Legislation introduced last year to help small device companies collect data to accelerate the process of gaining reimbursement for new technologies by letting patients pay for procedures was highlighted at a House hearing this week.

The Accelerating Innovation in Medicine Act (AIM) was introduced last December by Rep. Erik Paulsen, R-Minnesota; it was praised at a June 11 hearing of the House Energy and Commerce Health Subcommittee by a Democratic cosponsor of the bill and by a device venture capitalist who testified before the panel. The hearing was part of the “21st Century Cures” series run by Energy and Commerce. (See Also see "Shuren Highlights CDRH Actions To Ease Trial Burdens On Capitol Hill" - Medtech Insight, 7 May, 2014..)

The AIM bill (H.R. 3681) “would give device manufacturers the opportunity to make an FDA-approved product available on a self-pay basis, for an initial three years, before approaching CMS about Medicare reimbursement,” explained Rep. Jim Matheson, D-Utah, who cosponsors the bill.

The legislation “goes to the heart of one of the challenges we are facing,” said Mike Carusi, a partner with Advanced Technology Ventures. Carusi, who spoke on behalf of the National Venture Capital Association, AdvaMed and the Medical Device Manufactures Association, stressed that winning coverage and payment has become a steeper challenge than gaining FDA approval for small device firms in recent years.

Once a company has gained FDA’s blessing to market a device, “we’re in a process where we have to generate more data” to win Medicare program coverage, and reimbursement, Carusi said. “As we are generating that data, we’re not profitable entities – we’re burning $500,000 to $2 million per month, and that number tends to go up, because now we have to start marketing these products.”

The AIM bill, which has five cosponsors including three Democrats and two Republicans, calls on HHS to develop a list of medical devices, for which insurance benefits and payments would be prohibited under Medicare, with the result that a senior or other patient who consents to receive the device must pay for it out of their own pocket.

“Patients covered by the Medicare program are often willing to enter into self-pay arrangements with physicians and other providers to purchase items or services, yet under current laws restricting such freedom of choice, the self-pay arrangements may be associated with regulatory impediments or a risk of civil penalties,” the legislation states.

The hope is that if enough patients would be willing to pay for a device, the company could generate enough revenue to carry the product through additional studies to satisfy Medicare data requirements, ultimately supporting coverage.

However, the AIM Act has not yet had a committee hearing in the House, and no parallel bill has been introduced in the Senate. Time is running out in this legislative session, diminishing the bill’s chances of moving forward this year, and making it likely it would need to be reintroduced in 2015.

New Layers of IDE Requirements Driving VCs Away

Carusi put some attention on device regulatory concerns during the June 11 hearing. In particular, he cited challenges with gaining investigational device exemption approvals to start U.S. clinical studies.

“What’s happened over the years, is that the data requirements to start those [IDE] studies are now as if we were actually going for approval,” he said in response to questioning from Rep. Marsha Blackburn, R-Tennessee.

“We’re not going for approval, we’re going for the approval to start the trial. And … some of these [devices] are going to fail, they’re not going to work,” he explained. “If you start to layer on pre-clinical requirements, additional bench requirements … you are adding to the cost and time before we actually get to the experiment to see if the product is safe and effective.”

IDE approval challenges continue to push device firms to conduct trials and product development overseas, Carusi said. FDA has taken multiple recent steps to try to address complaints with the IDE approval. The device center has set a goal to reduce the number of IDE review cycles by half by the middle of next year. (See Also see "CDRH Focusing On New PMA Pathway, Clinical Trials Program In 2014/2015 Priorities" - Medtech Insight, 5 February, 2014..)

Carusi praised CDRH Director Jeffrey Shuren and the latest user fee agreement, enacted in the 2012 FDA Safety and Innovation Act. “We are starting to see benefit from FDASIA, and certainly with improved dialogue with ... Shuren we’re seeing improvements,” Carusi said.

“That’s why in my testimony, I move from FDA … to this reimbursement side of the equation. Because parallel to the discussions we had around FDA and the lack of predictability, transparency and consistency – that’s what we’re now facing in reimbursement.”

AIM Act Touted As One Solution To Device Reimbursement Woes

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