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CMS’ Proposed Rule on 'Breakthrough' Medical Devices Builds on a Flawed System

A proposed rule by the CMS would accelerate Medicare’s coverage and payment for FDA-designated breakthrough medical devices, likely increasing Medicare spending for medical devices that provide little to no value for patients and may even cause harm. This rule only builds on the already flawed U.S. medical device approval and payment system, which often approves and pays for medical devices without rigorous evidence on their value or effects on patients.

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On August 31, 2020, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that paves the way for quicker Medicare coverage of Food and Drug Administration (FDA)-designated breakthrough medical devices. The FDA breakthrough devices program is designed to speed the review and market approval of devices that treat life-threatening or debilitating conditions. In doing so, the program further loosens the already low evidence standards for medical devices, which have a history of resulting in ineffective, and sometimes even unsafe, devices being used by patients.

Under this proposed rule, Medicare would cover and pay for these breakthrough medical devices for four years beginning immediately upon FDA approval, during which time the device-makers would only be “encouraged” to voluntarily study how their medical device affects Medicare beneficiaries. Device companies argue that this change will expedite beneficiary access to innovative devices. However, payers argue that it will result in a less rigorous coverage process. There is reason for patients, taxpayers, and payers to be concerned.

When deciding whether to cover and pay for a device, payers should consider the value a new medical device offers to patients. FDA approval is not an indication of value. The FDA process for medical devices is rife with low evidence standards and loopholes for device-makers to gain market approval for devices that are ineffective compared to current treatments, and may even be harmful to patients.

The proposed rule would build on to this flawed system and extend the lack of stringent review to Medicare coverage decisions. Based on CMS’ own estimates, this could lead to Medicare paying up to $291.5 million in fiscal year 2021 and up to $2.04 billion in fiscal year 2024 for devices whose benefit for Medicare patients is unclear. Unfortunately, paying for medical devices that lack rigorous evidence is par for the course due to FDA’s approval process.

The FDA Approval Process Allows for the Approval of Low-Value Medical Devices

In order for device-makers to market their products in the U.S., medical devices first need to be approved by the FDA. The FDA classifies medical devices into approval pathways based on the level of risk to patients. Low-risk devices, such as bandages, can be reasonably approved based on limited evidence. However, FDA’s approval process allows even moderate- and high-risk medical devices, such as implants or life-sustaining devices like pacemakers or heart valves, to be approved on limited clinical evidence through the 510(k) and Premarket Approval (PMA) approval pathways.

For many moderate-risk or even some high-risk devices using what is known as the 510(k) approval pathway, device-makers do not have to demonstrate that a specific device is safe or effective for patients. Manufacturers only have to prove that the device is “substantially equivalent” to an existing device already on the market, called a predicate device, which is chosen by the device-maker. In some cases, predicate devices can be based on devices first approved more than 40 years ago — prior to when the FDA started requiring evidence of safety and effectiveness for approvals. Even if a predicate device is later found to be harmful and is then recalled, the subsequent devices approved on the predicate can still remain on the market.

Even for the most risky devices, which use the PMA pathway, there are a lack of rigorous data standards prior to approval. Although the FDA requires clinical trial data to show a reasonable assurance of safety and efficacy, what constitutes as “reasonable” and the standards and amount of data needed for approval can vary among devices.

One study conducted on the devices approved through this process found that two-thirds of the PMA approvals for implantable cardiovascular devices relied on clinical data from a single study, and most were not randomized controlled trials, the gold standard for scientific evidence. Furthermore, after devices in the PMA pathway are approved, device-makers can make small changes to the approved device by submitting a form called a supplement. By using this loophole, device-makers can make many different small changes to a device, effectively creating a different product without having to seek FDA approval again. One study found a median of 50 supplements for implantable cardiovascular devices initially approved through the PMA pathway.

FDA’s breakthrough designation allows medical devices using both the 510(k) and the PMA pathways to receive priority review. The FDA may also allow for more flexibility in the clinical study designs required for approval of the device, such as allowing changes to sample size and participants included, and a greater reliance on data collected after approval, which can lead to unclear evidence of benefits and risks. This lowered evidence bar and quicker review can put patients at risk. A study conducted by the American Heart Association found shorter FDA review times for high-risk cardiovascular devices were associated with a higher probability of an adverse event.

Low-Value Medical Devices Increase Costs and Potential Safety Risks for Patients

Although commercial and public payers can have their own requirements for paying for approved devices, they cover and pay for FDA-approved devices a majority of the time. A lack of rigorous review of medical devices during the approval process combined with low standards for payment and coverage of these devices can result in millions of wasted health care dollars, and serious patient harms. In 2019 alone, the FDA recalled more than 50 devices from the market due to safety concerns. A report by the Office of Inspector General (OIG) of the Department of Health and Human Services found that Medicare spent $1.5 billion on services and procedures associated with seven recalled or failed medical devices, and Medicare beneficiaries spent another $140 million in copayments and deductibles on those devices, over 10 years. Given data limitations around quantifying costs associated with medical devices, and the small subset of medical devices studied, wasteful Medicare and beneficiary spending on devices is likely much, much higher.

One prominent example of this issue for payers and patients is the approval of the Essure contraception device for women. The FDA granted approval for Essure in 2002 after only two small clinical trials with no control group and despite the harms reported during the trials. To address FDA concern, the manufacturer promised to conduct further trials after approval, which proved to be inadequate as well due their short follow-up periods, exclusion of key data and lack of a control group. Ultimately, after 16 years on the market and tens of thousands of patients reporting complications, the device was finally voluntarily discontinued by the manufacturer. In the meantime, not only did insurance companies and patients have to pay for implantation of the device (a study found the average payment for Essure was $1,287), but it could also cost up to $8,000 for removal of the faulty device. Essure is an example of what can happen under the more typical approval pathways — breakthrough devices, which are what the CMS rule is about — could face even less scrutiny from regulators. This is just one example out of many other devices that have been approved on little to incomplete evidence and have resulted in wasteful spending and patient harms.

Policy Changes Need to Focus on Increasing Standards for Approval and Payment

CMS’ proposed rule is a step in the wrong direction. Rather than applying even less scrutiny to medical devices, we need to reform our medical device system to create higher evidence standards for approval and for coverage and payment. Payers’ decisions should account for the value of the device so patients are protected and millions of dollars are not wasted on low-value devices. With the creation of the breakthrough medical devices designation and the new proposed coverage rule by CMS, many more ineffective, expensive, and possibly harmful medical devices may not only be approved, but paid for by taxpayers and Medicare beneficiaries despite their dubious value for patients.