Gottlieb's FDA Lights A Fire Under Medtech Policy Activity But Reimbursement Challenges Remain

When it comes to the US regulatory and policy environment in 2017, Donald Trump is the first name one must mention. But Trump's unexpected and unconventional presidency is not necessarily the core driving force behind many significant policy developments of most importance to medtech firms in the past year.

The year 2017 was so laden with big catalysts for change that it is difficult to sort the impacts. New appointments by the Trump administration to FDA and the Centers for Medicare and Medicaid Services (CMS), among other agencies, of course, played an important role. But there were two pieces of major FDA legislation passed by Congress within seven months of each other that enacted an array of reforms developed well before the current White House administration took power – the 21st Century Cures Act, enacted in the closing days of 2016, followed by the FDA Reauthorization Act, signed into law this summer.

The highest-profile US health care policy events in 2017 were Congress' repeated failed attempts to repeal the Affordable Care Act (and ultimate success in repealing the individual mandate associated with that legislation as part of December's sweeping tax reform). The challenges associated with those efforts were certainly one key factor in the device industry's failure on its signature legislative goal – to repeal the 2.3% device excise tax. Once the ACA "repeal-and-replace" measures fell through as viable legislation, the industry was never able find a workable alternative, despite repeated attempts. Companies are hoping the Internal Revenue Service will go easy on them until Congress finally does come through – if it does at all.

Gottlieb's Activist FDA

With regard to overall FDA medtech policy development, the year started slowly – very slowly. From Trump's inauguration on January 20 through June, the agency did not issue one medical device- or IVD-related guidance document. But once the new FDA commissioner, Scott Gottlieb, MD, was settled in, the dynamic changed dramatically. From the summer until now, the Center for Devices and Radiological Health (CDRH) has issued 44 new draft and final guidance documents – that is just about the same number that the center produced in the whole of 2016.

While the focus of the guidelines, and other policy documents issued in the Gottlieb era have varied, there has been an emphasis on new, sometimes experimental approaches to streamlining product development or oversight. In many cases, the documents are implementing provisions of the Cures or Reauthorization Acts, but the agency has also made a point of saying that it is using the new congressional authorities as a foundation to build out more expansive frameworks to support innovation.

New regulatory ideas or approaches that were developed internally during the prior administration in parallel to congressional processes appear to be rolling out at a rapid, but structured, pace by Gottlieb's agency. Digital health has been a major topic of focus in this regard. FDA unveiled an overarching action plan for the sector that incorporates deregulatory elements enacted in the Cures Act, but goes beyond what Congress mandated and envisions a completely new regulatory paradigm for health software tools that would apply the concept of "precertification."

Inspections Angst

Although there were significant developments and debates in the realm of US premarket regulation, 2017 might have been an even more eventful year in the postmarket realm, and, in particular, manufacturing and quality compliance.

Notably, "program alignment," a complete reorganization of FDA's field staff that was hatched years ago during the Obama administration, was finally rolled out in May. The change could have a big impact on the types of people who will be visiting device facilities to inspect and how inspections are conducted.

In addition, Congress included more reforms to FDA's inspection procedures in the Reauthorization Act, and the agency is pushing forward with multiple pilot programs experimenting with new philosophies of inspection and quality.

Meanwhile, the global environment in which device companies and US FDA investigators are operating is changing even more significantly, with the new international quality standard (ISO 13485) taking effect and the Medical Device Single Audit Program (MDSAP) getting off the ground. The long-term implication of these reforms remains to be seen, but it’s likely 2017 will be viewed as a pivotal time for FDA's approach to inspection and quality regulatory compliance.

Reimbursement And More For 2018

The FDA regulatory environment is in a good state and getting better from industry's perspective. More programs designed to give quicker options to market are anticipated for rollout in 2018, including a novel 510(k) pathway that the agency says won't involve predicate comparisons.

The bigger challenge for the coming year is likely to be in the realm of market access and reimbursement. As approval processes refine, Medicare and other payer policies that would help provide a market on-ramp for breakthrough technologies have not kept pace. Although finally wresting a victory on permanent device-tax repeal will be industry's biggest US policy goal in 2018, engaging CMS and Congress to improve coverage, coding and payment pathways for new technologies will also be high on the list.

Device firms in addition will be watching closely on policies impacting value-based purchasing models in health care. The Trump administration has taken clear steps to roll back or slow down Obama-era mandatory alternative-payment models, including bundled payment programs in orthopedic and cardiac device-dependent procedures. Many firms look at the moves as an opportunity to design payment models that will better reward the value that medtech tools bring to the system, but 2018 could be an important year in more clearly determining the government's role in this health care evolution.

On a macro-level, 2018 could be another year of political chaos in the US. With mid-term congressional elections coming in November and investigations of the White House over election collusion with Russia heating up, it is hard to predict what will emerge from the current policy-making environment.