Life Science Compliance Update

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May 12, 2017

MedPAC Discussed Medical Devices at April Meeting


During the Medicare Payment Advisory Commission (MedPAC) April meeting, Commissioners discussed the medical device market. Since the medical device market is not a primary focus of the Commission, MedPAC staff made sure to introduce statistics on the industry at the beginning of their presentation. The discussion on possible policy changes revolved around four issues: unique device identifiers (UDIs); gainsharing; price transparency; and physician-owned distributorships (PODs). While no immediate action is expected from the Commission, commissioners were generally in favor of considering policy changes in all four areas, especially with respect to implantable medical devices (IMDs).

During the discussion, Commissioner Rita Redberg, Professor of Clinical Medicine at the University of California of San Francisco, took a sharp tone, stating that the United States “uses more devices and pays more for them” than comparable industrial countries. One reason for that dilemma, she explained, was the slow approval process at the Food and Drug Administration (FDA) and the Medicare requirement for randomized controlled trials before devices hit the market. She noted that post-market trials were a good idea to speed the process, but that more data was needed on the devices’ failure rate and their impact on health outcomes.

The language used by Commissioners against PODs was consistent and vigorous, as Commissioners took issue with their general existence. Commissioner Warner Thomas of Oschner Health System urged the Commission to take a “harder approach” on PODs and noted that he could see no way that they were helpful for the program or beneficiaries. Commissioner Jack Hoadley of the Health Policy Institute at Georgetown University summed up the Commission’s thoughts by saying that “many of us are wondering if there’s any good reason for PODs to exist.” Chairman Jay Crosson, a former executive at Kaiser Permanente, said that addressing PODs may be “one of the easier areas” to address through MedPAC.

While the Commissioners did not like PODs, they were generally supportive of an increased use of UDIs, though they did not endorse a particular method. Chairman Crosson said that “bang for buck” will be an important consideration going forward. Vice Chairman Jon Christianson of the University of Minnesota said that UDI was a “quality issue” and that it was “clear” that the Commission needed to find a way to connect Medicare and the medical device industry.

Commissioners also largely endorsed the notion of aligning incentives for physicians and hospitals in device procurement, with Chairman Crosson saying that the Commission should “make suggestions on how it could be improved.” In addition, Commissioner Thomas said that Commission should consider a 340B program for medical devices similar to the current program that allows certain hospitals to purchase drugs at a discounted rate.

Chairman Crosson and Executive Director Mark Miller also noted their belief that the Commission could focus on the IMD market, given the costs involved. Commissioner Paul Ginsburg of the Brookings Institution said that price transparency would depend on the concentration of the market and that MedPAC should explore whether Medicare can collect price data and share it confidentially to hospitals and providers. He also endorsed mandatory warranties from manufacturers to help offset costs for hospitals dealing with the fallout of failed devices.

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