Pathways’ Pick of the Week: Budget Dotes on Device Center, Peeks at Priorities

[For a complete roundup of medtech policy happenings that should be on your radar this week and deeper analysis of the sector, check out Market Pathways.] 

The president’s annual budget request is typically more about political signaling than substantive policy development, and that is certainly the case with this week’s FY 2021 request from the White House, which includes major cuts to Medicare and Medicaid that are non-starters in the US House. But the request, nonetheless, highlights key priorities and includes a few realistic policy options to pay attention to from FDA.

The first thing I’d point to for the medtech space is that FDA’s device program is the only product area in the agency to get tapped for a meaningful increase. FDA as a whole—in a budget that includes many non-defense cuts—would come in for a small $25 million net increase (less than 1%) in taxpayer funding, not including a $240 million increase in industry user fees. Meanwhile, the device program is tapped for a $21 million, or 5%, increase, plus user fees, according to FDA’s detailed budget “justification” document. In comparison, the request includes no increase in taxpayer funding for the drug and biologics center, only a $2 million jump for the FDA’s food unit, and cuts in some facility costs.

That speaks to the attention and goodwill Jeff Shuren’s CDRH has generated at the agency. And even though it’s highly unlikely that this specific budget will ultimately make it through Congress, it bodes well for device program resources in general.

The bulk of the device increase is directed at upgrading the center’s IT infrastructure to a more modern, integrated system that officials say will help reduce review times, improve post-market surveillance, and make it easier to monitor specific issues like cybersecurity. This so-called “digital transformation” is already under way at the center, Shuren told Market Pathways in a recent interview. “That will be important, particularly as we are increasingly looking at ways in which we can make better use of the data we have both to inform us on the pre-market side, but similarly in our enhanced capabilities for post-market surveillance,” he said.

The other primary target of device-program funding is enhancing FDA’s ability to oversee digital health technologies, in particular artificial intelligence. There is a $5 million line-item in the request to build up its activities addressing AI medical devices, including a program to support more continuous adoption of new or updated standards for the agency to better keep up with AI advances. “This will...drive more efficient risk-based decision making, foster competition and more efficient innovation for safe, new and established AI and other technologies that use AI/digital health capabilities, as well as advance international harmonization,” the request states.

Coronavirus Reforms?

The request, as usual, also includes a dizzying array of non-budget-impacting legislative proposals that reflect agency wish lists. A proposal that appears in a White House budget request is still very far away from reality, but its presence establishes a marker that can be picked up for action in the right circumstances.

For instance, depending on what happens with the current Coronavirus outbreak, it could create a context for accelerating a few proposals in FDA’s request. Of primary note for the medtech space, FDA is proposing to add a new legal requirement for device companies (it already exists for drug firms) to “notify FDA when they become aware of circumstances that could lead to a device shortage.” That has been a growing priority for the agency, as officials have reported being in the dark about shortage risks resulting from state clamp-downs on device sterilization facilities. And FDA’s urgency for shortage information has increased in the wake of coronavirus, with potential emergent needs for diagnostics and protective equipment.

The request also proposes giving FDA more flexibility to allow cleared IVDs to be used in additional settings (e.g., moving a test cleared for use in a lab to a point-of-care setting) without having to go through a formal emergency use authorization process. FDA is currently in discussions with multiple diagnostics firms about EUAs to help address coronavirus. (For expert tips on the EUA process, see “Addressing a Global Health Emergency: Tips on Applying to FDA for a Novel Coronavirus Diagnostic EUA,” Market Pathways, February 7, 2020.)

Placeholders for Future Reforms

Other device proposals in the request, some of which are repeats from prior years, are assuredly not going to get traction this year, but are likely going to be topline priorities for FDA when it has its next big opening, during the 2022 reauthorization of the device user fee program. In that category, I’d point to four specific budget-request provisions:

• Progressive approval: A framework also put forward in last year’s budget that would create a pathway to grant a provisional approval of a device based on safety and limited effectiveness data that would automatically expire if the full safety and effectiveness threshold is not reached in a certain amount of time. Shuren has publicly championed the idea to give the agency more flexibility and a necessary step to support globally harmonized pre-market processes.
• Digital health authorities: A proposal to allow FDA to tailor appropriate requirements for approval of regulated software would likely be intended to provide the statutory leeway to implement the now-pilot-stage Software Precertification Program. The request would also add more explicit legal requirements for device firms to address cybersecurity.
• Special controls: A provision to allow FDA to impose so-called special controls, such as added labeling, training, or product features, on marketed devices more quickly through an order rather than via a formal rulemaking process. The idea was previously floated in the device center’s 2018 Medical Device Safety Action Plan. 
• No-predicate option: The request would also codify the agency’s recently launched Safety and Performance Based Pathway as an alternative 510(k) route that relies on performance criteria rather than comparisons to a predicate device.

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