LS&HC Horizons 2022 - Flipbook - Page 20
Hogan Lovells | 2022 Life Sciences and Health Care Horizons
20
Digital Health and AI
Speeding medical device approval and reimbursement
The FDA's Breakthrough Devices Program, finalized in 2018, continues
to gain traction, with the numbers of requests and devices granted this
designation steadily increasing. While the benefits for the FDA clearance/
approval process are attractive, the primary driver seems to be the
reimbursement benefits, which are of substantial interest to investors
driving innovation.
The program is intended to speed development and review of devices
which provide for more effective treatment/diagnosis of life-threatening
or irreversibly debilitating diseases or conditions. Features of the
program include increased interaction with FDA, including mechanisms
for quicker interaction like Sprint Discussions, and prioritization of the
submission in the review queue. Sprint Discussions are a particularly
useful feature that allow companies to obtain agency feedback in half
the time of a traditional pre-submission.
However, it is becoming apparent that FDA cannot grant breakthrough
status to all devices which may be eligible, especially in review groups
where most devices would qualify (e.g., cardiovascular). Given the
increased competition to obtain breakthrough status, it is critical
that companies present their strongest case in their application. Key
considerations include the timing of the breakthrough request in the
development program, and justification for meeting the eligibility
factors, especially showing the device is reasonably expected to be
“more effective” than the standard of care. This last criterion is the
one most cited when applications are denied by FDA.
Obtaining breakthrough device designation has tangible benefits from
a Medicare payment perspective, and perhaps for other payers. From
a Medicare payment perspective, having breakthrough designation
makes it easier to qualify for special, additional reimbursement. Under
Medicare’s inpatient hospital payment system, hospitals may receive
extra payment for technologies that qualify for new technology add-on
payments (NTAP). An FDA designated breakthrough device is deemed
to meet the most difficult two of the three criteria to qualify. Similarly,
under the Medicare hospital outpatient payment system, devices are
eligible for separate payment if they qualify for pass-through status.
Breakthrough designation means that the device automatically meets the
difficult “substantial clinical improvement” criterion. Thus, breakthrough
designation facilitates the ability to obtain these special additional
payments.
The Centers for Medicare & Medicaid Services (CMS) issued a final rule
in 2021 that would have allowed for four years of national Medicare
coverage for breakthrough devices under the Medicare Coverage
of Innovative Technologies (MCIT) pathway. However, that rule
was subsequently withdrawn and CMS is considering avenues to
facilitate Medicare coverage for new technologies, which may or may
not be applicable to breakthrough devices. It is unclear when CMS’s
consideration will yield a coverage policy proposal.
Given the FDA regulatory and reimbursement benefits, we only expect
competition to increase for breakthrough status in the coming years.
For devices which do not qualify for this program, there may be an
opportunity to qualify for FDA’s Safer Technologies Program (SteP),
which was finalized in January 2021, for devices targeting non-lifethreatening conditions; however, there are no similar reimbursement
benefits for this program.
Kristin Zielinski Duggan
Partner, Washington, D.C.
Stuart Langbein
Partner, Washington, D.C.
