4 Important Medtech Policy Takeaways From The MDMA Annual Meeting

Last week’s Medical Device Manufacturers Association (MDMA) 2014 Annual Meeting served as a call to arms for the medical technology industry.

I joined a diverse and enthusiastic group of more than 150 executives, government officials, physicians, regulators, and other medical technology advocates in Washington, DC, for the event. Over the course of two days, we heard presentations by some of the leading voices in the medtech space, discussing the biggest threats facing the industry and exploring potential regulatory and legislative strategies to help achieve the meeting’s overarching theme — “Shaping the Future of Healthcare, Improving Outcomes.”

During his opening remarks, MDMA chairman Dan Moore pointed out that we were sitting in a meeting room called the “Hall of Battles,” a fitting location for a besieged U.S. medical device industry to draw up its plan of attack. The enemies at the gates are legion: a “punitive, misguided device tax” (as Moore put it) that stifles innovation and cripples startups, inefficient regulatory and reimbursement pathways that delay life-saving technologies from reaching U.S. patients, a dysfunctional patent system that dissuades small companies from protecting their own IP, and many others.

With that as a backdrop, here are the four main observations I took away from the MDMA 2014 Annual Meeting.

1. The device tax could be repealed or suspended by this fall (but probably not sooner).
Five U.S. senators from both sides of the aisle — Kelly Ayotte (R-N.H.), Joe Donnelly (D-Ind.), Bob Casey (D-Pa.), Lamar Alexander (R-Tenn.), and Al Franken (D-Minn.) — took the podium during the event, all denouncing the “onerous” medical device excise tax and stumping for its repeal. Ayotte and Alexander were presented with 2014 MDMA Chairman’s Leadership Awards for their efforts to revoke the tax.

“What I want to see most of all is for us to repeal this tax,” Ayotte said in accepting her award. She described her recent visit to New Hampshire medical device startup Novocure, which has developed a cancer treatment that uses electrical fields to disrupt tumor cell division and inhibit proliferation. Novocure will pay $1.2 million in medical device taxes in 2014, according to Ayotte — money the company could otherwise be using to fund new clinical trials and accelerate the availability of new life-saving technologies.

“Not only is this tax a job killer, it’s a killer in general,” Ayotte said. “Repealing this tax is doing the right thing for patients.”

There appears to be strong bipartisan support in the Senate for eliminating the tax, though a repeal has yet to pass a binding vote. (Last year, 79 senators voted in favor of repeal in a nonbinding vote.) In the days leading up to the MDMA meeting, Senate Republicans, led by Sen. Pat Toomey (R-Pa.) and Ayotte, attempted to add an amendment to repeal the device tax to the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, more commonly referred to as the tax extender bill. However, Senate Democrats refused to allow the amendments, and the Republicans responded by blocking the bill last Thursday.

One route to eliminating the tax might be for supporters to back off their demand for a full repeal. Donnelly said that while he is hoping for a complete repeal, a two-year delay of the tax may be more realistic. It would also buy Congress time to find a solution to what has thus far been the biggest roadblock to repeal: coming up with a suitable replacement for the $30 billion the device tax will generate to support the Affordable Care Act (ACA).

Another option would be for the industry to cross its collective fingers and hope that the Republicans win a Senate majority through this fall’s midterm elections. “The best way to get the device tax repealed, to be blunt about it, is for the Republicans to win back the Senate in November,” Alexander said. Ayotte promised that if the Republicans take the Senate, the device tax will be a top priority.

2. CDRH knows where it needs to improve … and is working on it.
If the device tax was the number one issue at the MDMA meeting, then regulations came in a close second. Speakers and attendees expressed concern about the regulatory roadblocks that are slowing U.S. medtech innovation and compelling manufacturers to introduce their products overseas. They repeatedly expressed their desire for a more predictable, transparent, and nimble FDA — one that acts as an enabler and partner in the development of U.S. medical technology, not an inhibiter.

“We need to hold FDA’s feet to the fire when it comes to following through on MDUFA,” Ayotte said during her speech. MDUFA, or the Medical Device User Fee Agreement, authorized the agency to collect some $600 million in fees from medical device companies (when they submit new device applications or notifications) between 2012 and 2017. The FDA is using the funds to hire hundreds of new employees at the Center for Devices and Radiological Health (CDRH), in an effort to increase the efficiency of its regulatory processes and reduce amount of time it takes to bring new devices to the U.S. market.

I spoke with several attendees who were frustrated by recent dealings with CDRH, attributing some of the problems to new MDUFA hires and other employee turnover at the center. (To be fair, I heard from one attendee who was delighted by his newly assigned reviewer.) It will certainly take some time for all the new staffers to get up to speed, and in the meantime, device makers may have to suffer inexperienced reviewers and tolerate uneven customer service in their dealings with CDRH.

During an hour-long talk and Q&A session at the MDMA event, CDRH director Jeffrey Shuren addressed these and other concerns related to MDUFA implementation and provided an update on the center’s strategic priorities for 2014 and beyond.

In Shuren’s estimation, CDRH review of low-risk devices “compares favorably” with international regulators, though he acknowledged that the center still has a ways to go when it comes to evaluating high-risk devices. He also conceded that there is more work to be done in lowering the cost and increasing the speed of the medical device product lifecycle, and in attracting more medtech innovators to the U.S. “We do well on the ‘protect public health’ side of CDRH’s mission, but the ‘promote public health’ side has a much higher bar,” he said.

The center has made progress, Shuren reported. Average CDRH review times for premarket approval (PMA) submissions are down 32 percent, and the backlog in PMA submissions has been reduced by 46 percent. For 510(k) submissions, review time is down 10 percent, with a 27 percent reduction in backlog.

Shuren identified several recent changes at CDRH that he believes will further speed the review process. For example, the center is taking more of a “lifecycle approach to assessment” by shifting some of the data collection burden from premarket to postmarket. He called attention to recently issued draft guidance on this methodology, which should speed time to market while still allowing sufficient evidence to be generated over time. “We’re asking the question, ‘Is there data that can be collected postmarket or not at all?’” Shuren explained. He also believes that the newly proposed Expedited Access PMA (EAP) program will make certain devices available to patients more quickly.

In addition to striking the appropriate balance between pre- and postmarket data collection, CDRH’s other two strategic priorities are strengthening and streamlining the clinical trials enterprise and providing excellent customer service, Shuren said.

3. Reimbursement models and strategies continue to evolve.
While his organization is not directly involved with reimbursement/payment, even Shuren mentioned it as one of the major challenges facing the industry.

The Centers for Medicare & Medicaid Services (CMS) and private payers are feeling increased pressure to reduce the rate of growth in the nation’s healthcare spend. As a result, medical devices are under much more scrutiny to demonstrate clinical effectiveness. And even though devices represent only a small percentage of overall healthcare spending — making up only 4 percent of all U.S. hospital expenditures — they represent low-hanging fruit to payers seeking to negotiate lower costs, fair or not.

During an MDMA panel session called “Addressing the Rising Cost of Care,” Jim Mazzo, chairman and CEO of AcuFocus, highlighted the fact that there are more reimbursement specialists in medtech companies than ever before, and for good reason. He brought up the example of devices and drugs competing for reimbursement in the same space, for instance in the treatment of glaucoma. “A device can provide an effective alternative to drug therapy, but how do you get it reimbursed?” he asked.

Fellow panelist Louis Jacques, VP and chief clinical officer for ADVI, added that devices can be preferable to drugs early in treatment, providing better outcomes over the long term. However, there are situations in which payers won’t cover both a drug and a device in the same treatment area. In these cases, they are turning to clinical trial data to help make the decision — an area where the pharmaceutical industry, with its deep pockets and massive clinical trials, has a major advantage. Jacques asked: “Which will a payer choose: the device with a 40-patient trial or the drug with thousands of patients in its trials?”

The panelists all agreed that payers need to take a longer-term view of a treatment’s value, since devices like implants may have higher short-term costs but offer greater long-term benefits. So did Sean Cavanaugh, CMS’s new deputy administrator and director of the Center for Medicare, who spoke at the meeting. He sees a future in which price will become more marginal, as CMS and other payers assess the value of devices over the long haul. “We need to create new payment models that are focused on total cost of care,” he said, “looking at the benefits that accrue outside of the 30/60/90 day window.” He added that CMS is exploring ways to better measure value over time and is open to industry input and suggestions.

Also looking ahead, Mazzo thinks we might be headed toward a future where government is removed from the payment equation. Already, we see situations where patients are paying out of pocket for higher levels of care or newer technology than CMS or insurance is willing to reimburse. “Patients are becoming much more involved in the healthcare process, not just in terms of care but of payment,” he stated.

Until then, one way to accelerate reimbursement approval is to explore concurrent review at CMS and FDA, rather than waiting for FDA approval before initiating a CMS review. According to CDRH’s Shuren, the CMS-FDA parallel review pilot program can shave six to nine months off the CMS review process, though it is only applicable to a small percentage of devices. (One of the program’s early success stories was the parallel approval and implementation of transcatheter aortic valve replacement, or TAVR, devices.) Even if a device is ineligible for parallel review, manufacturers would do well to start gathering data for both regulators and payers very early in the product development process.

They should also be realistic about reimbursement, especially when it comes to first-generation devices. “Device makers want to be paid as though their first-generation product is an established product, which it is not,” ADVI’s Jacques said, sharing that he waited to buy an iPhone until the device was in its third generation. A first-generation device is rarely a home run — it will almost always need iterations. So manufacturers should adjust their expectations about payment for these devices and focus instead on accumulating evidence.

4. Device makers need to share more stories.
Regardless of your policy concern — whether it’s the device tax, regulations, reimbursement, or anything else — your best bet for influencing change is to connect with politicians and their constituents. Like it or not, medical technology is a not a priority in Washington, according to multiple MDMA speakers. Device makers need to make their voices heard, or their work will continue to be taken for granted. “There is no more powerful statement to a senator than to see local businesses,” Sen. Donnelly said. “You are the most powerful voice in your industry.”

Once you get their attention, don’t just talk about how a given policy is hurting U.S. competitiveness, stifling innovation, moving jobs overseas, or even increasing the cost of healthcare. Instead, tell the stories about how your technology has saved and improved the lives of actual people. “You need to talk about the value and benefit of what you produce — what your products are doing for real people and real families, not just the economics,” Sen. Casey said. Even better, tell the story in the patient’s voice.

Several of these amazing stories were, in fact, shared during a session called “The Impact of Medical Technology.” The first came courtesy of Ekso Bionics, developer of the world’s first untethered exoskeleton. The company’s bionic suit, based on DARPA technology, was originally created to decrease soldier injuries due to load carry. Today, it’s being used as a rehabilitation tool to help people who have suffered a stroke, spinal cord injury, or other neurological condition stand up, walk, and re-learn proper step patterns and weight shifts.

MDMA attendees didn’t only get to hear about the device — we got to see it in action. Gary Linfoot, a 23-year U.S. Army veteran, suffered a broken back and was paralyzed from the waist down during a helicopter crash in Iraq in 2008. During the presentation, Linfoot put on the Ekso suit, stood up from his wheelchair, walked across the Hall of Battles, and stood before the audience to tell his story. After describing some of the physical benefits the device can provide, he spoke of the emotional impact it can have: “One of the intangible benefits is how it makes a person feel to be able to stand again, walk again, and look somebody in the eye when you have a conversation with them. It’s something that makes you feel human again.” On Veteran’s Day last November, Linfoot became the first paralyzed veteran to walk on Liberty Island.

We then met Dan Armagh, an attorney who said he was “in the ninth inning with two strikes and two outs” as a result of advanced heart disease, the leading cause of death in the U.S. His life was saved by a left ventricular assist device (LVAD) from HeartWare. The miniature pump — small enough to fit in the palm of your hand and to be implanted without open chest surgery — attaches directly to the heart and is powered and controlled by an external unit the patient wears around the waist or over the shoulder. The next-generation version of the device, which is expected to enter human trials in Canada later this year, features a pump that’s approximately one-third the size of its predecessor, along with a smaller and more intuitive controller.

Although Armagh’s talk lacked the visible demonstration that Linfoot’s did, it was no less powerful. The attorney explained how the device has allowed him to return to work, to travel, and most importantly, to see his son graduate from high school. “There’s a difference between living and actually having a life,” Armagh told the crowd. “HeartWare gave me a life.” He hopes, if he’s “lucky,” that his heart pump will enable him to see his son get married someday.

Armagh also had some words of encouragement to share with the audience, words that you would do well to remember when the battle to deliver new life-saving technologies to patients seems lost: “Keep up the good work. Don’t get discouraged. It’s critically important that you keep the ball rolling.”

His sentiments were later echoed by Sen. Franken. “Thanks for doing what you do,” Franken said. “It gives people hope.”