Hits & Misses: Top Stories for 2016

Some years look better in the rear view mirror, but it’s tough to make that call in other instances. Let’s take a look at some of the developments in 2016 and consider what kind of year it was.

Diagnostics in churn in 2016

One item of particular interest to makers of diagnostics was the FDA’s draft co-development guidance, a companion piece to the agency’s companion diagnostic (CDx) guidance. Granted the co-development draft came to light only in July 2016, but it lags the CDx guidance (which was itself in mothballs for 37 months) by a couple of years, which is a problem in that the CDx guidance requires a companion diagnostic for many new drugs. Regardless of how long it takes the agency to wrap up the co-development guidance, it is well past due.

Makers of in vitro diagnostics performed in clinical labs received two good bits of news in 2016, including that CMS suspended its lab fee schedule overhaul until 2018. This development allows industry to avoid what some feared would be a massive gouging of reimbursement rates, but Medicare crosswalk procedures for 2017 might still ding the rates paid for a few tests.

Of perhaps greater importance was that the FDA officially withdrew its proposed framework for regulation of LDTs in 2016, but the agency vowed that would not be the end of the matter. Indeed, the FDA has published another document addressing regulation despite that Congress is crafting legislation that would carve out a unique regulatory regime for these tests.

Oddly, the new discussion draft, which appeared at the FDA website on Jan. 13, declares that its contents do not reflect the agency’s official position on the matter, perhaps an unavoidable concession. This document proposes that the agency would not attempt to regulate tests that are already in practice, tests deemed to be of the low-risk variety, and tests used for purposes of tissue matching.

The future of FDA’s regulation of LDTs is still up for grabs, but it seems certain that any regulatory regime will be less stringent than the one initially proposed. One wild card in this discussion is the timing of Congress’s efforts to deal with this predicament, given the need to deal with the overhaul of the Affordable Care Act and the tax reform imperative, not to mention the debt ceiling and continuing budget resolution dilemmas. The agency’s declared intent to let already-marketed tests go through unmolested could trigger a stampede of applications, however, and developers with the best sets of evidence for clinical validity may find their applications impeded by those with evidentiary foundations of lower quality.

Bundled payments in the crosshairs

One huge development was, of course, the election of millionaire Donald Trump to the White House, which doesn’t seem to bode well for current FDA commissioner Robert Califf. On the other hand, foes of the Affordable Care Act might be pleased to see Sen. Tom Price as Trump’s nominee for the Secretary of Health and Human Services job, given Price’s well-known animosity toward the law. Price is also averse to some of the recent bundled care payment programs rolled out by the Centers for Medicare & Medicaid Services over the past two years, programs that have some in industry worried about doctors stinting on care in order to avoid cost overruns.

Device makers were quite pleased to see passage of the 21st Century Cures Act, a bipartisan crowd pleaser if ever there was one. The legislation puts Medicare administrative contractors on notice regarding disclosure of local draft coverage determinations, but also requires some training of FDA staff on the least burdensome standard. The legislation doubled the number of devices that can be sold under the humanitarian device exemption from 4,000 to 8,000 a year, but the additional monies for more expedited drug and device reviews may prove a mixed blessing if any of the products thus approved are associated with severe or lethal adverse events.

Getting back to the discussion of taxes, the big question for 2017 is whether the device tax repeal will be handled separately from the ACA repeal-and-replace program. There are a lot of reasons to think the ACA repeal-and-replace imperative will prove unmanageable, but a permanent repeal of the currently suspended device tax comes across as an instance of lower-hanging fruit, particularly if the status quo holds through the congressional recess in August (recall that the suspension of the device tax expires at the end of 2017).

ISO-ing on the cake

The FDA wrapped up a couple of guidances of some standing in 2016, including the Section 522 post-market studies guidance, which gives sponsors 15 months from the date of an order to come up with a compliant postmarket study. The agency also exhibited what might seem a grudging concession on ISO 14971 in several final guidances, not to mention the agency’s adoption of the International Medical Device Regulators Forum standard for software as a medical device (SaMD).

Overall, the FDA gave more explicit ground to regulatory harmonization than ever, even if the term “regulatory convergence” might be a more apt characterization. On the other hand, the notion that the FDA is still the center of regulatory gravity isn’t exactly discredited when one considers the massive changes to the European Union’s Medical Device Directives. Recall that Jeff Shuren, director of the Center for Devices and Radiological Health, famously described EU clinical study enrollees as guinea pigs in 2011, a comment he had to retract after hearing from his higher-ups at HHS.

Consider, however, that the EU will henceforth require more routine use of clinical studies for marketing applications and more stringent oversight of notified bodies. Clearly, the FDA is still the standard-bearer for global medical device regulation, regardless of breathtakingly impolitic wordplay offered up by FDAers.

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