Life Science Compliance Update

April 21, 2015

FDA Acting Commissioner Ostroff Addresses the "State of the FDA"


The 2015 FDLI Annual Conference kicked off yesterday in Washington, DC. The conference hosted a variety of impressive speakers from the Food and Drug Administration, as well as FDA lawyers and in-house counsel. Dr. Stephen Ostroff, the Acting Commissioner at FDA, spoke as the conference's keynote speaker. After congratulating previous Commissioner Margaret Hamburg on an impressive tenure as FDA Commissioner, Ostroff ran through a long list of recent FDA accomplishments--"hitting the highlights," as he called it. Following Ostroff's address, a panel of industry experts provided a "to do list" for the agency for the coming year.

State of the FDA

First, Ostroff acknowledged the "extraordinary number of new approvals," by FDA in 2014, which included 51 new molecular entities and biological products--41 from CDER and 10 from CBER. Ostroff was especially impressed with the broad scope and significance of the products. Indeed, last year saw numerous revolutionary treatments for cancer, Hepatitis C, Type 2 Diabetes, as well as a meningococcal vaccine. Seventeen of these new treatments were “first in class,” and almost two-thirds were approved in the U.S. before receiving approval abroad.  Ostroff noted that many of these new products targeted specific characteristics of patients, exemplifying President Obama’s State of the Union call for “precision medicine.”

Second, Ostroff discussed FDA's approval of products to treat serious disease or that address unmet needs. “We have effectively employed expedited review programs including priority review, fast track, accelerated approval, and the much touted breakthrough therapy designation,” he stated. “Fully two-thirds of the new drugs approved last year took advantage of at least one of these programs.” The breakthrough therapy program has been surprisingly popular--FDA received 246 requests for breakthrough designation and granted 71, Ostroff noted.

Ostroff next spoke to FDA's Expanded Access program. Earlier this year, FDA streamlined the application procedures for expanded access, and last week, the Center for Devices and Radiological Health (CDRH) launched a similar expedited access program for devices.

The fourth area Ostroff listed was the agency’s reaction to the 2012 fungal meningitis outbreak concerning oversight of compounding pharmacies. Congress enacted the Drug Quality and Security Act in 2013.  “Since then, we have made great progress in implementing the provisions of DQSA,” stated Ostroff, who noted that the agency has issued three final guidances, ten draft guidances, and one proposed rule. FDA has also conducted over 140 inspections of compounders, issuing approximately 40 warning letters, and are working with the Department of Justice on civil and criminal enforcement actions, according to Ostroff.

Fifth, Ostroff stated that FDA has been focusing on more diverse clinical trial participants. They recently issued a guidance document on the “Evaluation of Sex-Specific Data in Medical Device Clinical Studies,” and are working “to promote clinical trial participation by women and minorities.” They have also posted Drug Snapshots about the age, race, and sex of participants in clinical studies of new drugs,” stated Ostroff.

Ostroff next addressed the first biosimilar approval—what he called a "game changer." In reference to Zarzio, a biosimilar to Neupogen, Ostroff noted: “Although this is the first, there will certainly be more to come, even as we work to educate the public and providers about this new category of products.”

Seventh, Ostroff spoke about antimicrobial resistance. President Obama’s National Strategy on Combating Antibiotic Resistant Bacteria, also known as the CARB, is intended to “ensure that the miracle drugs developed over the last 80 years will remain available and effective for future generations,” Ostroff stated. Last year FDA approved four novel antibiotics for several categories of infections. “As a comparison, just five new antibiotics had been approved in the previous ten years,” said Ostroff.

Opioid abuse was another highly publicized subject the FDA has worked to mitigate. “Interest in producing abuse-deterrent formulations has risen dramatically,” stated Ostroff. FDA has already received around 30 investigational new drug applications from manufacturers seeking to conduct clinical trials on potential abuse-deterrent formulations. “Recent steps taken by FDA include approval of an auto-injector form of naloxone to treat overdoses, which took the agency a mere 15 weeks from application to approval. Just recently, the agency issued final guidance on development of abuse-deterrent opioid formulations,” Ostroff stated.

Ninth--and finally on the drug and device side--Ostroff noted that FDA played a “critical, although somewhat unsung, role in the response” to Ebola, he stated, “involving more than 200 people across the agency, including several dozen deployed FDA commissioned officers to provide care in Liberia.”

Ostroff also noted accomplishments on the food and tobacco side, including the Food Safety Modernization Act. 

“We live in an era of unprecedented innovation in pharmaceuticals, diagnostics, medical devices, and food and nutrition science,” stated Ostroff.  “This innovation offers unprecedented opportunities to advance and improve public health.” He concluded: “It is essential that we at FDA keep pace with these changes, especially the evolving science that underpins them, in order to fulfill our regulatory responsibilities effectively and efficiently.”

FDA To Do List

Ostroff was followed by a group of experts who offered their predictions—or hopefuls—for FDA’s keynote at next year’s 2016 FDLI Conference.

Geoff Levitt, Senior VP & Associate General Counsel, Regulatory & Policy, at Pfizer applauded FDA on a successful 2014. In terms of future priorities for the agency, he responded that FDA must “acknowledge that there has been a paradigm shift in the information environment for medical products.” There are two key trends, Levitt states. One is the fact that control of information about the safety, efficacy, and value of medical products has moved away from FDA and sponsors toward academia, media, and payors. Second, Levitt noted that FDA should acknowledge broader and more diverse categories of data beyond the traditional adequate and well-controlled definition to include real world data and meta-analysis, for example. Levitt suggests that FDA continue to participate even more actively in setting quality standards to ensure that data from these sources is as reliable and comparable as possible. Levitt also calls for FDA to update the rules on communication to allow sponsors—who are uniquely restricted—to contribute their distinct knowledge on their own products.

Levitt also discussed FDA’s first biosimilar approval. He noted that FDA’s initial draft guidance stated that biosimilar labeling should include all information necessary for healthcare professionals to make fully informed decisions, including a clear statement that the product is an approved biosimilar and other pertinent clinical data for that product. He stated that the most recent approval did not include this information and, without arguing for any particular side, called for FDA to put forth reasoned decision-making through a transparent review process. FDA has promised guidance on biosimilar labeling this year. 

Sheila Hemeon-Heyer, President at Heyer Regulatory Solutions, LLC, spoke to the importance of streamlining the path to market for low risk devices. She noted that while the premarket approval pathway is appropriate for high-risk products, the vast majority of devices are very low risk and in many cases are handled with a “heavy stick,” where the FDA-required testing “far exceeds the risk of the product." 

Hemeon-Heyer also argued that the 510(k) process is “outliving its tenure.” It is increasingly difficult to demonstrate substantial equivalence, she states, for the “98-99 percent of all medical devices” that are low risk. In today's innovative environment, products can be low risk, but utilize technology for which there is no predicate. To avoid the onerous de novo process, however, companies in such a case may have to artificially find a substantially equivalent product on which to base their 510(k) application. Hemeon-Heyer concluded that products should be regulated based on their risk level, not necessarily on finding a predicate, and that changing this regulatory process would put the U.S. in line with the rest of the world.

Marta Villarraga, PhD, Principal in Exponent’s Biomechanics practice, spoke to the importance of a public and private partnership to promote bringing safer, cost effective devices to market. She specifically referenced the Medical Device Innovation Consortium (MDIC), which seeks to “coordinate the development of methods, tools, and resources used in managing the total product life cycle of a medical device to improve patient access to cutting-edge medical technology.” 

It will be interesting to follow FDA’s activity throughout 2015, and to see what trends make their way into the 2016 keynote presentation.  


April 20, 2015

Obama Signs SGR Repeal Legislation; Value-Based Payment Model Comes Into Full Force in 2019


On Thursday, April 16, President Obama signed into law the legislation ending and replacing the Sustainable Growth Rate (SGR) Formula, which would have reduced Medicare physician payments by 21 percent. Perhaps foreshadowing the dawn of a new age of physician reimbursement, Obama signed the bill outside on a beautiful spring day.  

Late Tuesday, the Senate voted 92-8 to approve the legislation. The American Medical Association (AMA) responded favorably to the news, stating that the bill, entitled the Medicare and CHIP Reauthorization Act (MACRA), “will ensure access to care for seniors, military personnel and their families, children and low income adults.” The Act “once and for all gets rid of the flawed [SGR] formula that has plagued the health care system for more than a decade, paving the way for physicians to implement new delivery and payment reforms that will improve quality of care and reduce costs.”

Under SGR, Medicare’s budget was calculated by linking Medicare spending to economic growth. However, once health care costs began rising faster than the growth of the economy, physicians were at continual risk for cuts to their reimbursements. For over a decade Congress passed temporary “doc fixes” to keep the reimbursements steady. The new legislation eliminates the need for repeated fixes by repealing the SGR law and replacing it with a new system that eventually ties payments to participation in value-based payment models. Most of the changes are not slated to take effect until 2019. Doctors will receive an annual update of 0.5 percent in each of the years 2015 through 2019.

In 2019, the payment models change significantly. The National Review summarizes the value-based goals:

The heart of the bill is a new, two-tiered indexing system for physician fees. Physicians who agree to participate in Medicare Accountable Care Organizations (ACOs)--or in similar alternative payment models--will receive a permanent 0.75 percent increase in their fees each year. Physicians that don’t join an ACO will be placed into the “Merit-Based Incentive Payment System,” or MIPS. On average, physicians in MIPS will receive a payment increase of 0.25 percent every year — far below the annual payment increase for physicians in ACOs.

Merit-Based Incentive Payment System (MIPS)

In addition to MACRA's payment incentives to encourage providers to participate in alternative payment models--like medical homes, accountable care organizations, and bundled care--the law introduces the concept of the Merit-Based Incentive Payment System for physicians not in these alternative models. MIPS “consolidates the three existing incentive programs, continuing the focus on quality, resource use, and meaningful electronic health record (EHR) use with which professionals are familiar, but in a cohesive program that avoids redundancies,” states the House Bill explainer.

Under MIPS Medicare’s current quality reporting programs will be streamlined and simplified into one merit-based incentive payment system, referred to as “MIPS.” This consolidation will reduce the aggregate level of financial penalties physicians otherwise could have faced. The three programs contemplated by the bill to be consolidated into the MIPS are:

  • The Physician Quality Reporting System (PQRS), which incentivizes professionals to report on quality of care measures through a combination of incentive payments and negative payment adjustments (View CMS's page on PQRS here);
  • The Value-Based Modifier (VBM) Program, which adjusts payment based on performance on PQRS quality measures (and Medicare cost data), though the value modifier (VM) is a separate adjustment from the PQRS payment adjustment (CMS's page here); and
  • "Meaningful Use" of EHRs, which stipulates certain requirements in the use of certified EHR systems (Health IT's page here).

Under MACRA, starting in 2019, payments will be adjusted based on provider performance in the MIPS, rather than the above individual programs. Each year, HHS will establish a list of MIPS quality measures through rulemaking. Eligible professionals will be assessed in four performance categories, namely:

  • Quality (using measures from existing quality programs and new ones developed by professional organizations);
  • Resource use, using measures developed by the current VBM program;
  • EHR ‘meaningful use’ (using requirements established under current regulation); and,
  • A new component, “clinical practice improvement activities,” which “gives credit to professionals working to improve their practices and facilitates future participation in APMs.”

Professionals will receive a “composite performance score” based on their performance in each of the above categories. 

As noted above, the MIPS quality measures will be fleshed out in rulemaking--and here is where the rubber will hit the road for the future of healthcare delivery. Matching up the proper incentives with the most cost-effective quality care is a topic for another day. 

Several interesting articles have been written about what quality metrics should dictate payments to physicians. The Wall Street Journal's "What Measures Should Be Used To Evaluate Health Care?" provides a variety of viewpoints about the best measures for patient care. 


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