Worldwide Medical Device Regulatory Updates

The US Food and Drug Administration (FDA) has floated the possibility of reorganizing the Center for Devices and Radiological Health (CDRH) and providing more resources to the branch in order to address issues in order to improve product review processes and meet the goals of the Medical Device User Fee and Modernization Act (MDUFA) reauthorization next year.

Agency representatives disclosed these suggestions at a May 4 negotiating meeting with the Advanced Medical Technology Association (AdvaMed), the Medical Imaging Technology Alliance (MITA), the Medical Device Manufacturers Association (MDMA) and the American Clinical Laboratory Association (ACLA). Minutes of the meeting were recently posted on the FDA's website.

The May 4 meeting follows the FDA’s unveiling of a proposal package for improving review processes and meeting MDUFA III goals at an April 13 negotiation meeting. Those proposals include:

• Improving device review performance via changes to premarket approval (PMA) goals
• Improving PMA review consistency and predictability
• Strengthening scientific infrastructure at the CDRH through better staff retention and more hiring in bottleneck areas
• Improving review management
• Providing clearer definitions of submission acceptance criteria

To meet these goals, FDA officials at the May 4 meeting explained that the CDRH would require 254 additional full-time equivalent staff as well as a bigger operating budget—to be funded partially via higher user fees, presumably.

Industry responses to the agency’s proposal package were mostly oppositional. Attending representatives questioned the FDA’s need to add additional staff, arguing that user fees established under MDUFA II were partially meant to cover staffing requirements. Industry groups also disputed FDA contentions that poor submission quality has partially contributed to missing MDUFA goals in the past, arguing that improper risk-benefit calculations and inexperienced agency reviewers were primarily to blame for missing those goals.

Such contrasting viewpoints as to how to improve the FDA device review process should hardly come as surprising given how vigorously regulators and the industry have staked out their positions on the issue. The next negotiation meeting, which occurred on June 1, was to entail submission of complete sets of proposals by both the FDA and industry, as well as draft commitment letters. It’s doubtful the two sides’ documents will have much in common.

Nine medical device industry associations have signed on to the Global Compliance Statement on Interactions Between Medical Technology Companies and Healthcare Professionals (HCPs), a document intended to promote ethically sound interactions between the groups’ member firms and health care providers.

The Advanced Medical Technology Association (AdvaMed), Eucomed and the European Diagnostic Manufacturers Association (EDMA) first signed on to the document in 2010; six additional groups—the European Coordination Committee of the Radiological, Electromedical and Healthcare IT Industry (COCIR), the International Medical Devices Manufacturers Association (IMEDA), MEDEC, the Medical Technology Association  of Australia (MTAA), the Medical Technology Association of New Zealand and the South African Medical Device Industry Association (SAMED)—signed the document during the 2011 International Medical Device Industry Compliance Conference in London, according to a Eucomed press release.

Specific efforts the associations have agreed to undertake include pushing their respective members to adopt compliance policies and procedures in line with industry codes; providing guidance to industry regarding ethical business conduct when engaging with health care professionals; keeping members informed of relevant laws, regulations and professional codes that impact how firms interact with health care professionals; and collaborating to increase adoption of ethical codes of conduct on a global scale.

Buy-in of the global compliance statement among a significant number of trade groups representing various medical device markets no doubt reflects a more advanced and nuanced level of maturity of the industry as a whole—but also the need for member companies to establish adequate processes and procedures in the face of growing regulatory interest.

The medical device excise tax provision passed last year as part of the Patient Protection and Affordable Care Act in the US has drawn heavy fire from industry groups, with entities such as the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association (MDMA) pushing for either clarification of how the rule will be implemented and enforced or for outright repeal of the tax.

Set to go into effect in 2013, the rule in question would levy a 2.3% tax on all medical device manufacturers' US sales revenues. A group of senators had proposed an amendment in late 2009 exempting manufacturers with less than $100 million in revenues from the tax, but that amendment was not included in the final law.

AdvaMed has focused on how the US Internal Revenue Service will implement the excise tax. In a March 22 comment letter submitted to the agency, AdvaMed offered several recommendations on what kind of guidance the IRS should issue regarding the tax:

• No multiple taxation of the same device
• Flexible definitions and rules to foster innovation
• Minimal conflict between tax guidance and other industry regulations currently in force
• Clear definitions of articles subject to taxation, as well as prices and timelines
• Clear definition of which entity within a device's manufacturing chain is responsible for the tax
• Minimal changes necessary to manufacturers’ accounting process in order to comply

The trade group further urged the IRS to clarify the definition of “manufacturer” for tax purposes to include only “physically transformative activities” such as reprocessing or remanufacturing of taxable devices. Questions regarding how the IRS would treat component and contract manufacturing were also raised by AdvaMed in the interest of avoiding multiple taxations of single devices. To that end, the organization recommended using contract manufacturing rules detailed in section 954 of the Federal Tax Code to deal with this issue, arguing that these rules are better developed and familiar to the industry.

“The contract manufacturing rules pinpoint a single manufacturer, avoiding multiple taxation of the same device,” AdvaMed stated. “They will also permit manufacturers to implement the excise tax consistent with their distribution networks.”

While AdvaMed appears to have pivoted from fighting enactment of the new tax to negotiating the terms of its implementation, the MDMA has dug in its heels, reiterating on March 23^rd its position that the tax should be repealed. Given that the MDMA’s membership comprises smaller-tier manufacturers whose bottom lines would be more acutely impacted than those of AdvaMed’s deeper-pocketed members, the group’s less compromising stance is understandable, but ultimately impractical. Perhaps the MDMA would better serve its member firms arguing for more favorable parameters of the new excise tax rather than against it altogether.

Opponents of the Food and Drug Administration’s reform efforts targeting medical device reviews have a sympathetic ear in Joe Pitts, the Republican congressman from Pennsylvania who now chairs the House Energy and Commerce Health Subcommittee.

That could mean at the very least Congressional hearings on whether and how the FDA medical device clearance and approval processes should be changed, and at most legislative intervention to quash efforts to step up the regulator’s review and enforcement powers.

In an op-ed published February 15 in The Hill, Pitts took specific issue with recent studies showing the European device review process to be faster and cheaper than the US model, and how that alleged shift will impact both US innovation and patient access to cutting-edge medical products.

Arguing that the FDA has become too “risk-averse,” Pitts wrote that his subcommittee would further investigate why and how the US has lost ground to Europe in terms of medical device innovation, faster time to market and flow of venture capital.

The recent AdvaMed-sponsored study by Boston Consulting Group, which compared recall rates between US and European markets, featured prominently in Pitts’s argument. No mention, alas, of a recent study published in the Archives of Internal Medicine noting that the majority of high-risk device recalls in recent years involved products cleared through the FDA’s less stringent 510(k) process.