Pathways’ Picks July 14: De Novo Rule, Doc Pay, Guidance Picks, and More

An FDA de novo final rule is coming soon, while CMS’ Physician Fee Schedule proposed rule is out this week. We look at both of those and a lot more in the latest edition of Pathways’ Picks.

Next Picks

What we’re watching for:

De Novo directive. We are looking for a final FDA regulation on the de novo classification process in the coming month. The de novo program offers a route for products that can’t gain a 510(k) because there is no market predicate, but shouldn’t necessarily require a PMA because they are not high risk. De novo classification has been on the statutory books for more than 20 years, but still lacks a standalone FDA regulation. The framework really got off the ground starting in 2013, when Congress removed a bureaucratic hurdle that had made de novos too inefficient for many companies to bother with. Since then, FDA has granted an average 25 de novos per year, with an emphasis on digital tools, diagnostics, and other novel technology. User fees linked to performance goals were established for de novos for the first time in 2018. Finalizing an official FDA regulation is the final puzzle piece to clarifying the de novo framework as a routine component of the agency’s regulatory toolbox. But the rule comes with risks. In a 2018 proposed rule, FDA presented the de novo classification process as a little too much “PMA-like” for industry’s taste. Here are three issues to look out for when the final rule is released:

• Inspections first? One clear distinction between PMA and 510(k) reviews is FDA routinely performs pre-approval facility inspections for PMAs, but it does not for 510(k)s. Perhaps the most controversial element of the 2018 proposal from industry’s perspective is FDA’s statement that it could perform such a pre-authorization inspection for sponsors seeking a de novo. Industry says the expectation of inspections, to assess both quality system and bioresearch monitoring compliance, would do a lot to take away any efficiency gains with a de novo compared to a PMA, and, in any case, does not comport with the law.
• Data demands. Eyes will also be on how FDA words its data expectations for de novo submissions and what type of leeway the agency offers. For instance, AdvaMed complained that the proposed rule’s request for all studies and data that is “known or reasonably known” is too broad.
• Special cases? There were also some requests following the proposed rule for more streamlined de novo processes for some products, reflecting the fact that the framework is meant to address a broad range of low-to-medium-risk devices. For instance, at least one company proposed a special submission process for devices that manufacturers believe ultimately will be designated as low-risk Class I products.

• Payment Picks

  Medicare payment progress:

  Doc pay reforms. CMS dropped its 1,500-page-plus Physician Fee Schedule 2022 proposal this week including several noteworthy medtech provisions. Three sections to highlight: 

• AI introspection. The agency acknowledges that its current physician pay methodologies do not effectively address integrating AI software into routine clinical practice. CMS is using the proposed rule to seek detailed input to help reform its systems, while in parallel trying to come up with temporary solutions to provide sufficient reimbursement in the short term. Read more in Market Pathways: “CMS Ponders the Path Ahead for AI Payments.”
• PODs report. CMS proposes multiple tweaks to its Open Payments system, which requires device firms, drug makers, and group purchasing organizations to report “transfers of value” to physicians and other healthcare providers. The change most likely to get (positive) attention from the device industry is CMS’ decision finally to explicitly call out physician-owned distributorships (PODs) as entities that must self-identify and report to the Open Payments database. PODs are groups of physicians that form a business to sell devices typically to the hospitals in which the practice. They are a source of pricing pressures and other market challenges for device manufacturers in orthopedics and other sectors, and the device industry has pushed for scrutiny of the practice for years. The fee schedule proposal is a step toward more required transparency for PODs. “The potential conflict of interest between providers and reporting entities is the heart of the Open Payments program, so quick and clear identification of physician-owned businesses would be beneficial,” the agency writes. 
• Tapering colorectal coinsurance. A routine colorectal cancer screening test, such as colonoscopy or DNA stool testing, requires no cost sharing for Medicare beneficiaries, but if the test finds something that requires more services like removing polyps, coinsurance mandates kick in. Congress passed a stimulus/appropriations package in December that requires CMS to transition to no coninsurance in these situations. The proposed rule would implement that mandate, gradually reducing coinsurance from 20% in 2022 to zero by 2030. 

• IPPS movement. The Medicare agency also apparently completed work on finalizing its FY 2022 hospital inpatient prospective payment system (IPPS) rule this week. In the proposal issued in the spring, CMS wrestled with several issues related to its new technology add-on payment (NTAP) program, including how to address the impact of the pandemic and questions arising from AI technologies. The final rule is now under review by the White House Office of Information and Regulatory Affairs and is likely to be released in August.

  Guidance Picks

  New guidelines and updates hot off the presses:

  AI classification. China’s National Medical Products Administration issued general guidelines July 8 for classifying AI software as a medical device and into the proper risk category based on factors including intended use and technology maturity. The document follows a guidance last month from NMPA that more broadly addresses registration and review expectations for AI devices. (Links in Simplified Chinese.)

  Notified body IVDR codes. New guidance seeks to explain how to apply the cross-section of codes established by the EU IVD Regulation to define the scope under which a notified body can operate and what type of expertise is necessary to assess different product types. There are a total of 80 codes describing particular test types (e.g., specific analytes or technologies, like genetic testing), test characteristics (e.g., relying on particular types of materials), manufacturing modes, verification methods, and areas of expertise that test assessment requires (e.g., bacteriology). The guidance describes how to appropriately designate codes for particular products, when multiple codes should be used in combination, and when to establish limiting conditions on codes if notified bodies or personnel only have expertise addressing part of what a code covers.

  EUDAMED guide updated for importers. Three weeks after issuing a guidance document spelling out to what extent actors other than the core entities regulated by the MDR and IVDR must comply with EUDAMED database requirements, the Medical Device Coordination Group rolled out an update with information more specific to importers about expectations for registering as manufacturers on the database.

  Nitinol guidance update. FDA updated a 2020 guidance addressing non-clinical assessment expectations for devices containing the metal alloy nitinol, specifically to clarify acceptance criteria for nitinol transformation temperatures when evaluating nitinol pseudoelastic properties.

  Canada COVID screening. Health Canada issued guidelines on a streamlined regulatory pathway for COVID-19 antigen assays that will be used for serial testing to screen asymptomatic individuals. Premarket clinical evidence in asymptomatic individuals will not be needed for authorization, mirroring a policy implemented by FDA in March.

  More to Watch

  Also on our radar:

  MDR notified body blackjack. The 21^st notified body was designated under the Medical Device Regulation July 14. Kiwa Cermet Italia S.P.A. is the third NB from Italy to make the grade. With some conditions, Kiwa is designated to perform assessments for 36 product codes (out of a possible total of 44) and 25 horizontal codes (out of a total of 27) addressing certain processes, materials, or characteristics.

  EUDAMED timeline. The European Commission tweaked its timeline for implementation of EUDAMED database modules. An update on its website maintained the plan for launching the UDI/device registration and the certification/notified body modules in September, but clarified that the mechanisms for the Expert Panel clinical evaluation consultation procedure will not be functional until all six EUDAMED modules are ready next year. The Commission just posted the first panel opinion directly on its website earlier this month. Currently, only one module, for registration of Actors (manufacturers and other entities) is functional.

  India classifications. India’s Central Drugs Standard Control Organization issued a notice July 12 risk-classifying (from lowest risk Class A to highest risk Class D)112 anesthesiology devices to initiate active regulation of the products under India's medical device rules.

  Suspended devices in Australia. The Therapeutic Goods Administration says suspended devices will soon no longer be visible in the Australian Register of Therapeutic Goods (ARTG) database, which is a record of lawfully supplied goods. In addition, the ARTG certificate and record summary of the suspended medical device will be watermarked as “suspended,” TGA says.

  White House calls for OTC hearing aid rule. An Executive Order from President Biden promoting improved competition in the American economy calls on FDA to issue its long-planned proposed rule to establish over-the-counter hearing aids within 120 days. An OTC hearing aid regulation was mandated by Congress in the 2017 user fee reauthorization bill. FDA has been working on the regulation, which likely has been delayed by the COVID-19 response.

  Device ban overturned. The DC Court of Appeals ruled July 6 that FDA does not have the legal authority to ban a particular use of an otherwise legal device, reversing the agency’s 2020 ban of electrical stimulation devices used to treat aggressive or self-injurious behavior at one facility—the Judge Rotenberg Educational Center in Massachusetts. The school and parents of affected patients sued to overturn the ban on the grounds that while FDA has the authority to ban devices, it can’t ban an application of a device that remains on the market for other purposes because that encroaches on the practice of medicine. The court agreed in a 2-1 decision.

  Comment extension requested. AdvaMed is asking for an extra 30 days to provide comments in response to FDA’s June draft guidance that attempts to define “remanufacturing” of medical devices. Comments are due August 23, but the trade group says vacations are challenging its ability to compile member feedback in time. “This is cross-cutting guidance of critical interest to many companies which affects a large number of medical device types,” AdvaMed wrote in its request.

  Dates to Remember

  For your calendar:

  July 19. Comments are due to FDA on its May draft guidance on “Feasibility and Early Feasibility Clinical Studies for Certain Medical Devices Intended to Therapeutically Improve Glycemic Control in Patients with Type 2 Diabetes Mellitus.”

  July 26. Comments are due to FDA on its May draft guidance documents on post-approval studies and Section 522 postmarket surveillance orders.