A Medicare advisory panel recommendation to cover implantable cardioverter defibrillators (ICDs) could be a major victory for companies such as Guidant (Indianapolis, Indiana), Medtronic (Minneapolis, Minnesota) and St. Jude Medical (St. Paul, Minnesota). The Medicare Coverage Advisory Committee, an independent advisory group to the Centers for Medicare & Medicaid Services (CMS), made the recommendation at a meeting last month. Medicare currently covers ICDs for an estimated 27,000 beneficiaries who've had heart attacks and considered at highest risk for sudden death due to rapid heartbeats.

The expansion recommendation means that an additional 60,000 beneficiaries could be eligible for the device, according to CMS acting chief clinical manager Sean Tunis, MD. The agency will issue a formal coverage ruling following a 60- to 90-day period. CMS officials, however, may closely scrutinize the expanded coverage because the devices cost Medicare around $30,000 each and could further burden a system already under stress, Tunis said. Local fiscal intermediaries can establish independent coverage decisions, but a national coverage determination establishes uniform policy for regional administrators. Private insurers usually follow Medicare coverage decisions once they are announced.

The unanimous advisory panel decision was bolstered by results reported in March 2002 from a study that found ICDs reduced death rates by 31% for patients who had previous heart attacks and impaired blood-pumping ability but no rapid heartbeats. The Multicenter Automatic Defibrillator Implantation Trial (MADIT) II was funded by Guidant. "We are gratified that the committee unanimously recommended a positive national coverage decision by CMS," said Fred McCoy, president of Guidant's Cardiac Rhythm Management business. "The Medicare Coverage Advisory Committee's recommendation affirms the pivotal role of sound clinical research policy decisions," he added.

Arthur Moss, MD, professor of medicine and director of the Heart Research Follow-Up Program at the University of Rochester Medical Center (Roch- ester, New York), said, "I am pleased by MCAC's decision, since the clinical trial data clearly indicate the lifesaving nature of ICD therapy in patients with a prior heart attack and compromised heart function." Moss was the primary investigator of the MADIT II trial.

The expanded CMS coverage would usher in a "new era of growth for defibrillators," said Kurt Kruger, an analyst with Bank of America Securities (San Francisco, California). He predicted that a positive decision from CMS is all but assured. "CMS's decision will open up defib therapy to as many as 300,000 additional patients a year in the U.S. and will essentially double the patient pool to 600,000," Kruger said. He estimates the market will grow 20.2% in 2003 and 19.3% in 2004.

FDA plans to speed device development

The FDA last month unveiled an agency-wide initiative to make medical technologies available sooner and reduce the costs of developing safe and effective medical products. The effort involves all four FDA product review centers: drugs, biologics, devices, and veterinary medicine. The initiative was outlined in a report, "Improving Innovation in Medical Technology: Beyond 2002." The FDA will achieve internal goals by focusing on three major areas:

Reducing the delays and avoidable product development costs by avoiding multiple cycles of FDA review when possible, through early communication and other steps to improve the quality of new product applications.

Improving the quality and efficiency of the review process by adopting a quality systems approach to medical product reviews.

Facilitating new product development by providing clearer up-to-date guidance for particular diseases and emerging technologies.

The agency acknowledged mixed results of its performance in 2002 and "longer total approval times in significant product areas, including Class III medical devices," it admitted. "[The] FDA approved a variety of important new medical products last year, and largely met its user fee review goals," said FDA Commissioner Mark McClellan, MD, in presenting the report. McClellan said that the agency is reacting to trends making research more costly. "We noted a decline in product applications from manufacturers in some key areas, which contributed to an increase in average and median review times. There is some evidence that this finding is a result of technology development becoming more costly, and reorienting to new areas as a result of breakthroughs in basic research," he said. "These results call for decisive action now, so that the trends of the future are not toward fewer products with higher development costs. FDA cannot control these trends, but we can take steps to help by making the drug development and review processes more efficient and effective."

The initiative was applauded by the Advanced Medical Technology Association (AdvaMed; Washington). "The FDA commissioner has put together an impressive action plan to enable FDA to keep pace with 21st century medical innovation," said Pamela Bailey, AdvaMed president. The increased collaboration, more efficient review procedures, and early communication of premarket requirements will shorten and increase the predictability of product development and review, Bailey said. "The big winners will be patients who will have faster access to new, safe and effective treatments," she added.

The FDA will start the process by analyzing the root causes of product approvals that require more than one review cycle. With the passage of the Medical Device User Fee and Modernization Act (MDUFMA), the agency said it "expects to move aggressively this year to install potential remedies for preventable cases of multiple-cycle review." It will implement a continuous marketing application pilot project to determine if the goals are being met. The agency is focusing on review cycles because a single cycle takes time typically between six to 10 months and many products ultimately approved do not get approval on the first cycle. Avoiding multiple cycles, where possible, can lead to substantial improvements in product availability and cost, the FDA said.

Citing a study from Tufts University (Medford, Massachusetts), the FDA said that manufacturers can save as much as $100 million in development costs by cutting total clinical development and regulatory review time by 25%. "Improved communication and guidance could help product developers achieve improvements by helping them design clinical studies more effectively. Savings could be used by the sponsor to develop other innovations, and passed on to patients as lower product prices," the agency noted.

Reduced approval times and costs can be built into the product development process rather than changing a set of standards, the FDA said. By including "predictability" in the process at the beginning, "the required scientific data are present in the marketing application the first time it is submitted," the agency added. "Improvement in the rate of single-cycle approval must result from better product development, not lower standards," McClellan said.

To help facilitate emerging technologies, the FDA will create clearer guidance for product approvals in priority areas. To promote development of novel treatments for diseases such as diabetes, the agency said it would create working groups that draw experts from across the agency and from the broader community to create guidance dealing with specific diseases. "Everyone with a stake in developing new treatments would then have a clearer understanding of key review questions, required scientific evidence and clinical endpoints to target for establishing efficacy in clinical trials, and what is expected in a new product application," the FDA said.

Grim outlook for NIH in Bush budget

Medicare is expected to get a makeover, but the National Institutes of Health (NIH; Bethesda, Maryland) could face grim years ahead based on President George Bush's 2004 budget, presented to Congress last month. The $2.23 trillion federal budget includes expansions for the military and homeland security while keeping other programs at current funding levels. The budget forecasts a $307 billion deficit this fiscal year a record in dollar terms, but not as a percentage of the overall economy. The deficit is projected at $304 billion next year.

A supplementary budget request would be sent to Congress should the U.S. declare war on Iraq, an Office of Management and Budget (OMB) official said. "A recession and a war we did not choose have led to the return of deficits," Bush said in a statement about his proposals. Officials in the OMB cite the 2001 recession, the Sept. 11 terrorist attacks and the war on terrorism for the deficits.

Bush proposes nearly $400 billion over a decade to reform Medicare and establish a prescription drug benefit for Medicare beneficiaries. Critics of the plan maintain that the drug benefit would cut some services. Medicare beneficiaries could remain in the traditional fee-for-service plan or enroll in a regional managed care plan that offers prescription drug coverage, according to preliminary details from OMB.

In addition to the Medicare funding, the U.S. Department of Health and Human Services would grow by 2.5%, and programs for the uninsured and temporary assistance for needy families would be included. Funds would also be available to ensure the privacy of medical records in the proposed budget.

NIH would gain an additional 2% increase in funds in fiscal 2004, but that would be a dramatic cut from previous years. For the past five years, NIH has received between 14% and 15% increases in funds as part of a plan to double the budget from the 1998 level of $13.6 billion. "It will be shocking. The response will be fairly negative," Donald Poppke, acting associate director for budget at NIH, said in response to the budget. The reduced amount will affect tens of thousands of researchers who depend on NIH grants, Poppke added.

Sens. Arlen Spector (R-Pennsylvania) and Tom Harkin (D-Iowa) introduced a bill to triple the NIH budget up to fiscal 2008. The bipartisan alternative could gain additional support because Bush's budget would make it difficult for NIH to maintain funding for current grants, according to Poppke.

Bush wants to add to the Strategic National Stockpile program by ensuring $400 million in maintaining and strengthening the existing vaccine and pharmaceutical stockpile, according to budget documents.

Nasdaq looks to ease rules

Aiming to help companies that trade their securities at depressed prices on its exchange, the Nasdaq Stock Market (New York) is working to relax its bid requirements. On Jan. 30, Nasdaq said it planned to extend a pilot program governing minimum bid price rules in effect providing companies added time to address bid price deficiencies that may be attributable to the continuing economic downturn and the related decline in the broad market averages. Many of the market's continued listing requirements are tied to market factors such as bid price, market value of public float and market capitalization.

"This is a prudent, measured response to these uncertain and unprecedented economic times," said Melissa Fox, director of Nasdaq corporate communications. "We believe this is a good move for companies and investors in that the U.S. market is suffering through its worst economic downturn since World War II." The proposal, which Fox said would bring Nasdaq's grace periods in line with other U.S. markets, remains subject to Securities and Exchange Commission (SEC) approval. She added that Nasdaq remains in an ongoing dialogue with the SEC. Nasdaq, which lists more than 3,700 companies, said it trades more shares per day than any other U.S. market.

For National Market companies, the proposal would extend the grace period from 90 days to 180 to maintain a $3 bid price required for continued listing, and provide an additional 180-day grace period for those National Market issuers able to demonstrate compliance with the core National Market initial listing criteria. Such criteria vary for three different standards. All include requirements for at least 1.1 million publicly traded shares and a minimum $5 bid price at the outset. But market caps vary for the three standards $8 million, $18 million and $20 million. The first two standards also require stockholders' equity of $15 million and $30 million, respectively.

For SmallCap companies, the proposed rule would keep the initial 180-day grace period to maintain a $1 bid price required for continued listing, but extend the minimum bid price grace period for those that comply with the core initial listing criteria from 180 to up to 540 days about 18 months. Compliance with the standard would be verified every 180 days. SmallCap companies must meet one of the following core initial listing criteria: net income of at least $750,000 in either a company's latest fiscal year or in two of its last three fiscal years, stockholders' equity of $5 million or a market capitalization of at least $50 million. The proposal also seeks to extend the pilot program expiration from Dec. 31 of this year for 12 more months.

"This is a good move for investors because it would enable them to continue to trade in a regulated liquid and transparent market," Fox said. "This will provide them more time to make investment decisions. They won't feel compelled to sell out of fear, which would only accelerate a price decline." When companies fall out of compliance in the National Market, they are considered for SmallCap Market listing provided they demonstrate an ability to meet such criteria. But an individual company must file for SmallCap listing and pay its initial listing fees.

Companies that are completely delisted by Nasdaq often are eligible for quotation on the Over-the-Counter Bulletin Board, an electronic quotation service operated by the National Association of Securities Dealers, assuming they are up to date with their periodic reports. If not, they may be listed on the Pink Sheets, a service that is not operated by NASD and does not require that companies register with the SEC or remain current with their periodic reports.