The Medical Device Manufacturers Association (MDMA) held a virtual meeting on Friday, September 23. Participants included representatives from the Food and Drug Administration (FDA), Centers for Medicare & Medicaid Services (CMS), and a variety of industry stakeholders. The agenda and full list of speakers can be found here.

CMS Update: More Information to Come Soon on Transitional Coverage Rule

In a key segment, Jonathan Blum, Principal Deputy Administrator & Chief Operating Officer, CMS, answered questions on a variety of topics from Mark Leahey, President & CEO, MDMA.

Blum indicated that CMS will release more information on the policies related to the new transitional coverage for emerging technologies (TCET) rule before issuing the proposed rule early next year. He also discussed transitioning away from COVID-19 Public Health Emergency (PHE) policies, transparency in Medicare Advantage, increasing staffing for coverage decisions, and focusing on providers and patients when transitioning to value-based care.

Ending COVID-19 PHE: Asked about the eventual end of the COVID-19 PHE declaration and the suggestion that some policies should be extended after its conclusion, Blum said that CMS was focused on three main areas in getting through the next state of the PHE: coverage; reimbursement for vaccines, treatments, and therapies vaccines; and payment waivers.

Blum noted that CMS has heard from hospitals and providers that waivers are vital to supporting the healthcare system. He said that CMS has gone through a disciplined public process to assess which waivers should be made permanent, which should sunset permanently because providers did not feel they added value, and which should be turned back on quickly in the event of similar conditions in the future.

Blum went on to say that when telehealth waivers were first put into place, there were concerns raised about fraud and abuse. However, according to Blum, CMS’s review of telehealth has found very little fraud. He said that CMS will expand telehealth in a way that supports healthcare delivery systems and patients and does not create more fraud, waste, and abuse. CMS feels that telehealth can be an effective means of addressing workforce challenges and extending access to care.

Inflation Reduction Act: Asked to share insights into the implementation of the Inflation Reduction Act, Blum said that beneficiaries will start seeing benefit changes on January 1, as the first two pieces of the legislation– more complete vaccine coverage through Part D and insulin being capped at no more than $35–go into effect. The Part D benefit will transform as a result of the legislation to a complete prescription drug benefit. He noted that the design of the benefit in 2003 reflected the reality of the time, rather than the clinical benefit. Moving forward, the Part D benefit will become the benefit that protects those that have the most catastrophic costs, including cancer patients and those with complex conditions. Blum noted that there will be stronger price incentives for drugs with the fastest rising costs. In addition, CMS will have the ability to negotiate drug prices. The legislation also continues health insurance subsidies for those covered under the health insurance marketplace. Blum stated that, had the subsidies not been continued, there would have been significant coverage losses, but the IRA will ensure continued growth in enrollment.

Rulemaking: In reference to the new TCET rule and what Leahey characterized as “shortcomings” in the Medicare Coverage of Innovative Technologies (MCIT) rule, Blum said that CMS is committed to issuing a proposed rule for breakthrough items and having a defined coverage for these items. He indicated that the agency would roll out principles over the next several months for how it plans to issue the rule, defining the key attributes. Blum said that the proposed rule will likely be released toward the beginning of 2023. He indicated that the agency would communicate the policy principles involved in creating the rule and remain transparent about the process.

CMS Staffing: Blum said that while staffing at CMS has been relatively flat for the last four to five years, the agency hopes to more clinical expertise and scientific expertise in the coverage group and is working to bring in people with knowledge and a passion for coverage issues.

Prior Authorization: On the subject of prior authorization (PA), which Leahey described as an issue in both Medicare Advantage (MA) and fee-for-service (FFS) Medicare, Blum identified two different questions. He said that CMS tends to be more comfortable with PA in FFS for services and procedures with a lot of post- payment review. He stated that CMS has tested models where PA can be a pathway to reduce post-payment review and tries to think about PA as a means to provide surety for coverage, particularly for high volume areas of post-payment review. Blum said that the pandemic made CMS consider when PA makes sense and when it does not in order to reduce burden on healthcare workers. Private plans (MA plans) using PA, such as in post-acute care for procedures and technology, use PA more expansively than FFS. Acknowledging that there are concerns from providers and hospitals about the time and burden PA requires, Blum stated that CMS would like to see PA processes simplified and more standardized. He said that PA should have a clinical purpose, common systems in place, and a format for providers to navigate in order to reduce provider burden. CMS plans to be more aggressive while overseeing plans on this issue.

Medicare Advantage: Asked if CMS will work to see MA coverage policies developed with more transparency, Blum responded that CMS was overwhelmed with interest and responses to the RFI. He noted that today roughly 50 percent of the Medicare population chooses to receive benefits through a private plan, and that that percentage will only increase over time. Private companies are delivering Medicare benefits under different rules, requirements, and processes than traditional Medicare. Blum said that there is often a black box to coverage and how plans provide benefits. CMS needs insight into where taxpayer dollars are going. CMS traditional Medicare processes can be thought of as creating standards for not just FFS but for all Medicare beneficiaries irrespective of plan choice. The RFI was intended to spark the public conversation over MA plan transparency concerns, and CMS wants to work together to balance the existing tensions in the MA program as it continues to grow.

Value-based Care: As to whether CMS will take a macro approach to future care models, Blum said that CMS is working to expand total cost of care models that promote more accountable care, focus more on the patient, and work to integrate specialty care into a larger vision of accountable care. He said that CMS needs to do more to convince physicians that value-based care will lead to more time with patients and better clinical practice. He acknowledged that many physicians do not see the difference between value-based care and FFS. Blum said that CMS also wants to improve its ability to communicate the benefits of value-based care models for patients, as they do not hear these terms and think it means better outcomes or quality of care.

Physician Fee Schedule: Addressing the Physician Fee Schedule (PFS) and practice expense, Blum said that CMS is aware that there is a cliff in physician payment. He noted that it was an area which Congress needs to address and stated that both Congress and CMS are interested in improving the PFS to increase payment accuracy and allow physicians to spend more time with patients

FDA Update: CDRH Experiencing Unprecedented Workload

William Maisel, MD, MPH, Chief Medical Officer, Center for Devices and Radiological Health (CDRH) Chief Medical Officer, FDA, provided an overview of CDRH’s supply chain response, COVID-19 response, COVID-19 transition plan, and Medical Device User Fee Amendments (MDUFA) V commitment letter.

Maisel noted that:

• CDRH reached out to over 1,000 manufacturing sites in 12 countries to assess supply chain vulnerabilities. CDRH worked with the Department of Defense and the Department of Health and Human Services to expand the available industrial base in response to COVID-19. CDRH also established a center-level program to repurpose approximately 130 employees and distributed a shortage notification policy for manufacturers.
• CDRH is experiencing an unprecedented workload. Compared to 2019, the volume of submissions increased by 70 percent in 2020, 25 percent in 2021, and ten percent in 2022.
• CDRH is experiencing a rapidly growing number of overdue files.
• CDRH reduced its Investigational Device Exemption approval timeline by 90 percent.
• The number of novel device authorizations increased four-fold over the past ten years, including premarket approvals, De Novos, Humanitarian Device Exemptions, breakthrough 510(k)s, and specific emergency use authorizations (EUAs) deemed novel.
• Over the next few years, CDRH is prioritizing promoting a modern and diverse workforce, enhancing organizational agility and resilience, and advancing health equity.

Maisel stated that he did not know when the PHE will be declared over. He called attention to two draft guidance documents issued in December 2021: Devices with EUAs and Devices Marketed Under Enforcement Policies.

Maisel also discussed FDA’s MDUFA V Commitment Letter, which addresses some of the current challenges. He noted that the FDA user fee program was set to expire on October 1, 2022. He stressed that CDRH is progressing as if October 1 is the launch date for MDUFA V to become effective. Congress is expected to advance funding for the FDA user fee program as part of broader legislation to fund the government into December, but it includes no additional policy reforms.

Election Update: Republicans May Take Full Control Of Congress

Panelists Josh Holmes, President, Cavalry, LLC, Andrew Rosenberg, Partner, Thorn Run Partners, and Alanna Temme, Executive Vice President, The McManus Group, discussed the upcoming midterm elections.

Holmes and Rosenberg agreed that Republicans have a chance of taking full control of both houses of Congress, noting that areas to watch will be Pennsylvania’s Senate election and the shift in working-class Hispanic voters, whom they characterized as increasingly motivated by the economy, lack of opportunities, border security, and crime.

The panelists also noted that factors such as the stock market, stabilized gas prices, and high inflation will also play an important role in the election.

Rosenberg stated that he assumed President Biden will run for re-election, but predicted there could be calls for a stronger candidate if the Democrats do not perform well in the midterms.

Considering the 2024 presidential election from the Republican perspective, Holmes noted that Donald Trump’s continued popularity among Republicans made him the most likely to top the party’s ticket. However, he noted that Florida Governor Ron DeSantis was garnering attention from Republicans for his border security, COVID-19, and education policies.

The Future Of Medtech Innovation: Supply Chain And Workforce Shortage Impacts

Panelists Andrew Cleeland, Chief Executive Officer, Fogarty Institute for Innovation, Josh Makower, M.D., Director & Co-Founder, Stanford Byers Center for Biodesign, and Denise Zarins, Chief Technical Officer, Fogarty Institute for Innovation, focused on the future of medical technology innovation. They discussed investment in the space, the areas of greatest clinical needs, and disease states.

• The panelists noted that it is becoming increasingly difficult for early and unproven entrepreneurs to get large investment early on, especially with supply chain shortages. Makower emphasized the importance of having a strong idea, team, and advisors.
• When discussing areas of huge benefit for future innovation, panelists mentioned focusing on classic diseases, mental health, prevention, improving efficiency at point of care testing, and telehealth and robotics.
• Ms. Zarins is expecting a massive influx of interest for early diagnosis and intervention.
• Mr. Cleeland proposed changing healthcare delivery systems to combat workforce shortages.
• Mr. Makower emphasized the need for smart proposals to rapidly advance innovation for people who need breakthrough therapies. He also pointed out opportunities to improve care and reduce cost in the rural healthcare system.

Medical Technology International Update

Ed Rozynski, Senior International Advisor, MDMA,  led a panel on Medical Device Regulation (MDR) with Phil Brown, Director of Regulatory and Compliance, Association of British Healthcare Industries Limited, and Suzanne Halliday, Regulatory Vice President, British Standards Institution Group.

Ms. Halliday referenced her position paper, which discusses the transition to the Medical Device Regulation (MDR), In-Vitro Diagnostic Medical Devices Regulation (IVDR), notified body capacity, and availability of medical devices and in-vitro diagnostics. This paper outlines the European Union’s (EU’s) regulatory system is not working well and offers suggestions for alternatives.

Mr. Rozynski discussed continued bottlenecks preventing products from getting to patients. He outlined three potential solutions:

1. 1. Legislation, which he believes the EU Commission will not want to pursue;
   2. Allowing member states to derogate, which will cause confusion; or
   3. Conditional approval, which he believes is the best choice.

Halliday noted the difficulties inherent in conditional approvals, as the law says the British Standards Institutions’ role is to look for evidence.

Brown observed that the United Kingdom has over 4,000 medical technology companies, more than 95 percent of which are small and medium enterprises.

Trends In Medtech Investment

Jonathan Norris, Managing Director, Silicon Valley Bank, outlined trends in the medical technology market from the banking sector’s perspective.

• Norris said that there has been a recent influx of venture capital fundraising in healthcare. 2021 saw a record high of $28.3 billion, and 2022 is on track to be another record year.
• Devices are an area of increased investment, but investors slightly retracted in the third quarter of 2022. Mr. Norris attributed this to investors working within their portfolios and deciding how to set valuations.
• There was less venture capital funding in the cardiovascular and imaging spaces, with some activity on the biopharma side.
• When asked about the future of medical technology companies seeking early-stage investment, Mr. Norris said the numbers are not always very reliable here. He believes early-stage investors are still active, but the data is slow to catch up.

Increasing Diversity In The Medical Technology Workforce

Nada Hanafi, Senior Vice President of Regulatory Strategy, MedTech Color, and Kwame Ulmer Founder of MedTech Color, provided an overview of the organization and its diversity journey.

• Ms. Hanafi and Mr. Ulmer stressed the importance of C-Suite-level commitment to developing an inclusive company.
• MedTech Color designed its Collaborative Community to increase Black and Hispanic individuals’ representation and participation in clinical trials and medical device development.
• Mr. Ulmer and Ms. Hanafi discussed MedTech Color’s upcoming goals of fostering 100 new African American and Hispanic chief executive officers through their Pitch Competition and professional partnerships. Through MedTech Color’s community initiatives and Annual Networking Breakfast, it also plans to establish the largest network of Black and Hispanic MedTech leaders.

 

This Applied Policy® Summary was prepared by Marlowe Galbraith with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at mgalbraith@appliedpolicy.com or at 610-937-8378.