FDA’s device changes defer biggest issues

By Lisa Richwine and Debra Sherman

WASHINGTON & CHICAGO | Jan 19-20, 2011

* Ruling delayed on new data requirements for some devices
* Other steps aim to streamline process
* Medtronic CEO describes FDA plan as “more balanced”
* Industry group: drops or defers access-denying proposals
* Health equipment index down in line with broader market (Adds FDA, analyst comments, share prices)

U.S. health officials unveiled steps to streamline reviews of medical devices and deferred decisions on contentious issues the industry feared would slow approval of new products.

The FDA said on Wednesday it would ask the Institute of Medicine for input on seven proposals, including creation of a new category of devices that would require more data to win approval. A report from the IOM is expected this summer.

The delay on the toughest issues was a win for the device industry, which worried the FDA would impose standards that would slow development of new products reviewed under an abbreviated process known as 510(K).

“This is a more balanced approach that sends a positive signal to industry that the FDA is engaged, listening and concerned,” Medtronic Chief Executive Bill Hawkins told Reuters.

The shorter approval pathway requires companies to show a product is “substantially equivalent” to one already on the market and typically does not require testing in people. The process has drawn fire from critics who say it is too widely used and allows unsafe products to reach the market. Most medical devices – about 3,000 each year – are cleared through that program.

Piper Jaffray analyst Thomas Gunderson said the FDA had tackled the easiest issues first.

“The controversial items are still to be determined. So it’s a smaller cloud hanging over the industry, but it’s still a cloud. There’s still uncertainty,” he said.

The FDA said it will impose 25 changes to the device approval process, including streamlining the review process for some lower-risk devices. The agency also will create an internal council to “assure timely and consistent science-based decision making.”

The steps will lead to “a smarter medical device program that supports innovation, keeps jobs here at home, and brings important, safe, and effective technologies to patients quickly,” said Dr. Jeffrey Shuren, head of the FDA device unit.

President Barack Obama highlighted the coming changes on Tuesday as an example of efforts to curtail rules that slow economic growth. The plan will “keep patients safer while getting innovative and life-saving products to market faster,” Obama wrote in an opinion piece in the Wall Street Journal.

Medical devices range from simple bandages to complex implants such as pacemakers, stents and artificial knees. The largest medical-device makers include Medtronic Inc (MDT.N: Quote, Profile, Research, Stock Buzz), Johnson & Johnson (JNJ.N: Quote, Profile, Research, Stock Buzz), Boston Scientific Corp (BSX.N: Quote, Profile, Research, Stock Buzz) and Abbott Laboratories Inc (ABT.N: Quote, Profile, Research, Stock Buzz).

The Standard & Poor’s Health Care Equipment Index fell 1 percent on Wednesday, in line with the decline in the broader market as measured by the S&P 500 Index .SPX.

One consumer advocate said the FDA had moved away from more dramatic changes that would have helped patients in response to industry lobbying.

“FDA has backed down on important safety measures that would have saved lives,” said Diana Zuckerman, president of the National Research Center for Women & Families.

The FDA’s Shuren said the agency already has tools to protect patients. Many of the deferred issues were meant to clarify when the agency would use various tools, he said.
Patient and physician groups also had raised concerns about some of the deferred proposals, Shuren added.

The Advanced Medical Technology Association, an industry group known as AdvaMed, welcomed the FDA plan as a “good first step” toward better consistency and more reviewer training.

The plan defers “many of the issues we had the greatest concern about, that we believe would have created undue burdens on industry without a commensurate public health benefit,” AdvaMed President Stephen Ubl said in an interview.

The FDA’s implementation of its plan will determine the impact for companies and patients, he added.

Orthopedic device makers would be most negatively affected by any changes that increase development times, Goldman Sachs analyst David Roman said in a research note. Those include Smith & Nephew (SN.L: Quote, Profile, Research, Stock Buzz), Stryker Corp (SYK.N: Quote, Profile, Research, Stock Buzz) and Zimmer Holdings (ZMH.N: Quote, Profile, Research, Stock Buzz).

John Babbitt, a device industry consultant with Ernst & Young, said uncertainty about future data requirements could hurt smaller companies.

“Uncertainty is what really causes indigestion for smaller companies. They might have one or a handful of products, so there’s less tolerance for these types of changes to be absorbed,” he said.

FDA posted the device plan on the Internet at link.reuters.com/cyt27r (Reporting by Lisa Richwine in Washington and Debra Sherman in Chicago; Editing by Tim Dobbyn)