BB&T Washington Editors

After a period of speculation, the Obama administration confirmed in early April that it would nominate Kansas Gov. Kathleen Sebelius for the job of Secretary of Health and Human Services, but also has appointed Nancy-Ann DeParle as the first director of the White House Office of Health Reform, according to an announcement posted at the White House web site.

The Sebelius pick had been rumored for some time, but the question of whether she would assume the post of healthcare czar seemed still up in the air. Sebelius has drawn raves from a wide range of stakeholders and the assumption going forward is that the Obama administration has scrubbed down this nomination much more carefully than previous cabinet picks.

Sebelius, who is serving her second term as governor, is ineligible for re-election, but the Democrat brings a substantial body of experience to the job, having served as both the state's insurance commission and Medicaid program director.

Like Sebelius, DeParle brings extensive experience to the job. She was director of the Health Care Financing Administration, since then renamed as the Centers for Medicare & Medicaid Services, from 1997 to 2000. DeParle also served as the associate director for health and personnel at the Office of Management and Budget during the Clinton administration, from 1993 to 1997, and joined the board of directors of Boston Scientific (Natick, Massachusetts) in 2006.

The White House's first pick for the HHS job, Tom Daschle, flamed out over unpaid taxes despite support from both sides of the political aisle. The HHS job is a priority over the nomination for the FDA commissioner's office despite the recent salmonella-tainted peanut butter crisis, which has renewed calls for taking responsibility for food away from FDA.

The president of the Federation of American Hospitals (FAH; Washington), Chip Kahn, issued statements lauding both moves. In a statement, Kahn described Sebelius as "an excellent choice," adding that FAH "heartily applaud[s] President Obama's nomination." Regarding DeParle, Kahn noted in an earlier statement that she is part of an effort by the administration to put in place "a first-rate team" for healthcare reform and that DeParle "will be a keystone of that team."

Nancy Nielsen, president of the American Medical Association (AMA; Washington) said that as the Kansas governor, Sebelius "demonstrated her commitment to healthcare reform by expanding access to care for children" and that as the state's insurance commissioner, she "helped preserve competition and choice in the health care marketplace by halting a problematic health insurance merger in the state."

Karen Ignagni, President/CEO of America's Health Insurance Plans (AHIP; Washington) said in a statement that Sebelius is "the right person to move the president's healthcare agenda forward," describing her as "a proven leader with extensive knowledge of health care issues and a long history of working effectively across the political aisle." Ignagni also said DeParle "brings considerable experience and a strong track record working on all of the health care issues facing the nation."

FDA to review devices marketed prior to 1976

The FDA reported in early April that manufacturers of 25 types of medical devices marketed before 1976 must submit safety and effectiveness information to the agency so that it may evaluate the risk level for each device type. Devices found by the FDA to be of high risk to consumers will be required to undergo the agency's most stringent premarket review process.

These 25 device types, which were listed in the Federal Register announcement posted on April 10, were marketed in the U.S. prior to the Medical Device Amendments to the Food, Drug, and Cosmetic Act of 1976. That law authorized the FDA to review new medical devices. Today's announcement is the first step towards completing the review of Class III device types predating the 1976 law, as was recommended by the Government Accountability Office in a January report to Congress.

The FDA classifies medical devices into three categories according to their level of risk. Class III devices represent the highest level of risk and generally require a showing of safety and effectiveness before they may be marketed. Class III devices include heart valves and intraocular lenses. Class I and Class II devices pose lower risks and include devices such as adhesive bandages and wheelchairs. Most Class II devices and some Class I devices are marketed after submission of premarket notifications establishing their substantial equivalence to legally marketed devices that do not require premarket approval.

After Congress enacted the medical device law in 1976, the FDA classified these 25 devices types into Class III (premarket approval). Under the law, these devices were not immediately required to undergo the premarket approval process. The law required the FDA to issue a rule subjecting the devices to that requirement. Until that time, new devices within those device types have been cleared through the premarket notification process, in which the agency determines whether they are substantially equivalent to legally marketed devices not requiring premarket approval. Devices that present a new intended use or include new technology that presents new questions of safety or effectiveness may not be found substantially equivalent and require premarket approval.

"We are taking the necessary steps to complete this very complex process while continuing to protect public health by thoroughly reviewing and evaluating all medical device submissions presented to the agency," said Daniel Schultz, MD, director of the FDA's Center for Devices and Radiological Health. "New premarket notification submissions for devices of these 25 types will continue to receive an appropriate level of scrutiny to ensure safety and effectiveness."

As of 1994, there were about 149 Class III, pre-1976 types of medical devices that had not yet been subject to premarket approval. Since then, the FDA has made significant progress in reviewing and issuing new regulations for all but 27 of those device types, including the review of 55 types since January 2000. The agency said it has already initiated this process for two device types, which will be completed separately.

Manufacturers of the 25 remaining device types must submit the requested information within 120 days. The FDA will review the submitted data and, based on the risk level, issue regulations for each device type that either will require manufacturers to submit premarket approval applications or will re-classify the devices into Class I or Class II.

Janet Trunzo, executive VP of technology and regulatory affairs for the Advanced Medical Technology Association (AdvaMed; Washington), said in a statement that the organization is "pleased" that FDA has moved expeditiously to begin the process for making final classification determinations for the remaining 25 Class III device types that pre-dated the 1976 medical device amendments."However, it needs to be clearly understood that the device types subject to the FDA notice have already been thoroughly reviewed by the agency involving the submission and evaluation of relevant technological and performance data, and in some cases, clinical data," Trunzo said.

"We believe these devices should be regulated by the agency commensurate with their risk profile, and the information that will be provided to FDA will allow the agency to determine whether each device type should be reclassified into Class I or Class II or require submission of a premarket approval application," she added.

China beefing up regs for imported devices

The State Food and Drug Administration in China may have started from scratch where regulations for drugs and devices are concerned, but government authorities in the world's most populous nation are making strides, as an April conference call hosted by the DC law firm of Hogan & Hartson (H&H) made clear.

Some of the impetus behind tighter regulations may be the execution of a former SFDA commissioner over scandals related to drug manufacturing, but Beijing also must consider international opinion in order to blunt further fall-out from episodes such as the tainted heparin coming out of China.

Another motivator is that China's device sector has acquired enough expertise to have produced a drug-eluting stent, the Excel, made by JW Medical (Weihai, China), so SFDA must contend with a burgeoning domestic industry as well as a coming onslaught of imports.

According to Roy Zou, senior counsel for regulatory affairs at H&H's Beijing office, SFDA has bolted down on existing healthcare product clearances. "In 2008, SFDA conducted a concentrated review . . . of about 25,000 drug applications submitted before Oct. 1, 2007, and approved only 9,200," or "about 37%," Zou said. Addressing devices specifically, he noted that SFDA will not permit the import of any devices that have not been approved or cleared in their home nations

"The most prominent change will be the eligibility to be registered," Zou said, noting that according to proposed regulations, would-be importers "must obtain marketing approval in the exporting country first. We are following closely whether this will be implemented," he said. SFDA requires that importers "appoint a legal entity to import" devices, and the agent of the device maker "will be responsible for taking regulatory actions" required by Chinese law.

The proposed measures include that the agent and manufacturer "are required to keep records" of adverse events "for no less than five years" and must also have procedures for dealing with these. "If there's an adverse event report, the rule requires that the manufacturer or distributor report the event to SFDA."

Zou noted that SFDA has about 48 testing centers "and they're aiming at about 10 such centers to expand" their capacities to full national testing capability. He said the agency also wants to "expand to another nine institutions to update their testing" technologies. He also pointed out that the size of this market is large and growing. "China issued its healthcare reform plan," Zou said, which is likely to involve $120 billion in annual spending. One of the "key elements is a reliable medial supply system," he said, hence the reforms in question.

Ted Wilson, a partner in the firm's DC office, warned device makers on the call that FDA is far from finished in its efforts to get a handle on supplier controls for medical devices. He led by pointing that the quality systems regulations (QSR) "applies to finished device manufacturers," but not directly to component makers. However, a smart client firm "can certainly require by contract that contract manufacturer's comply" with QSRs.

In this scenario, the device maker "serves as the gatekeeper over all components, materials and services" used in the manufacture, including any contract sterilization. Thus, "it's not just the product, it's also the service providers" who have to toe the line if devices are to carry a reasonable assurance of safety. This notion extends to third-party auditors as well, Wilson said.

ASLMS abstracts offer clues for tomorrow

Some of the more forward-looking work at any conference is found in the pages of abstracts that populate conference handouts. At the early-April annual conference of the American Society for Laser Medicine and Surgery (ASLMS; Wausau, Wisconsin), several abstracts gave some insight as to where device makers may be focusing their efforts in the years and decades to come.

One abstract dealt with the use of carbon nanohorns, a construct that upon close inspection more closely resembles a thimble than a horn. According to the abstract presented by a team led by Jon Whitney, a PhD candidate at Virginia Polytechnic Institute (Blacksburg, Virginia), laser therapy for cancer "could be greatly enhanced through integration of dual photothermal and photochemical sensitizing agents in the form of single-walled carbon nanohorns." The team's work hints that this configuration of carbon atoms does a nice job of absorbing energy at wavelengths near infrared and then expel heat as a result.

However, when the team inserted endohedral fullerenes, which are vaguely spheroidal and can house additional carbon particles, they boosted the thermal value of the particle, thus killing off more cancer cells. Another potential element of usefulness of the fullerene-containing nanohorn is the tendency of the combination to induce the formation of reactive oxygen species under laser light, which could kill off additional cancer cells by oxidation.

The researchers established the effect of these structures by inserting lutetium and gadolinium inside the fullerenes and measuring the absorption of laser energy in the range of 200 nanometers to 1,200 nanometers with a photospectrometer. The team measured the impact of the procedure on cancer cells by measuring levels of heat shock proteins (HSPs), which are known to promote the proliferation of cancers. The team at Virginia Tech is not the only group interested in HSPs, however. One of the more commonly examined heat shock proteins, HSP90, is named in 26 trials listed at clinicaltrials.gov.

Court dismisses whistleblower case

A Massachusetts district court early last month dismissed a government fraud case that alleged device distributors of giving kickbacks to doctors who used Medtronic (Minneapolis) products. The whistleblower claims were brought under the False Claims Act in 2007.

In the distributors' motion to dismiss, Foley Hoag partner Nicholas Theodorou and associate Ara Gershengorn argued that the plaintiff's fraud claims were not pleaded with specificity and that the claims were barred by the public disclosure and first-to-file rules of the False Claims Act. The court dismissed all of the plaintiff's claims against all of the defendants.

In 2007 plaintiff Jacqueline Poteet, a former Medtronic employee, sued 120 spine surgeons and the device distributors, claiming that they had defrauded the federal government. She claimed that, in 2006, the distributors gave the surgeons kickbacks in exchange for paid "consulting fees" totaling more than $8 million to promote off-label uses of Infuse, a Medtronic device used in spinal fusion operations. Poteet is a former manager of travel services for Medtronic Sofamor Danek (Memphis), a Medtronic subsidiary. In June 2007, the federal government declined to intervene in the case, and the plaintiff decided to continue to pursue the case as a private action, Foley Hoag noted.

There were 18 device distributors in total, but two were never served, Gershengorn told BB&T. Foley Hoag represented the 16 distributors that were served in the lawsuit.

Gershengorn said the plaintiff's claims in the case failed to meet the jurisdictional hurdles in the False Claims Act. She said the fraud claims, which did not identify individual false claims submitted for payment, were not pleaded with specificity.

CMS okays PET to diagnose, stage cancer

The Centers for Medicare & Medicaid Services reported last month that it will cover the use of positron-emission tomography (PET) in the initial staging of most solid tumors. Previous coverage for such uses of PET fell under the coverage with evidence development (CED) rubric, which requires that reimbursement be tied to the conduct of a clinical trial designed to establish whether such treatment is reasonable and necessary.

CMS reopened the question to a national coverage analysis in January, but the coverage decision deals primarily with the initial use of PET to diagnose and stage the treatment of most of the cancers in question, a list that includes lymphomas and melanomas and cancers of the cervix, breast and ovary. However, CMS's decision also provides reimbursement for follow-up imaging for diagnoses of myeloma and for cervical and ovarian cancers.

Acting CMS Administrator Charlene Frizzera said in the statement that the decision "shows that the CED program is a success," although the statement also notes that the decision "is the first time that CMS has reconsidered a coverage policy based on new evidence developed under the CED program."

The agency opted in 2005 to put PET on the CED list contingent on the submission of data to the National Oncological PET Registry (NOPR), operated jointly by the American College of Radiology (ACR; Reston, Virginia) and the ACR Imaging Network (ACRIN; Philadelphia). Among the other participants in the ACRIN effort are the Society for Nuclear Medicine (SNM; Reston, Virginia) and the American Society for Clinical Oncology (Alexandria, Virginia).

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