CD&D Washington Editors

The casual observer of the latest efforts at patent reform might see the idea as a cat with nine very messy lives, so it would come as no surprise that the witnesses at yesterday's hearing on the subject had divergent views of the appropriateness of the latest patent reform bill, the Patent Reform Act of 2009 (S. 515 in the Senate).

Still, there does seem to be some convergence, however slight, between the varying views of the apportionment question, which has been the main sticking point in previous attempts at reform. Perhaps of equal significance is the fact that the two top members of the committee are on record as committing to take whatever time is needed to get it right.

Sen. Pat Leahy (D-Vermont), chairman of the Senate Judiciary Committee, said in his opening statement during an early-March committee meeting, "As we all know, intellectual property [IP] is critical to our nation's economy," adding that IP is a huge part of the U.S. export picture.

"My own state is a significant exporter ... and a majority of that is intellectual property," he said. Toward the end of the hearing, Leahy made a promise: "There will be new patent legislation" coming out of this Congress.

Leahy would make no promises as to when he would like to present a bill to the full Senate, but he told Cardiovascular Devices & Drugs after the hearing, "I'm interested in as much bipartisan support as possible, so I'm flexible on the timeline."

The committee's ranking minority member, Arlen Specter (R-Pennsylvania), acknowledged in his opening remarks that the Senate "worked hard at [a bill] last year and could not come to a conclusion on the question of damages." He said that the information technology industry "argues that the entire market methodology [for determining damages] is undesirable and that there ought to be apportionment of damages," but noted most of the industries in the life sciences field see it very differently.

Specter, too, appeared to be willing to hit the brake pedal in favor of a bill that addresses apportionment in a way that all parties can live with. "It is of critical importance that we get it right, and if it takes more time, we'll have to spend more time," he stated.

Philip Johnson, chief IP officer at Johnson & Johnson (J&J; New Brunswick, New Jersey), spoke of the time and money J&J plows into research and development each year. "The jobs of about 60,000 depend on our patents," he said, adding that each patent "preserves and protects more than 100 job years."

However, Johnson made the case that investors are getting jittery over the current state of affairs, making the case that "we need to make it clear to inventors and investors alike that the promise of patents will be kept."

Johnson spent little time discussing the cost of defending against patent lawsuits, focusing on outcomes. According to Johnson's written testimony, a study of patent lawsuits conducted by Aron Levko of PriceWaterhouseCoopers (New York) published in February indicates that "the number of patent litigations in this country is at least leveling off." Johnson's argument was essentially that reform of how damages are calculated is "a solution in search of a problem," adding that of 2,700 cases filed each year, "fewer than five led to verdicts in excess of $100 million" and that "few, if any of these verdicts survive."

Mark Leahy, executive director of the Medical Device Manufacturers Association (Washington), told CD&D, "We really don't buy into the premise that there are these runaway jury verdicts." As for the idea of using legislation to get judges to deal more effectively with instructions to juries, he said, "we have said the 15 factors of GP give the flexibility required," and that "if there's a way to better instruct the jury ... we're okay with that."

Device pre-emption bill surfaces in House, Senate

The Supreme Court case of Riegel v. Medtronic, which appeared to tip the legal scales toward medical device firms and against patients had many Democrats on Capitol Hill up in arms last year, and the response in the House of Representatives was the Medical Device Safety Act of 2008. The act would have rewritten the Medical Device Amendments of 1976 (MDA) to end federal pre-emption of state liability laws for non-defective PMA devices.

Now that the implicit pre-emption of drugs has been ended by the Supreme Court Case of Wyeth v. Levine, sponsors of the device bill can move forward without having to decide whether to deal with the drug side of the question.

Thus, the Medical Device Safety Act of 2009 (H.R. 1346) has been introduced into the House Energy and Commerce's health subcommittee by chairman Frank Pallone (D-New Jersey), who was the author of the first iteration of this bill. The new version is essentially a duplicate of last year's bill and would modify the MDA with the addition of a passage that states "nothing in this section shall be construed to modify or otherwise affect any action for damages or the liability of any person under the law of any State."

In a March 9 statement, Pallone said the bill "eliminates the blanket immunity that medical device companies currently enjoy thanks to an unfortunate Supreme Court decision last year," adding that he expects "to move it through my subcommittee quickly." However, device makers argue that defective devices have never enjoyed immunity from torts in state courts.

In a statement, Sen. Pat Leahy (D-Vermont), chairman of the Senate Judiciary Committee, said the Senate bill is "another important step to correct an erroneous reading by the Court of Congress' intent in enacting the Medical Device Amendments of 1976." Leahy made the case that MDA was "never was intended to, preempt the common law claims of consumers injured by a federally approved medical device." The Senate version (S. 1861) is sponsored by Leahy and Sen. Ted Kennedy (D-Massachusetts), who chairs the upper chamber's Health, Education Labor and Pensions Committee.

The original idea behind providing devices with pre-emptive power under FDA regulation was that innovative devices enjoy a short product life cycle compared to drugs, given the iterative nature of device design. However, recent case law has sparked a furor in the media on the issue. Democrats in Congress also resisted the Bush administration's position expressed via FDA, which was that non-defective drugs and devices be exempt from state liability laws.

CBO: reform savings hard to snare

The Congressional Budget Office's new director, Douglas Elmendorf, testified on Capitol Hill last month about proposed reforms to healthcare, but his testimony might not have comforted proponents of reform as much as they'd hoped. CBO posted a copy of Elmendorf's March 10 report to the health subcommittee of the House Energy and Commerce Committee, and the news is that many of the anticipated savings will take a decade to materialize, assuming they ever will.

The report states, for instance, that savings from disease management plans "can improve health and may well be cost effective," but not if "the number of people receiving the services is generally much larger than the number who would avoid expensive treatment" with such services. The much-ballyhooed medical home, Elmendorf notes, "might have little impact on spending if the primary care physicians ... were not given financial incentives to economize their patients' use of services."

Regarding preventive health, the CBO chief states that services toward that end "could be cost reducing overall, but if the government began providing that service for free, federal costs would probably increase" if only because some of that care would have been provided in any event, but the cost of which would have been shared.

As for federal spending on healthcare information technology, the report states that the economic stimulus bill "will increase spending for the Medicare and Medicaid programs by about $30 billion" by 2019. Add in another billion for administrative costs and the savings of about $13 billion means that the stimulus bill will "increase direct spending on net by about $21 billion" by 2019.

The last sacred cow on Elmendorf's list, comparative effectiveness (CE), fares little better. He states that for CE studies to have any effect, they would "have to change the behaviors of doctors and patients," but payers would have to "incorporate the results in their coverage and payment policies" to see any benefit. This, Elmendorf notes, "would require legislative action" for Medicare and Medicaid, and though private payers have the option of doing so unilaterally, they nonetheless "might be reluctant to take such steps if Medicare did not do so."

Perhaps the most interesting statement regarding the systemic impact of the different arrangements between providers and payers started off by noting the difficulties inherent in the fee-for-service arrangement. However, Elmendorf cites a study that "randomly assigned enrollees to different health plans and found that those in an integrated plan used 30% fewer services than those enrolled in a fee-for-service plan.

AdvaMed issues guidelines for device DTC ads

The Advanced Medical Technology Association (AdvaMed; Washington) has issued guidelines for direct-to-consumer (DTC) advertising for member companies. The guidelines apply only to television ads, however, leaving out perhaps the primary vector for medical device marketing, the Internet. And unlike the code of ethics, adherence is not mandatory for member companies, leaving open the question of what the guidelines accomplish.

Steve Ubl, president/CEO of AdvaMed, noted, "Today's patients are voracious consumers of information," adding that "our DTC principals go beyond what is required by law." However, he also acknowledged that the document "speaks only to broadcast ads for non-OTC devices." As to why the guidelines omit other mediums for advertising, Ubl said "the principals take a dramatic step forward" and noted that "if there's an ad that's running on broadcast and on YouTube, it would be covered" by the guidelines.

The issue is not on the front burner on Capitol Hill at this point given the greater prominence of patent reform and pre-emption of state liability laws by FDA regulations for PMA devices but Sen. Herb Kohl (D-Wisconsin) has taken up the question of DTC ads for devices in his committee, the Senate Special Committee on Aging.

In a statement dated Sept. 17, 2008, released for a hearing conducted that day, Kohl remarked that even though the sums spent on device advertising are dwarfed by the amount spent to advertise drugs, "a number of DTC ad campaigns have been launched [recently] in an effort to market specific and often complex medical device products." Kohl also said FDA "has raised concerns about advertising [for] restricted medical devices," questioning whether those ads display risk and safety information with a sufficient prominence to catch the viewer's attention. Despite the congressional interest, Ubl maintained that "the goal [of the guidelines] is not to avoid legislation. The goal is to ensure that patients have accurate and fair information."

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