[caption id="attachment_3331" align="alignleft" width="210"]One of David Bowie's several ch-ch-changes: Would FDA have demanded a new 510(k)?[/caption]
FDA’s warning letters to device makers serve as vehicles for all kinds of statements, including statements about when a device maker needs a new regulatory filing. Lately it seems that has come up a lot more, but is that a trend or just a blip on the screen?
We all remember the outcome of FDA’s confrontation with Steris in 2009. The agency hammered the firm for a series of incremental changes to its System 1 sterilizers, and Steris eventually caved, withdrawing the sterilizer and filing a new 510(k). Since then, the pressure on the 510(k) program has been constant, but not unchallenged. The agency had to withdraw its ill-advised 510(k) changes draft guidance, but that’s not the only means by which FDA can regulate changes to class II devices, is it?
In any event, a good example of this is the agency’s June 6 warning letter to CareFusion of San Diego.* The found itself in hot water over its handling of particulate matter found in some devices, but FDA also had problems with changes in the materials used for two sets of devices. What kind of changes? The letter isn’t very specific on that score.
The June 12 warning letter to Spinal Elements included a discussion of changes to the company’s Lucent series of intervertebral fusion devices, but the citation seems reasonable to the untutored eye. FDA said the company had added some “bulleted” designs and changed the angle of curvature by five degrees in some of these implants.
Another June warning letter, this one dated June 11 to Smith & Nephew, dealt with a change to the filter used in the company’s Renasys negative wound pressure therapy systems. The interesting thing here is that the company undertook the changes to correct a problem with the previous filter, and apparently it worked. The company’s June 23 statement indicates it is working with FDA on the agency’s demand that S&N cease distribution, so it doesn’t sound like the company will have much trouble persuading FDA this is no big deal.
In sum, it’s perhaps asking a lot to extrapolate from this to a shift in how FDA goes after changes to 510(k) devices, but let’s see what happens between now and the end of the year. After all, this is three warnings all dated in the month of June.
(Edit: Within hours of the time I posted this, FDA announced in the Federal Register the final version of a 2011 draft guidance dealing with evaluations of substantial equivalence.)
The difference between what and what?
I know FDA gets tired of me picking at it, but the warning to CareFusion mentioned above includes one of the more peculiar findings I’ve ever seen in a warning letter. The letter states that CareFusion’s procedures for the medical device reporting form, known as form 3500A, was incorrectly described in the firm’s documents as “FDA Form 3500A: MedWatch Medication and Device Experience Report.”
FDA said the correct descriptor is “MedWatch Form FDA 3500A Mandatory Reporting,” but it strikes me as odd that the agency would make a point of saying so in a warning letter. FDA has in the past made a fuss over terminology such as “reasonably became aware of” adverse events, and one can understand how that might be important. But the title of a form is a big enough deal to say something in a warning letter?
Granted a search engine does not return the exact same results in precisely the same order for these two terms, but seriously, someone at FDA needs to lighten up. This is ridiculous.
* The URL for the CareFusion warning will change June 29, when the letter moves from the set of newly posted warning letters to the agency’s warning letter archive.
When my father had a serious fall last month, I was tasked with playing a much larger role in his health. I had heard stories about people taking care of their parents - some were horror stories - but my particular story is turning out to be a bit different.
That's mostly because of electronic health records - and a program that allows me to monitor my father's medications and make sure his prescriptions are up to date. The other part is because my father finally trusted me enough to see his passwords - but that's another story.
But now I'm able to log onto his physician's secure website, and monitor him closely. This is crucial since my father lives nearly five hours away.
Ten years ago, this never would have been possible. The bulky paper records coupled with HIPPA compliance would have been enough to drive someone insane and create a situation where it would be impossible to have this sort of intimacy with health records.
Ultimately, electronic health records are going to be the life blood for aging populations. The records are going to be a godsend for the caretakers of those individuals too.
[caption id="attachment_3302" align="alignleft" width="250"] The Statue of Liberty, an iconic symbol of the American Dream.[/caption]
In 2004 my hometown lost its largest employer to corporate greed. I was a young reporter for the local newspaper, The Register-Mail, when Maytag closed its doors in 2004, forcing roughly 1,600 workers in Galesburg, Illinois and surrounding towns out of their jobs. Most hurtful to the community was the factory’s reason for shutting down: Maytag moved to Mexico to take advantage of cheap labor.
Galesburg has never been the same and a lot of people there are still struggling financially and they feel betrayed by the broken promise of the American Dream.
Now I see a similar trend happening in the medical device industry. When I learned a couple weeks ago that Medtronic plans to buy Covidien, a decision largely driven by the desire to lower its tax burden, I got the same sick-to-the-stomach feeling I had 10 years ago when I listened to dozens of scared factory workers talk about their uncertain future.
Medtronic buying Ireland-based Covidien will take options off the table for young companies struggling to bring new products to market. The med-tech giant has tried to prove its loyalty to the U.S market by promising to invest $10 billion over the next 10 years through early stage VC investments, acquisitions, and R&D in the U.S. but that has done little to convince critics that the company has the U.S. economy’s best interests at heart.
Sure, this grand scheme to save on corporate taxes will actually generate a ton of other U.S. taxes, but Medtronic’s shareholders will have to foot that bill. That’s because when stock holders exchange their Medtronic shares for shares in the “new” Ireland-based Medtronic, it will be treated like a sale.
There are some bright sides to the proposed merger, such as increased scale in the face of hospital and payer consolidation in the U.S. and portfolio breadth, which is increasingly important in this post-Affordable Care Act environment.
And Medtronic’s executives have tried to sugarcoat the deal as a business strategy rather than tax inversion. I don’t disagree that there are strategic benefits to be realized. But if that was truly the driving force behind this $42.9 billion mega-deal, why is the agreement contingent on there being no new laws or regulatory actions passed that would make such inversion deals illegal or prevent Medtronic from capitalizing on Covidien’s lower tax rate?
Lee Schafer, a business columnist at the Star Tribune, a Minneapolis-based newspaper, has covered the deal from a few different angles. I imagine Schafer, being based in Medtronic’s backyard (or maybe it’s the other way around), has witnessed a similar state of dejection that I witnessed 10 years ago in the struggling, Midwestern factory town where I grew up.
Schafer hinted at those boiling emotions in a recent column in which he tried to offer the story from the company’s point of view. “But it seems clear that [Medtronic] underestimated just how mad individual shareholders would get once they learned they faced a capital-gains tax from the transaction and perhaps how many folks in our community felt betrayed that one of ours was leaving for tax reasons.”
[caption id="attachment_3271" align="alignleft" width="200"]Abandon all hope ... unless you speak governmentese.[/caption]
It’s that fun time of even-numbered years again when events in Washington bog down with the impending congressional summer recess and the November elections hanging over the heads of nearly everyone in Congress. Despite that Damoclean discomfort, shouldn’t we be rewarded with a regular set of spending bills?
As best as I can tell, Congress had passed no spending bills for fiscal 2015 on or about July 10, which means we’re almost certainly headed for another series of CRs, or continuing resolutions. The fate of H.R. 4800, the bill that would fund FDA, seems to be that of a paperweight made of – you guessed it – paper. How deliciously ironic.
As matters currently stand, Congress and President Obama are hard at work on a supplemental appropriation for the child migrant predicament. Thankfully the Ryan-Murray budget deal from December of last year puts the sequester on hold for the upcoming fiscal year. Otherwise, device makers would be watching a large amount of user fees going down the nation’s fiscal rabbit hole again.
Alphabet soup; OPPS floats to the surface
If you’re into a mind-bending level of detail, just read through the Medicare outpatient prospective payment system proposal (try saying that three times fast) for calendar year 2015. Not only is it called OPPS by insiders, it talks a lot about CPT and HCPCS (pronounced hick-picks if you’re among the coverage/reimbursement cognoscenti) codes and lots of fun things like that.
CMS posted this and the physician fee proposal July 3 in a vain attempt to ruin everyone’s Fourth of July weekend, but anyone in the cardiology business might want to read through this riveting 600-plus page document. The agency indicated it would like to compress six comprehensive ambulatory payment classification codes (C-APCs) for vascular procedures into three.
Among these are C-APCs 0082 and 0083, which deal with clogged coronary and non-coronary arteries. 0082 is the code for cleaning out the affected artery whereas 0083 applies to angioplasty and valvuloplasty. CMS floated a similar proposal for some electrophysiology codes, squishing another six codes into three, rendering four codes total for levels I through IV for defibrillators, pacemakers and “related devices.”
I won’t pretend to know enough about how this would work in practice to predict whether these proposals would create more headaches than they’d solve, but hospital administrators might think it’s a good thing any time you can reduce the number of codes.
Pronouncing “MPFS” without hurting yourself
What struck me about the Medicare physician fee schedule proposal (MPFS) for calendar 2015 was a discussion about 10- and 90-day global codes for surgical procedures. CMS spent a lot of time explaining the problems with the current set-up, including that the framework was established a couple of decades ago, and OIG has published two reports highlighting the difficulties with these “global” issues. So why tackle it now?
This might be the reason. The continued existence of these codes in their present form may “present obstacles to the adoption of new payment models,” the proposal said.
Not to make too fine a point of it, but the agency might have done the reader a favor and just said up front, “the current set-up stinks and we want to do more bundled payments.” That would have saved me a lot of time.
And while we’re at it … enough already with “next-generation” DNA sequencing. Why is it that every generation of sequencing technology is the next generation? What happened to the current generation?
One supposes I could just be grateful they’re not claiming their technology is “disruptive” anymore.
[caption id="attachment_3240" align="alignleft" width="320"]A famous site in Beijing, a city where not only dreams go to die.[/caption]
Anyone in the medical device business knows there is a sizeable intellectual property hazard to doing business in China, but one wonders if the rewards merit the risks. The answer at this point in time is apparently yes, but will it stay that way?
As this report points out, China’s government hacked three medical device firms last year, and it is widely known in Washington that China (and Russia, while we’re at it) has an official policy for hacking and IP theft.
Need another reason to believe doing business in China is growing more dangerous? Sen. Ron Wyden, chairman of the Senate Finance Committee, said in a June 25 statement that Beijing is not just a perennial currency manipulator, but that it and Chinese businesses “intimidate witnesses, forcing American businesses to relocate factories or surrender intellectual property, and threatening retaliation if they speak out against unlawful behavior.”
Need more evidence? This report, which is about a year old, alleges that China is responsible for roughly 80% of IP theft of American intellectual property. The Commission on the Theft of Intellectual Property at the National Bureau of Asian Research says in a recent report that theft of U.S. intellectual property is equal in value to everything the U.S. sells to all of Asia each year.
So what do we know about IP theft in China? Not much where U.S. med tech firms are concerned. Wall Street device companies have zero incentive to disclose such events because such disclosures would pummel their shares, so we can’t assume these companies will be forthcoming (pity the shareholder who finds out with no notice that the med tech CEO has allowed the thieves to destroy their investment).
Beyond that, it might take time for Chinese scientists to engage in the reverse engineering they’re so renowned for, so any piracy of device designs, including software, might not show up on the market for a couple of years.
In any event, one assumes Beijing will keep the piracy down to a level that will keep Western businesses and governments from abandoning the country entirely. Still, the picture is far less friendly than in bygone times, and we should assume we haven’t heard the last of China’s blatant theft of American technology.
The most distressing thing of all, however, is the continued pretense by Washington that China’s IP pirates are acting without Beijing’s consent. This report delusionally claims that China (and India) are not doing enough to fight intellectual property crime. Even more absurd is that the U.S. Trade Representative apes that kind of vapid thinking in a July 1 report.
Does anyone in their right mind really believe Beijing isn’t the director of this criminal circus? Ridiculous. Absolutely ridiculous.