October 29, 2018

Left to Their Own Devices: Administration, FDA Turn to Medical Device Innovation

Holland & Knight Alert
Ethan Jorgensen-Earp


  • Masked by the recent high-profile drug pricing debate has been the Trump Administration's discussions about the development, approval and reimbursement of medical devices. Recent comments by Administration leaders, as well as recent regulatory actions, indicate that the landscape may be changing for the better.
  • Even with steady improvements in terms of speed of review and decision times, the U.S. Food and Drug Administration (FDA) has signaled the need for new thinking around device approvals. As medical technology becomes more complex, the FDA must anticipate and adapt existing approval frameworks to match the technologies that patients need while also utilizing every available resource, including those outside the agency, to speed effective devices to market.
  • The Administration also is focusing on the reimbursement of devices, including increased coordination efforts with the Centers for Medicare & Medicaid Services (CMS)

It has been almost impossible to exist in Washington, D.C., during the past several months without encountering the drug pricing debate. From fiery tweets to Rose Garden announcements and speeches, President Donald Trump, along with Secretary of Health and Human Services (HHS) Alex Azar and other Trump Administration officials, have adopted the issue of reduced drug prices as a major domestic policy priority. Masked by this and other discussions about drug development and marketing, however, has been the discussion about the development, approval and reimbursement of medical devices. Recent comments by Administration leaders, as well as recent regulatory actions, indicate that the landscape may be changing for the better.


Since 1976, when the U.S. Food and Drug Administration (FDA) clarified its legal authority to regulate devices, the device approval process at the FDA has had mixed reviews. For devices that are important for sustaining life and function or those that are associated with potentially high risk of injury or illness, also known as Class III devices, the FDA's Center for Devices and Radiological Health (CDRH) relies on the Pre-Market Approval (PMA) pathway, which requires sponsors to submit substantial data and evidence showing that the devices are safe and effective. For Class I and II devices, which present fewer health risks, application reviews can be accelerated. Many of these devices, which range from wound dressings and some pregnancy tests to powered wheelchairs, are able to be approved through a process colloquially known as "510(k),"1 which requires manufacturers to prove that their device is substantially equivalent to a previously marketed device that does not require a PMA.

In terms of actual speed of review and decision times, FDA has improved steadily, with PMA decisions typically taking more than 200 days (down from more than 400 days in 2008) and 510(k) decisions coming in fewer than 150 to 200 days and decreasing.2 FDA, however, is still feeling pressure to be more responsive, and, through congressional authority, has accelerated consideration of innovative devices.3 For instance, sponsors submitting device applications, including 510(k) applications, have several avenues for accelerated consideration of "breakthrough" devices that treat unmet medical need. However, even with these existing programs, the FDA has signaled the need for new thinking around device approvals. As medical technology becomes more complex, the FDA must anticipate and adapt existing approval frameworks to match the technologies that patients need while also utilizing every available resource, including those outside the agency, to speed effective devices to market.

In September 2018, for instance, FDA launched the Quality in 510(k) "Quik" Review Program, which uses software to format an application for more efficient review.4 FDA has also recently released final guidance that helps clarify when developers of next generation sequencing (NGS) and other genetic and genomic tests may rely on FDA-approved public databases to provide information for determining the accuracy of these tests, helping to speed diagnostic technology to the market that could help many patients, including those with difficult-to-diagnose rare diseases. The expanded use of FDA resources, such as public databases, builds off of decades-long efforts by the agency to increase its ability to quickly clear devices, especially those that are lower risk, for use by patients. For instance, FDA was granted new authority in the late 1990s and early 2000sto approve third parties to respectively conduct the initial review of 510(k) applications and perform medical device facility inspections to ensure manufacturing quality control for Class II and III devices.5  6 However, given that only a handful of third-party reviewers have officially been registered and that the program is generally underutilized, FDA recently released new guidance in an attempt to revamp the program to help the agency meet the constant demand for safe and effective device technology.

Renewed Focus on Reimbursement

Although these changes have and will likely help reduce review times, approval and actual reimbursement of new devices are two very different things. To help bridge this gap, greater coordination and cooperation from other agencies will be needed to ensure device uptake by providers, and Administration and public priorities are shifting to a focus on reimbursement. In late September, Joe Grogan, Associate Director of Health Programs at the White House's Office of Management and Budget (OMB), said publicly that the Administration is taking a renewed focus on reimbursement of devices in addition to their approval as safe and effective by the FDA.7 Interest in this issue from some of the Administration's top officials follows longtime commentary from many in the device world that coverage of new devices can be extremely slow even if their review and approval was accelerated by FDA.

The lag between FDA approval and the coverage of devices by payers such as Medicare and private insurers is not a new concern, and is driven in large part by the amount of evidence required by a payer to justify a device's use in a population that goes above and beyond that required by FDA to show safety and efficacy. Coverage delays and inadequate payment may also be disproportionately felt by new and innovative technologies that do not fit within an existing payment paradigm, where value may not be able to be adequately measured and translated into reimbursement compared with pre-existing technology. Indeed, in many cases, the Centers for Medicare & Medicaid Services (CMS) and private insurers make different decisions regarding the coverage of devices, making it difficult for manufacturers to see a path forward for new technologies. Thus, increased FDA and CMS coordination at the very least offers a chance to shift this paradigm.

Increased Collaboration Efforts

In general, the FDA and CMS have a blanket agreement to collaborate on ways to enhance information sharing related to evaluating new medical products.8 Shortly after this agreement was developed, FDA and CMS in September 2010 announced the launch of a pilot program that would establish a system for "parallel review" of certain medical device applications, including those at the investigational level, by both FDA and CMS in order to shorten the time it takes for the device to be FDA-approved and also covered under an existing Medicare Part A or B benefit category.9 Despite HHS' intention to keep the program going indefinitely, only two devices have actually been approved through this program and received a national coverage determination (NCD) from CMS, including an NGS test that also benefited from FDA's breakthrough devices program.10 Although largely ineffective, the parallel review program can serve as a model for new pilot programs to help shepherd new technologies through the coverage maze.

It's also important for the FDA to continue to have conversations and agreements with other agencies, not only for payment but also to ensure that new, innovative devices are safe for patients from a data and security perspective. For instance, unlike traditional medicines, some medical devices, now labeled by FDA as "Tier 1" devices, and their related software face the same cybersecurity threats that confront many other non-medical sectors.11 Indeed, the U.S. Department of Homeland Security (DHS) and FDA very recently established a memorandum of understanding that formalized the relationship between the two agencies related to cybersecurity, in which DHS' National Protection and Programs Directorate would lead device-related cybersecurity policy and FDA would provide any technical assistance necessary from the device regulation and approval side. The formalizing of this relationship, which has existed informally for years, may seem small, but it indicates the extent to which agencies must cooperate in order to bring new and innovative technologies to the nation's sickest patients.

Furthermore, FDA will likely attempt to engage in conversations with CMS' innovation center, the Center for Medicare & Medicaid Innovation (CMMI), on accelerated coverage of devices. Although lawmakers' opinions on CMMI vary, Director Adam Boehler, a longtime private-sector healthcare executive, has expressed interest in looking into numerous healthcare innovation issues, from value-based care models to artificial intelligence, which could include new payment models around the coverage of innovative or breakthrough devices. Indeed, the idea of CMS focusing on this issue was bolstered with the Oct. 17, 2018, announcement of a new proposed rule, set for publication in March 2019, that would address coverage of "breakthrough technologies [that] have the potential to improve patient health outcomes."12 CMMI, in concert with existing CMS entities such as its Council for Technology & Innovation,13 could have a significant impact on the coverage of new and lifesaving devices, provided that each respective agency securely shares data and information about these technologies to the fullest extent possible.

Without new mechanisms for the secure sharing of information between agencies, the development of new device technologies promised in discussions around the 21st Century Cures Act and recent major Trump Administration announcements may simply be a mirage. 



1 510(k) refers to Section 510(k) of the Federal Food, Drug, and Cosmetic Act that outlines in statute this particular approval process.

2 U.S. Food and Drug Administration. Agenda for Quarterly Meeting on MDUFA IV (FY 2018-2022) Performance. Sept. 11, 2018.

3 U.S. Food and Drug Administration. 510(k) Submission Process. Accessed: Oct. 18, 2018.

4 U.S. Food and Drug Administration. 510(k) Program Pilots. Accessed: Oct. 18, 2018 .

5 21 U.S.C. §360m.

6 21 U.S.C. §374(g).

7 MM Stein. OMB Health Chief: Changes to How CMS Treats Medical Devices Coming. Inside CMS. Sept. 9, 2018:21(39).

8 75 Federal Register 48699.

9 76 Federal Register 62808.

10 M. Mezher. FDA, CMS: Second Parallel Review Decision Ever for NGS Test. Regulatory Focus. Dec. 1, 2017.

11 U.S. Food and Drug Administration. Content of Premarket Submissions for Management of Cybersecurity in Medical Devices: Draft Guidance for Industry and Food and Drug Administration Staff. Oct. 18, 2018.

12 Centers for Medicare & Medicaid Services. CMS-3372-P. RIN: 0938-AT88.

13 42 U.S.C. §1395ee(b).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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