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.

Breathing Room but Hefty Fines: NIH’s Final Rule for Study Registration

The National Institutes of Health has finalized the rule for registration of drug and device trials at clinicaltrials.gov, one of the most commercially important documents the agency has published in decades. While the NIH did relent on a couple of points essential to industry, it appears that the requirements will be retroactive, thus exposing device makers to a fine of $10,000 per day per violation for any studies that are not up to date regardless of when those studies first appeared at the clinical studies website.

The NIH notice of proposed rulemaking (NPRM) came to light in 2014, and the docket for this proposal drew more than 900 comments, some of which was reflective of a considerable amount of consternation by those in the life science industries. Among the concerns expressed by industry early on was that the draft rule would have forced the disclosure of confidential information that could compromise a drug or device maker’s competitive position. However, industry was not the only target of the rule. By some accounts, most of the failures to register a study are accounted for by researchers working on studies not sponsored by industry. In any case, members of the NIH team said in an article in the New England Journal of Medicine that only about 10% of the studies registered at clinicaltrials.gov include results data from the registered study.

The retroactive nature of the mandate suggests the FDA will be on the look-out for violations of the final rule by drug and device makers. There does seem to be a split on the question of Section 522 post-market surveillance studies, however. The NIH flowchart regarding clinical trial compliance under the Food and Drug Administration Amendments Act of 2007 – the law that gave rise to the NIH rule – suggests that Section 522 studies are only required to register at the NIH site if those studies are of devices in pediatric populations

Nonetheless, any laggardly performance in these non-pediatric Section 522 studies might show up on the FDA radar screen if the agency starts hearing from the public, or from Capitol Hill, about clinical trial compliance generally.

Makers of combination drug-device products were none too happy to see that the NIH draft had stated that trials of combination products would be treated as pharmaceutical agents for the purposes of trial registration. The NIH heard from a number of entities that the final rule ought to reflect the designation applied to the product by the FDA’s Office of Combination Products, which itself has come under a barrage of criticism of late. The final NIH rule conceded the point

On the point of disclosure of trade information, the NIH opted to give sponsors of clinical studies of unapproved drugs and devices a year after the study’s primary completion date to register the results of the study, although sponsors can avail themselves of an additional two years if they certify that they intend to continue development of the product in question. Disclosure of dead-end studies would be required upon the sponsor’s notification of abandonment of the study.

As for timelines, the NIH said the final rule goes into effect on Jan. 18, 2017, and that compliance will turn into enforcement three months later, on April 18, 2017. That leaves sponsors less than six months to determine which of their studies are subject to the final rule and get those studies’ data updated. After all, $10,000 per violation per day can add up quickly.

Nadcap-like Program Holds Promise for Recall Reduction and Enhanced Quality Assurance for Medtech Industry

Courtney A. Stevens, Esq. | Senior Attorney, Medmarc Loss Control

The Performance Research Insitute (PRI), the not-for-profit organization responsible for spearheading the Nadcap program in the aerospace industry, is now turning its focus on medtech and hoping to have the same dramatic results in quality improvement and supply chain management there that is attributed to it for aerospace.

Despite the multitude of standards and regulations that medical device and component part manufacturers are subject to, and indeed the corresponding barrage of audits to which they are subjected, leaders in the medical device industry working with PRI identified a real gap left by all—critical processes. That is, the specific, crucial processes manufacturers use to create their products—heat treating, welding, sterilization, plastics molding, printed circuit board assemblies, cable and wire harness, etc.—are not the focus of quality management system audits. Suppliers can pass all audits imposed on them by the FDA and their OEM-customers without ever having the integrity of their critical manufacturing processes assessed by subject matter experts. PRI’s MedAccred program endeavors to change that, and has already been adopted by some of the largest medical device OEMs (original equipment manufacturer) in the industry, including Johnson & Johnson, Stryker, and Philips Healthcare.

This article, Bringing Nadcap to the Medical Industry, discusses the prospects for the program in greater detail.

FDA Pushes Back the Date for Issuing Generic Drug Labeling Rule to April 2017

Jordan Lipp, Esq. | Partner, Davis Graham & Stubb

On Thursday, the FDA again pushed back the date it expected to issue its final rule on generic drug labeling.  The final rule is now expected in April 2017.  The highly controversial proposed rule, as discussed in more depth in earlier posts, would permit generic drug manufacturers to unilaterally change their labels under the changes-being-effected (“CBE”) process.  Besides likely creating a bureaucratic headache and allowing generic and brand-name labels to differ (potentially in violation of the Hatch-Waxman Act), the proposed rule would also threaten to undermine the generic drug preemption decisions by the U.S. Supreme Court.  The proposed rule has generated significant political heat for these reasons, and the date for the final rule has already been pushed back several times.  Although the FDA did not state a reason for pushing back the announcement of its final rule again, the new date of April 2017 is, of course, after the next election.  Whether the final rule will ever be issued, and what it may look like, are open questions.  In any event, the wait continues.


What Scalia’s Passing Means to Life Sciences Companies

Courtney A. Stevens | Senior Attorney, Loss Control | Medmarc Insurance Group

The recent passing of Justice Antonin Scalia, the Court’s longest-serving justice, means more than just political scuttlebutt over who will get to appoint his replacement. For life sciences companies, it means the loss of a real ally in matters of tort liability and a powerful force in intellectual property.


Scalia authored the 8-1 majority opinion in Riegel v. Medtronic, 552 U.S. 312 (2008), a pivotal decision in preemption jurisprudence that held that the Medical Device Amendments to the Food, Drug and Cosmetic Act (FDCA) preempted state-law claims relating to the safety and effectiveness of pre-market approval (PMA) devices. This effectively shields makers of PMA devices from products liability claims.

In Wyeth v. Levine, 555 U.S. 555 (2009), which undermined preemption in holding that FDA approval of a medication does not preempt state law failure-to-warn claims, Scalia joined the dissent (authored by Justice Samuel Alito). The dissent argued that this holding was inconsistent with their previously-adopted “conflict preemption” analysis.

Continue reading “What Scalia’s Passing Means to Life Sciences Companies”

Industry Victorious in Landmark Off-Label Promotion Ruling

Courtney A. Stevens, Esq. | Senior Attorney, Medmarc Loss Control

In what industry insiders are calling a “landmark decision,” on Friday, August 7, the Second Circuit granted for Amarin Pharmaceuticals’ motion for a preliminary injunction in an off-label promotion case, ruling that certain truthful, non-misleading statements about off-label uses are constitutionally protected under the First Amendment.

In reaching his decision, Judge Paul Engelmayor relied on the same court’s 2012 decision in U.S. v. Caronia, which overturned the conviction of a pharmaceutical sales representative for his off-label promotion comprised of truthful speech. Continue reading “Industry Victorious in Landmark Off-Label Promotion Ruling”