BB&T Washington Editor, and Staff Reports

The Centers for Medicare & Medicaid Services has wrestled for some time with the issue of reimbursement for angioplasty and stenting of the carotid artery in patients who are not good candidates for carotid artery endarterectomy (CAE), and last month's report that the agency would essentially hold its ground was not well received. One physician who has been involved in the issue for some time called the decision “an open stinking wound,“ but other voices said CMS already has plans to yield on coverage for high-risk patients.

The Dec. 9 decision memo states that coverage in symptomatic patients who are risky for CAE and have stenosis at 70% or higher is limited to those patients who also receive embolic protection devices. CMS indicated it will also maintain clinical trial reimbursement only for high-risk, symptomatic patients with stenosis of 50% to 70% and clinical trial coverage only for asymptomatic patients whose stenosis has narrowed the carotid artery by 80% or more. CMS has decided to “retain our existing coverage policy with a slight revision to the language regarding embolic protection devices.“

The issue has been brewing for some time, and physician members of some medical societies are eager to make more extensive use of carotid stenting. The Society for Cardiovascular Angiography and Interventions (SCAI; Washington) made the argument earlier this year that coverage should include all FDA-approved indications, a move that would substantially reverse field on the current reimbursement policy. SCAI also takes the position that endarterectomy has not been scrutinized to the same degree that stenting has.

Randel Richner, founder and president of the reimbursement consultancy the Neocure Group (Sherborn, Massachusetts), told BB&T's sister publication, Medical Device Daily, that this question has been in play for more than a decade.

“I have been involved in this product since 1997,“ she said, since about the time of the onset of planning for the CREST (Carotid Revascularization Endarterectomy vs. Stenting Trial) study, a project undertaken in part by the National Institutes of Health. Richner described the carotid stenting coverage issue as “the poster child for lots of interesting policy convergences“ and remarked that CMS opted not to cover the procedure some years back because the available technology “deserved not to be covered.“

All the same, Richner said, “this decision has been erratic in terms of how CMS has managed this,“ citing a perception that the criteria for determining reasonableness and necessity “always seem to be shifting.“ She said, “there are clear clinical guidelines that have been published“ on stenting, adding that she finds the latest decision “amazing“ because the procedure “has been well accepted [by clinicians] for quite a while.“

Richner said that eligibility under clinical trial coverage will not mean much in a few months because “the post-market trials that have been required are almost at completion.“ She also pointed out that while the utility of CREST for high-risk patients is limited due to the study's enrollment of medium-risk patients, CREST itself is no longer enrolling.

Still, she said, CMS will have to revisit the matter once the CREST study is wrapped up. “I think they're going to have to open it up again“ if CREST provides compelling results.

Clinicians are not happy at all with the CMS decision if the views of Christopher White, MD, are any indication. White, director of the Ochsner Heart & Vascular Institute (New Orleans), said he finds it mystifying that CMS “open[s] the decision repeatedly and they do nothing.“ He pointed out that this latest review was internally generated, “so everyone gets excited because they think CMS has opened the decision for a reason,“ but “they go through these motions and opinions don't change“ at the agency.

As Richner hinted, “the problem with CREST is that it's a low-risk group, so it's not really relevant to the patient population we care about the most,“ White said. “We're more interested in the patients being turned down for surgery“ because their health is not suggestive of an ability to withstand an open surgical procedure.

“My problem is that I have seven devices proved safe and effective by FDA,“ White said, “and then Medicare turns around and says they aren't reasonable and necessary. What in the heck does that mean? They can't tell you. CMS will not tell you what it takes to achieve 'reasonable and necessary.' They sort of tell you 'we'll know it when we see it.'“

All the same, White acknowledged that the problem is not entirely in the lap of CMS. “The house of medicine is divided on this“ because older surgeons are against stenting while interventionists, “the younger surgeons who do carotid stenting,“ favor the procedure and as a result, “CMS has doctors pitted against doctors and is frozen in the middle.“ He said this divide is “the reason for paralysis over the last five or six coverage decisions“ for carotid stenting.

Nonetheless, White remarked, “I thought that the surgeons were pretty well aligned“ in favor of coverage by now. He acknowledged the possibility that the agency is waiting for the results of the CREST study to give the nod for high-risk patients, but “then someone has to tell me why they opened the coverage decision to begin with“ if CREST is the final missing piece of the evidentiary puzzle.

“At the end of the day, this decision is not right for patients. It leaves many of them uncovered,“ White asserted. “I have to explain to them that they either have to dig into their life savings“ or “have a high-risk procedure“ that is unnecessary. He said, “with more than 10,000 patients in clinical trial data sets, there is no procedure that has been studied more.“

“This is an open, stinking wound,“ he concluded.

A source who asked not to be identified told MDD that all is not lost, but that things will not change immediately. This source said that the guideline document that CMS will publish after the completion of the CREST trial “is written except for low-risk patients, and they will cover high-risk patients“ for carotid stenting. This source states that “for investors, they should know that there is light at the end of the tunnel“ for carotid artery stents.

Device industry may be facing 'perfect storm'

For some months now a particularly controversial issue brewing in the healthcare reform debate is a proposal to tax startup and other small medical device companies on revenue rather than on profits. Among those who are concerned about the potential impact is Leslie Bottorff, general partner for the medical technology practice at Onset Ventures (Menlo Park, California), who said the proposed tax would make it harder for ongoing companies to survive and even tougher for startup companies to raise venture capital.

Bottorff, who has been in the VC business for 12 years and prior to that served in various sales and marketing positions in the medical device industry since 1979, said she fears the device tax issue is getting “lost in the shuffle“ of all the other hotly-debated healthcare reform issues. She said that the proposed tax, combined with changes being kicked around at the FDA where device approvals are concerned, added to reimbursement issues and patent changes, has created “the perfect storm“ in the device industry that could ultimately have a very adverse impact on innovation.

“It's been interesting for me,“ Bottorff said. “This healthcare reform bill has got so many aspects to it and so many moving parts.“ Bottorff said she is afraid “people don't realize what kind of an impact“ a tax on device revenue could have, if it is enacted, particularly for smaller venture-backed companies.

“This tax is going to hit those companies before they're profitable,“ Bottorff said. “They're going to have to raise venture capital and before they're profitable give it right back to the government.“ Because venture capital firms need to make a higher rate of return for a high risk, Bottorff explained that it will be hard for VCs to invest in a startup company only to see it go towards government mandated taxes. “I'm afraid that it's going to be yet another thing to discourage investors from investing in this area.“ And of course without VCs backing startup device companies, the impact on innovation would be “pretty substantial,“ she said.

While the tax proposal varies a bit from the Senate bill to the House bill, the general idea is the same. “The way it's going to work is the companies are exempt up until they have $5 million of revenue. Then this tax kicks in at half rate up until $25 million of revenue. Companies over that get taxed the full boat,“ Bottorff said.

“There are no startup companies that are profitable at $25 million. Sometimes they're not profitable until they have $50 million or $100 million in revenue.“ The problem is, Bottorff said, that those years of sales when these smaller companies have between $10 million and $25 million in revenue – when, according to the proposal they would be paying the “full boat“ in terms of the device tax – is exactly the time when they really need the cash flow. “Cash is king then,“ she said.

But Bottorff emphasized to MDD that the tax proposal is just “another straw on the camel's back.“ Other “straws“ that the industry should be concerned about are changes being kicked around at the FDA – namely, changes to the 510(k) process (MDD, Sept. 25, Oct. 15, and Nov. 17, 2009) – as well as reimbursement issues and patent changes.

What it all adds up to, Bottorff said, is “more time and more money has to be spent for startup companies to be profitable or have an exit event and it adds up.“

Bottorff is certainly not alone with her fears of how this device tax could impact the industry. Bill Cook, CEO and chairman of the Cook Group (Bloomington, Indiana) expressed similar concerns recently during an interview that appeared in last month's edition of BB&T. Citing the combination of a device tax and the increasing burdens from dealing with the FDA's regulatory maze, he forecast, “Most small companies are going to die, or never get started.“

According to Bottorff, “Congress and the administration both are looking at this in broad strokes and their saying 'gee, we're going to increase the number of people that have insurance,'“ therefore the taxes levied on medical device companies will be offset due to an increased pool of insured beneficiaries receiving treatment. “That's a vast generalization ... they're using a blunt instrument to do something that's incredibly complex – the blunt instrument being 'let's just tax revenue.'“

“It's a complete lack of education about the complexities of the industry,“ Buttorff said. “They're messing with some things ... that could have a really big impact on the American public and their health for the next 20 to 30 years.“ Then, using a well-known Biblical phrase, she added, “They know not what they do.“

In November, Stephen Ubl, president/CEO of the Advanced Medical Technology Association (AdvaMed; Washington), issued a statement after providing written comments to bipartisan leadership on the House's healthcare reform bill voicing similar concerns regarding the proposed tax. In the statement, Ubl acknowledged the decision by House leaders to limit the amount of the tax on medical devices, and that the proposed tax is transparent and deductible and would be implemented beginning in 2013 instead of 2010. However, he said, “A number of additional design features are important.“

“We recommend that the tax be differentiated by FDA product class to recognize the diversity of medical device products and the thousands of companies that develop and manufacture them,“ Ubl said. “Small manufacturers with less than $100 million in annual gross receipts should be exempted from the tax, perhaps through a rebate mechanism.“

Ubl also noted that, “with diverse companies of all shapes and sizes that produce as many as 80,000 unique products, protections should be put in place to make adjustments if the 2.5% tax rate generates more revenue than anticipated.“

The AdvaMed statement followed an earlier statement issued in October by the Medical Device Manufacturers Association (MDMA; Washington) in which that organization said its board had unanimously voted to oppose “any device tax as part of the healthcare reform bills moving through Congress.“ MDMA Chairman Joe Kiani, CEO and chairman of Masimo (Irvine, California), said that, “If enacted, this tax will stifle innovation, harm patient care and weaken the position of the U.S. as the global leader in medical device innovation.“

Panel recommends RCTs for prostate cancer

As some device makers tell it, enrolling patients into a randomized clinical trial (RCT) is like getting dancers on the dance floor, at least in one respect; it's tough to get someone to be the first. Unlike the accumulation of dancers on the dance floor, however, the arrival of the first enrollee in an RCT does not ensure a landslide of participation.

This was the message delivered to the gastroenterology and urology devices advisory committee in December by several leading physicians, who referred to several now-defunct trials of devices designed to treat prostate cancer. Their pleas fell on barren soil, however, as the panel concluded that RCTs are indeed necessary.

However, the most conspicuous feature of the hearing was that the event ran the full day without completely answering the first three questions put to the panel by FDA, let alone all five. There was talk of reassembling the panel at a later date to complete the task, although no date was suggested.

Offering the agency's views of such trials was John Baxley, who informed the panel, “there is growing interest in the clinical community and the device industry“ for therapies that incur less morbidity.

Baxley said that among the dilemmas for enrollment of RCTs are those “related to patient behavior and the evolving state of clinical practice,“ but he also the novelty of the technologies now in the developmental pipeline presents some hurdles due to difficulties in finding a reasonable comparator treatment.

Baxley reminded the panel that while RCTs are the gold standard, they have “in practice been difficult to carry out“ due to resistance to randomization. “Since men have strong personal preferences as to the type of morbidity they are willing to accept,“ he remarked, randomization can present a nearly intractable impediment to enrollment.

Baxley said the list of studies that faded because of the problem with randomization includes the Southwest Oncology Study “which terminated after enrolling only six of 1,000“ intended enrollees.

Among the speakers at the open public hearing was Lawrence Klotz, MD, of the University of Toronto (Toronto, Canada), who noted that three trials for prostate cancer treatments, including the Spirit trial, have tanked and that two others are en route.

According to Klotz, the Spirit study managed to enroll only 56 patients out of an intended 1,980. As for the START (Surveillance Therapy Against Radical Treatment) trial, Klotz said it was “launched about three years ago“ and has an enrollment target of 2,100. He said the study – for which he serves as the lead investigator – “has accrued very well in Canada, but very poorly in the U.S. and the UK.“ He went on to describe enrollment in the UK as “dismal,“ adding that the center in the UK, for this reason, “has withdrawn from the START trial.“

The problem with resistance to randomization “is more prominent in the U.S. than in Canada, and it's not about equipoise,“ Klotz said. “The question is what is enough to overcome inertia and get people interested,“ in participating. The founding editor-in-chief of the Canadian Journal of Urology said another problem is sometimes with physicians for whom the issue may be that “the trial may not be congruent with their own self interests“ to the extent that the trial calls for procedures that are not routinely practiced by the physician.

The panel did not fail to answer all of FDA's questions for want of opportunity. The questions were first aired toward the end of the morning discussion, starting with a question that assumed randomization, asking what sort of controls might be appropriate.

After hearing arguments against randomization, panel chairman Paul Palevsky, MD, of the University of Pittsburgh School of Medicine (Pittsburgh) concluded, “the sense ... is that the committee is inclined toward concurrent controls.“ He noted that the panel was “recommending against the use of historical controls“ for either focal or whole-gland treatments. “We're suggesting the appropriate comparator would be active surveillance“ for both focal and whole-gland treatment.

Active surveillance, seen as a more aggressive series of follow-ups compared to watchful waiting, was itself the object of an FDA inquiry. During the afternoon review of the FDA questions, Janine Morris, branch chief for urology and lithotripsy devices at the Center for Devices and Radiological Health, asked the panel, “do we need to discuss a definition of active surveillance?“ After some discussion, however, the panel concluded that the topic could not be resolved.

Despite the opinions of the experts such as Klotz and Cary Robertson, MD, of Duke University School of Medicine (Durham, North Carolina), Jason Connor, PhD, of Berry Consulting (Orlando, Florida) struck an unyielding stance regarding RCTs. Berry said, “I think it's really important that we push for RCTs.“ He said, “there are RCTs in all sorts of other clinical trials“ and argued, “by stressing that it's important, you can make them do it.“

“They're just not doing it,“ he concluded. After further discussion, the panel again drew the same conclusion regarding RCTs for both focal and whole-gland therapies, although the panel saw a need for greater latitude than is normally allowed for the P score for trials for focal-lesion treatments.

FDA posed the question of primary effectiveness endpoints for each of several scenarios. In a trial of whole-gland treatment with a control of surveillance, the panel chairman did not report a hard-and-fast conclusion, but several of the comments suggested composite endpoints. For the surveillance arm, this might be somewhat limited by the drop-out rate.

As for whole-gland versus active treatment, the panel's discussion was summarized by panel chair Palevsky by the comment, “we're not reaching a clear consensus in terms of the disease-specific endpoint,“ although the panel concluded that quality of life “is an important component.“ Freedom from cancer was seen as at least part of the primary endpoint and QOL measures as a secondary endpoint, with some discussion that the patient should decide which QOL points are most important for them.

This was as far as the panel got into the five FDA questions, leaving the balance of the third question and the fourth and fifth questions for another date.

Is reprocessing single-use devices unsafe?

The reprocessing of single-use medical devices has reportedly saved hospitals a substantial sum of money, but the practice is loaded with controversy. The European Medical Technology Industry Association (Eucomed; Brussels, Belgium), however, has taken square aim at the practice with a white paper that argues that such reprocessing compromises the safety of both patient and healthcare worker.

According to the Dec. 16, 2009, press release published with the white paper, Eucomed is calling for legislation that would “ensure that hospitals are not using, or not directed to use single-use medical devices more than once.“ The association's CEO, John Wilkinson, said in the statement that communicable diseases “are big threats to health,“ and that by an unidentified estimate, “up to three million patients treated in the European healthcare setting will contract an infection“ as a result, “of which 50,000 will die.“ Wilkinson argues further that the cost of reuse of devices includes “patient injury and repeat surgery or intervention, repeated diagnostic tests, increased use of antibiotics, or absence from work.“

According to Eucomed, the European Commission is set to review the white paper and subsequently “prepare a report on reprocessing of medical devices, which is expected by September 2010.“

The white paper takes up the economic argument, in part by asserting that any savings from reuse are not passed on to patients. Eucomed is of the view that “only the purchasing department [of a healthcare facility] will benefit financially“ and that the literature on reuse of single-use devices shows that the subject is “very poorly investigated and described.“ The existing studies are said to either “completely lack a calculation at the macroeconomic level“ or fail to “incorporate any costs associated with the increased risk of the reused device.“

The paper offers information on an examination of several types of devices, depicting various levels of degradation of device surfaces, but lacks any data on the incidence of adverse events associated with reuse of single-use devices. In the case of reprocessed electrophysiology (EP) catheters, the white paper states that an incident that took place in Germany in 2000 involved an EP catheter said to have “trapped the heart valve of a young African athlete and led to an insufficient heart valve.“ The authors of the white paper acknowledge that the investigations into this incident “did not lead to a clear identification of the cause,“ but states, “it is possible that the design of the single-use catheter might have been the cause.“

New Jersey offers conflict of interest law

State conflict of interest laws are not springing up en masse, but are becoming more conspicuous over time as individual states ramp up plans to monitor ties between physicians and makers of drugs and devices.

New Jersey's attorney general is said to have recently endorsed a report drafted by the state's Division of Consumer Affairs that urges the legislature to impose reporting obligations on physicians and makers of drugs and devices. The report suggests a ban on food provided to doctors' offices, for instance, unless the company receives payment for the food at fair market value. Doctors would not be permitted to receive free meals at unaccredited educational meetings, and industry sponsors would not be permitted to directly pay for meals even in accredited settings.

Physicians would be required to report gifts and other compensation in excess of $200 in any two calendar years, and would have to disclose such compensation in a searchable database.

Senate's health bill drops device tax delay

The U.S. Senate pushed through a healthcare reform bill – a mammoth 2,500-page chunk of legislation with bargains grand and petite for a number of stakeholders – by a party-line vote of 60-39 in December. The seeming momentousness of the occasion was belied by one last hurdle: managing the merger of the Senate's legislative tome with the relatively puny house bill, which comes in at roughly 1,900 pages.

Despite substantial support for an amendment offered by Sens. Amy Klobuchar (D-Minnesota) and Evan Bayh (D-Indiana), the manager's mark of the Senate bill will leave the implementation of the device tax at 2011 rather than 2013, and will omit the tax deductibility of the device tax. The Senate bill also offers no exemption from the tax based on annual revenue.

Other differences between the two bills are that the House bill does not allow subsidized health plans to cover abortions, but neither bill deals with looming cuts to physician payments under Medicare Part B. This issue is the focus of a patch bill that delays the cuts of more than 20% until the end of February, at which point Congress will have to tackle yet again the widely reviled SGR (sustainable growth rate) mechanism.

A flurry of press statements buried the Internet in a cover of white that was almost as deep as the 18 inches of snow that fell on the metro DC area the weekend before Christmas. Among these was a Dec. 24 statement by Karen Ignagni, president/CEO of America's Health Insurance Plans (AHIP; Washington), who said, “providing all Americans with healthcare coverage is crucial for the country.“ Ignagni noted, however, that “specific provisions in this legislation will increase, rather than decrease, healthcare costs,“ and would “reduce coverage options and disrupt existing coverage for families, seniors and small businesses – particularly between now and when the legislation is fully implemented in 2014.“

Steve Ubl, president/CEO of the Advanced Medical Technology Association (AdvaMed; Washington), said in another Dec. 24 statement that the association “appreciate[s] the progress made in a number of areas, including comparative effectiveness research, disclosure of payments to physicians, and various payment system reforms,“ but Ubl noted that AdvaMed is interested in a modification of the comparative effectiveness entity “to provide for greater public input.“ He also said the device tax “present[s] significant challenges for our industry,“ but that AdvaMed is intent on “a number of important refinements,“ including the start date of implementation, “protections for small companies, and ensuring that the tax is deductible.“

CMS says nay to home insulin IV therapy

The Centers for Medicare & Medicaid Services may or may not be thinking of cost containment in its coverage decisions, but a decision reported just before Christmas suggests that the agency's evidentiary standard is not slipping. On Dec. 23, CMS stated that it will not cover outpatient intravenous insulin therapy because the available evidence “does not support a conclusion that outpatient intravenous insulin therapy improves health outcomes.“

The agency took up the matter earlier last year, proposing in September that it would not cover the procedure. At that time, the agency stated that studies of animal models offered inconsistent results for glycemic control, and CMS found the human studies to be compromised by patient and treatment variables. According to the proposed decision memo, CMS's review of nine long-term human studies showed that four “were based on populations that were subsets of larger study populations“ and that none were blinded while only two were randomized. This group of studies was also said to have enrolled a total of only 250 patients and that none captured data from at least 100. The agency again cited these factors in rendering its final decision.