Medical Device Daily Washington Editor

FDA in May sent a warning letter to Metasurg (Houston, Texas,) maker of the Ti6 titanium internal fixation system, citing the firm for several deviations from the Quality Systems Regulations (QSRs).

The 11-page warning letter indicates that the company corresponded with the agency on the findings, but the firm's responses to nine of those deviations were insufficient to allay the agency's concerns.

Perry Forrester, president of the company, told Medical Device Daily yesterday that the company has "contracted with some of the experts in industry to handle all this," but that it remains a work in progress.

"We'll continue to monitor the situation," Forrester said.

When asked if the citations in the warning letter suggested a lack of awareness of the breadth of the requirements of the QSR, he said: "I think a lot of that's debatable."

One of the more conspicuous notations in the warning letter was that Metasurg evidently communicated to FDA that the company was unaware of any risks or hazards associated with bone screws and associated hardware.

The duration of the inspection gives some idea of how protracted the experience might have been for Metasurg. The unnamed investigator's audit ran from Feb. 26 to March 20, and the company's response to the findings was dated March 28.

The warning letter acknowledged that Metasurg was "in the process of using an outside GMP (good manufacturing practices) consultant" to shore up operations, but the agency nonetheless found the company's responses "incomplete" because lacking of information on proposed corrective action or a timeframe for completion of corrective actions.

The first finding cited Metasurg for failure to establish adequate design risk analysis techniques, methods or procedures, or to perform and document design risk analyses at any stage in the design process."

FDA said that the response had formulated "a list of questions referencing the ISO 14971 standard" used by the company, but another document in response to the finding was said to have indicated that "there were no identifiable risks or hazards associated with your bone screws and surgical instruments." FDA's rebuttal to this assertion was that "there are certain levels of known risks with any marketed implantable bone screws."

The warning letter, signed by Dallas district director Michael Chappell, indicated that validation records did not include data on an adequate rationale for the sample size used to test the performance and material integrity of the various sizes of two types of bone screws. The company was also unable to produce a certificate of performance for the purchased titanium.

FDA cited the company for failure to validate changes to the design the head size and slot depth in a series of cannulated bone screws "to ensure conformance to approved specifications." However, the firm did not produce any documents during the inspection as to what those dimensional specifications were, nor did Metasurg come up with any data as to damage from testing or "which of theses design changes were actually approved, implemented and released to production."

CMS rule attempts to trim drug costs

The Centers for Medicare and Medicaid Services last week posted a final rule that will trim the amount the agency pays for Medicaid prescription drugs.

According to the CMS statement, the rule should reduce the total state and federal outlays by almost $8.5 billion between 2007 to 2011, although total outlays over that time may run to $140 billion.

The change is prompted by the Deficit Reduction Act of 2005 and reports by both the Government Accountability Office and the Office of Inspector General at the Department of Health & Human Services, both of which alleged excess payments for generic prescription drugs to pharmacies.

Both reports concluded that states were paying too much for generics, due to the use of commercial drug pricing guidelines when setting reimbursement levels. According to the CMS, the investigation into the guidelines "documented that these prices were artificially inflated, especially for generic drugs." Pharmacies were said to be making "the most profit on those generic drugs with the highest mark-up, creating an incentive to dispense those drugs."

The 2005 DRA was not the first attempt to curb Medicaid drug mark-ups. The Federal Upper Limit (FUL) mechanism was a previous effort to cap payment, but an OIG report concluded that "FULs set under the previous calculation method were more than double the average pharmacy acquisition costs," according to the press release.

Acting CMS administrator Leslie Norwalk said that the move "allows Medicaid to pay more appropriately for prescription drugs" and that the FULs "were so high that most states set their own upper limits on allowable drug costs that were generally far less than" the federal cap.

Before the 2005 DRA, the cost of producing a drug was deemed a proprietary secret even for companies doing business with Uncle Sam, but the law required that average manufacturer prices (AMPs) "be publicly reported on the Internet," according to the press release. Under the law, manufacturers will have to report their costs monthly.

Thanks to feedback from industry and other stakeholders, the draft rule was tweaked to exempt sales to pharmacy benefits managers as well as pharmacies that serve assisted living facilities and nursing homes from the adjusted minimum pricing calculation. However, sales to home infusion and specialty pharmacies are included.

The CMS statement indicates that by some calculations, "the total pharmacy revenue for prescription drugs will decline by less than one percent," but the agency recommends that states evaluate "whether other fees they pay pharmacies are adequate to compensate them for their costs in dispensing the prescription." Dispensing fees were not limited by FULs.

CMS is encouraging comment from stakeholders on the questions of the definition of an AMP and of whether drugs that are sufficiently low in cost that they would fall under the outlier policy should be eliminated from the AMP calculation.