News Front

Senate Confirms Sebelius as Secretary of HHS

President Barack Obama filled his final Cabinet post with the appointment of Kathleen Seb-elius as secretary of the U.S. Depart-ment of Health and Human Services (HHS). HHS has authority over the U.S. Food and Drug Administration (FDA) as well as the Centers for Medicare & Medicaid Services (CMS) and the Cen-ters for Disease Control & Prevention, among others.

Sebelius, former Democratic governor of Kansas for six years, received approval from the Senate, 65-31, with then-Republican Sen. Arlen Specter of Pennsylvania, who announced the same day he was switching to the Democratic Party, voting yes. The GOP’s Sam Brownback and Pat Roberts of Kansas, and Susan Collins and Olympia J. Snowe, both of Maine, also voted for Sebelius.

Sebelius takes the reins of one of the largest civilian departments in the federal government. HHS employs more than 67,000 people. Sebelius, who is a former president of the National Association of Insurance Commissioners, will lead the administration’s goal of passing universal healthcare legislation and is tasked with working with Congress to receive more money for pandemic flu preparation, vaccine development and aid to state and local health departments.

Her nomination process had been a protracted affair. Lawmakers looked into what Sebelius called “unintentional errors” in three years of tax returns, resulting in her paying more than $7,000 in back taxes. Republicans had delayed the vote because of concerns about Sebelius’ support of abortion. Some Republicans also asserted that she and the administration intended to ration healthcare using the results of research comparing the cost and effectiveness of different treatments. Members of the medical device community have indicated they’re supportive of comparative effectiveness programs, provided they’re properly structured.

“It is an honor to lead the Depart-ment of Health and Human Services, and I am grateful for the opportunity to serve at such a pivotal moment in our history,” Sebelius said, following her swearing-in ceremony in the Oval Office at the White House.

“I have every confidence that given her experience as a governor who’s managed crises before, who’s worked on public health issues since she’s been in public life, she is the right person at the right time for the job,” Obama said.

The president added that he was “thrilled” to have Sebelius on board and, given the mounting healthcare challenges and threats currently facing the United States, it was time to have “ all hands on deck.”

A few of those “hands,” however, remain missing at the moment. Some of the key healthcare positions in government remain vacant, notably the top spots for FDA and CMS. The president nominated Dr. Margaret Hamburg as the next FDA administrator, but, as of press time, there has been no confirmation.

The medical device sector, which has been in the legislative crosshairs following the recent introductions of industry-specific bills in both houses of Congress, seems ready to work with HHS’ new chief, according to the Advanced Medical Technology Association (AdvaMed) in Washington, D.C.

“AdvaMed looks forward to working with Secretary Sebelius as the administration and Congress begin developing specific plans to reform the healthcare system. The medical technology industry is committed to ensuring that all Americans have access to affordable, quality insurance and the most effective medical innovations to meet their individual needs,” said Stephen J. Ubl, president of AdvaMed.

Stryker CEO Reveals China Manufacturing Plans

During the question-and-answer period of a recent shareholder meeting, Stryker Corp. CEO Stephen MacMillan said the company is breaking ground on a manufacturing facility in China.

“We certainly are expanding our manufacturing footprint and our selling operations around the world. Right now, most of our manufacturing today, for example, resides both in North America as well as in Western Europe,” MacMillan said, responding to a question about foreign investment. “ But as we go to the future, we have broken ground on a plant in China ... that will help us to serve the Chinese marketplace and potentially some of that part of the world going forward. We’re constantly trying to seize opportunities and stay flexible as to how we expand around the world.” Calls to Kalamazoo, Mich.-based Stryker were not returned by press time.

J. Patrick Anderson, Stryker’s vice president of Corporate Affairs released a written statement saying the move was part of the company’s “strategic expansion” in the Asia-Pacific region and that the facility will be located in the Suzhou Industrial Park and produce manual instrumentation used in orthopedic implant surgery. The plant is expected to be operational this year, according to Anderson.

The Suzhou Industrial Park is a unique joint venture between the governments of the People’s Republic of China and Singapore. Suzhou is located about 80 miles east of Shanghai.

“Suzhou Industrial Park provides a state-of-the-art manufacturing environment that is currently home to more than 75 facilities operated by global Fortune 500 companies,” according to the statement. According to MacMillan during the shareholder meeting, Stryker currently is 375th on the Fortune 500 list. However, if the list was rated on profits alone, the company would rank 135th, MacMillan noted, adding that the company is in a “financial position of strength.”

Despite its financial position, Stryker most likely won’t achieve a ninth straight year of double-digit sales growth this year. MacMillan told shareholders that cuts in hospital spending, reductions in surgeries and the strengthening U.S. dollar have contributed to slower sales. In 2008, Stryker was one of only 14 Fortune 500 companies to achieve eight straight years of double-digit revenue growth. It had revenue of $6.7 billion in 2008, a 12 percent increase compared to 2007. MacMillan predicted the company soon would return to double-digit revenue growth. He said Stryker is well positioned to handle weakness in the market because it currently has $2.2 billion in cash and no long-term debt.

Synthes Settles With N.J. Attorney General

Synthes, Inc. entered an Assurance of Voluntary Compliance Agreement (AVC) with New Jersey’s Division of Consumer Affairs. The AVC reinforces Synthes’ compliance policies regarding the collection and dissemination of information about relevant financial relationships of its clinical investigators. The settlement involves an inquiry initiated in 2008 by New Jersey’s attorney general, which focused on the company’s disclosure of the financial interests of certain investigators involved in the clinical trials for the ProDisc-L and ProDisc-C artificial spinal discs.

The U.S. Food and Drug Administration (FDA) approved the devices in August 2006 and December 2007, respectively. Patient safety and the effectiveness of the ProDisc products were not issues in the inquiry, according to the company. The FDA was advised of the results of the New Jersey inquiry and has not changed its conclusions that the ProDisc clinical studies are scientifically valid and that the ProDisc products are safe and effective, company officials added.

Synthes voluntarily entered into the AVC without any admission of wrongdoing and agreed to reimburse New Jersey $236,000 for the cost of the investigation. The company paid no fines or penalties. In addition, going forward, Synthes will not compensate trial doctors with company stock, will release information on payments to physicians, and also will release information about doctors involved in studies who have a financial claim in the trial results.

“It is outrageous that doctors who are testing and, in many cases, recommending the use of certain high-risk medical devices are being compensated with stock in the very companies that make the devices,” New Jersey Attorney General Anne Milgram told NJ.com. “All patients—but especially those considering high-risk devices such as spinal disc replacements—deserve honest, objective clinical trial information about the products available.” Milgram also noted that the FDA was not as diligent as it should have been monitoring Synthes.

“Medical device makers have a duty to make certain that clinical trial results are accurate and unbiased. In creating these financial incentives for doctors, Synthes and the rest of the industry have done the exact opposite. Going forward, if the industry will not address this problem voluntarily, we most certainly will,” Milgram added.

The FDA permits clinical investigators to have financial interests in a product or company. The agency requires, however, that clinical investigators disclose their relevant financial relationships to the company sponsoring a study and that the company report these financial disclosures to the FDA. FDA-approved clinical trials are specifically designed to eliminate or minimize the potential for investigator bias. Milgram has broadened the state’s investigation into similar conduct by other medical device firms. Five additional subpoenas were issued in early May seeking information from other manufacturers about their physician compensation practices. As of press time, the names of the companies had not been released.

Synthes is based in Switzerland, with U.S. headquarters in West Chester, Pa.

NuVasive Inks Deal for Cervitech

NuVasive, Inc. has acquired all of the outstanding shares of Rockaway, N.J.-based Cervitech, Inc. The purchase provides the potential to accelerate NuVasive’s entry into the growing mechanical cervical disc replacement market. The initial payment will be approximately $47 million, with an additional contingent payment of $33 million upon approval of Cervitech’s PCM cervical disc system by the U. S. Food and Drug Administration (FDA). PCM is a motion-preserving total disc replacement device. At NuVasive’s discretion, all payments may be made in up to 50 percent NuVasive stock.

“We believe that the cervical disc replacement market will become one of the fastest growing segments in spine over the next several years as surgeons and patients choose motion preservation over traditional fusion,” said Alex Lukianov, chairman and CEO of NuVasive. “ The PCM investigational device has the potential to significantly accelerate NuVasive’s entry into this important market.”

Lukianov said Cervitech is running an “impressive” clinical trial, and the published clinical data verifies that the PCM offers “significant benefits” to patients. Currently, the PCM investigational device is in an FDA-approved clinical trial in the United States, and two-year follow up should be completed in the fourth quarter of 2009, according to Lukianov. San Diego, Calif.-based NuVasive anticipates filing for FDA approval in the first quarter of 2010. The company expects modest sales outside the United States in the near term, with product revenue of $100 million annually within three years of U.S. rollout.