirements of FDA's proposed revision of the good manufacturing practices (GMP) regulation to carry out reviews that could inhibit product approvals. Agency staff, on the other hand, have repeatedly assured industry that such inspections are intended only to confirm the existence of a design control program--not to determine the adequacy of its performance as represented by a company's products.

"FDA has committed itself to the policy that design control inspections should not challenge a product's performance, only the design control system itself," says Jim Sandberg, director of product assurance and regulatory affairs at Protocol Systems, Inc. (Beaverton, OR). "Designing an adequate inspectional system will require a good cross section of people from industry. Design control doesn't apply to complex devices and systems the same way it does to in vitro diagnostics. The principles are the same, but the issues are different."

Trautman's announcement was delivered as part of her presentation to the 39th annual educational conference of the Food and Drug Law Institute (Washington, DC) last December. While confirming that FDA still expects the revised GMP regulation to be published this spring, Trautman also hinted broadly that there may be some delay in making it effective--a concession to earlier recommendations by a number of industry associations. "Industry will have adequate time to come into compliance with the regulation as a whole, including its design control requirements," she noted.

Trautman indicated that FDA expects the design control inspection committee to meet for the first time this September and to complete its work by spring 1997. She also said that the agency is working to develop guidances and other materials for use by both agency and industry personnel.

"I suspect that a lot of FDA staff have not inspected or worked with complex design control systems before," says Sandberg. "Ensuring consistency across the country will be a challenge for the agency."

Key training materials identified by Trautman include guidance documents on design control (draft due in February), human factors (summer 1996), and design and process validation (due sometime in 1996). The agency is also working on a series of training videotapes, which it expects to make available this summer.--Steven Halasey

A Wake-Up Call to Device Entrepreneurs

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

Jeffrey J. Kimbell

Executive Director, Medical Device Manufacturers Association (MDMA),

Washington, DC

Over the past year the medical device industry has witnessed a constructive effort by the 104th Congress to remove the regulatory hurdles that have stifled small business entrepreneurs in many sectors of the economy. From the vantage point of frustrated device manufacturers, no regulatory or enforcement agency has been more unpredictable than FDA. If leaders in Congress and industry accomplish their goal, however, the rules may soon change for the benefit of all.

It is common knowledge that the United States is rapidly, and unquestionably, losing its dominant edge in the high-technology medical sector of the world economy. Changing this perilous situation calls for action on the part of the thousands of device companies scattered throughout congressional districts nationwide. The FDA reform debate--filling the pages of MD&DI for a year now--must not occur solely in Washington, DC. If it does, the industry may soon find itself settling for toothless reforms that will aid few and continue the loss of U.S. technology to other countries.

During the past year I have spoken with many state device organizations, including the Michigan Medical Device and Suppliers Association and the Colorado Medical Device Association, and specialty groups such as the Orthopedic Surgical Manufacturers Association. These encounters have underlined for me the vital role such groups can play in drafting national policy. The former Utah Biomedical Industry Council--now the Utah Life Science Industry Association--and the Indiana Medical Device Manufacturers Council are two examples of groups that have used their elected leaders to take FDA reform from a local level to a national level. One reason for their effectiveness is their recognition that elected representatives are sensitive to the needs of employers based in their states or districts.

MDMA will continue to press the Clinton administration and the U.S. Congress from Washington, but the entrepreneurial companies that are the backbone of the medical device industry must join in the call for reforms from MDMA and like-minded state groups. To accomplish meaningful FDA reform, it is essential that every representative of the device industry express a position to those seeking election or reelection. The democratic system certainly has flaws, but failure to participate is one flaw that can be prevented.

BEYOND WASHINGTON

What must occur in the first four months of 1996 is for device industry CEOs and employees, health-care practitioners, and consumers who use devices to get involved through letters and phone calls to Washington and follow-up meetings with the members of Congress in their districts. If there is one undebatable outcome of the 1994 elections, it is that no congressional district is safe anymore. It is also clear that FDA responsiveness has been demonstrably altered by the activities of Congress and a continued interest in FDA by Vice President Gore. The result is an opportunity to get legislative cures for the illnesses at FDA.

The only companies that traditionally have had a voice in drafting device industry policy are those that have been able to maintain Washington offices and be active in larger trade associations. Although I encourage these companies to continue to be active in the democratic process, I ask the companies on the perimeter of the battle to come in and lend support. If you cannot participate with resources, then lend staff for CEO fly-ins and meetings with lawmakers at the local level.

Industry representation in Washington must have been asleep to allow the Safe Medical Devices Act of 1990 to pass. Eliminating the 90-day statutory requirement for 510(k) clearance has had the most damaging effect on entrepreneurial companies that cannot afford to wait 175 days or longer. Some large multinational, multibillion-dollar companies believe that paying FDA user fees to the tune of $52,000 per premarket approval or $3200 to $7200 per 510(k) may be an appropriate way of eliminating the bureaucratic sloth at the Center for Devices and Radiological Health. The vast majority of medical device companies--77% of which have fewer than 50 employees--do not.

MDMA speaks for those entrepreneurs who believe in market-based answers to government-imposed bureaucratic entanglements in business. As part of the National Medical Device Coalition, MDMA, along with nine smaller associations, successfully defeated the user-fee initiative on a very limited budget. The coalition succeeded because its message was clear and simple: taxing small business and giving more money to an agency with a documented management problem will not solve anything. The entire system is deficient at the core, both in the approval process and in the enforcement arena, and requires a fundamental revision, not an incremental fix.

STRENGTH IN NUMBERS

If more companies do not get involved in initiatives to elicit change at FDA in 1996, it is likely that only a small portion of what needs to be accomplished will be signed into law by President Clinton. A relaxation by the device industry in the next 12 months could result in a tremendous opportunity missed. The industry simply cannot afford the status quo to continue.

There is no question that we have witnessed a sudden mood change and shift at FDA, exemplified by its effort to embrace the industry by increased involvement with trade associations, like MDMA, and dialogue with grassroots partnership meetings around the country. Although these efforts are significant, the regulatory pendulum swings with the political tide on Capitol Hill and could easily swing back to 1993 approval and enforcement levels unless the industry maintains constant vigilance.

The public health is not a subject that can be explained in 10-second sound bites or 30-second commercials. It is going to take a push from industry trade associations speaking with a common voice, physicians demanding access to the best available devices for their patients, and the patients them-selves detailing horror stories of being forced to travel outside the United States to get the most state-of-the-art devices and therapies.

To the device industry, FDA reform is not about partisan views, but rather about survival. This is a critical time for the industry. I urge every U.S. medical device company to participate in local, state, national, or specialty organizations. Through such cooperation, we can achieve industry's goal of fundamental reform of FDA.

By the Numbers: DOD Purchasing Goes for Universal Standard

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

An Interview with LCDR Mitchell Cooper, USN

Universal Product Number Coordinator, Department of Defense, Portsmouth, VA

Effective July 1996, the Department of Defense (DOD) will require that all medical and surgical supplies it purchases be marked with a universal product number (UPN). The push for a universal number came from the need to identify medical products without extensive catalog research and without risk of ordering or receiving the wrong product.

In the past, DOD, which operates 132 army, navy, and air force medical treatment facilities, has encountered severe delays because of inconsistent product numbering. The logic behind the new UPN requirement is that it provides a common language for the medical product industry to simplify distribution processes.

The Health Industry Business Communications Council (HIBCC; Phoenix, AZ) defines the UPN as "a number that uniquely identifies a nonpharmaceutical healthcare product. It consists of either the HIBC­LIC (Health Industry Bar Code­Labeler Identification Code) or the UCC­EAN (Uniform Code Council­International Article Numbering) Primary Data Structures. Included are the manufacturer's identifier, product identification number, unit of measure/package level, and link character." Such a uniform number--and its accompanying bar code--enables customers to identify recurring needs, thereby making communication with distributors and manufacturers more accurate and eliminating cross-referencing.

LCDR Mitchell Cooper has served as DOD's UPN coordinator since November 1994 and has been a key player in the department's efforts to streamline commercial practices for the past 10 years. A staff medical logistician at the Naval Medical Center in Portsmouth, VA, Cooper has also been active in communicating DOD's plans to private sector health-care organizations and associations. In this interview with MD&DI, Cooper discusses the effects of DOD's UPN requirement on manufacturers and distributors, which he views as essential business partners in the task of streamlining the delivery of medical supplies worldwide.

How does a universal product number benefit medical device manufacturers?

Primarily, manufacturers will be able to guarantee that their product is truly identified as only their product. Right now, when a manufacturer puts a number on a package,

sometimes it is a part number, sometimes it is a catalog number, and sometimes it is a reorder number. None of those numbers work when you're ordering from a distributor. For example: if I search for a product based on its part number, the automated system will find all occurrences of that number--which may represent five completely unrelated products. One could be an aircraft, one could be a sponge, one could be a surgical instrument, and the other two could be pencils and paper, but they all have the same four-position identifier. To distinguish which of these products I really need, I have to rely on a purchasing agent. If the system finds five medical products that have the same number and only slightly different descriptions, that could present a real problem.

How does the universal product number help address these issues?

The universal product number gives each manufacturer and each product a unique identity code, so that when we key in its order number to our distributor, we get only that manufacturer's product, and there's no need for cross-referencing. It is similar to the national drug code, which is a unique number assigned to a particular pharmaceutical item. The national drug code consists of a manufacturer's identification (assigned by FDA), its product number, and its package indicator. If I provide a distributor with a particular national drug code, the distributor can cross-reference it to the order number if it wants to, but the invoice will reference the national drug code. The whole supply chain operates off that number. Similarly, the UPN is a unique number that identifies a nonpharmaceutical health-care item. They are both unique identifiers of products.

How does the UPN ensure a product's uniqueness?

The UPN has a unique identifier for each nonpharmaceutical health-care product. It can be in either the HIBCC's primary data structure or the UCC­EAN primary data structure. Both data structures contain four components that ensure uniqueness: a seven-position (UCC) or four-position (HIBCC) manufacturer's identifier; the manufacturer's product identifier; a package or unit-of-measure indicator; and a check or link digit. The UCC number is 14 positions, numeric, and fixed length. The HIBCC number is variable length and alphanumeric.

How does a manufacturer determine which system to adopt?

Using the UCC creates a dilemma for device manufacturers that use alphanumeric catalog numbers. We've afforded them the opportunity to use the HIBCC standard because that system can accommodate a 13-position variable length in an alphanumeric number. Either standard allows for unique product identification.

What are some other advantages to providers and users of medical products?

I can answer that by explaining our setup here at the Naval Medical Center. This is a 450-bed teaching hospital, and we have an automated central processing and distribution system. For me to identify products currently being used and match those up to my central processing and distribution identification number--and ultimately to my prime vendor number--I have to go through a multistep process. I have to cross-reference the manufacturer's part number to the central processing and distribution number, and then the system has to cross-reference that to the prime vendor numbers.

If you have 1000 hospitals and 1000 suppliers--and each supplier may be identified differently at each hospital--the sheer number of possibilities creates a tremendous need for extensive cross-referencing. A universal product number would be the sole number throughout the entire supply chain. Right now, that's just not possible.

What are the obstacles to instituting the UPN system?

One might think that manufacturers would be fighting this tooth and nail, but they're not. For a time, manufacturers were not clear about which system they would prefer. They did not know whether it was better to adopt the HIBCC standard or the UCC standard. They were not seeing the demand from the point of view of the customer such as a small hospital like ours. They were only hearing the demand from distributors who were absorbing all the requirements. Distributors must meet hospital requirements to bar code, and distributors usually only mark exterior packaging.

When I began talking to manufacturers, in January 1995, the major complaint was that our UPN designation required that manufacturers use only the HIBCC standard. But the alphanumeric HIBCC standard is not well accepted--except in North America and a specific region of Europe--and many manufacturers commented that the UCC was more user-friendly internationally. They attributed this to the fact that it is a fixed-length, all-numeric scheme, which allows any system worldwide to recognize it.

How have the provider and distributor communities responded to the UPN initiative?

It's been extremely well received. The distributors are ecstatic because a UPN removes a major part of their overhead. Distributors currently must cross-reference their product numbers with each hospital's numbers. We also have more and more provider groups coming on board.

Provider organizations continue to seek further information, and we are soliciting their support in making the UPN system mandatory. Most hospitals are members of group purchasing organizations (GPOs) that negotiate with manufacturers to obtain discount pricing for their members. These GPOs can really help to move the UPN project along, but they have to have the endorsement and support of their member hospitals in order to make the requirements enforceable.

What challenges remain?

The biggest challenge is that a lot of automated systems will have to be changed. Manufacturers, distributors, and consumers will have to change coding, reading, and imprinting systems. The minimum part-number configuration for the UPN ranges from 8 to 20 positions. Most manufacturers' and distributors' systems currently in place will not accommodate more than a 15-position number. We are working diligently to make software developers aware of this. Hospitals also need to be brought up to speed on bar coding. Healthcare EDI Coalition (HEDIC; Little Rock, AR) has formed a UPN-users group and we are working with that group to develop a cost/benefit analysis model for them.

How has the trend toward managed health-care delivery affected the establishment of this system?

In most cases managed-care hospitals are reimbursed on a flat, per-patient rate. If a managed-care hospital could identify its costs by procedure, then it would have a reason to seek lower-priced products that would meet its needs. That's almost impossible under the current system, but the existence of universal product numbers will improve hospitals' capabilities to more clearly identify and monitor their needs. A package bar code that is specific down to the user- inventory level can be scanned into an automated system, and thereby related to a particular patient, diagnosis, and procedure. This facilitates scanning at the point of use, which would tie in to matching the product used to the patient and ultimately to a diagnostic code.

How can manufacturers increase the support they need from their customers and distributors?

The biggest message I can convey to manufacturers is to come on board with the new Efficient Health Care Consumer Response (EHCR) initiative. EHCR is a concept in which the industry forms a coalition consisting of representatives from all sectors to embrace the latest technologies to take costs out of the supply chain. One of the key factors in this concept is product identification through bar coding.

EHCR is more of a philosophy than a technology. If manufacturers embrace the EHCR initiative and fully support the reengineering of the supply chain, everyone benefits, including the manufacturer. The real beneficiary is the end consumer of health care. This can literally purge millions of dollars in excess cost out of the health-care system.

What do you see happening to make the UPN work?

Most of the major software developers are going to need to modify their software to maintain a competitive advantage in the marketplace. Anyone who wants to keep an internal numbering system will have to add a method for cross-referencing those numbers to the UPN. All those who manufacture, distribute, or consume health-care supplies, including those who process payments or reimbursements for claims, will have to modify their numbering systems.

How are suppliers doing on meeting DOD's July 1996 deadline for implementation of the UPN system?

We are now in the process of compiling the results of a study that evaluated the progress of each of our distribution and pricing agreement holders. It looks like 80% or more are at some stage of the implementation process. We're waiting for responses from the remaining 20%.

Distributors are reengineering their systems. I've been in contact with each of the major distributors involved in DOD's prime vendor program, and all are progressing well. I think we're going to see continued improvement in adopting bar codes. In the past year, we went from 40% to about 52% compliant.

So you see the July deadline as achievable?

For the most part, yes. Some companies may struggle at first, but I think they will follow suit very quickly to avoid being at a competitive disadvantage. If a company's products are not marked and easily identifiable, that will become an impediment to the company's participation in the supply chain.

MDMA Hits FDA's Tobacco Plan

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

Vigorously opposed to FDA commissioner Kessler's tobacco initiative, MDMA is urging the agency at least to go through the device classification process set out in the 1976 Medical Device Amendments before it declares tobacco products to be nicotine-delivering medical devices. MDMA counsel Larry Pilot of the law firm McKenna & Cuneo (Washington, DC) wrote in a comment to the tobacco proposal docket (95 N-0253) that if FDA believes tobacco products are medical devices, "it must first propose to identify specifically what is a device and apply the requirements of the [Federal Food, Drug, and Cosmetic] Act applicable to classification of devices." Unless this is done, Pilot avers, FDA's approach is "fundamentally flawed" because it is not based on congressional authorization.

Pilot mocked FDA's "distorted interpretation" of the term device as used in the tobacco proposal, saying that if such a definition were upheld in litigation, then any "thing" that affected the structure or function of the body could become subject to regulation as a device--including furniture, eating utensils, transportation products, clothing, and heating and cooling systems.

Firm-initiated recalls that involve device modifications to correct the cause of the recall will have speedier reviews under a new guidance designed to eliminate redundant procedures. CDRH's "Guidance on Recall and Premarket Notification Review Procedures during Firm-Initiated Recalls of Legally Marketed Devices" will triage the modifications to determine whether they should be reviewed under the recall process or under premarket notification--as opposed to both, as was the case under the previous guidance.

James G. Dickinson is a veteran reporter on regulatory affairs in the medical device industry.

FDA's Small Business Representatives: Lending a Helping Hand to Small Device Firms

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

Mark Roh

The FDA good manufacturing practices (GMP) inspection process can be something of a mystery even to well-established medical device companies. Start-up companies have even less knowledge of what the agency focuses on during its inspections and may stumble badly during a preapproval or routine GMP inspection. Fortunately, the agency has a program to help all types of FDA-regulated industries achieve voluntary compliance with the laws and regulations it enforces. FDA's Small Business Assistance Program offers a unique opportunity for small and start-up companies to obtain confidential advice on compliance and to avoid situations that could delay product approval.

The objectives of this service program are to provide an efficient way for small businesses to obtain general guidance for compliance requirements and to reduce the complexities faced by small businesses in dealing with a large bureaucratic organization.

FDA's Office of Regulatory Affairs (ORA) is divided into six regions, each with a small business representative. The representative administers the regional Small Business Assistance Program and responds to industry inquiries about current FDA policies and legal and regulatory requirements. The response can vary from sending out forms and publications to providing regulatory guidance and technical assistance through phone calls or on-site visits. Through these regional representatives, manufacturers receive help much more rapidly than if they had telephoned or sent written requests to a headquarters office. Representatives also participate in industry meetings, conferences, and workshops and provide guidance pertaining to regulated products and regulatory policy.

The regional representatives are responsible for addressing the needs of all FDA-regulated industries, including foods, drugs, cosmetics, medical devices, biologics, and veterinary products. The Division of Small Manufacturers Assistance (DSMA) in the Center for Devices and Radiological Health is specifically focused on the needs of the medical device industry. Although the field representatives are part of ORA and not directly connected to DSMA, they do work closely with the division, as well as with the Office of Compliance and the Office of Device Evaluation, on issues that affect the medical device industry.

One of the most valuable services this program makes available to industry is the on-site visit. While on-site, the representative may conduct informal audits of the company's compliance with FDA requirements or participate in employee training programs, detailing the laws and regulations pertaining to their products. For instance, the forthcoming revision of FDA's medical device GMP regulation makes reevaluation of a firm's operations essential.

These visits also allow a company to express its concerns about proposed, pending, or revised regulations; the representative can then convey those concerns to the appropriate headquarters center office. Based on personal experience and suggestions from local small manufacturers, the representative can also advise the appropriate FDA center about the need for new educational programs and help develop such programs.

Representatives do not report to a local or headquarters compliance office. Unless an obvious and imminent health hazard is detected, representatives make no report about the company's compliance status. Local district offices are restricted from inspecting a facility for 60 days after a representative's visit, allowing the company time to voluntarily correct any noncompliant conditions. In the Pacific region, for example, since the program's inception in 1979 no on-site visit has resulted in a direct regulatory follow-up inspection or in FDA action against a company by the local district office. Representatives do maintain contact with the local compliance office and will not visit a firm that is currently involved in regulatory action unless asked to do so by the local district management and the company.

This program is intended to help the small business community achieve voluntary compliance before a regulatory inspection takes place, and to prevent regulatory problems before they occur. Industry is encouraged to use this program whenever it has doubts about whether a particular process or procedure is in compliance with the requirements set forth in the regulations. Whether a company needs information related to getting its product approved and on the market or needs copies of an FDA regulation, this FDA program can help. Unlike the Small Business Administration, FDA does not define a "small" business as one with fewer than 500 employees. The agency will assist any company that requests help regardless of the number of its employees.

The program does have some restrictions. For example, regional representatives can-not intervene between a company and the local district office following an inspection that reveals noncompliant conditions. Nor can representatives change or remove any item noted as objectionable during a compliance inspection.

Although FDA is actively reorganizing, it currently has six headquarters centers and 162 field offices. In each of the six regional offices, FDA has a small business representative who is available expressly to assist with the special concerns of small and start-up companies new to the regulatory arena.

The small business representative can clarify agency laws and regulations, suggest methods for meeting these requirements, respond to specific problem- or product- related inquiries, conduct or participate in workshops and conferences, and visit a company's facility at its request. Companies that believe a site visit to their facilities would be helpful should contact the representative in the regional office that serves their location.

Mark Roh has administered FDA's Small Business Assistance Program in the Pacific Region since 1990.

STRATEGIES

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published February 1996

Thomas J. Gunderson and Thomas P. Schnettler

Although the growth of a medical device company often depends on its ability to develop new and innovative products, a company's success is frequently determined by its strategies for handling the fluctuating regulatory and reimbursement environments. Such strategies also affect how the investment community allocates its funds. Careful study of some of the recent approaches of several manufacturers reveals how these strategies worked.

LENGTHY DEVELOPMENT CYCLES

Recent years have witnessed an increase in the length of the premarket approval (PMA) process for medical devices. More and better clinical data than in the past are often needed to satisfy FDA's requirements. Longer trials require more resources, not only to cover clinical costs, but often to sus- tain the company while the trials are being conducted.

Many manufacturers have overcome this obstacle with alternative strategies. In order to generate the revenue necessary to fund extensive clinical research in the United States, many development-stage companies such as Spine-Tech, Inc. (Minneapolis), Conceptus, Inc. (San Carlos, CA), and Urologix, Inc. (Minneapolis), have begun marketing their products in Europe. Marketing in Europe before the United States has also provided these companies with opportunities to implement product design improvements. Such improvements enable the company to produce a better product with which to enter U.S. trials, thereby reducing the risk of costly and time-consuming restarts of clinical research.

Vivus, Inc. (Menlo Park, CA), is pursuing FDA approval through a new drug application route. The company is minimizing clinical trial expenses by combining both regulatory and reimbursement concerns into a unified program.

Successful companies like these are surviving the long FDA review cycle by looking to markets outside the United States to produce capital, and by planning clinical trials with both FDA and payers in mind.

EDGING OUT THE COMPETITION

Longer development times tend to raise obstacles to competition. For example, Steris Corp. (Mentor, OH) has enjoyed a virtual monopoly since receiving FDA approval to market its low-temperature sterilizer in 1988. Two competitors with higher-priced products did not get approval until 1993 and 1995, respectively, whereas a third withdrew its submission because of FDA questions about its data. Meanwhile, Steris's investors have profited, as earnings have grown at a compound annual rate of more than 70% and the company's stock price has soared from $3.50 to $34.00 in less than four years, adjusted for a 2-for-1 split in 1995.

Exogen, Inc. (West Caldwell, NJ), received regulatory approval of its first bone-healing product late in 1994. Having collected ample data from its randomized, placebo-controlled clinical studies, the company is now well on its way to having physicians and payers accept its product as the current standard of care. Any new competitor may find it difficult to conduct a randomized trial with Exogen's product already approved and in use.

In short, companies that can accomplish quick, successful clinical trials and market their products first will reap the benefits of reduced competition.

STRATEGIC ALLIANCES

The increased resources necessary for new product development and the uncertainties of regulatory and reimbursement approval have resulted in increased interest in corporate partnerships between smaller entrepreneurial enterprises and larger, established medical companies. Partnering with big companies can lower the risk for development-stage medical companies. Conversely, larger companies can accelerate their growth by joining with smaller innovative companies that are developing new products. In such strategic alliances, the overall investment risk is reduced for both parties.

For example, Spine-Tech has united with Ethicon Endo-Surgery, Inc. (Cincinnati), to jointly develop minimally invasive surgical techniques for spine fusion, and to train surgeons in their use. The Sofamor Danek Group, Inc. (Memphis, TN), and Genetics Institute (Cambridge, MA) have agreed to develop bone-growth factors for use in spine surgery. And Mentor Corp. (Santa Barbara, CA) has a technology and licensing agreement with Sonique Surgical Systems (Escondido, CA) to develop an ultrasonic liposuction product. Such strategic alliances enable companies to offset part of the increased costs and risks of new product development while fostering close ties for the future.

FDA AND THE MEDIA

Over the past year, FDA's emphasis on enforcement has become widely apparent--more so for some companies than for others. Mentor Corp. and Sofamor Danek have both been under FDA scrutiny over issues relating to the safety of their devices. But media coverage and plaintiff litigation have had an even more significant effect on the two companies' businesses.

For breast-implant manufacturers such as Mentor, FDA requested more supporting safety data and eventually required that all silicone-gel implants be part of an ongoing postmarket trial. But the main reasons that the silicone-gel implant market in the United States dropped from roughly 160,000 units in 1991 to 80,000 units in 1994 were the highly publicized news coverage of medical problems attributed to leaks in silicone-gel breast implants and the related multibillion-dollar class action settlement. Mentor agreed to a relatively minimal $24-million settlement and has since gained from the pullback of its competitors, but its stockholders suffered initially as the breast- implant controversy battered all participants.

Questions surrounding the use of Sofamor Danek's pedicle screw had existed for two years without adversely affecting the company. But when the ABC news magazine 20/20 aired a segment unfavorable to pedicle screws, market demand fell 5 to 10%. Plaintiffs' lawyers gathered forces to try to receive class certification from the federal court. In the meantime, Sofamor's stock price fell from the mid-$30s before the show aired to $11 per share at its 1994 low.

These two examples show how adverse media coverage can greatly affect the success of a company. FDA actions can influence public and media perception of companies and their products. For the reasons above, successful companies are working to maintain good relationships with FDA while avoiding adverse media coverage.

INVESTOR PERCEPTIONS

Traditionally, investors have evaluated medical device manufacturers by characteristics that reveal each company's position in the marketplace. These include the type of proprietary product, size of the market opportunity, gross margin potential, revenue stream, and strength of the management team. Companies must continue to articulate these characteristics, but they must also emphasize to investors the following, less obvious traits:

* A clearly defined regulatory pathway with definite completion dates for clinical trials.

* Clinical data demonstrating efficacy and cost-effectiveness.

* Wherever possible, a reimbursement scheme for approved products.

* A demonstrated ability to secure regulatory approval ahead of competitors.

* Strategic corporate partnerships designed to add future value by bringing products more quickly to market, accelerating the ramp-up rate for sales outside the United States, and demonstrating market acceptance for new products.

* An FDA-compliant operation.

Accentuating such information can be useful in proving a company's worthiness to investors.

Recent statistics suggest that the investment community is eager to back medical device manufacturers. In 1995, 23 medical device companies had raised more than $1 billion in the public equity markets by the middle of September. In just the first half of the year, venture capitalists invested more than $300 million in 50 medical device and equipment companies. And, over the past 5 years, a set of 10 leading medical device stocks have nearly quadrupled in value, substantially outperforming broader market indices. For companies that can easily adapt to a changing regulatory environment and clearly communicate their strategies for success, a receptive audience of investors awaits.

Thomas J. Gunderson is a vice president and senior research analyst and Thomas P. Schnettler is a managing director and senior investment banker at Piper Jaffray, Inc. (Minneapolis), an investment firm.