CDRH Congress and the 510 k Process Mass MEDIC

CDRH, Congress and the 510(k) Process Mass. MEDIC | The 510(k) Process Best Practices in Changing Times Paul Kim, Foley Hoag LLP April 1 2010 ATTORNEY-CLIENT CONFIDENTIAL

§ § Health Reform Toplines Strategic Priorities Congressional Outlook Closing Discussion ATTORNEY-CLIENT CONFIDENTIAL | 2

Health Care Reform § Patient Protection & Affordable Care Act (Pub. L. 111‐ 148) – The Senate passed on December 24, 2009 – The House passed same bill on March 21 – President signed into law on March 23 § Health Care and Education Affordability Reconciliation Act (Pub. L. 111‐ 152) – The House passed the reconciliation bill, meant to change provisions in PPACA, on March 21 – The Senate passed and House agreed to on March 25 – President signed into law on March 30 ATTORNEY-CLIENT CONFIDENTIAL | 3

Core Consequences COVERAGE § Insures 32 million uninsured § Extends health insurance from 83 percent to 94 percent of Americans by 2019 COST § $938 billion, 2010‐ 2019 § Second decade costs grow dramatically § Deficit reduction of $124 billion FINANCING § Reimbursement reductions for Medicare providers § Excise taxes on high‐value health plans § Expansion of Medicare HI tax to non‐payroll income dusty fees ATTORNEY-CLIENT CONFIDENTIAL | 4

Timeline 2010 2011 2012 • Part D manufacturer discount, July • Part D model agreement, May • 340 B regulations, September • Increased Medicaid rebate, January • Funding for CER begins • Select insurance reforms: lifetime caps, preexisting conditions, rescissions, preventive services 2013 2014 • Physician payment annual reporting begins • Medical device tax • Individual mandate • Reduced beneficiary obligations in coverage gap begins • Hospital-acquired conditions regulations • Pharmaceutical industry excise tax • Prescription drug labeling report by Secretary • Medical homes 2016 2018 2020 • Payment bundling pilot program, per Secretary’s discretion • State exchanges begin • Prescription drug labeling regulations • First IPAB report to President & Congress • Wellness demonstration projects • Insurance industry fee • Employer mandate • Remaining insurance reforms: annual caps, pre-existing condition, discrimination, premium ratings • “Cadillac” tax • Part D medication therapy management programs • CMS Medicare & Medicaid Innovation Center annual reports begin • Rewards for ACOs ATTORNEY-CLIENT CONFIDENTIAL | 5

Payment Reforms § Comparative Effectiveness Institute – $600 M annual research budget to compare the clinical effectiveness, risk and benefits of two or more medical treatments, services or items § Medicare and Medicaid Innovation Center – Test innovative payment and service delivery models to reduce expenditures while enhancing quality of care § IPAB – Recommend ways to achieve “savings target”- lesser of 1. 5% of Medicare spending or excess identified by CMS Actuary; physicians, hospitals shielded until 2019 ATTORNEY-CLIENT CONFIDENTIAL | 6

Medical Device Excise Tax § Broad But Deferred Tax – Excise tax on devices equal to 2. 3% of price from 2013; tax deductible lessens impact; generate $20 billion over 10 years – All devices except eyeglasses, contact lenses, hearing aids, and other devices that are sold to the general public at retail establishments (Class I OTC) § Key Issues – Exemption but “generally purchased by general public”; “at retail”; and “for individual use” as determined by Treasury – Effect of reconciliation: dropped from 2. 9%, ratio of total gross sales, pushed back from 2011, dropped broad Class I exemption – Gone but not forgotten: House (Administration) national device registry ATTORNEY-CLIENT CONFIDENTIAL | 7

“Sunshine” Reporting § First Reports Due March 2013, Data Collection in 2012 – Device, drug manufacturers must disclose almost all payments and “transfers of value” made to physicians or teaching hospitals – Disclosures publicly available via a searchable online database – Specific payments made to individual physicians and teaching hospitals, rather than aggregate payments – Limited “floor” preemption overrides some state laws § Primes Heightened Scrutiny, Enforcement Initiatives – Significant financial penalties for noncompliance: unknowing failures, $1 -10, 000 capped at $150, 000 and knowing failures, $10 -100, 000 capped at $1 million ATTORNEY-CLIENT CONFIDENTIAL | 8

§ § New Leadership Strategic Priorities Congressional Outlook Closing Discussion ATTORNEY-CLIENT CONFIDENTIAL | 9

Leadership | Old is the New – Dr. Margaret ‘Peggy’ Hamburg – Dr. Josh Sharfstein, Principal DC – John Taylor III, Counselor – David Dorsey, DC Policy Planning Budget – Mike Taylor, DC Food – Dr. Jesse Goodman, Chief Scientist and DC – Dr. Mac Lumpkin, DC International – Dr. Janet Woodcock, CDER – Dr. Jeff Shuren, CDRH ATTORNEY-CLIENT CONFIDENTIAL | 10

FDA Priorities – Funding (FY 2011 +23%, +6% in approps) – Scientific Staffing – Imports, Food Safety, H 1 N 1, Tobacco – Transparency, Consistency, Predictability – Congressional Oversight Unabated but Administration Freedom to Operate – Reviews and Credibility – REMS, 510(k)s ATTORNEY-CLIENT CONFIDENTIAL | 11

CDRH FY 2010 Strategic Priorities – Fully Implement a Total Product Life Cycle Approach – Enhance Communication and Transparency – Strengthen Our Workforce and Workplace – Proactively Facilitate Innovation and Address Unmet Public Health Needs ATTORNEY-CLIENT CONFIDENTIAL | 12

CDRH Pre‐Market Reforms – Begin implementing cross‐center compliance strategy (May) – Implemented 510(k) Working Group (Sept) – Adopted 510(k) i. Reviews (Sept) – “Take steps” on class III 510(k)s (end 2010) – Improve quality of PMA clinical data (end 2010) – Assessed IOM recommendations (June 2011) ATTORNEY-CLIENT CONFIDENTIAL | 13

CDRH Post‐Market Reforms §Increase real‐time AERs and establish Med. Sun interoperability, increase registry partnerships (Jan 2011) §Better capture, analyze, share high‐quality AER information (Jan 2012) §Implement a Unique Device Identification (UDI) system (Jan 2013) ATTORNEY-CLIENT CONFIDENTIAL | 14

“Let’s look under the hood and The best there any problems” see if laid schemes o' mice an' men Gang aft agley ATTORNEY-CLIENT CONFIDENTIAL | 15

§ § New Leadership Strategic Priorities Congressional Outlook Closing Discussion ATTORNEY-CLIENT CONFIDENTIAL | 16

Menaflex “External considerations affected the decision-making process and possibly the review decisions of the ODE Director” [This] “constitutes a clear deviation from the principles of integrity used in this review and undermines the ability of the agency to counter the suggestion that lobbying on behalf of Re. Gen affected the decision” “The predicate [510(k) review] system, as implemented, appears to perpetuate questionable review decisions” Hamburg: Schultz’s departure “would be in the best interest of the center and the agency” ATTORNEY-CLIENT CONFIDENTIAL | 17

Decisions about Class III Devices Fiscal Years 2003– 2007 ATTORNEY-CLIENT CONFIDENTIAL | 18

MDUFMA Performance Goals – +242 FTEs in FY 2007 vs 2002 – Medical Device User Fee Amendments of 2007 – MDUFMA fees “significantly reduced” – 510(k) fee fell 18%, PMA fee by 34% – Small business feel 49% and 57% – Will short‐term benefits be offset in reauthorization? Post‐market safety ‘mission creep’? ATTORNEY-CLIENT CONFIDENTIAL | 19

Heightened Advocacy “Clearly, the focus of the 510(k) process has been on letting companies change devices in the name of innovation, not based on public health standards or problems. As a result, devices are being sold that are so different from previous “substantially equivalent” devices that the FDA has no idea whether the product is safe or effective, and in many cases these innovative devices are either not as safe as other products on the market, or not as effective. ” ATTORNEY-CLIENT CONFIDENTIAL | 20

Select Issues – Reforming 510(k) Clearance Authority – 510(k) Rescission Authority – 510(k) Postmarket, ‘Condition of Clearance’ Studies – Preclearance Inspections Linkage – MDUFMA Fee Linakge – Riegel, Wyeth Preemption – Device DTC Restrictions, Disclaimers ATTORNEY-CLIENT CONFIDENTIAL | 21

Potential Vehicles – Post health reform fatigue, short election year – yet food safety (S. 510) may move – FDAGA as vehicle – 2011 MDUFMA and ‘UFA reauthorizations – Note progression of ‘counter cyclical’ legislation: Sunshine (Kohl‐Grassley), reverse payments –Sustained Oversight (Myxo mitral‐valve ring, orthotics, etc) ATTORNEY-CLIENT CONFIDENTIAL | 22

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§ § New Leadership Strategic Priorities Notable Product Reviews Closing Discussion ATTORNEY-CLIENT CONFIDENTIAL | 24