Porzio Pharmaspective

FDA Issues Draft Guidance to Help Companies Distinguish Between a Voluntary Medical Device Recall and a Product Enhancement

2013-05-23T12:35:37-04:00

By Laura C. Conway and Stephen C. Matthews

On February 22, 2013, the Food and Drug Administration (FDA) issued a draft guidance entitled “Distinguishing Medical Device Recalls from Product Enhancements and Associated Reporting Requirements.” (Docket No. FDA-2013-D-0114) (Draft Guidance). The purpose of the Draft Guidance, according to FDA, is to “clarify when a change to a device constitutes a medical device recall, to distinguish those instances from product enhancements that do not meet the definition of a medical device recall, and to identify the associated regulatory reporting requirements for each.” (Draft Guidance, lines 90-93)

The Draft Guidance applies only to voluntary recalls, whether they are commenced by the manufacturer on its own initiative or as the result of a formal request by FDA, as opposed to mandatory recalls. Mandatory recalls are governed by the Food, Drug and Cosmetic Act (the “FDCA”), 21 U.S.C. §360h. Voluntary recalls are governed by related regulations found at 21 CFR, part 7.

The distinction between whether an action constitutes a “recall” or a “product enhancement” is significant, because product recalls necessitate submission of a correction and removal report (also known as an “806 report”) to FDA (if the violation at issue may present a risk to health), often generate negative publicity, could damage the company’s reputation with customers, could reduce revenue of the product line or lines associated with the recall, and could have implications in subsequent lawsuits. What medical device companies previously viewed as improvements could now be considered recalls in some circumstances. Changes to products that constitute recalls can range from labeling changes to updates to instructions for implantation to component substitutions.

The regulations define a “recall” as “a firm’s removal or correction of a marketed product that the Food and Drug Administration considers to be in violation of the laws it administers and against which the agency would initiate legal action, e.g., seizure. Recall does not include a market withdrawal or a stock recovery.” 21 CFR § 7.3(g). A “market withdrawal,” in turn, is defined as “a firm’s removal or correction of a distributed product which involves a minor violation that would not be subject to legal action by the Food and Drug Administration or which involves no violation, e.g., normal stock rotation practices, routine equipment adjustments and repairs, etc.” 21 CFR § 7.3(j). A “stock recovery” is “a firm’s removal or correction of a product that has not been marketed or that has not left the direct control of the firm.” 21 CFR § 7.3(k).

The regulations do not define “product enhancement.” The Draft Guidance provides the following definition: “For purposes of this guidance document, product enhancement means a change or improvement to a non-violative device as part of continuous device improvement activities.” (Draft Guidance, lines 138-140) According to FDA, product enhancements include “changes designed to better meet the needs of the user, changes to make the product easier to manufacture, and changes to the appearance of the device that do not affect its use. A product enhancement is both (1) a change to improve the performance or quality of a device, and (2) not a change to remedy a violation of the [FDCA] caused by the device.” (Draft Guidance, lines 140-6)

Distinguishing between a product enhancement and a recall can be difficult. Essentially, FDA states that an action does not constitute a recall unless it is a change to a marketed medical device that addresses a violation of the FDCA. The changes could be to “1) the device design; 2) the manufacturing process; 3) the device labeling . . . . (including updating the labeling of a distributed product); and 4) marketing practices (e.g., a removal of the device from the market).” (Draft Guidance, lines 185-189).

FDA provided an example of a product enhancement and a recall relating to an approved implantable device that contained a battery with an estimated battery life of five years under normal conditions of use. A change to a new battery that extended the battery life to five and one-half years under normal conditions would constitute a product enhancement, not a recall. Similarly, including a new battery from a new supplier with a six-year battery life because the prior battery is obsolete would be a product enhancement rather than a recall. In contrast, FDA provided an example when a change would not be a product enhancement but rather a recall. Under the Draft Guidance, when a device manufacturer with two battery suppliers with an aggregate life of five years determines that the battery from one supplier is found to have a lifespan of four years rather than the specified five years due to manufacturing issue. Those devices that contained the battery that prematurely depleted would be subject to a recall even though the device as a whole had an average battery life of five years. (Draft Guidance, line 238)

Whether the change is made to correct a violation of the FDCA is not always clear. The Draft Guidance provides that, generally, devices that fail to meet specifications or fail to perform are considered “adulterated” and therefore violative of the FDCA. Changes to correct those failures would constitute recalls, according to the Draft Guidance. (Draft Guidance, lines 219-223). Similarly, the Draft Guidance provides that devices that are mislabeled or provide inadequate directions are considered misbranded under and therefore violative of the FDCA. As such, according to the Draft Guidance, corrections to false or misleading labels, which include pamphlets, instruction books, direction sheets, and websites, would constitute recalls. (Draft Guidance, lines 244-260.).

Of significant note is the statement in the Draft Guidance that even a product enhancement that does not constitute a recall may be reportable. (Draft Guidance, lines 260-263, 415-429). FDA provides the following examples of changes that do not qualify as recalls but nevertheless must be reported through an 806 report because they were “initiate[d] to reduce a risk to health posed” by the device: addition of new warnings to a label in order to reduce a health risk, a manufacturing change to reduce likelihood of contamination of a sterile device, and a “design change to improve a product’s safety profile.” (Draft Guidance, lines 415-429)

In short, the Draft Guidance provides that if “the result of [the manufacturer’s] assessment indicates that the change is made to a violative marketed device to bring it into compliance with the laws administered by FDA, then the change would most likely constitute a medical device recall.” (Draft Guidance, lines 267-269). Many updates that may not appear to be recalls could be interpreted as such, which would subject companies to more stringent requirements. Medical device manufacturers’ marketing, research and development, regulatory, quality assurance, and legal departments, among others, must be mindful of whether changes to their products or labeling could constitute recalls so they can ensure that they follow all of the procedures for recalls.

The FDA invited comments on the Draft Guidance. To date, seven public comments have been made available. Three of those comments were submitted by the industry, while the other four were submitted by individuals. While the substance of the comments varies, the comments generally raised the following concerns about the Draft Guidance’s:

creation of additional and potentially burdensome reporting requirements for product enhancements;
definition of “product enhancement,” including that it is potentially subjective, which could lead to inconsistent interpretation by industry and FDA;
discrepancies between definitions included in the guidance and those provided in the established regulations;
inclusion of the term “product enhancement” in the definitions of “correction” and “removal,” which potentially and incorrectly could equate a product enhancement with a recall;
absence of definitions of “violation” and “violative device,” which definitions would assist manufacturers in determining whether an action is a recall or an enhancement;
imposition of definitions and reporting requirements through a draft guidance rather than the rulemaking process;
lack of clarity in the example and flow chart included in the guidance and the scope of devices covered by the guidance document; and
eliminating the manufacturer’s discretion in determining whether an action is a recall or an enhancement.

Please contact us if you would like more information about the Draft Guidance or submitted comments.

Laura C. Conway, Esq.

Counsel, Porzio, Bromberg and Newman, P. C.

Manager, Regulatory and Compliance Services, Porzio Life Sciences, LLC

Stephen C. Matthews, Esq.

Principal, Porzio, Bromberg and Newman, P. C.

CMS Is Accepting Comments on the Revised Templates for Data Collection and Submission of Reports Required by the Sunshine Act

2013-05-21T11:43:18-04:00

As previously reported on Pharmaspective, the Centers for Medicare and Medicaid Services (CMS) recently posted on its website revised templates for data collection and submission of reports required by the Transparency Reports and Reporting of Physician Ownership or Investment Interests section of the Patient Protection and Affordable Care Act, commonly referred to as the “Sunshine Act.” The Sunshine Act requires applicable manufacturers of covered drugs, devices, biological products, and medical supplies to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires applicable manufacturers and group purchasing organizations (GPOs) to report all ownership and investment interests held by physicians or members of their families. As set forth in the final regulations, applicable manufacturers and GPOs must begin data collection on August 1, 2013, and must file their first reports on March 31, 2014.

CMS is currently accepting comments on the following revised templates:

General Payments (Non-Research) Template;
Physician Ownership Template; and
Research Payment Template.

To be assured consideration, comments and recommendations must be received no later than 5 p.m. on June 3, 2013, at the following electronic address:

Office of Management and Budget

Office of Information and Regulatory Affairs

Attention: CMS Desk Officer

Fax Number: (202) 395-6974

Email: OIRA_submission@omb.eop.gov.

CMS Will Hold a Conference Call on Wednesday, May 22 to Discuss the National Physician Payment Transparency Program

2013-05-10T09:56:57-04:00

By Nancy A. Henshaw

The Centers for Medicare and Medicaid Services (CMS) is continuing its efforts to inform interested parties on its National Physician Payment Transparency Program (Program). The Program implements the Transparency Reports and Reporting of Physician Ownership or Investment Interests section of the Patient Protection and Affordable Care Act, commonly referred to as the “Sunshine Act.” The Sunshine Act requires applicable manufacturers of covered drugs, devices, biological products, and medical supplies to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires applicable manufacturers and group purchasing organizations (GPOs) to report all ownership and investment interests held by physicians or members of their families.

On Wednesday, May 22, 2013, CMS will hold a conference call to discuss the Program. The target audience for this conference call are physicians and teaching hospitals. The conference call will provide an overview of the final regulations, a review of key dates for the Program, the role of physicians and teaching hospitals in the Program, and resources available to physicians and teaching hospitals.

As defined in the final regulations, a “teaching hospital” is “any institution that received a payment under 1886(d)(5)(B), 1886(h), or 1886(s) of the Act during the last calendar year for which such information is available.” CMS recently posted the list of teaching hospitals on its National Physician Payment Transparency Program: Open Payments website. This list identifies hospitals that are considered “teaching hospitals” under the Sunshine Act. Additionally, for the purposes of the Sunshine Act, the term “physician” includes the following practitioners who are legally authorized to practice by the State in which they practice:

Doctors of Medicine
Doctors of Osteopathy
Dentists
Podiatrists
Optometrists
Chiropractors

The conference call will be held on Wednesday, May 22nd from 2:30 to 4:00 p.m. Interested parties may register for the conference call by visiting CMS’ website:

http://goo.gl/0bg8T

CMS has indicated that the presentation for the conference call will be posted on its website at least one day prior to the call, and will be emailed to registrants on the day of the call.

CMS Posts Revised Templates For Data Collection and Submission of Reports Required By the Sunshine Act

2013-05-08T08:28:13-04:00

By Rachael Garrison

The Centers for Medicare and Medicaid Services (CMS) is continuing its efforts to quickly implement the Transparency Reports and Reporting of Physician Ownership or Investment Interests section of the Patient Protection and Affordable Care Act, commonly referred to as the “Sunshine Act.” The Sunshine Act requires applicable manufacturers of covered drugs, devices, biological products, and medical supplies to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires applicable manufacturers and group purchasing organizations (GPOs) to report all ownership and investment interests held by physicians or members of their families.

On February 1, 2013, CMS announced the release of the final regulations implementing Sunshine Act. CMS also released proposed templates for data collection and submission of reports required by the Sunshine Act. Interested parties were permitted to submit comments on the proposed templates by April 9, 2013. CMS recently posted on its website the following revised templates for data collection and submission of reports required by the Sunshine Act:

General Payments (Non-Research) Template;

Physician Ownership Template; and

Research Payment Template.

In addition to the revised templates, CMS also posted a “Revisions Crosswalk” document, which outlines the changes and additions that were made to the proposed templates and the reason for such changes and additions. Although the revised templates are currently undergoing final clearance, CMS has indicated that it intends to use the revised templates for 2013 data collection. As set forth in the final regulations, applicable manufacturers and GPOs must begin data collection on August 1, 2013, and must file their first reports on March 31, 2014.

CMS Publishes List of Teaching Hospitals Subject to Reporting Under the Sunshine Act

2013-05-07T09:33:16-04:00

By James E. Squier

As defined in the final regulations, a “teaching hospital” is “any institution that received a payment under 1886(d)(5)(B), 1886(h), or 1886(s) of the Act during the last calendar year for which such information is available.” In order to assist applicable manufacturers in identifying teaching hospitals, CMS stated that it will publish a list “at least 90 days before the beginning of the reporting year, or for the first reporting year, at least 90 days prior to the start of data collection.” As set forth in the final regulations, applicable manufacturers must begin data collection on August 1, 2013, and must file their first reports on March 31, 2014.

CMS recently posted the list of teaching hospitals on its National Physician Payment Transparency Program: Open Payments website. This list identifies hospitals that are considered “teaching hospitals” under the Sunshine Act. This list is to be used for payments and transfers of value made in 2013, to be reported to CMS by March 31, 2014. The teaching hospital list will assist applicable manufacturers in determining which payments must be reported and provides address information and a tax ID for each hospital. For future reporting years, a list of teaching hospitals will be posted on October 1st of each year.

In addition to the list of teaching hospitals, CMS has also updated its website to include a “Key OPEN PAYMENTS Activities” section. The section identifies ten key activities “that must happen on time so that 2013 OPEN PAYMENTS program cycle is successful” and information about the status of each. With respect to the report templates, CMS states that the 2013 reporting period data collection templates “are currently undergoing final public and federal clearance and therefore are subject to change. We anticipate that any changes that may arise will be minimal, and should not impact applicable manufacturer’s and applicable GPO’s ability to establish internal systems necessary to adhere to the OPEN PAYMENTS submission requirements.” Templates for future reporting periods will also be posted on October 1st of each year.

Musings From TEDMED 2013

2013-04-23T11:42:09-04:00

By Scott S. Liebman

TEDMED is some creative combination of industry conference, Broadway production, nerd fest (me included), and health food store. The marble walls; the bright red carpet; the bronze bust of JFK at the Center for Performing Arts named in his honor: I felt like a tourist at the registration table. That feeling, however, subsided as soon as I entered The Hive—the designated social and exhibit area set up to buzz with the community’s brainpower and energy. After two and a half days, I rode the Acela home to New York City feeling not only that I experienced healthcare innovation in progress, but also that I had uncovered an urgent demand for greater problem solving in healthcare-aligned industries like my own.*

If it isn’t clear from the line-up of influential professionals, let me emphasize that TEDMED is all about the people. This concept hit home for me when I realized that, at a restrictive 15-20 minutes, the presentations by impressive, accomplished thinkers for their equally ambitious and effective audiences seemed to have been processed into intellectual junk food. But the concentration of all these overall great people makes the conversations that take place in the hallway, inside The Hive, at dinner, and even on the walk back to the hotel truly remarkable. Brilliant. Inspiring. I am not the first to make this observation. TEDMED calls this unstructured but invaluable meld of delegates the “unexpected connections.” Admittedly, I laughed when I saw that tagline, but, in all frankness, my experience validates its premise.

Among the all-star scientists and caregivers, I still found a void in the conference. Actually, it was more of a missing link. Laws and regulations so often mold the healthcare system, especially with the ongoing implementation of the Patient Protection and Affordable Care Act (PPACA). Yet, the PPACA was barely discussed, if at all. TEDMED has done a stellar job providing a public platform for healthcare innovation. But from my experience in the compliance industry, I know that innovation can only work with the support of and within the confines of laws and regulations. Now, more than ever, PPACA is necessitating structural innovation. There was no discussion of Accountable Care Organizations or Healthcare Insurance Exchanges, which are just two areas in need of major innovation. In fact, they are in their infancy and require the smartest and best minds of our generation—the TEDMED Community—to invest time and energy. Both of these areas will have significant impact on the American healthcare system. If we get these wrong, the consequences will be far and wide; but if we get them right, we will all benefit. These areas require innovation that would affect everyone at the Kennedy Center for TEDMED and many that watched from home.

On the train back home, while I thought about all I had experienced in my half-week long trip to a healthcare-industry oasis, a fellow TEDMEDster asked if I would attend next year. The answer: yes. For one reason and one reason only: the people.

* For substantive comments or great ideas presented at TEDMED 2013, follow my Twitter feed @ScottLiebmanPLS.

CMS Is Accepting Comments on the Proposed Templates for Data Collection and Submission of Reports Required By the Sunshine Act

2013-04-04T15:28:58-04:00

By Monica Aurelien

On February 1, 2013, the Centers for Medicare and Medicaid Services (CMS) announced the release of the final regulations implementing the Transparency Reports and Reporting of Physician Ownership or Investment Interests section of the Patient Protection and Affordable Care Act, commonly referred to as the “Sunshine Act.” The Sunshine Act requires applicable manufacturers of covered drugs, devices, biological products, and medical supplies to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires applicable manufacturers and group purchasing organizations (GPOs) to report all ownership and investment interests held by physicians or members of their families. As set forth in the final regulations, applicable manufacturers and GPOs must begin data collection on August 1, 2013, and must file their first reports on March 31, 2014.

In addition to the final regulations, CMS also released the following proposed templates for data collection and submission of reports required by the Sunshine Act:

Non-research Payment Template;
Physician Ownership Template; and
Research Payment Template.

CMS is currently accepting comments on the proposed templates. Interested parties may submit their comments electronically to:

http://www.regulations.gov/#!documentDetail;D=CMS-2013-0052-0001

Comments may also be submitted via regular mail to the following address:

CMS, Office of Strategic Operations and Regulatory Affairs
Division of Regulations Development
Attention: Document Identifier/OMB Control Number CMS – 10419
Room C4–26–05
7500 Security Boulevard
Baltimore, Maryland 21244–1850

Comments must be submitted by April 9, 2013, to assure consideration.

OPDP Restructures Again: Promotional Review By Therapeutic Area Instead of Audience

2013-03-11T13:51:06-04:00

By Kim C. Capone

According to a recent FDA announcement, the Office of Prescription Drug Promotion (OPDP) is restructuring its review process. OPDP currently reviews and analyzes its workload and review processes through two divisions: the Division of Consumer Drug Promotion, and the Division of Professional Drug Promotion. According to the March 8 announcement, pending final approval, OPDP will rename and restructure its divisions to oversee different therapeutic classes of drugs.

The divisions will be renamed and organized as follows:

The Division of Advertising and Promotion Review I:

- Neurology, Psychiatry

- Hematology/Oncology (blood cancers)

- Oncology (solid tumors)

- Analgesics, Anesthetics, Antivirals

The Division of Advertising and Promotion Review II:

- Osteoporosis, Reproductive, Urology

- Dental, Dermatology, Metabolic & Endocrine

- Allergy, Gastroenterology, Pulmonary, Rheumatology

- Anti-Infective, Cardiovascular, Medical Imaging,

- Ophthalmology, Renal, Transplant

According to Janet Woodcock, Director of the Center for Drug Evaluation and Research (CDER), "As a way to distribute the work evenly, each division will oversee different therapeutic classes of drugs. These changes will allow OPDP to review direct-to-consumer (DTC) and health professional advertising more effectively."

Minnesota Legislature Proposes to Repeal the Annual Disclosure Requirement for Wholesale Drug Distributors and Manufacturers

2013-03-06T14:08:20-05:00

By Jenna Gervasio

Minnesota law [Minn. Stat. § 151.47(f)] currently requires wholesale drug distributors and manufacturers to report annually to the Minnesota Board of Pharmacy (Board) all "payments, honoraria, reimbursement or other compensation" permitted under the gift prohibition statute and provided to practitioners during the previous calendar year. On March 5, 2013, the Minnesota Senate introduced Senate Bill 1081 (SB 1081), which would repeal this section of the law.

The introduction of SB 1081 comes almost two months after the Board indicated in a letter that it will not require wholesale drug distributors and manufacturers to submit annual disclosure reports for the 2012 calendar year. The Board’s letter noted that the Sunshine Act provisions of the federal Patient Protection and Affordable Care Act (Sunshine Act) preempts state laws that require manufacturers to report the same information required by the federal law. Since the Board requires wholesale drug distributors and manufacturers to report most of the information required by the Sunshine Act, the Board indicated that it will not require these entities to report data for the 2012 calendar year. In this letter, the Board also noted that it intended to ask the Minnesota Legislature to repeal section 151.47(f) of the law.

SB 1081 would not repeal the gift ban [Minn. Stat. § 151.461], which prohibits wholesale drug distributors and manufacturers from offering or giving any gift to a practitioner in excess of $50 per calendar year.

On Friday, February 1, 2013, the Centers for Medicare & Medicaid Services (CMS) announced the much anticipated release of the final regulations implementing the Sunshine Act. The Sunshine Act requires applicable manufacturers of covered drugs, devices, biological products, and medical supplies to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires applicable manufacturers and group purchasing organizations (GPOs) to report all ownership and investment interests held by physicians or members of their families. As set forth in the final regulations, applicable manufacturers and GPOs must begin data collection on August 1, 2013, and must file their first reports on March 31, 2014.

Understanding the Global Transparency Landscape: The Beginning of An Ongoing Journey

2013-02-25T09:30:48-05:00

By Brian P. Sharkey

The quest for transparency in the relationships between life sciences companies and healthcare professionals has become a global movement, as companies are beset by a multitude of obligations designed to make public their interactions with their customers. Effectively managing those obligations while concurrently ensuring compliance with the growing body of international transparency requirements and anti-corruption legislation is a significant challenge to the continued growth and success of life sciences companies.

For a number of years, pharmaceutical companies doing business in the United States have dealt with a host of states that impose limits and reporting obligations on interactions with healthcare professionals. Device companies were brought into the fray more recently when several states expanded the applicability of their laws. However, the past two years have seen the rise of transparency challenges throughout the world. Two countries, France and Slovakia, have enacted laws similar to the US Sunshine Act. In other countries, reform is taking place through industry codes enacted by the relevant industry association. Pharmaceutical industry codes including reporting requirements have been enacted in a number of countries, including, significantly, the Netherlands, the United Kingdom, Japan, and Australia. The transparency trend has not affected the medical device industry as much yet, as medical device industry associations have yet to impose reporting requirements in their codes.

It is widely anticipated that numerous countries will join this growing trend. The key question for the life sciences industry is whether reporting requirements will be imposed through governmental action or voluntary industry self-regulation. Although a self-regulatory solution would likely be more consistent and efficient than a plethora of disparate legislative obligations, in either case it is imperative for life sciences companies to monitor which approach is adopted in individual countries and regions.

Another transparency challenge facing the life sciences industry is the burgeoning body of anti-corruption laws. Although these laws are distinct from the transparency codes and laws, in no small part because violations can lead to criminal penalties, anti-corruption laws relate to transparency requirements in two ways: 1) both are aimed at rooting out corruption and reducing the cost of doing business; and 2) the increase in transparency reporting can provide ammunition to prosecutors in seeking indictments.

The purpose of this post is not to explore these global challenges; rather, it is to introduce these issues to our loyal readers and outline how we will be addressing them going forward. We envision periodic posts about these types of global compliance issues –for example, we may highlight the transparency requirements in Australia’s pharmaceutical industry code; or discuss the United Kingdom’s Bribery Act; or analyze Eucomed’s White Paper on transparency issues. Unfortunately for companies in the life sciences industry, the possibilities for topics that we can cover is endless. We intend to do our best to span the globe and keep you informed about the latest news and trends in this evolving area, and we welcome your feedback about how you may dealing with these challenges.