Supreme Court Clears Path for Medical Device Manufacturers But Leaves Dangerous Stones Unturned (cont'd)

 
 

Post-Riegel Opportunities

In Riegel v. Medtronic, the Supreme Court has at last given effect to the MDA’s preemption clause, and reduced the litigation induced economic barriers to research and development of new medical devices to benefit mankind.  The decision in Riegel applies only to devices that have been granted pre-market approval, generously estimated at 10% of existing medical devices.11  The benefit of the decision however, will far outweigh its impact on the limited number of devices that are directly affected, as conscientious companies now have an opportunity to expand their research and development without the economic uncertainty of state lawsuits.    

The variety and uses of medical devices are also likely to expand, as companies have previously focused on only those devices where economies of scale provided a cushion against development costs and litigation risks.  Some commentators have noted that “pre-marketing review for new medical devices is a rare event indeed,”12 and history supports that conclusion.  During the first decade under the Medical Device Amendments, roughly sixty percent of all pre-market approval applications were not for new devices, but for “transitional devices.”13 

Riegel grants medical device manufacturers a new realm of opportunity to expand and develop new devices unhindered by the structural economic limitations that mitigated against such development before Riegel.  After Riegel, companies are freer to expand development into new technologies, such as nanomaterials, both to modify existing devices and to create entirely new categories of medical device.14  In addition to the decreased litigation costs and expanded opportunities that Riegel represents, recent legislation further increases the opportunities for innovation.  Changes to the Medical Devices User Fee Modernization Act (MDUFMA), as enacted in the FDA Amendments Act of 2007 (FDAAA)15 significantly reduce medical device application fees, increase fee discounts for small manufacturers, and allow businesses earning up to $100 million in annual sales to qualify for the discounts, up from the previous $30 million ceiling. This is intended to spur greater medical device innovation by providing a measure of assistance to smaller companies, which tend to focus on creating novel technologies,16 by not penalizing their growth.  Significantly, the FDA has also committed to streamlining and making more predictable the pre-market approval process, with the intention of reducing associated costs and thereby further stimulating development of new medical devices and technologies.17

Avoiding Pitfalls

To take full advantage of the legislative developments and the promise that Riegel holds however, manufacturers must proceed with care, and are best advised to continually review and, where necessary, revise their manufacturing processes to ensure compliance with all FDA manufacturing regulations.  Fortunately, the FDAAA has made it easier for companies to do so and, for practical reasons, has given manufacturers a much greater level of autonomy and influence in determining how they fare in FDA inspections and compliance with FDA regulations.  For example, under the FDAAA, device manufacturers may request FDA permission to undergo inspection by a third-party inspector if it received a “no action indicated” or “voluntary action indicated” rating for its most recent FDA inspection and notifies the FDA of its intention to use a third-party inspector at least thirty days prior to the inspection.

The degree of regulatory affirmative action the FDAAA cedes to manufacturers will allow manufacturers to proceed with development of new products at a much more rapid pace and at decreased expense.  It will also give manufacturers the ability to avoid negative FDA assessments of manufacturing processes or facilities by making preemptive self-assessments (by approved third-parties engaged by the manufacturers), and necessary corrections or modifications.  In conjunction with Riegel’s preemptive effect,this expansion of individual manufacturers’ ability to influence the process of FDA facility inspections can provide a significant reduction in a manufacturer’s litigation costs by forestalling the avenue of litigation left open by Riegel –liability for failure to comply with FDA regulations.

At the same time, the removal of the layer of consumer protection afforded by state lawsuits, coupled with a spate of high profile cases involving contamination of FDA approved drugs manufactured in foreign countries, and defects in FDA approved devices manufactured in foreign countries, will likely to cause the FDA to step up efforts to police facilities that manufacture drugs and devices.  Under the MDA, all establishments that manufacture medical devices for marketing in the United States must register with the FDA18 and, prior to obtaining pre-market approval to manufacture a device, provide “a full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and, when relevant, packing and installation of, [a] device.”19  As has been widely noted, the FDA’s ability to enforce regulations has heretofore been hampered by inadequate funding, but FDAAA contains numerous provisions specifically intended to increase the money available to FDA to carry out its duties. 

For example, FDAAA adds several new fees that did not exist under the original MDUFMA, and eliminates the administrative requirements of providing review cycle status updates to manufacturers, freeing FDA reviewers to devote more time to completing reviews, and providing more money to support FDA’s other responsibilities.20  FDA advisers proposed a $375 million increase in the agency’s budget for FY 2009, a 5.7% increase over the FY 2008 budget.  The FDAAA also expands participation in the program of accredited third-party inspections that the FDA first began in 2002 under the MDUFMA, and streamlines the process to allow more inspections to be completed.  Among the new fees are a $2,960 fee for 30 day notices of modifications to manufacturing processes, and a $1,706 annual establishment registration fee for each facility that is registered with the FDA.  The latter fee is scheduled to increase to $2,364 in 2012.  Under the FDAAA, the FDA should collect $287 million in device manufacturer fees between 2008 and 2012, a $122 million increase over what would be collected under the original legislation.  “MDUFMA II [enacted as FDAAA] will also give the agency the resources it needs to maintain cutting-edge scientific expertise necessary to provide the timely review, and to ensure the safety of increasingly complex devices of tomorrow . . . It’s also for device safety.  It goes for the whole program.  In fact, the scope of MDUFMA covers a variety of device safety activities.”21 The FDAAA also expands participation in the program of accredited third-party inspections that the FDA first began in 2002 under the MDUFMA, and streamlines the process to allow more inspections to be completed.

 

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11 Eighty to ninety percent of medical devices receive approval under 510(k) substantial equivalency.  Robert A. Gerberry, Medtronic v. Lohr: State Lawsuits May Proceed Against Medical Device Manufacturers, 11 J. L. & Health 221, 223 (1997). Return to cited sentence

12 Michael D. Green, William B. Schultz, Tort Law Deference to FDA Regulation of Medical Devices, 88 Geo. L.J. 2119, 2136(July 2000). Return to cited sentence

13 Id.  Transitional devices are products that were already on the market before the MDA, but were regulated as drugs because the FDA’s only pre-marketing regulatory authority was for drugs. Return to cited sentence

14 See, e.g. Drew L. Harris, Mark J. Graffagnini, Nanomaterials in Medical Devices: A Snapshot of Markets, Technologies and Companies, 4 Nanotechnology L. & Bus. 415 (Winter 2007). Return to cited sentence

15 21 U.S.C. §§ 212 et. seq. Return to cited sentence

16  See, Shawn Rea, Devising A New Approach; Proposed Changes To Device Law Aim To Boost Funding, Streamline Product Review, Modern Healthcare, Vol. 37, Issue 22, May 2007, at 2. Return to cited sentence

18 21 U.S.C. § 360(b)(i). Return to cited sentence

19 21 U.S.C. § 360e(c)(1)(C). Return to cited sentence

20 Shawn Rea, Devising A New Approach; Proposed Changes To Device Law Aim To Boost Funding, Streamline Product Review, Modern Healthcare, Vol. 37, Issue 22, May 2007, at 2. Return to cited sentence

21 Comments of Dr. Shuren, FDA Assistant Commissioner for Policy, at MDUFMA Public Stakeholder Meeting (April 30, 2007) http://www.fda.gov/cdrh/mdufma/043007-transcript.html Return to cited sentence