November 26, 2015

GAO Report Finds Steady Medical Device Profit Climb – Especially the Big Boys

Michael Causey, Editor-in-Chief, Association of Clinical Research Professionals

Michael Causey, Editor-in-Chief,
Association of Clinical Research Professionals

A new Government Accounting Office (GAO) report designed to shed light on what impact the medical device tax will have on the industry in the future might have done a better job of taking us under the industry’s financial hood today.

The GAO, the non-partisan counting house arm of the federal government, is often called upon by lawmakers to assess the financial impact or cost of compliance for potential regulations and taxes. These folks at GAO are mostly career bureaucrats. On top of that, they’re mostly career accountants. In other words, they aren’t known for cooking the books to benefit either side.

But where a 2014 Congressional Research Service study suggested a medical device tax would not impact company profits, GAO seemed to play it more neutrally in a report made public July 30. That’s why their overall assessment of the medical device industry just might be the most interesting thing they produced. GAO defined thirty of the companies as large-sized, including 3M, Baxter, Boston Scientific and Medtronic. It defined 35 as medium-sized, including Accuray, Biolase, Luminex, and Utah Medical Products. GAO defined 37 of the medial device companies as small, including Bovie Medical, Fonar, Urologix, and Zynex.

Here’s a little of what they found:

  • Net sales and profits were up between 2005 and 2014 – but it was better to be a big device company. Of the 102 surveyed, the 30 large-sized companies garnered more than 95 percent of the total net sales gains. Overall the industry enjoyed a 43 percent increase over the period, rounding out about a 4 percent increase annually.
  • Profits usually went up, except when they didn’t. While the overall trend was north rather than south, there were three periods were overall net profit decreased: 2005-6, 2007-9 and 2011-2.
  • Device industry still doesn’t know how bad it thinks device tax will be. According to GAO, 75 of the 102 companies in the report were uncertain about the full impact on their business.

While AdvaMed and others have slammed the device tax, saying it threatens jobs and funds for medical device innovation, others, including The Washington Post, have shrugged those job claims off as more about hype than fact.


Obama Veto Threat Looms Over Medical Device Tax Battle

Michael Causey, Editor-in-Chief, Association of Clinical Research Professionals

Michael Causey, Editor-in-Chief,
Association of Clinical Research Professionals

With medical industry trade groups and many House and Senate members lined up on one side determined to repeal the medical device tax, the other side may have the final ace: a veto threat by President Obama.

Not so fast, say opponents of the tax. They believe they have enough votes from Democrats to override any veto. Already in the House of Representatives, a June vote fell just one shy of the 281 needed to brushback any Obama veto. It’s worth noting that 12 Republicans were absent on the day of that vote. Most, if not all, would certainly support killing the device tax. The House, at least on an initial vote, appears to be a lock for those who want the tax gone.

It’s a little trickier in the Senate, where several Democrats have joined Republicans to remove the tax from the Affordable Care Act, commonly referred to as Obamacare. The Supreme Court’s recent decision that essentially upheld the Act could give political cover to wavering Democrats to stick with Obama and preserve the tax. Another factor: Dems against the tax might vote against it the first time, but then back off from overriding a veto and doing political damage to Obama.

demrepWith the presidential primary season already lurking in the background, Dems could be reluctant to weaken the President’s “value” when it comes to campaigning for Dems in key Senate and House races — not to mention supporting Hillary Clinton or whomever ends up grabbing the presidential nomination.

In the days before air conditioning, Washington was something of a ghost town in July and August. Business on Capitol Hill essentially ground to a halt. Today, life on the Hill does slow during those months, but deals are still cut and compromises worked out.

The smart money is on some kind of showdown next month. But remember, this is Washington D.C. Sure, today’s lawmakers can crank up the a/c and remain more active than their predecessors sixty years ago, but that doesn’t make them more predictable.

D.C. is a weird place in any weather. Watch this space.


FDA’s UDI Initiative Continues to Roll Forward

Jeff Mazik

Jeff Mazik, Vice President, Life Science Solutions, AssurX

With the close of the 7th Annual UDI Conference in Baltimore late last month, FDA took another big step forward in providing an electronic library of medical device information. During the conference, FDA shared a number of milestones completed in the last eight months since the previous conference.

Linda Sigg, FDA’s Associate Director of Informatics, shared that since the last conference held in October 2014 there has been quite a lot of progress made by her UDI group as well as the Medical Device community. In these past eight months, the number of Device Identification records in the GUDID increased from 33,000 to over 75,000. The number of manufacturer/labeler accounts grew from 240 to 425 accounts and FDA’s UDI Help Desk inquiries doubled to over 8,000 with an increase in their closure rate from 91% to 95%.

This growth was primarily due to the second group of devices requiring to meet FDA compliance due dates by September 24, 2015: those devices classified as implantable, life-saving, and life-sustaining.

UDI LabelingAlso accomplished during this time frame was the launch of the “AccessGUDID” website for public searching and downloading of the “GUDID” repository, finally allowing the fruits of all this collection of data to be visible to the healthcare community, at least for devices currently required to comply.

Mrs. Sigg also announced that upcoming capabilities to watch for was an advanced searching capability within the AccessGUDID system, as well as the implementation and availability of web services for external access to the GUDID. Ostensibly, the web services function will allow labelers/manufacturers and 3rd party vendors to actively integrate and search/download information electronically from the GUDID without the use of the AccessGUDID interface.

As the manufacturers/labelers of implantable, life-saving, and life-sustaining devices get closer to their due date for labeling and GUDID submissions this year, the next group of manufacturers/labelers: Class II devices (that are not implantable, life-saving, and life-sustaining) come to the plate. Accounts and GUDID access for these manufacturers/labelers will start being processed and made available in January of 2016 so as to help this group meet their labeling and GUDID submission compliance date of September 24, 2016. Following this September milestone, the information available in the GUDID will increase substantially. Soon after this milestone, Class I and unclassified devices will have their turn to begin labeling and submitting UDI information to the FDA, in order to meet their compliance date of September 24, 2018.

Also during the conference, guidance on the direct marking of devices was released, and for those devices requiring direct marking (e.g. the device is intended to be used more than once and intended to be reprocessed before each use) there are specific compliance due dates as well. These are posted on the FDA UDI website.

If your business manufactures Class II or Class I devices, be ready to get involved soon. Start planning now, if you haven’t already done so. Don’t wait until FDA grants your company access in order to begin to plan out how you will be compliant in your labeling of your devices, including direct marking (if applicable), as well as planning how to best manage and electronically submit your device’s UDI information to the GUDID system.


Will New User Fees Fuel More FDA Inspections?

Patrick Stone

Patrick Stone, President, TradeStoneQA

For FY 2016, FDA is requesting $4.9 billion to support our essential functions and priority needs, which is $425 million above the FY 2015 enacted level.  Of the total funding, $2.7 billion is budget authority and $2.2 billion is user fees.  The FY 2016 increase consists of $148 million in budget authority and $277 million in user fees.

User fee monies come from new health care sponsors applying for FDA approval to speed up the time it takes to get an audit scheduled. The user fee monies go toward FDA operating cost and employee payroll.

This means FDA will be expected to conduct more inspections to meet the demands placed on it by collecting user fee monies – but this idea raises a number of questions:

  • Will FDA be able to increase the amount of clinical trial audits globally in order to keep up with the user fee expectations for audit scheduling?
  • fancyFDAlogoHas FDA increased training for bioresearch monitor training and have trained inspectors ready to meet this challenge? FDA’s focus has been on food and tobacco inspections the last few years. The latest’s initiatives have been focused on compound pharmacies, the drug inspectorate, and the “antimicrobial blitz for use in feed lots & human use for resistance strain reducing strategy.”
  • Will FDA also increase the amount of health care products approved for the domestic market as well?

The drug shortage list has remained at high levels for the past few years and this fast track approval change is definitely part of the mitigation effort. Most of the budget increase comes from private industry and new product developers so the government burden is around one hundred and fifty million (2.7 billion total). We can only hope FDA is able to meet the increased demand for audit increases and is not postponing regulatory oversight due to limited trained staff shortfalls.

Patrick Stone is the author of Bubble Gum Badge – An FDA His-Story. You can also follow him on Twitter.


FDA Warning Letters Hit Device Makers Over CAPA, MDR Failures

Michael Causey, Editor-in-Chief, Association of Clinical Research Professionals

Michael Causey, Editor-in-Chief,
Association of Clinical Research Professionals

It’s been a little while since we checked the FDA’s outgoing mail tray to find out what inspectors are looking for – and often finding – during their visits in the first half of 2015

We start with a rather hefty June 12 letter to AG Industries in St. Louis, hit for a number of alleged 820-related shortcomings, including:

  • Failure to promptly review, evaluate, and investigate complaints related to a Medical Device Report (MDR) review and file an MDR with the agency for what it deemed one of perhaps several “serious complaints.” FDA found AG’s response “inadequate” because the firm labeled the incident to be not life threatening, where the agency clearly has some doubts.
  • Failure to adequately validate according to established procedures for a process those results can’t be verified by additional testing.
  • Failure to adequately establish procedures for finished medical device acceptance.

FDA says about ten percent of the nearly 210 complaints the firm has received since early 2013 are still open. Specifically, it called out a complaint that AG received in August 2013.

Note: Throughout the letter FDA says AG’s characterization of its CAPA problem as minor “appears inappropriate.”

fancyFDAlogoInsulin Management System manufacturer Insulet Corporation had a relatively easier time of it in a June 5 letter. FDA hit the firm for devices it alleges are adulterated because the methods used in, or controls of, the manufacture, packing, storage, or installation don’t meet FDA good manufacturing practice (cGMP) requirements of its Quality System regulation.

FDA fired back that the firms April 16 response was not adequate and advised the firm that “regulatory action” could be initiated without further notice unless the Massachusetts-based firm takes prompt action to correct violations FDA alleges in the warning letter.

In New Jersey, FDA called out Ultrafiler-maker Nephros for alleged failure to document evaluation of its suppliers. Like Insulet, the firm was also criticized in the May 27 letter for not including required info of complaint investigations.

Bothell, Washington-based Thorn Dental Laboratory LLC was challenged in a June 2 letter of a number of CAPA-related fronts, including:

  • An inability to produce CAPA procedures for review during the inspectors’ series of inspections in February.
  • Failure to establish and maintain procedures for receiving, reviewing, and evaluating complaints by a formally designated unit.
  • Failure to establish and maintain procedures to ensure that all purchased or otherwise received product and services conformed to specific requirements such as failing to maintain adequate documentation of suppliers, contractors and consultants.
  • Failure to establish and maintain procedures for finished device acceptance.
  • Misbranding its anti-snoring/sleep apnea devices.

Our final letter in this go ‘round’s review focused on Irvine, California-based Insightra Medical, maker of catheters and hernia implants. The agency said the firm’s devices are adulterated because Insightra failed to control its facilities in terms of manufacture, packing, storage, or installation.

Insightra was hit with a number of MDR shortcomings, including failure to establish internal systems that provide for “timely transmission” of complete medical device reports.


Medical Device Makers Express Optimism About Future — But QA Worries About US Regulatory Burden

Michael Causey, Editor-in-Chief, Association of Clinical Research Professionals

Michael Causey, Editor-in-Chief,
Association of Clinical Research Professionals

Crystal may be clear, but crystal balls, at least metaphorically, are certainly not. The late, great political columnist David Broder with The Washington Post used to run a column at the end of the year tallying up where he had guessed correctly – and where he’d missed the mark. Not many columnists have the guts to do that.

A survey taken earlier this year found that some 75% of more than 5,000 medical device professionals felt “very or somewhat positive” about business prospects for 2015. Those numbers are pretty much in line with the findings of the 2014 survey, conducted by our friends at The Emergo Group.

Taking a closer look at the 2015 numbers, it’s clear that domestic device makers feel better about their prospects than do counterparts in the EU – and this was before Greece really started to tank.

Casting eyes around the globe, it turns out device makers in Asia were even more optimistic than those in America. Still, confidence among Asian device makers fell to 77% in 2015, from 83% in 2014. It’s interesting to note that, even then, concerns about a slowing Chinese economy don’t reflect an increasing edginess about the state of things in the world’s most populous nation.

X-ray of hipIn the U.S., smaller companies actually felt a bit more optimistic than their big brothers and sisters. But mid-size and big shops were a little less thrilled about the future, likely due to “regulatory and pricing pressures,” Emergo notes.

The study burrowed down to quiz more than 2,000 QA/RA professionals for their thoughts on current and prospective regulatory trends. Just over one-third of American respondents said they expect the process of gaining regulatory approval will be tougher than it was a year ago. The study says about 3.5% think the regulatory process is getting easier, though I’ve personally never found or spoken to any of those people!

Not surprisingly, the QA/RA pros in the U.S. said their country was one of the toughest when it comes to regulatory approval. Even the FDA sometimes acknowledges that, as we noted in an earlier blog when FDA’s Center for Devices and Radiological Health Jeffrey Shuren noted the agency is sensitive to this and trying to make some pro-industry changes.

We’ll check back with Emergo – and Shuren – later in the year. Let’s see if we can find some of that Broder confidence where folks circle back and reassess their predictions.


Study: FDA 510(k) Approval Process Now Averages Over Six Months

Michael Causey, Editor-in-Chief, Association of Clinical Research Professionals

Michael Causey, Editor-in-Chief,
Association of Clinical Research Professionals

If you’ve got six months – and nerves of steel – here’s some good news: You have a 61% percent chance of getting your medical device approved by the FDA. That’s one nugget of interesting data to be found in a recent Emergo group report that analyzed some 15,000 device clearances between January 2010 and December 2014.

We’ve blogged about this quite a lot over the past four years or so, and it looks to be another case of the more things change the more they stay the same. Back in June 2011, we reported on an Emergo study which found that in 2006 it took about 96 days to get clearance. By 2010 that number had leapt to 132. Today, Emergo reports that “it now averages about six months.” Blame for this trend is slung around between industry and regulators – each time FDA says it’s made a big step forward, industry tends to toss these kind of stats back in the agency’s face.

FDA can’t exactly point to any kind of consistent improvement. It approved 3,173 devices working their way through the 510(k) maze in 2014, which was up nearly 5% from 2013, but pretty much in line with 2011 and 2012. Check back in a year or two to see if 2014 was the start of a positive trend.


Radiological and Orthopedic devices are usually the fleetest of foot in the race for approval, averaging about 140 days last year, that’s up from 135 in 2013. Overall, about 22% of devices are cleared within three months.

The study also finds that third party reviewers tend to work more quickly than internal agency reviewers. While not all devices qualify for this program, think about grabbing it if you can. Your device might clear in 68 days, on average, or more than 110 days faster than with an internal FDA reviewer.

Note: FDA doesn’t release data about submissions rejected, withdrawn or abandoned by the submitter. Emergo’s analysis doesn’t include devices subject to the Pre-Market Approval (PMA) process.

So, still trying to figure out how your new medical device might fare in today’s FDA climate?

A fun new tool from Emergo just might sweep aside some of the fog. Simply plug in (or look up) your device product code, then sit back and let the tool tell you an estimate approval time based on similar products that have gone through – and survived – the process.

Unfortunately, you probably don’t need any kind of online tool to tell you one thing: The FDA’s 510(k) approval process keeps getting slower and slower and slower…


FDA Issues Deadline Reminder to Medical Device Companies on Electronic Medical Device Reporting

Tamar June

Tamar June, VP, Strategic Marketing, AssurX, Inc.

Looks like it’s crunch time for medical device manufacturers. Whether they submit one or 10,000 medical device reports (MDRs) to the FDA per month, they are required to go all electronic come August 14, 2015. No faxes, no mailed in reports, no more burned CDs. Device manufacturers have two choices. Either use the eSubmitter, or utilize the HL7 ICSR. Both go through FDA’s Electronic Submissions Gateway.

If device manufacturers haven’t yet setup their ESG accounts, they better get started right away. It takes at least two weeks to get on board with FDA, as well as additional time to test the submissions. FDA issued another reminder and an updated implementation package this morning:

fancyFDAlogoOn August 14, 2015, the eMDR final rule goes into effect, requiring manufacturers to submit medical device reports (MDRs) to the FDA electronically rather than in paper form. Electronic submission expedites report processing and reduces the burden of data entry on the FDA, manufacturers, and importers. There are two options available to all reporters for submitting eMDRs: eSubmitter or Health Level 7 Individual Case Safety Reports (HL7 ICSR).

Today, the FDA released an updated implementation package with the system requirements to enable manufacturers that chose the HL7 ICSR submission option to prepare for and test eMDR submissions.

As a reminder, both eSubmitter and HL7 reporting options transmit MDRs to the FDA using the FDA Electronic Submission Gateway (ESG), a secure entry point for all electronic submissions to the Agency.

Manufacturers should consider registering for an ESG account and submit a test submission as soon as possible to ensure that they are electronic submission compliant by August 14, 2015, regardless of which transmission method they choose. Manufacturers may begin testing their submissions as early as June 29, 2015.

Information on the FDA ESG and steps to obtain a production account, please visit the Electronic Submissions Gateway page.

For more information about how to prepare for eMDR, please visit the FDA eMDR page.

After this deadline, there will be no more extensions. Even if device manufacturers rarely submit reports, they need to make sure they are ready just in case.


FDA’s Shuren Works to Assure Device Industry Innovators

Michael Causey, Editor-in-Chief, Association of Clinical Research Professionals

Michael Causey, Editor-in-Chief,
Association of Clinical Research Professionals

Calling it something of a “culture change” at the Center for Devices and Radiological Health (CDRH), Director Jeffrey Shuren said his team is working hard to find ways to speed approval of new medical devices by, in part, placing more stress on patient needs when looking at high-risk devices.

If potential users believe a product’s benefits outweigh its potential risks, Shuren said the agency is more likely to approve it today. “We want to make the U.S. a much more attractive market for medical device innovations,” he told attendees at this month’s Drug Information Association (DIA) convention in Washington, D.C., acknowledging that America has some of the toughest standards blocking the way between device manufacture and approval.

Jeffrey E. Shuren, M.D., J.D., Director, CDRH

Jeffrey E. Shuren, M.D., J.D., Director, CDRH

Shuren pinned a lot of his hopes on the Medical Device Innovation Consortium (MDIC), the first public-private partnership devoted to the advancement of regulatory science in the medical device industry. MDIC aims to coordinate the development of methods, tools, and resources used in managing the total product life cycle of a medical device to improve patient access to cutting-edge medical technology. It will hold its annual meeting September 25 in D.C.

Boasting 49 members, including large and small device companies, PhRMA, venture capitalists, consumer groups, FDA and NIH, MDIC has been active over the past year or so, holding a slew of meetings across the U.S. (and Japan), spreading the good word of innovation.

Shuren also talked about the FDA’s May guidance which offers additional detail regarding how it will consider patient needs as it weighs risk/benefit calculations. “We’re looking to find ways to reduce medical device time to market,” he said. CDRH is making “changes in our approach” as evidenced by the guidance and the FDA’s work with MDIC, among other things, Shuren stressed.


FDA Moves UDI Initiative Further Down the Production Line

Michael Causey, Editor-in-Chief, Association of Clinical Research Professionals

Michael Causey, Editor-in-Chief,
Association of Clinical Research Professionals

We, and others, like to take the FDA to task for missing deadlines or behaving in ways that are sometimes difficult to fathom. But it’s only fair to give equal space to something when they seem to get it right. Take the Agency’s Unique Device Identification System (UDI).

Readers of this blog might have different experiences with it – and we’d like to hear about them, good or bad – but you’ve got to tip your hat to FDA because they’re trying to get it right.

Last month, FDA launched the Global Unique Device Identification Database (GUDID), a searchable website containing a listing of all UDIs. Expectations, both from industry and the agency, are high for this system implemented to simplify the identification of many regulated medical devices used by patients in the United States.

GUDIDThe complex infrastructure, which will be phased in over several years marked by a variety of deadlines that began in 2014 and are slated to wrap up in 2020, offers a number of potential benefits, including:

  • Speeding and improving the accuracy of the reporting, reviewing and analyzing of an adverse event.
  • A quicker means to identify a device and extract important information about it.
  • Enhancing analysis of devices on the market by providing a standard and clear way to document device use in electronic health records, clinical information systems, claim data sources and registries. A more robust postmarket surveillance system can also be leveraged to support premarket approval or clearance of new devices and new uses of currently marketed devices.

Ultimately FDA hopes its UDI can become a worldwide model, too.

It’s worth noting that FDA’s former point man for the initiative, Jay Crowley, continues to lead the bandwagon now that he’s ensconced in private practice with USDM Life Sciences. He’s led a number of webinars and given a number of talks that make a persuasive case for the positive impact UDI will have on the device industry. Sometimes, a former FDAer spends the next ten years of his or her career criticizing the very program they led. Not the case with Crowley and that bodes well for UDI.