Medical Devices Today

Product Liability Insurers Raise The Bar On Risk Management

This article is reprinted from "The Gray Sheet" – May 5, 2008

Device firms large and small must do even more to satisfy commercial insurers than what the government requires. In fact, FDA may be of limited concern to companies faced with plaintiffs' suits and escalating premiums, device industry insurance experts say.

Commercial plans provide key protections for companies, such as product liability policies that defend firms and pay on their behalf when negligence claims are made. They can also head off future lawsuits by showing firms where their vulnerabilities lie. Yet companies are often so focused on FDA compliance that they ignore liability issues, according to device and diagnostics insurance firm Medmarc (see chart: "¹Product Liability Insurance 101").

"Companies get lulled into believing that if they get that FDA stamp of approval, everything's going to be fine," said Sara Dyson, loss control manager at Medmarc. "Regulatory compliance needs to be your floor, not your ceiling. You absolutely need to comply, but you can't stop there."

"There's always a product liability problem lurking around the corner that the FDA's quality regulations aren't going to address," Dyson told "The Gray Sheet."

U.S.-China Device Talks Yield Some Concessions, But Big Issues Unresolved

This article is reprinted from "The Gray Sheet" – April 28, 2008

A recent meeting between U.S. and Chinese government officials and device industry reps yielded some concessions to opening up China's market, but left many more issues on the table, according to a U.S. industry participant.

"There are a number of outstanding regulatory concerns," said Nancy Travis, VP of global analysis and strategy for AdvaMed, in an interview.

Travis traveled to Guilin, China, the week of April 7 to participate in talks with staffers from the U.S. Department of Commerce and China's State Food and Drug Administration about issues impacting trade between the two nations. In addition to AdvaMed, the Medical Imaging Technology Association and the China Association for Medical Devices Industry represented device firms.

The talks were part of the U.S.-China Joint Commission on Commerce and Trade, a long-standing dialogue vehicle that includes a medical device task force. FDA often participates in the meetings, but did not attend this year.

CMS Inpatient Payment Proposal Addresses “Charge Compression”

This article is reprinted from "The Gray Sheet" – April 21, 2008

CMS plans to take steps next year to improve the accuracy of its payments to hospitals for high-cost devices, though the agency does not promise as quick of a remedy as sought by manufacturers.

The so-called "charge compression fix" is included in the agency's fiscal year 2009 inpatient prospective payment system ¹proposed rule, which was released April 14.

Charge compression, as described in a March 2007 CMS-commissioned report from research firm RTI International, relates to variations in hospital markup practices for certain products, and most notably affects devices and medical supplies.

Hospitals generally mark up charges for relatively inexpensive supplies at a higher rate than expensive devices. But CMS payment calculations, which are based on hospitals' cost reports, group all the products together to derive an overall payment for a procedure or diagnosis. Based on the math, the costs for services that include expensive products with low markups tend to be underestimated in the payment rates.

Datascope Investors Cheer Divestiture, Send Stock Up 13% In Q1 – Index

This article is reprinted from "The Gray Sheet" – April 14, 2008

Datascope's divestiture of its patient monitoring business in March and its plans to pass on the proceeds to shareholders drove a 13.8% stock price gain for the company in the first quarter of 2008.

The sale of the monitoring business to China's Mindray Medical for $202 million, announced March 11, will result in an estimated $185 million after-tax gain for Datascope (¹"The Gray Sheet" March 17, 2008, p. 3).

The firm plans to use the proceeds to either provide a special dividend to shareholders, or repurchase company stock, or do a combination of both.

"If we distribute all the cash as a special dividend, stockholders will get between $11 and $12 per share," CEO Lawrence Saper said when announcing the deal. If the firm uses all the cash to buy back stock, it would increase earnings per share "substantially," the exec added.

Investor enthusiasm for the deal pushed Datascope's stock price up 14% that day, or $4.75, to close at $38.28. For the quarter, the issue closed at $41.43, representing an increase of $5.03 for the three-month period. Datascope's stock had been roughly flat in 2007.

Questions Remain Over Usefulness Of The Expanding National ICD Registry

This article is reprinted from "The Gray Sheet" – April 7, 2008

Some cardiologists doubt the value of the national registry for implantable cardioverter defibrillators that was created to satisfy CMS coverage requirements, even as the registry is about to expand.

Brian Olshansky, University of Iowa, is among ICD implanters who question whether the National Cardiovascular Data Registry data will be used in a scientifically valid way.

"The information is going to be used for political purposes by CMS to limit implantation of devices," Olshansky said at the American College of Cardiology's annual meeting in Chicago March 30.

"It's not going to be for the benefit of the patients, and it's not going to be for the benefit of the profession."

GMP Inspection Results Can No Longer Stay Within Borders, Says FDA

This article is reprinted from "The Gray Sheet" – March 31, 2008

Results from manufacturing facility inspections conducted in one country will easily be shared with regulators in another in the near term, says Larry Kessler, FDA officer and chair of the Global Harmonization Task Force.

"We are now setting up electronic systems to share regulatory auditing information around the world," Kessler, also the director of FDA's Office of Science and Engineering Laboratories within CDRH, said March 27 at a meeting of device industry stakeholders at Harvard University.

The new systems are being developed as part of the GHTF National Competent Authority Report exchange program, he said at the annual Medical Device Regulatory, Reimbursement and Compliance Congress.

The exchange program, in which countries such as China have pledged to participate, is already up and running for sharing among national authorities adverse event reports and information on device returns, modifications and destruction (¹"The Gray Sheet" Aug. 22, 2005, p. 19).

Radio Interference? FDA Studies Potential RFID Impact On Implantables

Radiofrequency fields are becoming more prevalent in hospitals and other public spaces as a tracking identification tool, but government scientists worry the energy waves could impact the performance of implantable devices such as pacemakers and defibrillators.

Little is know about how radiofrequency identification (RFID) systems may interfere with pacemaker and implantable cardioverter defibrillator (ICD) performance, so FDA researchers, implantable cardiac device makers and RFID system manufacturers have begun to investigate the issue.

Engineers at CDRH's electromagnetic and wireless technology lab at the new White Oak facility in Silver Spring, Md., are testing pacemakers and ICDs from five major cardiac implant manufacturers using seven different RFID readers.

Seth Seidman, an electrical engineer at the agency's Office of Science and Engineering Laboratories (OSEL) who is leading the project, says FDA receives numerous incident reports related to electromagnetic interference from cell phones, anti-theft systems and metal detectors, but the RFID issue is "pretty new."

Combo Products Offer Ambiguity For Product Liability Pre-emption

This article is reprinted from "The Gray Sheet" – March 17, 2008

Plaintiffs lawyers are trying to leverage the ambiguous status of combination products as an exception to a Feb. 20 U.S. Supreme Court decision that affirms significant protections for the device industry from personal injury lawsuits.

Steven Angstreich, a trial lawyer with Levy, Angstreich, Finney, Baldante, Rubenstein & Coren in Philadelphia, argues that drug-device products should not be entitled to federal pre-emption under the Food Drug and Cosmetic Act (FDCA).

Stuart Gerson, an attorney with Epstein, Becker & Green who represents pharmaceutical and device companies, agrees that combination products are not a settled matter when it comes to liability protections. "There is plenty of room yet to wiggle and combination products provide that wiggle room," he said.

Angstreich is a lead plaintiffs' counsel in ongoing multidistrict litigation against St. Jude Medical arising from a 2000 recall of the company's Silzone-coated mechanical heart valves. He also represents plaintiffs suing Medtronic following the October 2007 recall of its Sprint Fidelis ICD leads.

Patients Deserve More Information On Potentially Faulty Devices – Maisel

A leading expert on medical device safety wants Congress to compel FDA and manufacturers to provide more consumer protections for patients with implanted devices.

"The welfare of medical device recipients must become a higher priority for the FDA and manufacturers, and it is increasingly apparent that such a change will require Congressional action," William Maisel, M.D., argues in an editorial in the March 6 New England Journal of Medicine.

Maisel is the director of the Medical Device Safety Institute at Beth Israel Deaconess Medical Center and a faculty member at Harvard Medical School. He has published several studies on device safety and physicians' responses to FDA recalls. Maisel is also a past chairman of FDA's Circulatory System Devices advisory panel and currently serves on CMS' Medicare Evidence Development and Coverage Advisory Committee.

"Remarkably, we have consumer protections for airline passengers, cable-television customers, and cellular-telephone users, but few for patients who receive life-sustaining medical devices," Maisel observes. "Only with well-defined, specific consumer protections for such patients can we hope to minimize adverse health consequences and avoid costly recalls."

FDA Is Crystallizing Standard Template For Press Releases On Recalls

FDA is proposing a new template for all product recalls, from medical devices to pet food, that seeks to have firms put recalls into the proper context. It also offers them some flexibility in wording the announcements made in response to safety reports.

The agency's Office of Regulatory Affairs presented FDA's Risk Communication Advisory Committee with a model of the proposed template, which the agency has been developing for several months.

An internal working group will take the committee's suggestions into consideration as it finalizes the form, said David Elder, director of ORA's Office of Enforcement, at the inaugural committee meeting, held Feb. 28-29 in Gaithersburg, Md.

FDA sought advice from the committee on the structure and content of the template, whether it will actually reduce risks to patients and whether standardization is appropriate across all FDA products.