07.31.12
President Obama has proven a friend to the medical device industry, at least in terms of U.S. Food and Drug Administration (FDA) regulatory reform. He signed the bipartisan Food and Drug Administration Safety and Innovation Act into law, which reauthorizes user fees as well as renovates many criticized aspects of FDA operations.
Housed within the legislation is the Medical Device User Fee Act (MDUFA), which effectively is a renewal of the Medical Device User Fee and Modernization Act (MDUFMA), originally passed in 2002 and then reauthorized in 2007.
Most changes to MDUFMA were made to speed up approval and clearance times for devices, partly by raising fees paid to the FDA (to which the industry did not balk, provided that speed and predictability from the agency are forthcoming). The House and Senate voted the reauthorization bill through with little squabbling, and the bill was an encouraging example of bipartisan agreement. On June 26, the bill was approved by the U.S. Senate in a 92-4 vote.
“The [increased] user fees will improve FDA’s ability to provide timely and expedited review and approval of applications for prescription drugs and medical devices,” said David L. Gollaher, Ph.D., president and CEO of the California Healthcare Institute. “The legislation extends and modifies FDA
authorities related to drugs intended for use by children, improves the drug and device approval processes and offers new incentives for innovators to develop antibiotics.”
Lawmakers had set a goal of getting the bill to the president’s desk before Independence Day recess, and they succeeded. More importantly, lawmakers avoided possible renegotiations triggered by the U.S. Supreme Court decision on the Affordable Care Act on June 28. President Obama signed the Act on July 9.
“S. 3187 is the culmination of the work of the administration and Congress, in partnership with patients, the pharmaceutical and medical device industries, the clinical community, and other stakeholders, to provide the Food and Drug Administration with the tools needed to continue to bring drugs and devices to market safely and quickly and promote innovation in the biomedical industry, and to help secure the jobs supported by drug and device development,” U.S. Department of Health and Human Services Secretary Kathleen Sebelius said in a statement.
Industry executives expressed their pleasure with the result of what often has been a long road:
“This bill provides for the opportunity to accelerate the introduction of innovative medical devices without compromise to patient safety,” said Hank Kucheman, Boston Scientific CEO. “We are hopeful that these reforms will have a strong and lasting impact on the FDA’s ability to address lengthening review times, spur innovation and promote faster patient access to new therapies. We appreciate the collective effort undertaken by Chairman [Sen. Tom] Harkin, Senator [Mike] Enzi, Chairman [Rep. Fred] Upton and Congressman [Henry] Waxman to speed this important bipartisan bill through Congress. We look forward to working with the FDA on the implementation of the bill.”
MDUFMA has four main objectives:
“This legislation will help improve an already robust review process by giving FDA the additional tools and resources it needs to improve its timeliness and consistency,” said Stephen J. Ubl, Advanced Medical Technology Association (AdvaMed) president and CEO. “That means more American patients will have access to safe and effective treatments and diagnostics sooner, which is the shared goal of both FDA and industry.”
AdvaMed Chairman and Zimmer Holdings Inc. CEO David Dvorak had a warning for the industry: “The legislation … will require consistent and effective implementation by FDA, which will be held accountable to meeting its commitments.”
U.S. Supreme Court Votes to Uphold Universal Healthcare
The Supreme Court of the United States (SCOTUS) voted to uphold almost all clauses in the Patient Protection and Affordable Care Act (PPACA). The most controversial part of what many call a revolutionary piece of legislation in America was the individual mandate, which would require all Americans to have health insurance from birth till death or pay a penalty. The bill, including the individual mandate, was upheld in a close split of 5-4. Dissenting justices were Antonin Scalia, Clarence Thomas, Samuel Alito, and Anthony Kennedy.
Justice Anthony Kennedy, famous for being the traditional “swing vote” since he replaced Justice Sandra Day O’Connor in 2006, was the watched vote. He notoriously argued that if the government can force citizens to buy insurance, it would only be a short journey to forcing them to buy broccoli.
Pundits mused that after his arguments, the media overstated his opposition out of surprise at his language—but he proved true to his initial statements, voting to strike down the individual mandate.
The most surprising vote to uphold the PPACA in its entirety is that it was not Justice Kennedy who was the swing vote, but Chief Justice John Roberts, who sided with the liberal justices. Roberts was appointed by President George W. Bush after the death of Chief Justice William Rehnquist, and his vote typically falls on the right. Kennedy is viewed as politically moderate, and the public usually counts on him to be the unpredictable vote.
The individual mandate was upheld as a tax law, as individuals who do not buy insurance will be required to pay a “penalty tax.” Whether the penalty was a tax or not was a point of contention in early arguments, but the vote had designated it as such. Congress, SCOTUS argued, can impose such a law using its taxing power. Because the mandate was upheld, the court did not need to deliberate on whether other sections of the PPACA are constitutional, except for a provision that “requires states to comply with new eligibility requirements for Medicaid or risk losing their funding,” said Amy Howe of the SCOTUS blog.
Of course, upholding of the PPACA means the medical device tax is still set to begin in 2013. “This only speaks to the need for legislative action before Jan. 1 to repeal the device tax,” chief lobbyist for Advanced Medical Technology Association (AdvaMed) J.C. Scott told The Wall Street Journal.
AdvaMed President and CEO Stephen J. Ubl emphasized that according to its principles, the association has and still does support healthcare reform. However, he stressed the importance of weeding out aspects of the law that are damaging to the medtech industry.
“We have consistently opposed the $29 billion medical device tax because of its damaging effects on economic competitiveness, jobs and the research and development needed to find tomorrow’s treatments and cures,” he said. “The House has already voted to repeal the device tax, and we are heartened by the number of senators who have said they oppose the tax. We will continue to work with policymakers on both sides of the aisle to achieve this goal.”
Medical device companies already are preparing for doomsday, as it were, with layoffs and cost cutting. Stryker Corp. laid off 1,000 employees in November 2011 and a further 107 employees in New York are getting cut by December of this year, while Zimmer and others have layoffs in the works.
Small startups will be most affected as the tax will be on total sales rather than profits. Both Stryker and Zimmer have been lobbying for the repeal of the tax.
Curtis Rooney, president of the Healthcare Supply Chain Association, the healthcare purchasing lobby group, had this to say of cost cutting:
“Hospital budgets are already stretched thin, and as hospitals move forward with healthcare reform implementation, they will likely continue to face mounting financial pressures. [Group purchasing organizations] stand ready to continue to work with hospitals, long-term care facilities and other healthcare providers to provide critical cost savings to identify and bring innovative medical products to market and to help preserve affordable and accessible patient care.”
Clinicians worry about other aspects of the PPACA, such as the Independent Payment Advisory Board that was formed in 2010 to save money in Medicare without affecting quality or coverage.
“We cannot overlook provisions like the Independent Payment Advisory Board that threaten the 20-23 providers’ ability to deliver quality care by infringing upon exam room time,” said John R. Tongue, M.D., president of the American Academy of Orthopaedic Surgeons (AAOS). “The AAOS will continue its efforts to achieve a patient-centered solution to health reform by working with Congress to best implement the beneficial provisions of PPACA; repeal the detrimental provisions that still exist, and; to solve critical issues, like achieving a permanent solution to the flawed Sustainable Growth Rate formula and addressing federal medical liability reform that the law failed to address.”
While Congress continues to go through the processes of voting to repeal the medical device excise tax, President Obama has promised to veto the measure if it reaches his desk. The U.S. House of Representatives already has voted to repeal the tax, but a similar result in the U.S. Senate is less likely.
FDA Releases Plan for Unique Device Identification System
The U.S. Food and Drug Administration (FDA) will assign medical devices unique identification numbers in an effort to improve patient safety. Most devices—such as catheters, defibrillators, heart stents and artificial joints—fall under the plan, but there are some devices that will be excluded from this program. It isn’t clear yet what kind of devices those will be.
A unique device identification (UDI) system was mandated in 2007 by Congress, but it has not yet been implemented. The FDA user fee bill that was passed in Congress in June contains language mandating the FDA implement such a system within the next two years. The UDI program may cost as much as $68.4 million per year, according to a pending rule proposal available to the public on the FDA website.
“These regulations are long overdue and are critical for protecting patients from faulty and dangerous medical devices,” said Lisa Swirsky, senior policy analyst for Consumers Union, the policy and advocacy division of Consumer Reports. “Effective post-market surveillance of medical devices depends on having UDI in place. Once it is fully implemented, this system will enhance the FDA’s ability to identify problem medical devices more quickly and inform patients when their safety is at risk.”
Consumer Reports is a consumer and patient advocacy watchdog organization that has been critical of the medical device industry lately.
Identifiers would include bar codes and other technology, and they would help identify a range of details of the device in question such as batch number, serial number and expiration date. The FDA regulation is not specific about what kind of technology will be used; the identification technology used will be at the discretion of the device manufacturer. The UDI also would help regulators trace and track flaws, failures and incompatibilities before the risk becomes too great—and manage recalls better. On its website, the FDA says that its UDI system has the potential to lead to a global standard for medical device identification.
“Under the proposed system,” the electronically published proposal states, “the health care community and the public would be able to identify a device through a UDI that will appear on the label and package of a device. The UDI will provide a key to obtain critical information from a new database, the Global Unique Device Identification Database (GUDID), which will include information important to the identification of devices. UDIs will appear in both plain-text format and a format that can be read by a bar code scanner or some other [Automatic Identification and Data Capture] technology.”
GUDID will not include any personal information such as who uses a device.
The FDA published the proposal in the Federal Register on July 10, and companies have 120 days from that date to submit any comments, suggestions or requested changes. Manufacturers of highest risk devices, identified as Class III, must comply with the final version of the plan within a year of its final publication. Class II devices have three years to meet requirements, while Class I manufacturers will have five years.
Housed within the legislation is the Medical Device User Fee Act (MDUFA), which effectively is a renewal of the Medical Device User Fee and Modernization Act (MDUFMA), originally passed in 2002 and then reauthorized in 2007.
Most changes to MDUFMA were made to speed up approval and clearance times for devices, partly by raising fees paid to the FDA (to which the industry did not balk, provided that speed and predictability from the agency are forthcoming). The House and Senate voted the reauthorization bill through with little squabbling, and the bill was an encouraging example of bipartisan agreement. On June 26, the bill was approved by the U.S. Senate in a 92-4 vote.
“The [increased] user fees will improve FDA’s ability to provide timely and expedited review and approval of applications for prescription drugs and medical devices,” said David L. Gollaher, Ph.D., president and CEO of the California Healthcare Institute. “The legislation extends and modifies FDA
authorities related to drugs intended for use by children, improves the drug and device approval processes and offers new incentives for innovators to develop antibiotics.”
Lawmakers had set a goal of getting the bill to the president’s desk before Independence Day recess, and they succeeded. More importantly, lawmakers avoided possible renegotiations triggered by the U.S. Supreme Court decision on the Affordable Care Act on June 28. President Obama signed the Act on July 9.
“S. 3187 is the culmination of the work of the administration and Congress, in partnership with patients, the pharmaceutical and medical device industries, the clinical community, and other stakeholders, to provide the Food and Drug Administration with the tools needed to continue to bring drugs and devices to market safely and quickly and promote innovation in the biomedical industry, and to help secure the jobs supported by drug and device development,” U.S. Department of Health and Human Services Secretary Kathleen Sebelius said in a statement.
Industry executives expressed their pleasure with the result of what often has been a long road:
“This bill provides for the opportunity to accelerate the introduction of innovative medical devices without compromise to patient safety,” said Hank Kucheman, Boston Scientific CEO. “We are hopeful that these reforms will have a strong and lasting impact on the FDA’s ability to address lengthening review times, spur innovation and promote faster patient access to new therapies. We appreciate the collective effort undertaken by Chairman [Sen. Tom] Harkin, Senator [Mike] Enzi, Chairman [Rep. Fred] Upton and Congressman [Henry] Waxman to speed this important bipartisan bill through Congress. We look forward to working with the FDA on the implementation of the bill.”
MDUFMA has four main objectives:
- User fees for medical device premarket approval (PMA) applications, which would provide additional funds to the FDA to help accelerate review processes;
- Performance goals and commitments for many types of PMAs, giving the FDA a road map of sorts to follow;
- Inspections of medical device facilities may be conducted by accredited third-party persons under certain circumstances in strictly prescribed conditions; and
- Strengthened agency authority to regulate reprocessed and single-use devices, to ensure that devices are safe and effective.
- Additionally, some of MDUFA’s new provisions include:
- The FDA will be able to monitor high-risk devices that already are on the market, and spur innovation by speeding up review processes for low- to medium-risk devices;
- The agency can reclassify a device on administrative order rather than a more burdensome rule-making process; and;
- The FDA must publish a proposed regulation for unique device identifiers by the end of 2012, finalize those regulations by the fall of 2013, and implement a program within two years of the final rule’s publication date.
“This legislation will help improve an already robust review process by giving FDA the additional tools and resources it needs to improve its timeliness and consistency,” said Stephen J. Ubl, Advanced Medical Technology Association (AdvaMed) president and CEO. “That means more American patients will have access to safe and effective treatments and diagnostics sooner, which is the shared goal of both FDA and industry.”
AdvaMed Chairman and Zimmer Holdings Inc. CEO David Dvorak had a warning for the industry: “The legislation … will require consistent and effective implementation by FDA, which will be held accountable to meeting its commitments.”
U.S. Supreme Court Votes to Uphold Universal Healthcare
The Supreme Court of the United States (SCOTUS) voted to uphold almost all clauses in the Patient Protection and Affordable Care Act (PPACA). The most controversial part of what many call a revolutionary piece of legislation in America was the individual mandate, which would require all Americans to have health insurance from birth till death or pay a penalty. The bill, including the individual mandate, was upheld in a close split of 5-4. Dissenting justices were Antonin Scalia, Clarence Thomas, Samuel Alito, and Anthony Kennedy.
Justice Anthony Kennedy, famous for being the traditional “swing vote” since he replaced Justice Sandra Day O’Connor in 2006, was the watched vote. He notoriously argued that if the government can force citizens to buy insurance, it would only be a short journey to forcing them to buy broccoli.
Pundits mused that after his arguments, the media overstated his opposition out of surprise at his language—but he proved true to his initial statements, voting to strike down the individual mandate.
The most surprising vote to uphold the PPACA in its entirety is that it was not Justice Kennedy who was the swing vote, but Chief Justice John Roberts, who sided with the liberal justices. Roberts was appointed by President George W. Bush after the death of Chief Justice William Rehnquist, and his vote typically falls on the right. Kennedy is viewed as politically moderate, and the public usually counts on him to be the unpredictable vote.
The individual mandate was upheld as a tax law, as individuals who do not buy insurance will be required to pay a “penalty tax.” Whether the penalty was a tax or not was a point of contention in early arguments, but the vote had designated it as such. Congress, SCOTUS argued, can impose such a law using its taxing power. Because the mandate was upheld, the court did not need to deliberate on whether other sections of the PPACA are constitutional, except for a provision that “requires states to comply with new eligibility requirements for Medicaid or risk losing their funding,” said Amy Howe of the SCOTUS blog.
Of course, upholding of the PPACA means the medical device tax is still set to begin in 2013. “This only speaks to the need for legislative action before Jan. 1 to repeal the device tax,” chief lobbyist for Advanced Medical Technology Association (AdvaMed) J.C. Scott told The Wall Street Journal.
AdvaMed President and CEO Stephen J. Ubl emphasized that according to its principles, the association has and still does support healthcare reform. However, he stressed the importance of weeding out aspects of the law that are damaging to the medtech industry.
“We have consistently opposed the $29 billion medical device tax because of its damaging effects on economic competitiveness, jobs and the research and development needed to find tomorrow’s treatments and cures,” he said. “The House has already voted to repeal the device tax, and we are heartened by the number of senators who have said they oppose the tax. We will continue to work with policymakers on both sides of the aisle to achieve this goal.”
Medical device companies already are preparing for doomsday, as it were, with layoffs and cost cutting. Stryker Corp. laid off 1,000 employees in November 2011 and a further 107 employees in New York are getting cut by December of this year, while Zimmer and others have layoffs in the works.
Small startups will be most affected as the tax will be on total sales rather than profits. Both Stryker and Zimmer have been lobbying for the repeal of the tax.
Curtis Rooney, president of the Healthcare Supply Chain Association, the healthcare purchasing lobby group, had this to say of cost cutting:
“Hospital budgets are already stretched thin, and as hospitals move forward with healthcare reform implementation, they will likely continue to face mounting financial pressures. [Group purchasing organizations] stand ready to continue to work with hospitals, long-term care facilities and other healthcare providers to provide critical cost savings to identify and bring innovative medical products to market and to help preserve affordable and accessible patient care.”
Clinicians worry about other aspects of the PPACA, such as the Independent Payment Advisory Board that was formed in 2010 to save money in Medicare without affecting quality or coverage.
“We cannot overlook provisions like the Independent Payment Advisory Board that threaten the 20-23 providers’ ability to deliver quality care by infringing upon exam room time,” said John R. Tongue, M.D., president of the American Academy of Orthopaedic Surgeons (AAOS). “The AAOS will continue its efforts to achieve a patient-centered solution to health reform by working with Congress to best implement the beneficial provisions of PPACA; repeal the detrimental provisions that still exist, and; to solve critical issues, like achieving a permanent solution to the flawed Sustainable Growth Rate formula and addressing federal medical liability reform that the law failed to address.”
While Congress continues to go through the processes of voting to repeal the medical device excise tax, President Obama has promised to veto the measure if it reaches his desk. The U.S. House of Representatives already has voted to repeal the tax, but a similar result in the U.S. Senate is less likely.
FDA Releases Plan for Unique Device Identification System
The U.S. Food and Drug Administration (FDA) will assign medical devices unique identification numbers in an effort to improve patient safety. Most devices—such as catheters, defibrillators, heart stents and artificial joints—fall under the plan, but there are some devices that will be excluded from this program. It isn’t clear yet what kind of devices those will be.
A unique device identification (UDI) system was mandated in 2007 by Congress, but it has not yet been implemented. The FDA user fee bill that was passed in Congress in June contains language mandating the FDA implement such a system within the next two years. The UDI program may cost as much as $68.4 million per year, according to a pending rule proposal available to the public on the FDA website.
“These regulations are long overdue and are critical for protecting patients from faulty and dangerous medical devices,” said Lisa Swirsky, senior policy analyst for Consumers Union, the policy and advocacy division of Consumer Reports. “Effective post-market surveillance of medical devices depends on having UDI in place. Once it is fully implemented, this system will enhance the FDA’s ability to identify problem medical devices more quickly and inform patients when their safety is at risk.”
Consumer Reports is a consumer and patient advocacy watchdog organization that has been critical of the medical device industry lately.
Identifiers would include bar codes and other technology, and they would help identify a range of details of the device in question such as batch number, serial number and expiration date. The FDA regulation is not specific about what kind of technology will be used; the identification technology used will be at the discretion of the device manufacturer. The UDI also would help regulators trace and track flaws, failures and incompatibilities before the risk becomes too great—and manage recalls better. On its website, the FDA says that its UDI system has the potential to lead to a global standard for medical device identification.
“Under the proposed system,” the electronically published proposal states, “the health care community and the public would be able to identify a device through a UDI that will appear on the label and package of a device. The UDI will provide a key to obtain critical information from a new database, the Global Unique Device Identification Database (GUDID), which will include information important to the identification of devices. UDIs will appear in both plain-text format and a format that can be read by a bar code scanner or some other [Automatic Identification and Data Capture] technology.”
GUDID will not include any personal information such as who uses a device.
The FDA published the proposal in the Federal Register on July 10, and companies have 120 days from that date to submit any comments, suggestions or requested changes. Manufacturers of highest risk devices, identified as Class III, must comply with the final version of the plan within a year of its final publication. Class II devices have three years to meet requirements, while Class I manufacturers will have five years.