DTC Gene Tests, Tax Reform in the News

2017 is starting to wind down as evidenced by the resurgence of holiday-themed music and Christmas jingle-riddled television commercials, but Washington is nonetheless making good use of these last few weeks of the year. In one of the more significant regulatory concessions in recent memory, the FDA said it will use a more streamlined approach to direct-to-consumer genetic tests, but the current state of tax reform seems headed for game-stopping controversy unless significant concessions are made.

‘Precert’ the New Approach to DTC Gene Risk Tests

The notion of pre-certification, or “precert,” has gained a lot of momentum at the FDA this year. First, the FDA said in July it would use a precert program for some moderate-risk digital health applications, and now the agency is making use of that same concept in connection with direct-to-consumer genetic tests that disclose the customer’s risk for diseases. The announcement affirms yet again that the agency has adopted a much less militant approach to its regulation of the life sciences under the new leadership.

Readers will remember the controversy over DTC marketing of such tests shortly after Margaret Hamburg took the commissioner’s chair in 2009, which led to a warning letter to several makers of these DTC genetic propensity tests. The agency wrote a warning letter to 23andMe of Mountain View, Calif., in 2010 about this kind of activity, but even two years ago, the FDA was still trying to keep a lid on such activity as indicated by a Sept. 21, 2015 warning letter to Pathway Genomics Inc. of San Diego for the company’s marketing of its Cancer Intercept test.

FDA commissioner Scott Gottlieb said in a statement that these tests do carry some risk, but he also cited the need to devise a regulatory regime that avoids strangling innovation in technological spaces that move at a more rapid pace than the agency can hope to match. Gottlieb made reference to a de novo filing for the 25-hydroxyvitamin D test system by AB Sciex LLC of Redwood City, Calif., but the FDA also announced it had approved a de novo application by 23andMe for the company’s Personal Genome Service (PGS) test on the same day the agency announced the precert program.

The net effect is certainly a positive change for makers of these tests, but any allegations that a false negative cost a consumer their life will undoubtedly spark a severe case of whiplash, at least on Capitol Hill. The real test in this scenario is how the FDA would respond to such criticism.

Tax Reform Gains Momentum

The push for corporate tax reform is heating up on Capitol Hill, and both the House and the Senate have legislation in the works. While neither proposal seems to include a repeal of the medical device tax, both versions eliminate at least some of the credit for orphan drug development, a move that seems certain to drive resistance among drug makers and patient groups alike.

The House Ways and Means Committee passed its tax reform vote on Nov. 9 in a party-line vote, perhaps a predictor of how this issue will play out on both sides of the Capitol. Section 3401 of the Tax Cuts and Jobs Act of 2017 completely eradicates the tax credit for clinical testing for orphan drugs, which the authors of the legislation say will save the taxpayer roughly $54 billion over 10 years.

The Senate took a less stringent but more convoluted approach, with the net result that drug makers will lose $30 billion in tax credits over 10 years. At least one patient group, the American Cancer Society Cancer Action Network, voiced its opposition to several features of the House bill, stating that the majority of cancer drugs qualify for orphan drug status “at some point in their lifecycle.” The group also said a study conducted in 2015 suggested that elimination of the orphan drug tax credit “would be to decrease orphan drug development by one third.”

The issue of the device tax is not necessarily dead despite the failure of both chambers to include a repeal in their respective bills. Much of the conversation about a device tax repeal seems to revolve around the reauthorization of the Children’s Health Insurance Program, which must be completed by Dec. 31. Ways and Means chairman Kevin Brady lent credence to that expectation, stating recently that temporary relief from the device tax will arrive via an unidentified legislative vehicle “before the end of the year.”

International; A Tangled Time for Devices

Taking any medical product across national borders nearly always presents an interesting dilemma or two, but while it’s sometimes horrible, it’s not always bad. Following is yet another example of the classic good news/bad news conversation, but the implications of each depend on where a device maker is selling its wares … or where it intends to go next.

MHRA Breezy on the Brexit

Device makers want to know how British regulators will manage things after the Brexit is an accomplished fact, but the “when” of the Brexit is still up for grabs. Recent reports suggest that Prime Minister Theresa May has agreed to a Brexit bill of €40 billion, but that figure might not be especially popular in some quarters in London.

By some accounts, the initial offer was roughly half that sum, but the €40 billion figure has nonetheless been making the rounds for several months. Antonio Tajani, President of the European Council, is quoted as having described the €20 billion offer as “peanuts,” but May has her hands full at home with members of Parliament (MPs) who would prefer to just walk away from the European Union and pay nothing for the privilege.

As if all this were not enough, there are new reports that May was “begging for help” with the Brexit in a dinner with the President of the European Commission. The story is all over the European press and does nothing to help May’s hand in dealing with intransigent MPs.

Meanwhile, the Medicines and Health Care Products Regulatory Agency has been busy, issuing a guidance on human factors engineering for devices as the third week of September drew to a close. MHRA followed that in short order with a document dealing with medical device stand-alone software, which includes apps. The MHRA stated in the latter document that its approach is based on the EU standard, Meddev 2.1/6, qualifying the British version as “the U.K.’s interpretation” of the EU guidance.

The details of the guidance are not unimportant, but what the MHRA leadership is clearly conveying is that it intends to run as close to parallel as it can with the EU approach to device regulation, at least so far as circumstances permit.

This might come as nothing new to MHRA watchers who probably noticed the paper the agency published toward the end of August for device regulations generally. That document did little more than spell out the requirements of the European Union’s MDRs, hence the software document reaffirms what was already suspected regarding MHRA’s intentions.

As for the human factors guidance, the document stated that its terms apply only to changes to existing approvals and to new applications, but MHRA advised that post-market surveillance will also be very much on its mind going forward. Among the entities said to have collaborated with the agency on this document is Eucomed, so clearly the agency consulted extensively with industry, particularly given that Smith & Nephew is also listed as a collaborator.

New Delhi’s device dilemma

Speaking of tense international relations, the Advanced Medical Technology Association has petitioned the Office of the U.S. Trade Representative to pull India off the list of nations that enjoy the benefits of the U.S. Generalized System of Preferences (GSP). AdvaMed filed the petition because of a recent string of mandatory price cuts for cardiology and orthopedic devices, but trade talks in Washington this week may include a discussion of that problem.

India’s drug pricing authority had applied a hard cap to prices for drug-eluting stents in February, and since then has moved to cap prices for some orthopedic implants as well. AdvaMed said the hit for coronary artery stents is as much as 85 percent in some instances, while some orthopedic devices would face cuts of 70 percent.

Abbott Vascular had attempted to pull its Xience Alpine stent from India, and initially, the government agreed. Despite that typically such withdrawals entail only a six-month transition, India’s National Pharmaceutical Pricing Authority required that the company keep the device on the market for a year.

As luck would have it, however, NPPA reversed that decision and has advised Abbott that it would have to keep supplies of the Alpine available indefinitely. There has been some indication of flexibility on the part of NPPA, which is said to have informally floated a less strangulating cap on trade margins recently, but AdvaMed seems likely to continue pressing its case. Those who tracked the string of Asian compulsory licensing episodes of the previous decade may see a similarly unfriendly shadow over these markets, particularly given hints that other nations in Asia may follow suit.

The governments of the U.S. and India will meet this week at the Trade Policy Forum in Washington, but it’s not just any meeting of the forum. This is a ministerial-level meeting, so the USTR will have all the brass it needs to make a high-level case that the NPPA’s moves are out of bounds. Device makers would do well to stay tuned to this story.

Of Patents and the Parsing of Words

Makers of FDA-regulated products usually have a lot to keep track of, and the last few weeks are no exception. Recently, the FDA seemed to tell industry, “do as I say, not as I do” in connection with combination product classification, while a federal court breathed new life into a lawsuit that could badly damage a very expensive patent for a cholesterol statin.

FDA; Devices are Drugs, too

Some systems of justice say you are innocent until proven guilty, but the FDA guidance for combination product classification has a different approach, stating that in conceptual terms, “all FDA-regulated medical products meet the definition of a drug.” The passage seems to resurrect industry concerns that the primary mode of action (PMOA) controversy is not over yet after all.

The 21st Century Cures Act purportedly fixed a number of problems with combination products, including the PMOA problem as seen in Section 3038 of the Cures Act. That portion of the legislation stated that the PMOA is “the single mode of action of a combination product expected to make the greatest contribution to the overall intended therapeutic effects of the combination product.”

Granted that this passage is no novelty where the regulation is concerned, but the inclusion of this language in the statute might be seen as putting the FDA’s Office of Combination Products on notice that would get away with no adventurism on the PMOA question. As is widely known, the FDA has locked horns with industry, in and out of the courts, on a number of occasions over the agency’s product classification process, partly because the agency seemed to develop a penchant for seeing any chemical mode of action at all as necessarily categorizing the product as a drug.

This bias toward categorization  of a combo product as a drug was a significant bone of contention with industry in the 2011 draft guidance for determination of product classification. One of the arguments raised by industry at the time was that the text and the legislative history of the Food, Drug and Cosmetic Act suggested that if anything, the bias should be that a medical product is a device, not a drug. However, the final guidance states, “conceptually, all FDA-regulated medical products” meet the definition of  a drug “due to the broader scope of the drug definition.”

For what it’s worth, the agency addressed the chemical action question a bit more forthrightly than it has in the past, vowing that it will not assume that a product with a chemical action in the body is necessarily a drug, but that passage may prove to be of little consolation when the next inevitable close call shows up at OCP’s doorstep.

Patent Scrum Over PCSK9s Not Over Yet

Amgen v. Sanofi is headed back to a district court after the Court of Appeals for the Federal Circuit overturned a couple of determinations by a district court, and upheld a couple of others. The Federal Circuit lifted an injunction the district court placed on one of these cholesterol statins, but the more interesting matter may be how the Federal Circuit ruled on whether evidence developed after the patent priority date can be used to invalidate a patent.

Amgen’s lawsuit against Sanofi and Regeneron alleged infringement of Amgen’s patents for Repatha, the PCSK9 inhibitor that hit the market a couple of years ago with an eye-popping price tag that had payers in an uproar. Prior to the hearing at the Federal Circuit, the case was heard in a district court in Delaware, where U.S. District Judge Sue Robinson affirmed Amgen’s argument that the patent was not obvious, and ordered the defendants to pull Praluent off the market.

Robinson also excluded evidence about the patents for Repatha that was based on data developed after the patent priority date of January 2008. The question here seems to revolve around whether Amgen was required to characterize all the species of antibodies that bind to the PCSK9 enzyme, a bit of biochemistry that is necessary to achieve the cholesterol-lowering effect of this class of drugs.

Amgen is said to have screened 3,000 species of antibodies to arrive at the two that are used in the drug, but Robinson had ruled that Sanofi and Regeneron could not introduce evidence that the written description for Repatha failed to comport with the statute governing patents. The passage in question, Title 35 of the U.S. Code (§112), states that a patent applicant must characterize the patented item in “full, clear, concise and exact terms,” a standard the sponsors of Praluent said Amgen had failed to fulfill.

Robinson’s rationale was that the evidence offered by Sanofi and Regeneron would not have served to “illuminate” the state of the art at the time of the filing of the Repatha patent, but the Federal Circuit saw otherwise, essentially concluding that the question is not whether the evidence was illuminating, but rather whether Amgen’s written description of these antibodies was sufficient to support a patent.

The Federal Circuit also said Robinson’s instructions to the jury led the jurors to believe that a description of a novel antibody would suffice to cover the requirement that a patent describe a correlation between structure and function. The net effect of all this is that the case will head back to the district court, but a date has not been set, and Robinson is said to have left the court. Her absence will likely be felt, given that TC Heartland v. Kraft will soon load the court with a large volume of cases thanks to that decision’s effect on the long-standing forum question and the presence of a huge number of LLCs in the Blue Hen State.

A Festival of Device Guidances

Now that the first half of 2017 is vanishing in the rear-view mirror, the FDA’s device center has resumed its steady production of draft and final guidances. Thanks to the 21st Century Cures Act and the FDA Reauthorization Act of 2017, there’s much more to come, but regulatory geeks can now celebrate the end of a long guidance drought at the Center for Devices and Radiological Health.

Data Disharmony on Display

Between regulatory harmonization and regulatory convergence, the latter is the less implausible, but the FDA final guidance for demographic representation and reporting in clinical trials does not mesh well with the current state of affairs in the European Union, which may complicate the conduct of multinational clinical studies.

The CDRH final guidance for enrollment and reporting of different demographic groups in clinical studies stems at least in part from congressional mandates, but the statute in several European jurisdictions may complicate the gathering of demographic information for participants in those studies. For instance, Article 8 of the European Data Privacy Directive 95/46/EC states that EU member nations “shall prohibit the processing of personal data revealing racial or ethnic origin” and a number of other pieces of information, including anything pertaining to “health or sex life.”

At least two EU nations, France and Portugal, have similar laws on the books, so it’s not as if the problem can be handled in its entirety in Brussels (although by some accounts, the updated French statute carves out an exception for clinical studies). Because of the congressional mandates, the FDA also has little room to breathe.

Whether the authors of the Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA) realized there was an impasse in the offing for multinational clinical studies is not clear, and it should be noted that the EU directive does not kick in until May 2018. Nonetheless, consent is likely to be more worksome in these instances, particularly since the EU law also addresses de-identified sources of data.

FDA Rejects Five-Year Follow-Up in HPV Final

The term of follow-up is always a bone of contention between the FDA and device makers, but the agency resisted calls from clinicians to tack on a five-year follow-up requirement in the final guidance for diagnostics for the human papillomavirus.

This is a document with some history behind it, including a 2009 draft that drew fire for its insistence that all precision studies be conducted at one site. The final guidance allows a sponsor to use two external and one internal testing sites for reproducibility studies, which typically encompass evaluations of precision.

Perhaps of greater importance is that the final guidance requires that sponsors follow patients for a shorter span of time than was recommended by several professional societies. The American Society of Cytopathology and the College of American Pathologists were among those who urged the agency to require that sponsors follow a subset of women with negative co-testing results for five years, but the agency indicated no interest in such a requirement despite the societies’ argument that this would comport with their guidelines for co-test screening intervals.

In a somewhat related development, CDRH announced in the Sept. 8 issue of the Federal Register that it has scheduled a Jan. 11, 2018, workshop for self-collection devices for pap tests. Clearly the agency’s primary interest is in public health – the agency remarked that there are still gaps in screening for cervical cancer – but the development might also seem to portend a more relaxed approach on the agency’s part to home sample collection going forward. It’s too soon to anticipate where this particular conversation might be headed, but testing labs would probably have to more vigorously demonstrate the reliability of their tests than is currently the case, and designers of collection kits might be charged with usability studies to ensure those kits can be reliably used by those with limited familiarity with such things.

Cosmetic Industry on Oodles Of Needles

Those who are in the business of making microneedling devices for cosmetic purposes might want to take heed of the draft guidance recently issued by the FDA’s Center for Devices and Radiological Health, which appears to take on a burgeoning set of offerings from the cosmetic industry. The agency clarified the characteristics that would distinguish items that are and are not regulated as devices, explaining that the length and sharpness of the needles in these needle arrays is one indicator of whether such an instrument is indeed a medical device.

Another factor is whether the item in question achieves its primary intended purpose through chemical action within or on the human body, which if so would constitute a medical device. Claims that suggest the device is intended to do nothing more than remove the outermost regions of the epidermis, (the stratum corneum) would not be subject to regulation, but anything suggestive of penetration or delivery of an effect “beyond the stratum corneum into living layers of skin” would likely make that item a medical device.

As of yet, no microneedling devices have gone through regulatory review, and thus anyone who files for a premarket review faces either a class III designation or must file a de novo application. De novo filings are now subject to $93,000 in user fees under the fourth device user fee agreement, although the agency is on the hook for a turn-around of 150 days under this new de novo paradigm. In this first year of the MDUFA IV, only half of de novos have to meet that 150-day turn-around, however.

Life Sciences’ September Surprises

The October surprise may be the stuff of electoral legerdemain, but drug and device makers are seeing a few interesting legal twists inside and outside the courtroom in the month of September. In one instance, PMA preemption is back in the news, while another story involves what seems a very generous sale of intellectual property assets forced by multiple patent challenges.

Lassoed Again by the Riata

Despite best intentions, sometimes an old drug or device comes back to haunt its maker. This would appear to be the case with the Riata and Riata ST series of electrophysiology leads made by St. Jude Medical, now a subsidiary of Abbott. While this seems a fairly typical preemption case, Connelly v. St. Jude Medical seems to revive the issue of a litigant’s access to confidential commercial information.

According to documents from the U.S. District Court for the Northern District of California, Richard Connelly received a total of three Riata leads between 2003 and 2015. Connelly’s attorneys argued liability on the basis of manufacturing defects, failure to warn, negligence and negligence per se, and Abbott responded that the first three claims are explicitly preempted while the last is truncated by implied preemption.

Judge Edward Davila rejected the failure to warn claim, albeit with a possible amendment of the claim, the same determination he came to regarding the negligence per se claim. Avila gave the plaintiff until Sept. 8 to amend those claims, which apparently his counsel has done.

However, Avila affirmed the manufacturing defect claim partly because the plaintiff’s attorneys had no access to the entirety of the documentation for the regulatory filing. The basis of the manufacturing defect argument commenced with three pieces of evidence; an FDA inspectional form, the recalls of the Riata series of devices, and an internal root cause analysis undertaken to examine the lead insulation problems.

Avila wrote that California state law does indeed run parallel to federal law on the manufacturing defect issue because the plaintiff had demonstrated “a plausible connection between the alleged manufacturing defect and his injuries.” He based this conclusion in part on a 2014 case in the U.S. District Court for the Northern District of New York, Rosen v. St. Jude, but not much else.

Avila conceded that the Court of Appeals for the Ninth Circuit “has not directly addressed this issue,” but states that a plaintiff’s inability to access confidential commercial information at the time complaint was filed – coupled with factual evidence presumed to be sufficient to demonstrate a causal connection – are all that is needed to sidestep federal preemption and satisfy the requirements of Twombly.

The negligence claim survived on essentially the same set of facts, and the court determined that Abbott is not liable in this instance because its acquisition of St. Jude was not completed until after Connelly was injured. Avila indicated that the plaintiff can amend the complaint on this point as well, however. It seems fairly plausible that this case will end up in Ninth Appeals, regardless of the outcome in this venue.

Allergan’s IP End Run

Most methods for dealing with patent challenges run to the tried and true, but Allergan’s move to insulate its patents for Restasis may have left some members of the patent bar a bit dewy-eyed for not having thought of it themselves.

Allergan has declared it will transfer all patent rights for the treatment for dry eye to the St. Regis Mohawk Tribe, which will confer sovereign immunity on the related patents. This would seem to fend off ongoing challenges via the inter partes review process at the Patent and Trademark Office, but there are suggestions that Allergan has progressively less to lose. While sales of the product exceeded $350 million in the third quarter of 2016, the FDA has yet to decide whether generic versions will have to go through clinical trials in a debate between the agency and the manufacturer that is now in its fourth year.

The company is also fending off a patent challenge in the patent rocket docket in Marshall, Texas, over the production of generics, which some believe will hit the market as early as 2019. The problem for Allergan in this lawsuit, at least in terms of optics, is that the company has already settled with Famy Care Ltd., which will be able to market its generic version no later than 2024 (when the patent expires), and possibly substantially earlier.

Under the terms of the licensing agreement, the St. Regis Mohawk Tribe seems to be doing quite well, indeed, explaining in a Sept. 8 statement that it will receive more than $13 million from Allergan to take ownership of the patents in addition to an expected annual sum of $15 million in royalties.

Cardiaq Sustains Narrow Win Over Neovasc

The patent scrum between Cardiaq Valve Technologies and Neovasc Inc., made it all the way to the Court of Appeals for the Federal Circuit, which has affirmed a district court decision awarding the plaintiff more than $110 million. In Cardiaq Valve Technologies v. Neovasc, Inc., the plaintiff alleged that Neovasc had breached a contract the two companies had signed as part of a development program by Cardiaq toward a transcatheter mitral valve technology, which Neovasc purportedly violated by using some of the intellectual property in an effort to develop its own mitral valve device.

In addition to the initial jury damages of $70 million, Neovasc will have to pay roughly $20 million each for interest and enhanced damages, although neither the district court nor the Federal Circuit agreed to enjoin Neovasc’s development program. While Cardiaq won’t enjoy the kind of exclusivity typically afforded by a patent, it was acquired by Edwards Lifesciences, which has a degree of credibility with cardiologists that Neovasc cannot possibly match in the near term. Thus, while the patent fight seems uncomfortably close to a draw for plaintiff, the physician adoption curve is nearly certain to favor Cardiaq by a wide margin.

Of Pens, Delays, and Balloons

Some stories in the life sciences are years in the making while others take a more swift course to resolution. Below are three stories of varying degrees of persistence, but it may be that we have not heard the last of any of them just yet.

EpiPen Settlement a Sore Spot for Some

The EpiPen settlement between Mylan and the Department of Justice is finally in the books, but there were several interesting developments involved in this action, which has spanned at least the better part of a decade. The company has agreed to pay $465 million to settle these allegations, but there are indications that this matter is not finished.

To recap, the EpiPen controversy was already the subject of federal government interest in 2009, when the Office of Inspector General at HHS cited the Epipen as a product of interest in a report on the accuracy of drug prices for Medicaid rebates. The Aug. 17 DoJ statement announcing the settlement said Mylan had “violated the False Claims Act by knowingly misclassifying EpiPen as a generic drug to avoid paying rebates,” but the DoJ nonetheless stated that the claims “settled by this agreement are allegations only, and there has been no determination of liability.”

The department’s announcement lists only one relator in this qui tam action, Sanofi-Aventis, but Ven-a-Care of Key West, Fla., was also on board. Ven-a-Care is purportedly a pharmacy, but some see the company as more of a bounty hunter, given the frequency with which its owners avail themselves of large sums for similar cases. Thus, the Mylan case was driven by two relators rather than the more typical single relator, suggesting the data provided by Ven-a-Care and Sanofi were substantially different.

Another interesting facet of this case is that non-governmental 340B drug programs will enjoy rebates from the action, which is not ordinarily the case. In any event, this settlement might not be the last word on the controversy as Sens. Chuck Grassley (R-Iowa) and Richard Blumenthal (D-Conn) have criticized the amount of the damages as grossly inadequate.

The drug pricing controversy is providing plenty of whiplash for Valeant as well. Recently, Valeant investor Lord Abbett & Co. filed suit in New Jersey with the argument that Valeant’s actions violate that state’s Racketeer Influenced and Corrupt Organizations law. Should a judge accept that argument, Valeant could face treble damages.

340B Final Rule Delayed Again

In spite of all the consternation about drug prices, the Department of Health and Human Services has announced that it will once again delay a rule that would have dinged drugmakers for overcharging several types of institutions, including safety net hospitals.

The related provisions of the Affordable Care Act had expanded the types of institutions eligible for participation in the 340B program to include children’s hospitals and free-standing cancer centers, but the latest 340B final rule would have hit drugmakers with a $5,000 fine for each instance in which the charge for a drug exceeded the ceiling price. This is the third time the implementation date of this final rule has been pushed back, which is now suspended until at least July 2018. The move was blasted by a number of affected entities, but there are rumblings that the 340B reporting portal administered by the Health Resources and Services Administration is not fully operational.

Rates for Drug-Coated Balloons may Crater

A Medicare advisory board will recommend that the Centers for Medicare & Medicaid Services allow reimbursement for drug-coated balloons (DCBs) to lapse to the rates paid for standard angioplasty of the lower limbs. The decision flew in the face of clinician input, but whether CMS will go along with the advisory panel’s recommendation is not yet clear.

The Medicare advisory board for the outpatient prospective payment system said the rates paid for DCBs – such as Medtronic’s Admiral InPact and the Lutonix by C.R. Bard – should be allowed to fall to the rates paid for standard angioplasty balloons used in the femoral and popliteal arteries. DCBs enjoyed a higher reimbursement rate under the Medicare new technology pass-through program, but these devices have used up their eligibility for the program. This predicament leaves Bard and Medtronic facing a rate as low as $4,999 in calendar year 2018, a rate that clinicians said would impede access and possibly trigger a spike in the amputations DCBs are credited with preventing.

Physicians have argued that the use of a DCB requires both pre- and post-dilatation of the target vessel with a plain balloon to achieve the desired effect on vessel patency, a necessity that boosts both procedure time and costs. An industry representative suggested a rate closer to $8,000 for DCBs, but the panel clearly was not amenable. The panel endorsed a proposal that CMS track costs and utilization of these devices in CY 2018 in order to evaluate whether a new ambulatory payment classification code is needed to account for the costs associated with DCBs, but that proposal leaves patients and physicians with a 12-month question mark.

In the meantime, hospitals and other institutions will have to decide whether to take the financial hit for these devices in an effort to avoid readmissions, which are squarely in CMS’s crosshairs via several well-known health care delivery reform programs.

Going Solo, and Who Needs Government Anyway?

Some days it seems the idea of interdependence is really gaining ground, but then there are days that seem to trash the idea completely. Below are a couple of stories of the latter variety, stories that might seem more pointed to the diversity ethic that is also very much in vogue in these early years of the 21st Century. First, however, we ask whether the FDA’s device center is losing its appetite for heavy-handed regulation.

FDA Going Soft on Software?

The Center for Devices and Radiological Health at the FDA was pretty quiet for the first half of the year, but is a little more active recently. For instance, CDRH published a digital health action plan in response to pressure from Congress, but the plan is also a tacit admission from the agency that its quality systems regulations (QSRs) don’t always work well where software is concerned.

The reader may remember the FDA’s interest in medical device data systems dating back to 2011. Hospital administrators were wary of the cost and hassle of standing up a QSR-compliant regime in the first place, but four years would pass before the agency renounced the idea, undoubtedly with the help of some arm-twisting from Capitol Hill.

The FDA’s digital health innovation action plan includes a precertification pilot that calls for a review of a publisher’s approach to software quality control rather than a full-blown premarket review of each product. The program is limited to items that qualify as software as a medical device (SaMD), however, and excludes items such as software integrated into devices.

The precertification pilot does include site visits, but the agency is willing to conduct virtual site visits in lieu of the real thing. Ergo, one can argue that this is QSR-lite at worst. Still, one has to wonder how much time will pass before an SaMD will start pushing the FDA’s safety and efficacy buttons despite FDA commissioner Scott Gottlieb’s assertion that the program is strictly for “certain lower-risk devices.” That lower-risk assurance seems odd, given that the sponsor will be on the hook for collecting post-market data for that product.

The day one of these calls for a de novo application might herald a time when the agency will scrutinize these SaMDs individually, but how long after that will a sponsor discover they have tripped the class III/PMA trigger? Only time will tell.

Disharmony from Asia

Some see global regulatory harmonization as a pipe dream, and India’s Central Drug Standards Control Organization has released a draft guidance dealing with standards for safety and performance of medical devices that would seem to support that view. This document, which supplements a novel regulatory framework specific to med tech in India, suggests that CDSCO will handle stand-alone software in the same manner as traditional medical devices despite the FDA’s hands-off approach.

CDSCO gave interested parties only three weeks to comment, hardly sufficient time to absorb the implications of such a document, particularly since the document is undated, other than to note the month of publication (July). The agency said it does not want to dictate how a device maker might demonstrate compliance, but the scope of the 27-page document encompasses a wide range of product categories, including combination products, a breadth of scope which might come across to some as lack of specificity disguised as flexibility.

In any case, the document also takes aim at devices “that incorporate software and stand-alone medical device software,” which is where it rubs up against the new approach at FDA in a disharmonious manner.

As noted above, the American regulator is steering an entirely novel tack for its regulation of SaMD, which had said last year would revolved around a guidance drafted by the International Medical Device Regulators Forum. India is not a participant in the IMDRF effort, although it is a member of the Asian Harmonization Working Party (AHWP), which is an IMDRF affiliate and which has inked its own SaMD proposal, said to be built around the IMDRF effort.

One way of looking at this is that the FDA is the outlier and that the disharmony is coming from Silver Spring, Md., and not from New Delhi, although it may be instructive to note that the latter has a very limited body of experience with med tech-specific regulations. Either way, publishers of SaMD will continue to face very different regulatory regimes if they want to do business in both the world’s richest market and its second most populous market.

No DOJ? No Problem

As is commonly known, the Department of Justice does not dive head first into every qui tam action that pops up, but government attorneys seem to be involved in nearly every whistleblower suit that costs the target company money. Celgene of Summit, N.J. offers the exception, getting stung with a $280 million hit in a False Claims Act case that asked the federal government to do nothing more than accept a nice, fat check from the company.

The company denied any culpability, and Celgene may have a case given that the Centers for Medicare & Medicaid Services is somewhat more lenient about off-label use of oncology drugs. However, court documents indicated that Celgene helped patients financially by contributing money to two patient-directed organizations, which were said to have “acted as conduits for Celgene” and thus had “eliminated any price sensitivity” for both patients and prescribing physicians.

The court also said “the United States did not intervene” without comment, although the court pointed to two other qui tam actions against the company, both of which were dismissed.

The biggest problem for Celgene might have been that the company purportedly persuaded physicians to influence guidelines published by the National Comprehensive Cancer Network, and was alleged to have “caus[ed] doctors to change ICD-9 diagnosis codes.” The lay person sitting in a jury box might find it difficult to hear of manipulation of codes used in Medicare billing without thinking the source of that manipulation was up to no good, particularly given how much very visible emphasis there is these days on Medicare fraud.