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Institute of Medicine to Examine CDRH’s 510(k) Review Process

The U.S. Food and Drug Administration (FDA) is getting introspective. This bit of self-inflicted organizational soul searching comes in the form of a review of the agency’s 510(k) review process by the Institute of Medicine (IOM).

Critics inside and outside of the agency have said the process, which examines and clears (or denies)medical devices for marketing based on the existence of a predicate device, is flawed. Most devices that undergo a 510(k) submission to the FDA have not been required to undergo a clinical trial. Daniel Schultz, former head of the FDA’s Center for Devices and Radiological Health (CDRH) recently resigned, in part, due to calls for a thorough restructuring of the agency’s activities and allegations that some devices were cleared without enough scrutiny.

The 510(k) program has been under fire on Capitol Hill for several years. A report released in January from the Government Accountability Office determined that the program was inappropriately used to clear hundreds of complicated medical devices including pacemakers and replacement heart valves, and suggested the agency strengthen its approval standards and make them more consistent.

In March, former FDA Commissioner Andrew von Eschenbach said the use of the abbreviated approval process had “spun out of control” after FDA scientists raised questions about a knee-surgery device that was approved using the 510(k) path. The medical device industry has been expecting changes to the program and possible restrictions, given new leadership at FDA.

The $1.3 million IOM review commissioned by the agency is scheduled to be completed by 2011, according to acting CDRH director Jeffrey Shuren. The examination will emphasize more post-marketing research, increased transparency in decision-making and establish “clear procedures to resolve differences of opinion,” within the agency, Shuren said in a statement.

If the review finds deficiencies in the current 510(k) process, the IOM will recommend legislative, regulatory and administrative modifications to the program. As part of its review, the IOM will hold two public workshops during the next nine months and form a committee to investigate whether the regulatory process “optimally” protects patients and promotes innovation. CDRH also will empanel its own internal task force to appraise and improve the decision-making behind the review process.

“Good government conducts periodic reviews and evaluations of its programs,” Shuren said. “Our working group and the IOM’s independent evaluation will help us determine how the 510(k) process can be improved to better support the FDA’s mission to protect and promote the public health.”

The Advanced Medical Technology Association (AdvaMed) has defended the current 510(k) process as “a well-defined, science-driven method used by FDA as part of a comprehensive regulatory framework.” In a statement, AdvaMed urged the institute to include device experts in the review.

“During the past three decades, technology and the medical device industry have changed dramatically, making it an appropriate time for CDRH to review the adequacy of the premarket notification program,” according to a statement released by the FDA. “We believe IOM’s study committee should include individuals expert in the medical device innovation model and regulatory process.”

There is precedent for this type of review. In 2006, the FDA turned to the IOM to review its drug-approval process after recalls of popular, expensive drugs. The subsequent report slammed the agency’s drug-approval division, noting that it had an organizational culture that was “not optimally functional.” As a result, numerous changes were made at the drug-approval section, many of which were incorporated into the Food and Drug Administration Amendments Act of 2007. The legislation established stricter standards for monitoring drugs after they go on the market and created a public register of all pharmaceutical clinical trials.

The 510(k) protocol was founded under the Medical Device Amendments of 1976 to promote safe and effective medical innovations in the United States. Although most class III devices—novel, implantable or life-sustaining products, for example—are approved through the premarket approval method, certain types of high-risk devices that are similar in terms of technology and intended use to pre-amendment device types (class III products on the market before May 28, 1976) can be cleared through 510(k) until the FDA publishes regulations requiring them to go through PMA or reclassifies them into a lower class.

“It’s autumn, and change is in the air. This is particularly true for our 510(k) program,” Donna-Bea Tillman, head of CDRH’s device evaluation office wrote in a recent e-mail to her staff that was leaked to The Wall Street Journal. Tillman added that she needed to “get a better lay of the land” and called on branch chiefs to inform her when they were asked to clear a new “indication” or use “that you have never cleared for that device type,” the paper reported. In response to the Journal article, the FDA said in a statement that Tillman’s memo “reflects and is a furtherance of [FDA chief Margaret Hamburg’s] new direction.”

Deals Roundup: September Brings Device Deal Making

Covidien Inks Aspect Medical Deal
Covidien purchased Aspect Medical Systems Inc. for $210 million. The boards of directors of both companies unanimously approved the acquisition, which is expected to wrap up by the end of the year.

Founded in 1987, Aspect develops brain-monitoring technology. The company had 2008 revenues of $99 million. The company’s primary product, its Bispectral Index (BIS) technology was the first clinically proven and commercially available direct measure of the effects of anesthetics and sedatives on the brain, according to the firm. BIS technology is designed to allow medical professionals to reliably gauge the precise amount of anesthetic medication required by each patient to optimize patient outcomes.

“The acquisition of Aspect will allow Covidien to broaden its product offerings and add a market-leading brain-monitoring technology to its portfolio,” said Pete Wehrly, president of Covidien’s Respiratory & Monitoring Solutions unit. “Aspect will bring us enhanced clinical expertise, a strong research and development organization and expand our presence in the operating room.”

Nassib Chamoun, president and CEO of Norwood, Mass.-based Aspect Medical Systems, said joining Covidien would provide his firm with “the scale and resources to accelerate growth of BIS and other Aspect products, to continue to invest in outcomes research, comparative effectiveness and innovation, and to support the strategy of providing products that are designed to improve patient outcomes.”

Once the transaction has been completed, Dublin, Ireland-based Covidien will report the Aspect business as part of its Oximetry and Monitoring product line in its Medical Devices segment.

In other Covidien news, Embla, a manufacturer of sleep diagnostics, has purchased Covidien’s sleep diagnostic business, including products sold under the Sandman brand name. Financial terms of the transaction were not disclosed. The combined entity will form the world’s largest company to focus entirely on sleep diagnostics, with close to 1,700 customers in North America and about 2,500 worldwide, according to a statement from Embla. The Covidien Sandman Sleep Diagnostic business is headquartered in Ottawa, Canada, where Embla has a research and development and technical support facility. Embla is based in Broomfield, Colo.

Abbott Buys Remaining Stake in Evalve
Abbott Laboratories agreed to buy surgery-device maker Evalve Inc. for up to $410 million, broadening the firm’s reach in the emerging market for minimally invasive heart repair. Abbott already owns 10 percent of Evalve. The company will pay $320 million in cash initially, plus payments tied to regulatory milestones. Abbott officials don’t expect the acquisition to change the company’s 2009 earnings outlook.

Ferolyn Powell, CEO of Menlo Park, Calif.-based Evalve, will continue to lead the business after the deal closes in the fourth quarter of this year.

“The acquisition of Evalve will provide Abbott with leading technology in the emerging field of minimally invasive heart valve repair and further broadens Abbott’s medical devices portfolio,” said John M. Capek, Ph.D., executive vice president of Abbott’s Medical Devices unit. “Evalve is on the cutting edge with its non-surgical approach to treating structural heart disease. With this breakthrough mitral valve repair technology, physicians will be able to offer their patients a minimally invasive alternative to open heart surgery—not unlike the opportunity that stents provided more than two decades ago for the treatment of coronary artery disease.”

Mitral regurgitation, a condition that prevents the mitral valve from closing completely, is the most common type of heart valve insufficiency in Europe and the United States, and affects millions of people worldwide. Traditionally, mitral regurgitation is treated through open-heart surgery.

However, only about 20 percent of the 600,000 patients diagnosed in the United States and Europe each year undergo surgery, according to Evalve. Evalve’s minimally invasive catheter-based MitraClip system, used to clip the leaflets of the mitral valve together to reduce regurgitation, is the first commercially available treatment option approved in Europe for non-surgical mitral valve repair for patients suffering from the effects of mitral regurgitation. The system is an investigational device in the United States and is currently in clinical trials.

The strategic acquisition comes after rival Medtronic Inc. spent more than $1 billion in February to buy two privately held makers of replacement heart valves that don’t require major surgery. Medtronic purchased CoreValve, based in Irvine, Calif., and Ventor Technologies, based in Netanya, Israel, which both make technologies that allow heart valves to be replaced using a catheter, instead of through surgery. Neither CoreValve’s nor Ventor’s technologies are available yet in the United States. Medtronic paid an initial $700 million for CoreValve, with additional payments depending on whether the company hits certain undisclosed milestones. It paid $325 million for Ventor.

ThermoFisher Buys German Firm
Waltham, Mass.-headquartered Thermo Fisher Scientific Inc. plans to purchase in-vitro diagnostics test firm Brahms AG for about $470 million. Brahms, which employs approximately 400 people worldwide is a German firm with sales offices throughout Europe and the United States. The company will become part of the Specialty Diagnostics unit of Thermo Fisher’s Analytical Technologies Segment. Brahms develops a diagnostic biomarker, called Procalcitonin, which detects and monitors the treatment of sepsis, a condition of bacterial infection in a person’s bloodstream.

Danaher Makes Billion-Dollar Deals
Washington, D.C.-based Danaher Corporation will acquire the Analytical Technologies division of MDS, which includes a 50 percent ownership position in Applied Biosystems/MDS Sciex joint venture (a mass spectrometry business) and a complete ownership of the former Molecular Devices Corporation, a bioresearch and analytical instrumentation company.

In a separate, but related transaction, Danaher also signed an agreement with Life Technologies Corporation to acquire the remaining 50 percent ownership position in AB SCIEX. After completion of both transactions, Danaher will own AB SCIEX and Molecular Devices outright. The aggregate purchase price for the combined transactions is $1.1 billion, including debt assumed and net of cash acquired. AB SCIEX designs and manufactures mass spectrometers, highly sensitive and sophisticated instruments used by researchers and clinicians to identify and quantify specific molecules in complex samples. Typical applications include proteomics research, drug development, food and environmental safety testing and diagnostics testing. Molecular Devices supplies high-performance bio-analytical instrumentation systems and consumables to improve research productivity and effectiveness in life science research and drug discovery.

The acquired businesses will operate within Danaher’s Medical Technologies segment, joining Danaher’s Leica, Radiometer, Sybron, and KaVo businesses, and will expand the segment’s annual revenues by more than $650 million, the company said. The acquired businesses will increase Danaher’s life sciences and diagnostics annual revenues to more than $2 billion.

Danaher expects the transactions to close in the fourth quarter.

Grant Seeks to Grow Indiana’s Orthopedic Sector

A private foundation awarded a $7 million grant to create a group that will help foster the growth of the Hoosier State’s orthopedic industry. The money, according to a news release, will fund the creation of OrthoWorx, a Warsaw, Ind.-based organization described as an “industry, community and education initiative” that will advance and support growth and innovation in the orthopedic device sector.

The idea for OrthoWorx came from BioCrossroads Inc., a life sciences development group based in Indianapolis, Ind. The group proposed the creation of OrthoWorx in a Sept. 10 report that analyzed the strengths and challenges of Warsaw’s orthopedic sector. The report was funded by Lilly Endowment Inc., the foundation that awarded the grant. “Indiana is indeed fortunate to be home to this extraordinary cluster of orthopedic companies in the Warsaw community,” said N. Clay Robbins, Endowment president. “We are pleased that a promising plan and framework have been developed, after many months of deliberation and good effort, to secure and enhance the region’s competitive appeal to the orthopedic industry now and in the future.”

The report, titled “Warsaw, Indiana: The Orthopedics Capital of the World—An overview, analysis and blueprint for future industry and community growth,” concludes that the $11 billion in annual revenue generated by the Warsaw region’s orthopedic sector represents more than half the nation’s market share and more than one-third of the industry’s $32.5 billion in worldwide revenue.

The report identifies two major challenges facing Warsaw region orthopedic firms: the squeezing of profits by healthcare reform and increased federal regulations; and technology that could one day render hip and knee replacements obsolete.

Lilly Endowment is giving the grant money to the Kosciusko County Community Foundation, which will, in turn,create a charitable affiliate called the Orthopedic Capital Foundation. The Kos-ciusko County Foundation also will work to form a business league focused on the orthopedic industry.

CareFusion Launched on NYSE

CareFusion Corporation Chairman and CEO David L. Schlotterbeck, center (red tie), rang the New

Photo courtesy of NYSE Euronext Photo Group.

York Stock Exchange (NYSE) opening bell last month to mark the company’s spinoff from Cardinal Health Inc. CareFusion Corp. common stock began trading on the NYSE Sept. 1 under the symbol “CFN.”

CareFusion was created from the spinoff of Cardinal Health’s medical products division. Based in San Diego, Calif., the new company reported $3.7 billion in sales and nearly $450 million in profit during fiscal 2009, ended June 30. CareFusion makes ventilators and respirators, neurological monitoring and diagnostic products, smart pump intravenous systems, surgical instruments, and automated medication dispensing systems.

“We congratulate CareFusion Corporation on becoming an independent, publicly traded company,” said Scott R. Cutter, NYSE Euronext executive vice president and head of Listings, Americas. “As a leader in the medical technology industry, CareFusion is a welcome addition to the NYSE roster of listed companies. We look forward to a lasting partnership with the company and its shareholders.”