BB&T Washington Editor and BB&T Staff Reports

New FDA guidances can trigger a lot of development activity, but a recent FDA guidance on nanomaterials raised the question of just what constitutes nanoscale materials, stating that in some instances, the guidance will apply to materials at sizes of one micrometer (µm), or 1,000 nanometers (nm).

This threshold is an order of magnitude larger than the commonly accepted definition of nanomaterials, which is anywhere from 1 to 100 nanometers (nm), and promises to capture some applications that some in industry might not have anticipated would be thus regulated.

FDA posted the draft guidance June 9 and acknowledged that the agency has yet to provide regulatory definitions for the terms “nanotechnology“ and “nanoscale,“ but nonetheless points out that the commonly accepted definition runs up to 100 nm. Among those who have employed this definition, the guidance states, is the National Nanotechnology Initiative Program, which has used that scale to define nanomaterials along with the descriptive phrase “where unique phenomena enable novel applications.“

That last piece of language seems to be the key for FDA's use of 1µm as the outer boundary. The guidance states that material of a sufficiently small size “can lead to properties that are clearly different from those of the conventionally-scaled material although the material or end product itself may not necessarily be within the nanoscale range.“

Among the elements of consideration here are “structures such as agglomerates and aggregates“ and “coated, functionalized, or hierarchically assembled structures.“ FDA states that the micrometer threshold “would serve as a reasonable parameter for screening materials with dimensions beyond the nanoscale range for further examination to determine whether these materials exhibit properties or phenomena attributable to their dimension(s) and relevant to nanotechnology.“

FDA indicates, however, that it is not interested in a regulatory capture of anything simply because it happens upon this threshold. The guidance states that FDA's interest lies principally in materials “that have been engineered to contain nanoscale materials or involve the application of nanotechnology“ as distinct from “those products that contain incidental or background levels of nanomaterials or those that contain materials that naturally occur in the nanoscale range.“ The agency states that it is “particularly interested in the deliberate manipulation and control of particle size to produce specific properties, because the emergence of these new properties or phenomena may warrant further evaluation,“ but FDA is not particularly concerned in this context about “the more familiar use of biological or chemical substances that may naturally exist at small scales, including at the nanoscale, such as microorganisms or proteins.“

MedPAC recommends CMS approval for Part B scans

The Centers for Medicare & Medicaid Services has heard a lot about Medicare Part B spending, and the agency has for the second time heard an outside entity recommend that it make use of prior authorization to help tamp down on imaging costs. The suggestion has hit a considerable headwind thanks to medical specialty societies, but Congress has a close eye on costs, suggesting that legislators may feel it is time to consider such a move.

MedPAC's June report to Congress states that prior authorization could be used to deal with physicians whose usage of imaging is conspicuous rather than for all doctors who order such tests, and MedPAC indicates that such a limitation to pre-authorization would hold down CMS's resource needs. The report also recommends that such a program be limited to imaging for which there are consensus standards, noting that this kind of program could be deployed to other areas of Medicare that demonstrate conspicuous growth rates, such as physical therapy and radiation therapy.

The report also states that doctors could employ clinical decision support systems in lieu of the pre-authorization mechanism so long as the data from those systems were reported to CMS to permit the agency to track the clinician's usage. MedPAC notes that doctors who continue to go outside guidelines despite making use of clinical decision software could then be enrolled in a full-blown pre-authorization program. However, the report indicates that physicians who participate in an accountable care organization might be excluded from any such requirements.

Another of MedPAC's recommendations is that the Centers for Medicare & Medicaid Services work with the relative value update committee, operated by the American Medical Association (AMA; Washington), “to accelerate and expand ongoing efforts to combine into a single payment rate multiple discrete services“ that are routinely handled at the same time. Among the remaining recommendations is that CMS reduce payment rates “for imaging and other diagnostic tests paid under the physician fee schedule when the same practitioner“ orders and performs the tests, a notion MedPAC states is supported by the fact that some of the work a doctor does in interpreting the diagnostic effort “duplicates activities that have already been performed“ by the doctor.

Prior to getting into all the details, the report states that one approach to suppressing irrational growth in Part B imaging services might be to “narrow the types of services or physician groups covered“ by the exception to self referral under Stark law, but such limitations could cramp efforts to integrate and coordinate care, and any such narrowing might capture practices that improve quality of care along with those that use imaging for questionable purposes. Hence, MedPAC suggests that Congress leave the exemption where it stands.

Physician groups working under the umbrella of the Access to Medical Imaging Coalition (AMIC; Washington) responded quickly to the MedPAC report, stating that the organization's members are “very concerned about MedPAC's recommendation to use prior authorization for imaging services.“ The June letter claims that such a mechanism “impedes patient access to needed care . . . and has not been shown to reduce costs over the long term.“

The letter states further that pre-authorization “means having to devote additional uncompensated physician time as well as staff to a burdensome administrative process.“ The letter includes the logos of several patient groups, but none of the medical specialty societies that are AMIC members, including the American College of Radiology (Reston, Virginia). The Advanced Medical Technology Association (Washington) and the Medical Imaging & Technology Alliance (Arlington, Virginia) are also members.

AMIC had weighed in earlier this year on the imaging question, noting that costs have fallen in some imaging areas since the provisions of the Deficit Reduction Act of 2005 went into play, but some members of Congress had urged MedPAC to take another look at the data the commission uses to address the Part B imaging fee cost predicament. Reps. Joe Pitts (R-Pennsylvania) and Frank Pallone (D-New Jersey) wrote the commission in May that MedPAC seems to omit some data in its calculations, especially where “recent trends in utilization“ are concerned. However, congressional appropriators have been taking aim at almost everything in the federal budget.

Regarding SGR (also known as the “doc fix“ problem), MedPAC remarks that the mechanism for controlling physician fees under Part B deals with “aggregate spending across all physicians and practitioners“ and hence fails to induce efforts to control growth “at a more granular level.“ The report states that a “fundamental issue“ in the SGR dilemma is “whether to maintain an expenditure target either narrowly . . . or more broadly throughout all of Medicare,“ although the commission indicates that a broader effort could carry the same flaws where incentives to providers are concerned. One approach, MedPAC states, might be to give the Secretary of Health and Human Services “discretion to adjust payments,“ which could help blunt spending on services MedPAC states are likely to be “too high, perhaps by a wide margin.“

Global venture funding needs strong IPO market

Venture capitalists worldwide are dismayed by the current level of initial public offering (IPO) activity, saying the shortage of opportunities to take a company public in turn means a lack of support for a healthy VC industry. According to the 2011 Global Venture Capital Survey sponsored by Deloitte (London) and the National Venture Capital Association (NVCA; Washington), more than 80% of global venture capitalists surveyed said current IPO activity levels in their home countries are too low. The VC respondents said the kind of returns generated by IPOs are critical in providing “superior“ returns to limited partners and growth capital to developing portfolio companies.

Scott Tobin, head of Battery Ventures' Israel office, said the moribund IPO market affects more than VCs and other investors. “It's important to remember that it affects entrepreneurs as well. Whether in the U.S., Israel or anywhere in the world, they dream of solving big problems and building long-lasting public companies that survive beyond their tenure as CEO. [But] you need a healthy IPO ecosystem to encourage that innovation and ensure that these incredibly smart and talented individuals truly reach for the stars.“

The Deloitte/NVCA findings are not all bad, at least as far as healthcare investing is concerned. The survey found that healthcare services, along with information technology and clean technologies, is atop the list of industries tabbed as desirable for investment. China and India were cited as countries where there is considerable interest in both biopharmaceuticals and healthcare services as sectors worthy of investment.

That follows the 1Q11 MoneyTree Report produced by NVCA and PricewaterhouseCoopers (New York), which indicated that the life sciences sector – representing biotechnology and medical device industries combined – saw an increase of 16% in VC dollars invested, although deal volume fell by 9% in the same period. In all, $1.4 billion went into 164 deals in the sector.

Respondents to the Deloitte/NVCA survey said a vibrant capital markets system requires a strong investor appetite for equity in public companies (83%), the need for a stable economic environment (52%), and the need for more adequate stock analyst coverage (32%). U.S. respondents also cited easier reporting for newly public companies (33%) and the need for a competitive investment banking community (30%) for IPOs. VCs in the U.S., China, Brazil, India and France found it most important to have an active IPO market in their home countries, followed closely by the UK, Canada, Germany and Israel. In the U.S., fully 91% of venture capitalists said the IPO market is a “critical element“ of the domestic venture capital industry.

Globally, 87% of respondents selected Nasdaq as one of the three most promising stock exchanges for venture-backed IPOs; 39% went with the New York Stock Exchange, and 33% cited the Shanghai Stock Exchange. The vast majority of VCs around the world still look to the U.S. exchanges to provide a healthy and vibrant market, but 87% of U.S. venture capitalists included in the survey said they believe that the current level of IPO activity is too low. Contrasting from the global trend, only a little more than one-third of U.S. venture capitalists who responded (36%) said that IPO markets in other geographies were essential to the success of the U.S. venture capital industry.

Mark Jensen, partner in Deloitte & Touche and national managing partner for venture capital services, said, “innovation continues to be an important driver in our economic health and a strong exit marketplace is critical to the venture capital ecosystem driving much of that innovation. The industry continues to feel the ripple effects of the global economic downturn, most notably in the form of limited exit opportunities. However, with signs of improvement in the economy and easing of the liquidity crisis, the tide may be turning.“

Mark Heesen, president of the National Venture Capital Association, said, “the recovery of the IPO market, both here in the U.S. and abroad, is not a nicety but a necessity for the future health of the global economy.“ He said the venture-backed IPO market “has been an extraordinary creator of economic value in countless ways. Not only have millions of jobs been created, but superior returns have been delivered to pension beneficiaries, endowments and charitable foundations for decades. Entire industries have been formed, pushing innovation forward, and changing the way we live and work for the better.“

Despite the current economic challenges, the survey indicated considerable promise for the VC industry globally. Of those VCs who are investing outside their home countries, 57% plan to increase this activity during the next five years and an additional 35% plan to maintain their level of investment. Deepak Kamra, general partner of Canaan Partners (Menlo Park, California), said, “The recent run of global IPOs shows that innovative companies can come from anywhere. Some of the companies with the strongest potential to become profitable global leaders have a multinational focus from the beginning – leveraging R&D in Israel, manufacturing in China, services in India, and partnerships in the U.S. – and this is driving investors to increase their global coverage.“

FDA: no need for second sensor in low-glucose devices

One of the advantages of medical society meetings is that regulator and regulated alike are motivated to conduct a little public outreach. Thus it was that Medical Device Daily was able to interview a representative of FDA during the 71st annual scientific sessions sponsored by the American Diabetes Association (ADA; Alexandria) on a long-awaited guidance for a low-glucose suspend (LGS) device, a guidance spanning nearly 60 pages and encompassing a wide array of issues.

The language of the guidance at one point hints that FDA sees the use of a single glucose monitor as offering too little reassurance that such a system will correctly interpret and act on serum glucose levels, but the chief of FDA's artificial pancreas project told BB&T, “we recognize the challenge, but we are recommending one“ sensor rather than two.

BB&T interviewed Charles “Chip“ Zimliki, PhD, who has the task of administering the artificial pancreas project at FDA's Center for Devices and Radiological Health, to get some details on the guidance. BB&T also asked him to respond to comments by JDRF suggesting that FDA is overly reticent to allow more such systems to move into phase III trials.

Zimlilki said the LGS guidance “clearly identifies what FDA needs“ for an outpatient trial and that at least some firms “have sufficient data to proceed to an outpatient study.“ He mentioned the Aspire study sponsored by Medtronic (Minneapolis), which the firm announced last year in a June 25, 2010, statement that declared the first enrollee had entered the study.

“We're hopeful we'll see [the results from that trial] sooner rather than later“ Zimliki said, adding that the guidance “clarifies any outstanding issues that any company will have“ about phase III trials for LGS systems. Still, he acknowledged, “this is a draft guidance. We would love to have any comment from anybody“ interested in doing so, he said, adding that interested parties have 90 days from the late June announcement in the Federal Register to comment.

Zimliki characterized this as “a unique guidance in that we published it without having a device going through the [approval] process“ first. Stating that the agency hopes “that the guidance isn't speculative,“ he said that while last year's workshop on the artificial pancreas project triggered “a passionate debate“ about what a trial should entail, the guidance represents FDA's “best attempt to get [sponsors] the information they need.“ to go to trial with their devices.

The guidance indicates that FDA is open to the use of both parallel and cross-over designs for randomized, controlled trials, but Zimliki said he was not interested in forecasting whether patients might be less than enthused about getting stuck in the control arm of a parallel study design. “We're not trying to dictate the exact design“ of a study, he said, but remarked, “you're talking about a three-month study“ in a parallel study, a design that might entail a larger enrollment than a cross-over design. A crossover study, he said, “takes twice as long but [requires] a smaller sample size.“ Industry, he said, should “feel free to do it whichever way“ it sees as appropriate.

When asked whether FDA is hearing from industry that the parameter sensitivity analysis requirement calls for too much data because of a potentially large range of values – which could drive a substantially larger enrollment than a sponsor might initially anticipate – Zimliki said that one sponsor had mapped out a set of scenarios in response to this proposition that resulted in a set of 45 parameters that could conceivably have to be addressed in a trial.

Still, Zimliki said a sponsor will “probably initially start out with a small parameter space“ in a trial, but that “over time, sufficient safety data will be brought in“ to fill in the gaps and satisfy FDA's concerns over safety considerations. He said FDA is open to ideas on how to address this issue.

Zimliki acknowledged that this feature of LGS systems provides “a lot of parameter space [sponsors] can get lost in“ when designing and executing a trial, citing threshold of glucose level as one parameter and predictive horizon as another. He suggested that academic and clinical physicians could help fill in the blanks on this point. “We would love for the medical community to come up with“ a way “to deal with that parameter space,“ he said.

Regarding sample sizes for pivotal studies, the guidance makes note of how a study should include “reasonable assumptions“ about several things, including losses to follow-up in a post-approval study (PAS). CDRH director Jeff Shuren, MD, said recently in the context of silicone breast implants that a retention rate of 85% would be satisfactory, but Zimliki was reticent to put a metric to post-approval studies for LGS systems. “It's too early to talk about what would be a successful PAS,“ he said, adding that this reticence extends to whether the agency would want a hypothesis-driven PAS. He said FDA is working with “limited information right now“ and hence is not interested in speculation. Despite that this is a potentially costly feature of an effort to get a device to market, he said, “we wouldn't want to be prescriptive right now,“ offering only that “we can work through that once a device is approved.“

The question posed by BB&T as to whether the agency believes one glucose sensor would suffice for LGS systems was prompted by a passage in the guidance stating: “Using the same CGM to measure success and to make decisions about if and when to turn the pump off will introduce bias.“ The guidance states further, “although the size of the bias may or may not be large, determining the extent of the bias will be impossible without an independent measure.“

Despite the reservations the guidance hints at about a single-sensory system, Zimliki indicated that he sees no need for a second sensor. Whether this will still be the case for a fully functional artificial pancreas is difficult to forecast, but Zimliki seemed persuaded of a functional approach to LGS systems, stating that if a sponsor has a sensor that can do the job by itself, that sponsor shouldn't expect problems at FDA over the use of a single sensor.

Zimliki also went out of his way to encourage stakeholders to make their views known. “If you have any questions,“ he said, industry should contact the agency. “The point is we're here to help and we're optimistic about the artificial pancreas.“

However, Zimliki indicated that the feedback will inform not just the final cut of the LGS guidance, but the one to follow on fully functioning automated insulin systems, which he promised will be out by year's end. “We want feedback on this guidance document,“ partly because “we're going to use the information in this one to shape the next one, so this is the time for feedback,“ he said.