FDA Releases Action Plan for AI

The FDA announced an action plan for artificial intelligence in mid-January, which comes across largely as a follow-up to a discussion paper the agency posted in April 2019. The plan lays out a number of specific objectives, but the text of the plan suggests that the FDA is little farther along in its attempt to fashion a regulatory regime for AI than it was two years ago.

The action plan lists five activities that are critical to the development of a regulatory framework for AI, such as development of a draft guidance for predetermined change control plans. This draft guidance, which the FDA said should be ready for public comment at some point in 2021, will provide details on the type of information that should appear in a developer’s algorithm change protocol (ACP), but the agency is still pondering the question of the types of modifications that would fall under this requirement.

The FDA will also work toward a more robust, harmonized approach to good machine learning practices (GMLPs). The agency made note of several ongoing programs to develop GMLPs, such as those sponsored by the Association for the Advancement of Medical Instrumentation (AAMI) and the Institute of Electrical and Electronics Engineers (IEEE). Those who responded to the April 2019 artificial intelligence discussion draft are said to have cited GMLPs as a major concern, in part over the potential for conflicting requirements.

Despite the seemingly large task facing the FDA and stakeholders regarding the ACP concept, the discussion of real-world performance (RWP) monitoring may present a more difficult proposition. The collection of RWP data will be critical to ensuring the algorithm functions as intended, but the action plan raises several questions, such as how much oversight will be provided by each of the stakeholders involved in a given algorithm’s use. The volume and frequency of data submitted to the agency as part of the RWP surveillance is also as yet not well characterized, but the agency is assembling a voluntary pilot program to assist in development of a working policy.

Other questions raised in the action plan include transparency of the algorithm, including to patients, and development of regulatory science to evaluate an algorithm’s robustness and to eliminate any unintended bias. While much of the FDA’s device center is caught up in the response to the COVID-19 pandemic, the agency’s Digital Health Center of Excellence will be tasked with shepherding the AI action plan as it evolves.

Medicare Confirms Coverage of Breakthrough Devices

The Centers for Medicare & Medicaid Services followed through on its plan to offer Medicare coverage for devices reviewed by the FDA’s breakthrough devices program, but the agency also followed up on its promise to redefine the term “reasonable and necessary.” The first of these proposals will be the more quickly felt, but the redefinition of reasonable and necessary could have a profound impact on a wide range of products going forward.

The Medicare Coverage of Innovative Technology (MCIT) program offers coverage on the date of the FDA’s approval, clearance or grant of de novo petition, thus eliminating any lag in coverage. The concept behind MCIT can be seen in an industry proposal from 2016, which was dubbed the Provisional Accelerated Coverage to Encourage Research (PACER) initiative. This proposal was rebranded when it appeared on the Office of Management and Budget’s regulatory agenda in 2018, but the proposal seemed to fade out of view until the CMS resurrected the concept via the MCIT program in August 2020.

MCIT offers device makers four years of Medicare coverage, after which the sponsor will be faced with choosing between a national coverage determination or one of the alternatives, such as a series of local coverage determinations. However, the final rule allows device makers to apply for coverage for devices that had already gone through the breakthrough devices program, although coverage in that scenario also expires four years after the FDA grants marketing authorization.

The proposal to redefine reasonable and necessary starts with an analysis of whether the device has moved past the experimental/investigational label. A manufacturer can apply for Medicare coverage based on any coverage provided by commercial payers, but the agency declined to spell out a methodology for determining whether existing private payer coverage is sufficient to meet the new definition. CMS said it would issue sub-regulatory guidance within 12 months of the date of the final rule, although the proposal to redefine this key Medicare term would seem to be susceptible to the regulatory freeze imposed by the Biden administration Jan. 20.

Biden Administration Revokes Series of Executive Orders

The Biden administration has wasted no time in issuing a number of executive orders (EOs), including those that applied a freeze to or revoked a number of orders issued under the Trump administration. Among these is an order designed to require a cost-benefit analysis of new regulations, but the net effect is to clearly signal that the relatively restrained regulatory approach of the past four years is over.

The Trump administration issued EO 13771 Jan. 30, 2017, only 10 days after President Donald Trump was sworn into office. This order, titled, “Reducing Regulation and Controlling Regulatory Costs,” required that U.S. government agencies repeal two existing regulations for every new regulation, and to do so in a manner that is at worst cost neutral to regulated entities. This order was the subject of a number of lawsuits, but was rescinded when President Joseph Biden formally withdrew EO 13771 in an EO dated Jan. 20, 2021. This was the date of Biden’s inauguration, signaling that the new administration would waste no time in leaving its imprint on the executive branch.

Public Citizen was among those who challenged EO 13771, although the lawsuit failed to gain the desired traction in court. In 2019, the U.S. District Court for the District of Columbia indicated that Public Citizen lacked standing to sue, not the first time this litigant failed to gain much traction in court.

Another of the repealed Trump era rules was EO 13891, the final version of which noted that the order was accompanied by a relatively short comment period of only 30 days. This order took up the question of good guidance practices, although the FDA has its own working set of standard operating procedures for guidance development. The FDA would have had to amend its approach to reflect the terms of the EO 13891, had the rule withstood the change of administration.

Another withdrawn entry in the Trump administration’s rulemaking agenda was EO 13892, which stated that enforcement discretion could be applied when the defendant could demonstrate there was no intent to violate the law. Another component of this executive order echoed the Brand memo to the extent that it disallowed the practice of using non-compliance with agency guidance in federal enforcement or prosecution.

Lack of Clarity on Several Issues

There are a number of other federal department/agency actions undertaken over the past four years that may be at risk. For instance, Merrick Garland, the nominee for Attorney General of the U.S., may decide that the Granston and Brand memos are due for revision or withdrawal, assuming the Senate confirms his appointment. Garland’s tenure at the U.S. Court of Appeals for the D.C. Circuit did not seem to include a large volume of cases involving the False Claims Act, but Sen. Chuck Grassley (R-Iowa) has indicated previously that he has misgivings regarding the use of the Granston memo to dismiss qui tam litigation. Thus, any Senate hearings for Garland’s appointment might not excessively press the jurist on his views of the Granston memo.

In a separate action, the White House posted notice that it would impose a regulatory freeze for any regulations that were recently published in final version in the Federal Register. The effective date for any such regulations is pushed back 60 days, while any draft regulations that did not reach final form are to be withdrawn.

There are exceptions to these two requirements, including instances in which agency or department directors make a compelling case for an exception, but the order also notes that guidance, not just rules, may be part of the freeze/review mandate. There is no indication as yet as to whether the Biden administration will address the August 2020 HHS order rescinding the FDA’s authority to regulate lab-developed tests, however, a question that may surface in the House as the VALID Act is inevitably resurrected on Capitol Hill.

HHS Posts Civil Enforcement, Regulatory Review Mandates

The administrative levers at the U.S. Department of Health and Human Services will change hands shortly, but the current administration has taken two actions that each could have a significant impact going forward. HHS finalized a November 2020 draft rule stipulating a decennial review of regulations, while the second action sets an enforcement policy that in part seems to reflect the terms of a memo released by the Department of Justice in January 2018.

HHS had proposed a decennial review of regulations issued by its agencies under the Regulatory Flexibility Act of 1980, which proposed that the review include a consideration of whether a rule should be modified or rescinded. The proposed change was justified in part by a retrospective examination of regulations posted prior to 1990 by means of an artificial intelligence algorithm, which determined that 85% of these legacy regulations had never been edited.

The final rule, announced Jan. 8, is dubbed the Securing Updated and Necessary Statutory Evaluations Timely (SUNSET), and retains the 10-year lookback interval provided by the draft. Any regulation that is 10 years old as of the date of the final rule must be examined within five years of the effective date of the rule, more than twice the two-year term of compliance provided by the draft.

One difficulty for the authors of this rule is that it does not go into force until 60 days until after its appearance in the Federal Register, suggesting the incoming administration will have ample opportunity to repeal it. Given the robust history of bipartisan support for such actions as cited in the HHS press release, however, the next administration at HHS may believe there is some justification for leaving it in place.

Rebranding the Brand memo

HHS posted a second final rule in mid-January, which is “designed to enhance” department practices in the context of transparency and fairness in civil enforcement actions. The Jan. 12 announcement for the rule was followed Jan. 13 by a formal statement by HHS chief of staff Brian Harrison, which states that the rule pertains to parties caught up in administrative enforcement and adjudication proceedings.

An example of this policy is that HHS will conduct its in-house adjudications in a manner that more strongly resembles those conducted in federal court, but also that enforcement discretion may be exercised for defendants who had acted in good faith when they breached the law. Harrison said the department’s civil enforcement division activity can readily cripple small businesses and individuals, and that HHS owes it to these entities to ensure that any such proceedings are fair and transparent.

Among other things, the final rule reinforces the HHS commitment to prohibit the practice of treating non-compliance with “a standard or practice” that appears nowhere but in HHS agency guidance “as itself a violation of the law.”

The HHS announcement would seem to echo the Brand memo, which the Department of Justice disclosed in January 2018. DOJ characterized the memo as a prohibition of the conversion of agency guidance documents into binding rules during civil enforcement actions. The scope of this policy was presumably limited to the actions of federal attorneys, although the memo itself states that its terms are applicable when those attorneys are handling affirmative civil enforcement cases for client agencies. Among these client agencies is the FDA.

That understanding was reinforced by a presentation made by Deputy Assistant Attorney General Ethan Davis in February 2018. The conference at which Davis spoke dealt with the off-label promotion question that has vexed the FDA for a number of years, and Davis noted that the department’s civil division collaborates closely with the FDA.

In addition to the provision regarding agency guidance, the HHS rule requires that all civil administrative inspections be conducted according to published rules of procedure. The rule also requires that the department provide written notice and opportunity to respond before taking any civil enforcement action with legal consequence, although HHS said exceptions exist.

Industry: FDA Staffing a Key User Fee Issue

Negotiations are underway between the FDA and industry regarding MDUFA V, the fifth medical device user fee agreement, but there are still some issues with the current agreement. One of those, according to industry representatives, is that the agency still has not hired all the staff it had committed to under MDUFA IV, an omission they say must be corrected expeditiously.

According to the transcript for the Oct. 27, 2020, meeting for MDUFA V, Janet Trunzo, senior vice president for regulatory affairs at the Advanced Medical Technology Association (AdvaMed), said user fees promote rather than distract the FDA from fulfilling its mission of protecting public health. Trunzo also said user fees have allowed the FDA’s Center for Devices and Radiological Health to hire hundreds of scientists, engineers and medical officers, and that interactive reviews have enabled a faster, leaner resolution of issues encountered in premarket submissions.

Nonetheless, Trunzo recommended that the agency complete the hiring of all staff that were agreed to and funded by MDUFA IV “as soon as possible.”

That perspective was echoed by Mark Leahey, president and CEO of the Medical Device Manufacturers Association. Leahey expressed some concern about the ever-rising volumes of user fees with each agreement, but added that the agency has yet to make approximately 50 hires agreed upon under MUFA IV.

Leahey also questions the FDA’s method for calculating the cost of each full-time equivalent (FTE) employee. He said the agency’s practice is to divide the total device review budget by the number of FTEs to arrive at the cost per FTE. Device makers are waiting for some information from the agency about this calculation, Leahey said, adding that industry seeks to arrive at a more appropriate approach for making such calculations.

Fees Supplemental, not Primary Revenue Sources

MDMA’s Leahey said the primary responsibility for FDA’s funding sources is congressional appropriations, and that user fees were always seen as supplemental to appropriations. That perspective should be maintained as the negotiations grind on, he said.

The first device user fee program yielded $144 million and jumped to $312 million under MFUFA II. The volume of fees doubled in each of the following iterations and will amount to more than $1 billion under MDUFA IV when all is said and done. Leahey said user fees amounted to more than $200 million in fiscal year 2019 alone.

Peter Weems, senior director of policy and strategy at the Medical Imaging & Technology Alliance, did not specifically call out the dollar figure for the next user fee program, but did state that MITA does not anticipate any need for major new programmatic initiatives or major new commitments. The association’s position is that all programs assembled with the help of user fees should be revisited to determine which should be sustained going forward, and which should be halted if there is a determination that the need is no longer there.

FDA commissioner Stephen Hahn had no reservations about another expansion of total user fees. Hahn stated that the device user fee program and the associated resources “are only a fraction of the size of the programs for prescription and generic drug user fees.” This fact makes the success of the device user fee programs “all the more remarkable,” he stated.

Hahn said he is concerned about the long-term health of the device user fee program, given the pace of innovation in the device industry. The next user fee agreement will give stakeholders a chance “to see what investments we can make in human resources and programs” that enhance communication between sponsors and the agency, he said, a statement he applied to registries as well. Hahn more or less reiterated that view toward the end of his remarks, stating that the negotiations will also provide an opportunity “to consider how we can provide technological, programmatic and other resources to the device team,” including human resources.

EU releases IVD Risk Classification Framework

The medical device regulatory office for the European Commission (EC) finalized a guidance for risk categorization of in vitro diagnostics (IVDs), but concerns about the related implementation date persist. Despite the fact that the original implementation deadline was suspended for a year, many of the affected parties are arguing that industry needs at least another year to implement the new regulations because of the impact of the COVID-19 pandemic on the IVD ecosystem in Europe.

The Nov. 13, 2020, risk classification document by the EC’s Medical Devices Coordination Group (MCDG) employs a four-tier risk scheme, with class D the highest risk category per the manufacturer’s statement of intended use. Any software used with an IVD would necessarily fall into the same risk category as the device with which the software is used.

Despite that the implementation date for the overall IVD regulation has already been suspended for a year, MedTech Europe preemptively argued in July that a number of crucial elements in the regulatory ecosystem are not yet in place. Among the missing building blocks cited by MedTech Europe is a body of guidance documents that are up to the task of explaining the regulations, but the association also noted that there is an insufficient number of notified bodies to handle the impending volume of test recertifications.

Serge Bernasconi, CEO of MedTech Europe, stated that the diagnostics industry is still committed to assisting in the effort to recover from the COVID-19 pandemic, but said the impact of the pandemic on the IVDR implementation “has been considerable, and this must be neither underestimated nor ignored.” In an attached position paper, MedTech Europe called for a delay beyond the existing implementation date of May 26, 2022, but offers no specifics regarding the term of any additional delay.

Ambiguity in Intended Use a Possible Problem

The document is divided into seven rules for risk classification, such rule 2, which covers devices intended for use in blood grouping. Product labeling should clearly spell out the intended use of the diagnostic and the related risk classification, and any ambiguity on this point may lead to a higher risk classification than that proposed by the test maker. There is also some variability within tests for a specific biological agent. The guidelines state, for instance, that a screening test for syphilis would likely fall into class D, but a test to diagnose syphilis in the individual is more likely to be deemed a C risk device.

The guidelines are intended to apply uniformly across technologies, although two tests using the same specimen type may or may not be deemed to fall into the same risk classification. Tests and any associated devices, including software as a medical device, that are used to detect exposure to or the presence of a transmissible agent in the blood, blood components or other organs would be class D devices when those tissue products are intended for transplant, transfusion or administration of cells for therapeutic uses. However, a class D designation might not attach to the same test for such pathogens when conducted for other purposes.

Also among the rules listed in the guidelines are those for devices for self-testing and tests for sexually transmitted diseases. Companion diagnostic tests would fall under class C, as are tests to determine the stage of the disease. Conversely pregnancy tests and tests for fertility are slotted into class B. The guidelines provide classification for instruments, reagents and calibrators as well. Test developers will be liable for annual surveillance assessments for class C and D tests, but not for class A and B tests.

HHS Proposes Decennial Review of Regulations

The U.S. Department of Health and Human Services posted a notice of proposed rulemaking requiring HHS agencies to periodically assess their regulations to determine whether a regulation is reviewable under the Regulatory Flexibility Act (RFA) of 1980. Under the proposed rule, any regulation issued by an HHS agency becomes null at 10 years unless a confirmatory review is conducted, but the rule has a short activation time, given the impending change of administration at the White House.

The Nov. 4 HHS statement asserts that federal government agencies should retrospectively re-examine the initial projections of the impact of a rule to determine whether the rule should be amended or rescinded. HHS stated that an analysis of HHS data performed by an artificial intelligence (AI) algorithm disclosed that 85 percent of the regulations issued by HHS agencies before 1990 have not been edited. HHS Secretary Alex Azar said the proposed rule would help ensure that the affected agencies are fulfilling their responsibilities “in a way that maximizes benefits, minimizes costs, and keeps up with the times.”

Several types of regulations would not be subject to the proposed rule, such as regulations issued jointly by two or more agencies. Any regulations that are exempt from rulemaking requirements under the Administrative Procedures Act would also be exempt (the RFA was an amendment to the Administrative Procedures Act).

The statement lists similar actions undertaken by every president to hold office since 1978, along with statements in support of routine regulatory review from members of the Obama and George H. W. Bush administrations. The Organization for Economic Cooperation and Development (OECD) is also among the entities that have recommended this type of review function, with OECD recommending that regulations be subject to a sunset to incentivize the review.

One of the issues that surfaced during the AI review of HHS regulations is that the U.S. Code of Federal Regulations (CFR) bears nearly 300 references to portions of the CFR that no longer exist. There are 50 references to requirements to submit paperwork in triplicate or quadruplicate, and 114 sections with no regulatory entity listed. HHS stated that a number of regulations that have been relaxed to aid in the response to the COVID-19 pandemic would also be subject to review.

HHS acknowledged the problem with the proposed rule in the event the 2020 presidential election failed to return President Donald Trump for a second term. The comment period ends Jan. 4, 2021, but HHS said that whether it finalizes the rule and the time frame for doing so “depends on the comments received during the public comment period.” Inauguration day is Jan. 20, 2021, leaving HHS with only 16 calendar days to act on the proposal once the comment period closes.

HHS Using Algorithms in Regulatory ‘Clean-up’ Initiative

The Nov. 4 HHS statement’s references to the use of AI for regulatory review were expounded on in a Nov. 17 HHS statement describing the use of a new department-wide regulatory clean-up initiative, which uses both AI and natural language processing (NLP) technologies. The intent of this program is to identify entries in the CFR that call for correction, such as the incorrect citations mentioned in the Nov. 4 HHS statement. The process used by HHS also examined the CFR for misspellings, typographical errors, and erroneous language, but the HHS statement also tabulated the CFR at approximately 185,000 pages, a testimonial to the complexity of compliance.

This regulatory clean-up program is part of a final rule that is effective Dec. 16, and which takes aim at administrative, non-substantive changes that will clean up HHS agency regulations. This final rule is based on a pilot program that employed the same algorithms to analyze a limited section of the HHS portion of the CFR. The statement describes this pilot program as having demonstrated that federal agencies can execute “a cost-effective, enterprise-wide approach to regulatory reform that could improve accountability and transparency.”

The HHS statement further emphasizes the deregulatory agenda of the Trump administration, and HHS deputy secretary Eric Hargan said HHS accounted for more than half the regulatory savings achieved by the federal government between fiscal years 2017 and 2019. Hargan said HHS is the first cabinet agency to use AI and NLP to conduct a regulatory clean-up that will eliminate “archaic, obsolete and inconsistent rules.”

HHS Announces Delayed HIT Compliance Deadlines

The Department of Health and Human Services has responded to concerns about compliance dates for healthcare IT with an interim final rule that relaxes those deadlines by nearly half a year. According to the Oct. 29 HHS press release, vendors of health IT systems have until April 5, 2021, to comply with information blocking provisions of the 21st Century Cures Act, a delay some saw as critical due to the COVID-19 public health emergency.

The Office of the National Coordinator (ONC) had released the final rule March 9, 2020, which in addition to the information blocking provisions included certification requirements for application programming interfaces (APIs). ONC director Don Rucker emphasized that this latest delay does not eliminate the rules requiring greater patient access to their health information, but is intended to allow developers to focus on the pandemic.

In April 2020, the ONC exercised enforcement discretion by adding three months to several of the compliance deadlines included in the March final rule, making the Oct. 29 delay the second such announcement this year. In addition to the delay until April 2021 for the Cures Act’s information blocking provisions, the ONC will allow developers until Dec. 31, 2022, to demonstrate that their software complies with the updated requirements for API functionality.

The Healthcare Information and Management Systems Society Inc., (HIMSS) of Chicago, said the announcement allows the health care sector to focus on the pandemic while sustaining a path forward toward greater patient access to their own information. HIMSS stated that the scope of the information blocking provisions will expand in October 2022, prior to which developers will have to demonstrate only that they are providing access to a limited number of elements initially included in the U.S. Core Data for Interoperability. This will allow developers to become more accustomed to these requirements prior to the compliance date of Oct. 6, 2022, when the full scope of a patient’s electronic health information becomes mandatorily accessible to patients.

The American Health Information Management Association (AHIMA), also headquartered in Chicago, applauded the delay in an Oct. 29 statement. AHIMA CEO Wylecia Wiggs Harris, said the additional delay “is a prudent decision, as the reallocation of resources due to the COVID-19 pandemic has made it challenging for many health information professionals to ensure their institutions are sufficiently in compliance.” Harris thanked ONC “for being cognizant of the realities health information professionals are encountering during the COVID-19 pandemic.”

CMS Resets Two DME Policies

The Centers for Medicare & Medicaid Services released two policy changes, one each for competitive bidding for durable medical equipment (DME), and the other for how items are categorized under the Medicare Part B DME benefit. Of the two, the more immediate impact on patients may be created by the Oct. 27 CMS proposal to classify all continuous glucose monitors (CGMs) as DME, providing broader coverage of CGMs than has been available up to now. At present, Medicare covers these devices only when approved by the FDA for use in making treatment decisions for those with diabetes, such as changes to insulin dosage or to diet.

The policy change would provide coverage for CGMs for more routine considerations, such as potentially hazardous overnight glucose excursions. CMS also made note of the fact that one in every three Medicare beneficiaries suffers from diabetes. The proposed rule would also expand the DME classification of external infusion pumps to permit more in-home use.

The second CMS announcement regarding DME for the week ending Oct. 30 stated that the competitive bidding program would be delayed again for most items. Two items, off-the-shelf (OTS) knee and back braces, will be subject to bidding in 2021, and CMS indicated that the bidding process may save $600 million over the three years of the bidding program for these two items.

The 2021 round of bidding had originally included non-invasive ventilators, a category the agency removed because of the COVID-19 pandemic. OTS back and knee braces were not included in previous bidding programs, but bidding for the other 13 categories was dropped because previous bidding rounds failed to deliver on the anticipated savings.

The American Association for Homecare lent its support to the changes to the bidding program, stating that the program has established a price floor for the 13 devices that will be exempt from bidding year. The statement also recommended that bidding for these products be permanently ended.

FDA Closes EUA Program to Lab-Developed Tests

The question of whether the FDA has the authority to regulate lab-developed tests (LDTs) boiled into plain view in August when the Department of Health and Human Services directed the agency to stand down on its regulation of LDTs. The predicament took another turn Oct. 7 when the FDA announced it would no longer review LDTs under the emergency use authorization (EUA) program, a change that was not well received in some quarters.

The HHS order to the FDA arrived with a reference to two executive orders from the Trump administration, but the notice also stated that developers of LDTs could voluntarily file for an EUA or a conventional premarket review. One of the more significant drawbacks described in the rescission order was that any LDTs that did not go through the FDA would not enjoy immunity from litigation under the Public Readiness and Emergency Preparedness (PREP) Act. At the time of the HHS announcement, however, there was no signal from the FDA that it would refuse to review LDT filings under the EUA program.

The FAQ page for testing stated, “we are currently in a different phase of the pandemic with respect to tests than we were previously, where many COVID-19 tests are now authorized to be run in labs.” The update states that the agency is prioritizing review of EUA requests for considerations such as public health need and availability of the product.

Among the priorities cited by the FDA are testing that would increase accessibility, such as point-of-care tests and home collection test kits, and tests that consume relatively few supplies. The statement said the FDA was declining to review EUA requests for LDTs “at this time,” suggesting the policy can be reversed if circumstances dictate.

Three members of the House of Representatives took the news as a negative, casting the FDA’s decision as “a grave mistake” that was prompted by officials at HHS. The letter described the change as reckless and as increasing the risk of false negative test results. Another concern voiced by Reps. Anna Eshoo (D-Calif.), Frank Pallone (D-N.J.) and Diana DeGette (D-Colo.) was the abruptness of the announcement, which did not allow the FDA to make changes to previously posted policy announcements.

The American Clinical Laboratory Association (ACLA) provided a brief Oct. 7 statement, making the argument that many of the LDTs that have been granted EUAs are known for reducing the reliance on supplies and for increasing testing capacity. ACLA President Julie Khani said these “are exactly the kinds of tests the FDA has stated it wants to prioritize,” adding that the FDA should continue to review LDTs under the EUA program. Khani also said the announcement “creates unnecessary confusion.”

CMS Cracking Down on CLIA Certification

Two days after the FDA announced its change in policy for LDTs, the Centers for Medicare & Medicaid Services announced it is targeting clinical laboratories that have lapsed certifications or are conducting tests not included in their certifications. The agency directed these labs to immediately cease any violative testing, although no enforcement action was spelled out in the statement.

The CMS said it has issued 171 cease and desist letters to labs since Aug. 12, 66% of which were for labs that were conducting tests that fell outside their certifications under the Clinical Laboratory Improvement Amendments (CLIA) Act. The other 34% were conducting tests with no CLIA certification at all, and recipients of the CMS letters were required to certify that they had desisted from the violative testing activity. The agency indicated that it had offered labs an expedited review process early in the COVID-19 pandemic, but said there is concern that these labs’ operations could lead to errant tests that would worsen the pandemic. However, the letters were sent with instructions on how to amend the oversights, assuming the recipient lab is interested in resuming the violative testing protocols.

FDA Revisits Intended Use Rule

The FDA’s policy for determining a manufacturer’s intended use has strained relations between the agency and industry in the past, but the agency said in a press release that the latest version clarifies that simple knowledge of off-label use does not suffice to infer intended use. The press release highlights this as a significant change despite that essentially the same language appears in the version of the rule published five years ago.

A previous version of the intended use rule was released in September 2015, and led with a discussion of the agency’s regulation of tobacco, only belatedly discussing pharmaceutical products and medical devices. The 2015 edition states that the FDA can consider any objective evidence to determine intended use, including direct and circumstantial evidence.

The text of the 2015 rule states that circumstantial evidence is often sufficient to determine a manufacturer’s intent even in the absence of express claims about off-label use. However, this portion of the 2015 rule states also that the agency would not infer intention “based solely on the firm’s knowledge” of off-label use.

Interestingly, the agency’s press release for the Sept. 22, 2020, rule states that a firm’s knowledge of an unapproved use of a medical device or pharmaceutical, “standing alone, is not sufficient to establish the product’s intended use.” The FDA said this update should provide a greater degree of certainty and predictability for regulated industry.

The statement contends that the new rule does not reflect a change in the agency’s policies, but is intended to reemphasize the FDA’s long-standing approach to the question. The preamble to this latest version provides some examples of evidence that would not be deemed adequate to infer the manufacturer’s intent. The new rule would replace the version issued in 2017, which carried its own controversies.

The Jan. 9, 2017, final rule states that the agency would rely on the totality of the evidence to determine a manufacturer’s intent, a provision that was not well received. One commenter stated that the totality of the evidence standard had not previously been discussed in connection with the intended use rule, and that this standard was not a logical outgrowth of any prior communications on the FDA’s part. Because this standard was not discussed in a draft version, its introduction in the final rule violated the Administrative Procedures Act, said Richard Samp and Mark Chenoweth of the Washington Legal Foundation. The FDA is taking comment on the draft rule through Oct. 23.

DOJ Revisits APA a Second Time

The U.S. Department of Justice expressed its views of the current understanding and use of the Administrative Procedures Act in early August, but the matter wasn’t closed as of the date of that Aug. 11 statement. This was followed quickly by an Aug. 26 statement that provided details on two executive orders that are intended to provide guidance on adherence to the terms of the APA, a question that has arisen in the context of FDA guidance and rulemaking on several occasions.

Attached to the Aug. 11 statement was a report on a summit regarding the APA, which provided some insights into the concerns held by a number of parties about the evolution of the act. One source of concern was that compliance with federal regulation adds $2 trillion in costs to the economy each year, perhaps not surprising given the staggering volume of guidance and rulemaking across the federal government.

There is also some legislative interest in bringing independent federal agencies under the umbrella of the APA, such as the Securities and Exchange Commission. However, the larger point of interest for the DOJ consists in part of thwarting the use of guidance to create novel liabilities for the private sector without going through the normal notice-and-comment process required of rulemaking. The underlying theme in this regard is the 2017 Sessions memo, and Executive Order 13891 is intended to codify that principle.

Another consideration expands on the 2018 Brand memo, which pushed back on the use of agency guidance in affirmative civil enforcement. The second Executive Order announced Aug. 26 likewise codifies the Brand memo, but also provides a set of procedures for DOJ staff regarding the review and clearance of department guidance. Going forward, DOJ will be required to post all guidance documents on a web portal set up specifically for that purpose, but also creates a process by which the public can petition for withdrawal of a guidance.

Deputy Attorney General Jeffrey Rosen said guidance broadly is helpful to regulated parties, but observed that “backdoor regulation by guidance document is improper.” Rosen stated further that the Executive Orders will ensure “that guidance documents will not be used to impose novel legal requirements as a shortcut around the rulemaking process.”

CMS Floats Coverage Policy for Breakthrough Devices

The Centers for Medicare & Medicaid Services recently unveiled a new plan to offer four years of Medicare coverage for any medical devices cleared or approved through the FDA’s breakthrough devices program. The news won raves from medical device associations, but the offer comes with a postmarket study requirement that may exceed the demands usually imposed by the FDA for breakthrough devices.

The CMS announcement describes the terms of the Medicare Coverage of Innovative Technology (MCIT) pathway as providing coverage on the same date as the FDA marketing authorization. This coverage would last four years, an offer that assumes, but does not mandate, that the sponsor of the device continues to collect data in the postmarket realm.

Following the four years of MCIT coverage, that device would have to be covered by one of the conventional Medicare coverage mechanisms. In addition to national and local coverage determinations, the CMS press release cites claim-by-claim decisions as one of the post-MCIT alternatives. However, the agency advised that a coverage with evidence development outcome may follow the fourth year of MCIT coverage, adding that participants may be incentivized to gather postmarket data.

CMS said the MCIT program is available only to breakthrough devices that fit within an existing Medicare benefit category, while coverage is limited to on-label use. Device makers are encouraged to communicate with the CMS during the four-year coverage period, but the agency also suggested that sponsors of MCIT devices communicate their interest in an NCD or LCD before the four years are up.

‘Reasonable and Necessary’ Defined

CMS also offered a definition for the term “reasonable and necessary,” which would eventually be codified in the regulation. This definition would address all coverage decisions, rather than being limited to the scope of the MCIT program.

As described in the regulatory notification, the first prong of the three-part test for whether a device or service meets the definition of reasonable and necessary is whether the device is safe and effective. The second prong stipulates that the device must not be strictly experimental or under investigation for the use in question, but the third prong is more complex and asks whether the device or service is appropriate for Medicare patients.

The process for determining appropriateness can be fairly complicated, starting with determining whether the device’s use is consistent with accepted standards of medical practice. The device or service must also be “at least as beneficial as an existing and medically appropriate alternative,” and must not exceed the patient’s need.

However, CMS is offering an alternative mechanism by which appropriateness can be determined. This approach hinges on whether private payers are covering the item or service, although the sponsor would have to demonstrate that the commercially insured individuals are more or less clinically homogenous with Medicare beneficiaries. Sponsors could entirely eliminate the other standards for appropriateness if they can meet this requirement for commercial payer coverage.

The proposal was met with enthusiasm by the trade associations, including the Advanced Medical Technology Association (AdvaMed). Scott Whitaker, AdvaMed’s president/CEO, said in an Aug. 31 press release that the proposed rule would “help ensure the patients who need these innovative technologies have access to them.” Executives from several major device makers also lent their support in the AdvaMed statement, including Mike Mussallem, CEO of Edwards Lifesciences, and John Liddicoat, executive VP for the Americas for Medtronic.

Mark Leahey, president/CEO of the Medical Device Manufacturers Association (MDMA), also supported the proposed rule, something Leahey said MDMA “has long advocated.” He said the association would continue to work with the White House, Congress and other stakeholders to “narrow the gap between regulatory and reimbursement decisions that will bolster patient care.”