User fees are just one area that may eventually increase costs for medical device manufacturers. Another area will be in medical device tracking under new rules issued last month by the FDA. But the rules are intended to be clearer, and many devices could be exempted from the tracking provision. The revisions were first proposed in the Feb. 8 Federal Register and the final rule appeared in the May 15 Federal Register. Besides revising outdated terminology and references, the new rules add patient confidentiality requirements and make other changes in the scope of section 519(e) of the FDA Modernization Act of 1997 (FDAMA), which the agency calls "substantive."

The FDA estimates that the costs to the industry associated with maintaining device tracking systems will increase from about $40 million in 1999 to $71 million in 2006. However, those manufacturers that currently track devices will not incur additional costs as a result of the rule changes, according to the agency.

One of those groups that will incur new costs, as the "distributor" of a medical device, will be hospitals. The agency used the examples of dura mater implants and abdominal aortic aneurysm stents to illustrate this principle. FDA estimates that hospitals will incur an average annual cost of $66,000 cumulatively to track these two devices, estimating $130 for each hospital per year, but only 10% of U.S. hospitals implanting about 22,000 units per year. The changes should not have a significant economic effect on most smaller hospitals, the agency concluded.

There is considerable good news in the new rule. The agency has more discretion in deciding which devices to track, and the revision eliminates the requirement to track all devices in some categories. And even if a device meets one of three criteria for tracking, it may not have to be tracked. The FDA will notify a manufacturer through an order that a device must be tracked.

Specifically, the revised language of section 519(e) of FDAMA reads: "The Food and Drug Administration may require a manufacturer to adopt a method of tracking a class II or class III device, if the device meets one of the following three criteria and FDA issues an order to the manufacturer: the failure of the device would be reasonably likely to have serious adverse health consequences; or the device is intended to be implanted in the human body for more than one year; or the device is a life-sustaining or life-supporting device used outside a device user facility."

As of a January 2000 guidance document, the FDA requires manufacturers to track the following implantable devices:

  • Temporomandibular joint prosthesis.
  • Glenoid fossa prosthesis.
  • Mandibular condyle prosthesis.
  • Implantable pacemaker pulse generator.
  • Cardiovascular permanent implantable pacemaker electrode.
  • Replacement heart valve (mechanical only).
  • Implantable cardioverter defibrillator.
  • Implanted cerebellar stimulator.
  • Implanted diaphragmatic/phrenic nerve stimulator.
  • Implantable infusion pumps.
  • Dura mater.
  • Abdominal aortic aneurysm stent grafts.

The FDA has issued orders to manufacturers who are required to track the following devices that are used outside a device user facility:

  • Breathing frequency monitors.
  • Continuous ventilators.
  • Ventricular bypass (assist) device.
  • DC-defibrillators and paddles.
  • Infusion pumps (electromechanical only).

The new rule also provides new definitions for two terms: "importer" and "permanently implant-able device." The new definition of "importer" is "the initial distributor of an imported device that is subject to a tracking order. Importer does not include anyone who only furthers the marketing, such as brokers, jobbers, or warehousers." The definition for permanently implantable device was revised to clarify a difference between permanent and temporary devices. The new definition reads: "Device intended to be implanted in the human body for more than one year means a device that is intended to be placed into a surgically or naturally formed cavity of the human body for more than one year to continuously assist, restore, or replace the function of an organ system or structure of the human body throughout the useful life of the device. The term does not include any device that is intended and used only for temporary purposes or that is intended for explanation in one year or less."

CMS: Drug-coated stents to be covered

A national reimbursement coverage decision for drug-eluting stents for Medicare patients will likely occur following FDA clearance of those devices. That's the prediction from Tom Grissom, director of the Centers for Medicare & Medicaid Services (CMS; Baltimore, Maryland) center for Medicare management, speaking at the annual meeting of the Medical Device Manufacturers Association (Washington). Grissom's presentation served to reinforce the message delivered earlier last month with a new rule proposing increases in Medicare payments for inpatient hospital services. While that rule indicated the CMS intention to cover drug-coated stents after they are FDA-cleared, as well as new coverage for blood products, it did not provide coverage for four products under a "new technologies" program. And Grissom offered the gloomy prediction that the long-sought drug coverage for seniors, if achieved, would have a negative impact on new technology development.

But Grissom did all he could to counter a general industry perception that CMS is against new technologies, citing drug-coated stents as a kind of case study. "The manufacturers have been very effective in telling their story about the [drug/stent] product effectiveness, and my boss [HHS director Thomas Scully] is talking about it, and we will no doubt make a decision on coverage after the FDA makes a decision," Grissom told MDMA attendees.

While Grissom said he did not see any large changes in the rule proposed, he assured the med-tech manufacturers at the association meeting that CMS is "very aware of what your products do and their importance in patient care." At the same time, he added important qualifiers: "Remember that every new technology or procedure has to be placed in a fixed monetary pie. Unfortunately, the products being produced and used far outweigh the funds available in our existing budget. Everything at CMS is on a budget-neutral basis," he added.

The proposed rule for 2003 will continue to include the "substantial improvement" criteria for devices that receive pass-through payments.

$2.1M pledged to NASPE effort

The North American Society of Pacing and Electrophysiology (NASPE; Natick, Massachusetts) Focus on the Future campaign has received a $2.1 million gift from St. Jude Medical (St. Paul, Minnesota). The pledge, which will be paid over five years, was announced at NASPE's annual scientific sessions, held last month in San Diego, California. The Focus on the Future campaign campaign seeks to raise funds for expanded research, education and patient and professional advocacy in the fields of electrophysiology and arrhythmia management.

To date, more than $4 million in donations have been pledged to Focus on the Future. In addition to the $2.1 million donation by St. Jude, corporate gifts of $1.25 million from Medtronic (Minneapolis, Minnesota) and $900,000 from the Guidant Foundation (Indianapolis, Indiana) also have been pledged. The Medtronic and Guidant donations were announced last year, along with an additional $5 million in grants – $2.5 million from each corporation – for the NASPE Advanced Training Clinical Fellowship Award Program.

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