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Articles from 2014 In March


2014 Medical Design Excellence Awards

2014 Medical Design Excellence Awards

For 17 years the Medical Design Excellence Awards (MDEA) program has honored advances in medical product design and engineering that improve the quality of healthcare delivery and accessibility.

The awards celebrate the achievements of medical product manufacturers, their suppliers, and the many people behind the scenes—engineers, scientists, designers, and clinicians—who are responsible for the groundbreaking products that are saving lives and changing the face of medtech.

The gold, silver, and bronze MDEA winners in each category, as well as the readers' choice and best-in-show, were announced at a ceremony on June 11, 2014, at the MD&M East conference and exposition in New York City. 

Here's a rundown (updated periodically) of UBM Canon's editorial coverage of the 2014 MDEA program:

2014 MDEA Winners Announced!

AtomoRapid HIV Named Best-in-Show at 2014 Medical Device Excellence Awards

Persona Knee System Wins Readers' Choice Award

MDEA Lifetime Achievement Award Winner Dean Kamen Doesn't Rest 

Cast Your Vote for the 2014 MDEA Readers' Choice Award

Trends from the 2014 Medical Design Excellence Awards

How a Doctor Became an Award-Winning Device Inventor

The Snug Vest: A Wearable Medical Device That Looks Cool

‘MuV’-ing Patients within a Hospital

Telepresence Robot Gives Patients Access to Remote Physicians

How Plastics Help Define Medical Design Excellence in 2014

How a Silicon Valley Startup Upgraded the Stitch

Glucose Monitor First to Use E-Ink

6 Trends Reshaping MedTech in 2014

4 Ingenious Medical Devices That Help Hospitals Save Cash

Medication Management Solution Wins MDEA Silver Award

2014 MDEA Finalists

Facebook May Be Eyeing Healthcare with $2B Acquisition

Oculus Rift
The Oculus Rift technology was recently acquired by Facebook by $2 billion.
The Oculus V virtual reality headset emerged as one of the star products at the annual CES conference this year in Las Vegas. The technology also impressed Facebook, which recently announced their intent to acquire the firm for $2 billion. While the first applications are in the gaming sector, healthcare applications could be on the horizon as well. Last week, Facebook CEO Mark Zuckerberg hinted at the headset's potential application in telemedicine, where it might be used to enable doctors to virtually see their patients. Oculus inventor Palmer Luckey has been much more overt about the technology's medical applications. In an interview with Popular Mechanics earlier this year, Luckey said that developers are creating Rift-based apps that enable clinicians to explore 3-D CT scans. Users can look within the body, and selectively remove anatomy from the view that is not of interest to the diagnosis in question. Zuckerberg believes that virtual reality could be the next big technology. Similar to mobile technology, whose functionality has exploded in the past two decades while costs have sunk, virtual reality technology today is light years away from the crude VR simulators of the 1990s such as Nintendo's Virtual Boy system. The Oculus technology boasts high-resolution image processing, a large field of view, and relatively light weight. Gone are the days when wearing a VR headset and simply turning one's head resulted in significant lag that made the experience feel profoundly unrealstic. The falling price point of the technology, which is now costs $350 for a developers kit, puts it in the hands of budget-minded medical students and not just well-heeled research hospitals, Luckey says. Virtual reality in general could represent the future of diagnostics. To back up that claim, Luckey points to medical-school researchers who are now exploring the technology for that application. Virtual-reality technology could have a range of additional applications in healthcare, ranging from training of surgeons to rehabilitation. Luckey says the system could also be used to treat mental disorders like phobias and post-traumatic stress disorder as well. The technology also could be used to help amputees adapt to new prosthetic limbs. Already, the healthcare-related applications are numerous for another headset device--Google Glass technology, which is being explored for its augmented reality potential in surgery and for diagnostics. The video below shows a somewhat comical Oculus Rift-based surgical simulator (with a drugged-surgeon nonetheless):

Touring the BIOMEDevice Show Floor

From a dental device that vibrates in order to keep the patient from feeling a needle to IVD-related devices, there was plenty to check out on the floor of BIOMEDevice Boston in late March. Check out this video to see what Qmed/MPMN senior editor Chris Newmarker discovered:

Wish you had been in Boston? Check out MD&M East, June 9-12, 2014 in New York City.

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker.

9 Ways Medical Devices Fail

GE Healthcare

Medical device recalls appear to be growing at a slower pace than the device industry itself. But when they do happen, they can produce tragic, even deadly, results for patients.

MPMN asked members of the LinkedIn Medical Devices Group why device failures happen, receiving nearly 50 answers to date ranging from inexperienced startup companies to plain old human error.

Here are nine direct quotes from the discussion that each highlight a way medical device failures can happen, along with some insights from MPMN:

1. Startups with Limited Expertise

"Start-ups in particular ... need to identify/recognize their shortcomings in terms of managerial skills at different stages of the development. This is especially true if a device company is spun-out from an academic institute and is run by people inexperienced in getting sufficient and timely [financing] in place, people with inadequate technical and project management skills, and people with no understanding of marketing and product launch. Projects can fail at any of these stages. Of course you can (very selectively and very carefully) outsource many of these aspects --especially technical development and project management. It's easier to identify how things can fail than it is to say how they will succeed. If it was that easy we'd all be doing it!!"

--Greg Smith, business development director at Integrated Technologies Ltd.

MPMNAn MD&M Minneapolis seminar last October hit on a similar theme: Lack of materials knowledge is an issue among medical device startups, and it is going to hurt them down the road, says Mark Breyen, senior director of core technologies at Medtronic.

2. Plain Old Human Error

HeartMate II
HeartMate II, as shown on Thoratec's website

"Human error is likely the leading cause of failure; either the operator failed to use the device correctly, or the manufacture failed to realize that the operator was going to use the device incorrectly.  A good example is of this is took place in the early 1990s. Several manufactures came out with pulse oximeters. Unfortunately, more than one manufacture used a round 9-pin patient probe connector. However, the manufacture's used different wire configurations. This resulted in several patients receiving burns on their finger at the site of the red LED. The human failure occurred when the manufacture failed to use a unique locking/attachment system for the patient probe AND human failure occurred when medical personnel switched the probes between units manufactured by different companies."

--Joseph Mandell, equipment planner at TEAM Integrated Engineering

MPMN:This issue can even extend to instructions, as demonstrated by two medical device failure issues that recently caught the FDA's eye.

Thoratec Corp. issued an urgent safety advisory over four patient deaths related to its HeartMate II left ventricular assist device (LVAD). No products need to be returned because the deaths and serious injuries were not the result of device failure, but rather patients and caregivers who were unable to understand instructions. Meanwhile, the FDA is warning that a Greatbatch Medical Orthopedic surgical tool could cause serious injury or death because it came with inadequate sterilization recommendations.

3. Not Employing Human Factors Research

"Personally, I used almost all insulin pumps available on the market. Recently, I have switched to t:slim insulin pump from Tandem Diabetes Care. They developed insulin pump based on intensive research studies by using human factor research. ... I'm using this pump for over seven months and no problems so far. I was involved in focus group and surveys with development of new version of medical devices (insulin pumps). ...  Every company, which is planning to develop new medical devices, MUST switch to human factor studies."

--Eugene Kaganovich, founder at wellness4diabetics.com, advice4diabetes.com, medicalchartplus.com

MPMNLook up the definition of human factors research on Wikipedia. It seems pretty involved: "Human factors and ergonomics (HF&E) is a multidisciplinary field incorporating contributions from psychology, engineering, biomechanics, mechanobiology, industrial design, graphic design, statistics, operations research and anthropometry."

Still, it might be worth the effort, especially if it enhances ease of use and prevents failures. The FDA appears to have taken this position in the past.

4. A Bridge Too Far When It Comes to Errors

"Medical device failures are really system failures. The surgeon didn't read the instructions for use. The checklist was not followed. The device was improperly maintained. The device was improperly stored. The nurse input the wrong settings. The cleaner didn't properly clean the room and left infectious material behind. The disposable device used was out of date. The switchover at a shift change didn't communicate the vital information. A clinician installed the tubing incorrectly. The clinician did not fully comprehend the physiology of the procedure. And someone got hurt. In each one of these cases, the 'failure' was the last event in a series of events that led up to the final 'failure.' It is encouraging that the medical community is starting to make checklists standard procedures that are always followed, to use root cause analysis find the process and procedural errors that led to 'failures,' to say, 'I am sorry,' and own up to the errors that culminated in the final failure."

--Albert de Richemond, consulting engineer at Consulting Engineers and Scientists 

5. Lack of Good Manufacturing Practice

"Some history from the FDA's early 1980's 16-page document entitled, "Device Recalls: a Study of Quality Problems" [HHS Publication FDA 90-4235 (January 1990)]. ... The work was published by the FDA's CDRH and covers Medical Device recalls from October 1983 to September 1988. 3,144 recalls were done in the five-year period, and 1,664 Quality problems were identified. The root causes of these 1,664 problems were grouped into four categories - one was GMP (780 instances) and another was Pre-production (Design, Components, Software, Package, Label) a total of 724 instances plus some fewer cause types to total 1,664."

--Daryl Mullins, project manager, program manager, expertise in lean, scrum, PMBOK types

MPMNGood Manufacturing Practice, or GMP, is apparently still an issue three decades later. For example, GE Healthcare is recalling a host of infant resuscitators from the past five years over a serious error during the assembly process. The FDA announced Feb. 28 that it has designated the recall as Class I. FDA officials think the resuscitators could potentially seriously injure or kill infants because oxygen and air wall inlet fittings on their back panels were reversed during assembly.

Giraffe Stand-alone Infant Resuscitation System
The Giraffe Stand-alone Infant Resuscitation System, as shown on GE Healthcare's website.

6. A Poor Corporate Culture Inside Device Makers

"When Toyota had a rash of recalls a few years ago, one theory was that, despite its legacy as a leader in quality culture, the company had in fact morphed to a culture where bad news was getting ignored. In the financial system meltdown a few years ago, one problem that was found in many companies was a quick dismissal or minimization of risk (or even identifying the risk-creator as a hero). Similarly, many device failures can be traced to causes that were known or knowable, when they could have been addressed much more simply economically, but the manufacturing culture did not value paying attention to that risk.  ... This issue is being discussed at leading hospitals, such as Johns Hopkins. They recognize that risks that lead to massive impact, such as a problem with a commercial airplane, get addressed immediately, but that risks that may only impact one or two patients get minimized, even if the aggregate of the risks that individually could only impact a few patients may collectively result in hundreds or thousands of patient issues each year."

--Ian Nemerov, quality and regulatory affairs expert

7. Reusing Devices That Should Not Be Reused

"A lot of things which are critical are deemed to be single-use items, just because of the problems with failure that can occur if you reuse them. That causes a lot of discussion as reuse is constrained by FDA regulations, but some hospitals do it anyway, against manufacturer's stated use conditions. In other words, the users can beat any great product until it 'dies,' whether it is reusable or not. In the end you need a very experienced engineering team to get close to a 'failure-proof' product, but you will never achieve it. There is value in being a 'grey beard' in complex design choices."

--Burrell (Bo) Clawson, president of ColonTest LLC

MPMN: One alarming issue involves U.S. health providers seeking to save money by having supposedly single-use medical components sterilized and reprocessed so that they can be reused, according to Len Czuba, president of design firm Czuba Enterprises (Lombard, IL). Czuba advises anyone getting a medical procedure to ask their health provider whether they're being exposed to a reprocessed medical device. "If anyone uses reprocessed devices, patients should be made aware of it," Czuba says. "There have been cases where the tip of a balloon catheter has broken off. They have had to go in and open up the patient and fished out the lost piece."

8. Not Involving the Doctors

"Having been inundated with approaches from IT specialists, all of whom claim to have developed the latest innovative 'app' for patient self diagnosis/monitoring/treatment, none seem to have included a clinician or medical devices expert in the development. That's a sure formula for failure and demonstrates inadequacy in product development which any potential investor would question--that's before any submission to the regulatory bodies."

--Gordon Millar, owner at Virtu~Pack

9. Not Keeping Other Cultures in Mind

"In [Latin American] countries, labels must follow certain local norms. These are not all the times complied or correctly assessed in customs. Then, we ended up with labels that are difficult to understand for the final user--becoming a possible cause of misuse. My suggestion would be to bolster the risk assessments not only for the country of origin but for all the other markets the manufacturer is going to sell. In other words, if manufacturers updated their risk assessments considering the new markets they get into, less human errors worldwide would be the cause of failures.  ... I have [gone] through many MRI manuals that are quite difficult to understand in Spanish. Therefore, service engineers must struggle with the English versions (if they are not English readers) or with the Spanish rough translations."

--Miguel Angel Torres Tello, biomedical engineer

Related content

7 Recent Medical Device Failures Catching FDA's Eye

Medical Device Recalls Growing at Slower Pace Than Industry

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker.

Medtronic's Failed Hypertension Study Details Revealed. Long Live Renal Denervation?

Medtronic's Failed Hypertension Study Details Revealed. Long Live Renal Denervation?

At the 2014 American College of Cardiology meeting that began Saturday, Medtronic, for the first time, revealed details about results from the failed HTN-3 randomized clinical trial evaluating the safety and effectiveness of its Symplicity renal denervation system.

The trial included 535 patients and while the Minnesota device maker was able to prove that the device was safe - in fact safer than expected - it failed to show a significant and meaningful reduction of blood pressure recorded in the physician's office six months after the procedure.

The results show that the trial had a large placebo effect -  and in a discussion about the trial that was webcast Monday, physicians speculated whether the design of the trial led to some patients adhere more strictly to their medication than they would in the real world, thereby lowering their blood pressure.

JPMorgan Chase's Michael Weinstein called the effect of the placebo on the trial results "surprising" in a research note.

"In fact, the sham procedure also resulted in a statistically significant reduction in both office BP and 24-hour ambulatory BP at 6 months compared to baseline, a difficult result to explain logically given the fact that these patients were supposed to have uncontrolled hypertension despite being maximally medicated," he wrote.

Failure has also been laid at the feet of the device used, including St. Jude Medical's CEO who speculated soon after Medtronic announced the trial failed in January that the first-generation technology with a single-electrode system was perhaps not up to the task. 

A Leerink Partners analyst - Danielle Antalffy - also at ACC, wrote that physicians felt that that Medtronic's " 'primitive' first generation Symplicity device was difficult to use and not as effective as newer products – this was believed to be a strong possibility [for trial failure]

In the live webcast from the ACC meeting, physicians also suggested that a more rigorous evaluation of the target population must be done given that the HTN-3 data shows that the procedure was able to meaningfully reduce the blood pressure of non African Americans and people under 65.

Despite the failure, there appears to be some level of consensus about the future of renal denervation. 

Physicians discussing Medtronic's trial results pointed to the large unmet need globally for a disease that has high prevalence and no clear path to strong, life-long adherence to medication for people who have cardiovascular risk.Weinstein echoed their thoughts.

Ultimately, the key question may be how amenable the FDA is to a more real world trial design. Having a study population full of patients on maxed out doses of a handful of blood pressure drugs creates a very artificial environment. And while some doubters may look at the HTN-3 data and say “See, the patients just need to take their meds,” we know from studies of drug compliance that this does not happen in the real world, creating a need for an alternative treatment approach.

-- By Arundhati Parmar, Senior Editor, MD+DI
arundhati.parmar@ubm.com

UDI and GUDID Compliance: Start Planning Now

There are lots of medical devices out there. But what measures are necessary to identify and track them? How are regulators, medical professionals, and patients to know that devices are safe? To address these issues, FDA last year published its final rule on unique device identification (UDI), the purpose of which is to substantially reduce existing obstacles to the adequate identification of medical devices used in the United States. “By making it possible to rapidly and definitively identify a device and key attributes that affect its safe and effective use, the rule will reduce medical errors that result from misidentification of a device or confusion concerning its appropriate use,” according to the agency. “The identification system established under this rule will lead to more accurate reporting of adverse events by making it easier to identify the device prior to submitting a report.”

However, while the rule promises to increase patient safety and standardization, it places a considerable regulatory burden, not to mention a high price tag, on medical device manufacturers, remarks Gary Saner, senior manager of information solutions—life sciences at Reed Tech. “Thus, six months after new federal labeling requirements for medical devices were issued, many device manufacturers still have not begun preparing to meet the regulation’s looming deadlines.”

 
Figure 1: UDI data must be displayed on most medical device labels in both plain text and in a machine-readable format such as a bar code. (All Figures courtesy of Reed Tech)

The implementation of the rule, according to Saner, will require that most medical devices distributed in the United States be labeled with specific information, as illustrated in Figure 1. Most device labeling and packaging, and many devices themselves, will be required to display this UDI information in both plain text and in a machine-readable format such as a bar code.

FDA is also creating a repository of information on medical devices known as the Global Unique Device Identification Database (GUDID). Medical device manufacturers will be required to submit substantial amounts of information on each of their device products to FDA so that it can be entered into the database. This database, in turn, will be available to the public.

In addition to enabling the public to identify medical devices more rapidly and precisely while allowing regulatory officials to better monitor adverse events reports, the new labels and informational database should render adverse events reporting more efficient and thorough. “This is a landmark step for FDA,” states Jeffrey Shuren, the director of FDA’s Center for Devices and Radiological Health. “UDI may be an acronym for Unique Device Identification, but what it really stands for is better patient health.”

UDI: What to Expect Next

 
Figure 2: Timeline for medical device companies to comply with the new UDI regulations.

“FDA’s final rule on UDI did not come as a surprise to most medical device makers,” Saner says. “The effort had been underway for years, and the government solicited input from industry representatives during the process of formulating the rule. Nevertheless, many companies are now grappling with the reality of having to comply with the UDI regulations.” A timeline for compliance is presented in Figure 2.

From September 24, 2013—the issue date of the final UDI rule—manufacturers will have from one to five years to comply with both the UDI label and GUDID submission regulations, depending on the complexity of the device. For example, manufacturers of Class III medical devices must comply within one year, or no later than September 24, 2014. On the other hand, manufacturers of implantable, life-supporting, or life-sustaining devices—such as implantable pacemakers or automated external defibrillators—must comply within two years, or by September 24, 2015. Finally, manufacturers of lower-risk devices will have more time to comply.

 
Figure 3: For inclusion in the GUDID database, companies will have to gather 55 points of data for every individual product and product version.

“Compliance with the new regulations will be no easy task,” Saner comments. “GUDID submissions alone will present substantial investments of time and resources that will grow in relation to a company’s product portfolio.” For example, as detailed in Figure 3, companies will have to gather 55 points of data for every individual product and product version. This information will be included in the GUDID database.

Great uncertainty still surrounds the implementation of the UDI system, according to Saner, and many device manufacturers are just beginning the planning process for UDI compliance. Meanwhile, many companies are unsure about what types of data they will have to submit, while many do not know how long it will take to gather this information. Moreover, companies have not yet decided which of the four methods they will use to submit the required data: the FDA’s online interface, a hosted software solution, an interface offered by an outsourced service provider, or an internally administered software system.

According to a February survey conducted by Reed Tech, which offers a UDI/GUDID solution to device manufacturers, only about one in three respondents had begun UDI compliance planning, and many didn’t know how to begin. At the same time, nearly nine out of 10 respondents were unsure when they would begin submitting the required data to GUDID or what submission method they would use. Only 1% of the 407 respondents had completed the planning phase.

To begin the process, medical device companies must obtain a unique device identifier from one of three FDA-accredited agencies, according to Saner: GS1, a global, not-for-profit company that developed the first universal product code, or UPC, in 1973; Health Industry Business Communications Council, an internationally accredited nonprofit standards development organization; or International Council for Commonality in Blood Bank Automation, a nonprofit company that manages the ISBT 128 international information standard for the identification of medical products of human origin.

Then, companies should review FDA’s final UDI rule, identifying the requirements and the deadlines to be met, after which they should begin identifying and gathering the data required for product labels and submissions to the GUDID. In addition, companies should evaluate which method they prefer for submitting information to FDA’s database, including FDA’s online interface, a hosted software solution, a vendor-provided interface, or an internally administered software system. A company’s preference will depend on the cost, labor, and expertise involved. Finally, companies should evaluate the different UDI/GUDID vendors to determine which ones will help them achieve full FDA compliance in the most cost-effective manner possible.

Bob Michaels is senior technical editor at UBM Canon.

bob.michaels@ubm.com

15-Year Old Develops Wireless Prosthetic Arm

Shiva Nathan
Shiva Nathan

A 15-year-old high school sophomore has designed and built a low-cost modular prosthetic arm and hand controlled by the wearer's brainwaves.

Shiva Nathan, of Westford, MA, says that he designed and built his Arduino Prosthesis after a cousin in India lost both her arms in an explosion. The prosthetics she was using were expensive, and not very good, he explained to Design News. So he determined to build something better.

Nathan's prototype uses an off-the-shelf Neurosky Mindwave Mobile headset that uses an EEG pickup to capture the wearer's brainwaves. The headset sends data to an Arduino open-source microcontroller via Bluetooth. The microcontroller actuates the servos that move the hand. The Mindwave device sends two channels of data, which it terms 'attention' and 'meditation.' Nathan has used these to control finger flexing and elbow movement. Aside from the electronics, most of his prosthetic is made of acrylic.

Nathan entered his design in the 2013 National microMedic Contest and won the top prize in the student division. Entrants were challenged to use microcontroller and sensor systems to create medical applications and products for possible use in the healthcare industry, medical simulation training, and the battlefield. The contest was hosted and sponsored by the U.S. Army Telemedicine and Advanced Technology Research Center (TATRC), Carnegie Mellon Entertainment Technology Center, and Parallax Inc.

prosthetic arm
Shiva Nathan's Arduino Prosthesis. (Courtesy learn.parallax.com)

He also won the top student prize in the 2014 Bluetooth Breakthrough Awards. These awards recognize the most innovative uses of Bluetooth technology in products, applications, prototypes under development, and student-led projects in the concept phase.

Nathan also writes iPhone apps and takes precollege classes at the Massachusetts Institute of Technology (MIT). According to an article in the Boston Globe, he is now using Pupil, an eye-tracking technology developed at MIT,  in a more advanced arm. He hopes to convert the eye-tracking signals to impulses that move individual fingers simply by looking at them.

Nathan told the Globe that he hopes to someday work on robots at Google or iRobot Corp. in Bedford (MA), or perhaps to launch a prosthetics business.

Stephen Levy is a contributor to Qmed and MPMN.

Medtronic Crowned “Clear Winner” In Race to Dominate TAVR Market

 Medtronic Crowned “Clear Winner” In Race to Dominate TAVR Market

At the 2014 American College of Cardiology meeting in San Francisco, analysts crowned Medtronic the clear winner in the race to dominate the transcatheter aortic valve replacement market. At least in the next year or two.

Edwards Lifesciences is the only other company with an FDA-approved, commercially available TAVR product int the market, although St. Jude Medical and Boston Scientific are developing their own devices. These devices are meant to treat patients with severe aortic stenosis, some of who cannot undergo open heart surgery.

Why has Medtronic and its CoreValve TAVR System taken center stage, even though Edwards introduced Sapien more than two years ago?

The data presented at ACC has some answers:

  • Medtronic became the first company to show in a clinical trial that TAVR is superior to surgically replaced diseased aortic valves. At one year following the procedure, CoreValve’s mortality rate was 14.2% versus. 19.1% for those who underwent surgery)
  • Stroke rates were low and not that different from patients who underwent surgical intervention to replace diseased valves. major stroke rates in patients who received the CoreValve System were 3.9% at 30 days and 5.8% at one year, while those same rates for patients with surgery were 3.1% at 30 days and 7% at one year. High incidences of stroke was one reason of concern for physicians when considering a TAVR procedure, Medtronic said.
  • The device also has lower paravalvular leak, which causes blood to leak out when an implanted valve fails to seal adequately.

Medtronic also announced that the FDA has decided that it will not require a panel review of its high-risk arm data, which analysts took to mean that an expanded indication and approval from the FDA would come sooner than expected - possibly in the next six months.

All of this means only one thing - Medtronic will gain share in the marketplace at the cost of Edwards Lifesciences.

“We leave ACC even more convinced that the company will take greater US TAVR market share from Edwards over the next 12-18 months than the Street expects,” wrote Michael Weinstein, an analyst with JPMorgan Chase.

That thought was echoed by other analysts.

“We assume, that in the US, Medtronic takes 25.5% share in 2014, 31.8% in 2015, and 40.0% in 2016 (versus our previous estimates for 24.8%, 24.4%, and 30.2%),” wrote Joanne Wuensch, analyst with BMO Capital Markets.

Another analyst with Leerink Partners reported that physicians were impressed by the clinical data from CoreValve.
They “generally characterized the data as a ‘home run,’ " and expected to see their practices expand the use of the product in the next year or two than they initially projected, wrote Danielle Antalffy.

Over at RBC Capital Markets, analyst Glenn Novarro called Medtronic the “clear winner” and began adjusting his forecast for Edwards Lifesciences:

“Given strong High-Risk data and an earlier than expected regulatory pathway for MDT's expanded label, we are reducing our U.S. Sapien revenue forecast by ~$15 [million] to $328 [million] in 2014,” Novarro wrote in his latest research note.

Yet, all is not lost for Edwards Lifesciences as it battles Medtronic and soon-to-follow competitors like St. Jude Medical and Boston Scientific. In an European clinical trial that pitted its lower-profile Sapien XT device against Medtronic’s CoreValve, the California company came out on top.

Called CHOICE, the clinical trial involving 241 patients showed that “device success” was higher with Edwards’s Sapient XT than with Medtronic’s CoreValve.

“This result is important but should not be interpreted as a surrogate for long-term outcomes such as death, stroke, and quality of life,” said Dr. E. Murat Tuczu and Samir Kapadia in an editorial in the Journal of the American Medical Association published Sunday.

They reminded readers that Sapien and CoreValve were based on different technologies: Edwards’ Sapien is a “balloon-expandable (BE) valve … made of bovine pericardium mounted in a cylindrical, relatively short stent” while Medtronic’s CoreValve is “self-expanding (SE) valve made of porcine pericardium mounted in a taller, nitinol stent with an adaptive shape.”

The technologies are different, but the question of choice for physicians and patients - whether to use Edwards’ Sapien XT, which is not as yet approved in the U.S. or Medtronic’s CoreValve - has not been definitively answered.

“Continued efforts at understanding the risks and benefits of TAVR particularly in relation to patient characteristics and long-term outcomes are imperative for continued progress and refinement of these revolutionary devices. Additional rigorous randomized trials like the CHOICE trial will provide the quality of evidence necessary to ensure optimal use and optimal patient outcomes from TAVR.”

[Photo Credit: iStockPhoto.com user akindo]

-- By Arundhati Parmar, Senior Editor, MD+DI
arundhati.parmar@ubm.com

3 Things MedTech Companies Need to Know about IRS Compliance Reviews

3 Things MedTech Companies Need to Know about IRS Compliance Reviews

By Mitchell Kopelman and Ori Epstein, Habif, Arogeti & Wynne

When you think of a medical device company, a software company is probably not the first thing to come to mind. With the myriad advances in technology, however, it is becoming more and more common for software companies to fall under the medical device umbrella. This becomes more perturbing if it subjects your product to the medical device tax. So it may seem strange to hear that a developer of picture archiving and communications system (PACS) software had to register and pay the medical device tax. If it seems strange to you, imagine how the IRS must have viewed the registration!

The PACS developer received a letter that it had been selected for a compliance review by the IRS. When the company received notice, it was unsure of what to expect. Was this an audit or something less severe? This scenario is familiar to healthcare IT companies across the country and is, most likely, at least partially to blame for some of the recent heated discussion about companies being audited for the medical device tax.

The fact is the letter was not a notification of an IRS audit. Rather, the IRS was conducting a medical device excise tax compliance review as a standard part of the process when a firm registers with the IRS as a medical device company.

Why all the attention from the IRS? Simply put, the IRS has been burned before. Many years ago after implementing a fuel excise tax, firms figured out how to take advantage of the system by setting up fake companies. A partial reason for a compliance review is simply to make sure a business is real.

With more knowledge and clear insights into what happens during a compliance review, healthcare IT companies can better prepare themselves and eliminate some of the stress of meeting with the IRS.

Below are the three things you need to know now to go through the compliance process quickly and with little disruption to your business:

1. Your documents will be requested. Though the documentation requested by the IRS may vary from company to company, in general the IRS likely will request audited financial statements, tax returns, and a narrative of business operations. The reasoning is two-fold: 1) to fully understand your business and confirm that you filed your previous year tax returns and 2) to avoid harassing taxpayers by, for example, selecting them for a compliance review and then selecting them for an income tax audit several months later. And if you’re selling your medical device into another country, be sure to have the correct documentation available to prove that your device did, in fact, leave the country. In the case of this PACS developer, providing an agent with acceptable documentation for overseas sales of an intangible medical device product, like software, proves to be more complicated. The IRS agent in this specific case informed us that companies selling intangible products should keep purchase orders, customer acceptance documents, and invoices on hand to prove that the software was received overseas.

2. You will be interviewed. During the interview portion of the compliance review, the IRS agent asked questions about business activities, the product, the owners and their roles within the business, and research and development activity. Some of these questions are to better understand the business, others are purely for data mining purposes, and some may be used to pinpoint areas that could be audited.

3. Your facility will be toured. A walk-through of your facility will be conducted during the IRS audit to ensure that your company is a real operating business. For our specific client, a software company, the tour was unlike anything the IRS agent had ever experienced. The agent was use to visiting facilities with full manufacturing operations rather than a quiet office where software was being developed.

While an IRS compliance review doesn’t cost a dime, medtech firms can save themselves valuable time by prepping for the meeting and having all financial records readily available during the review.

We recommend coordinating your preparation efforts with your CPA and scheduling the compliance review for a time when one of them can attend the meeting. Having your CPA by your side will ensure that all questions about the medical device excise tax can be accurately answered and addressed.

It’s important to note that every compliance review will be different, but with these insights into the overall process you can be better prepared if you receive a compliance review notice.

Mitchell Kopelman is partner-in-charge of the technology and biosciences group at Habif, Arogeti & Wynne, LLP. Reach him at mitchell.kopelman@hawcpa.com.

Ori Epstein is senior manager in Habif, Arogeti & Wynne’s technology and biosciences group. Reach him at ori.epstein@hawcpa.com.

J&J Agrees to Sell Blood Testing Business for $4 Billion

Johnson & Johnson announced Monday that it has accepted a binding offer from The Carlyle Group to buy its Ortho-Clinical Diagnostics business. The roughly $4 billion purchase, still pending customary closing requirements, is expected to close toward the middle of the year. News of the potential sale came out early this year, with Monday the deadline for J&J to accept or reject the Carlyle Group's offer. The Ortho Clinical Diagnostics division provides blood-testing equipment and chemicals. So what exactly does the Ortho Clinical Diagnostics division sell? The Associated Press has a good summary of the business: "One division supplies equipment and chemicals to screen donated blood for HIV, hepatitis C and other serious diseases, and for typing donated blood to ensure patients get safe, compatible blood transfusions. The other division makes technology for advanced testing of blood to diagnose a range of health conditions and to monitor the effects of medication."

Refresh your medical device industry knowledge at MD&M East, June 9-12, 2014 in New York City.
One would think a blood testing equipment business would be a gold mine. Getting one's blood drawn is pretty common, after all. But it has not been so for J&J. The company's diagnostics business brought in $1.89 billion in revenue in 2013, a nearly 9 percent decline from 2012. J&J is not alone in this situation. Even with a slight uptick related to the U.S. Affordable Care Act bringing in new patients, the $75 billion lab testing industry will continue to slow down through 2015, according to G2 Intelligence research recounted by American Public Media's Marketplace. The culprit is shrinking testing reimbursements from both public and private insurers.

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker.