Medtech Issue 87 Pharma Intelligence Informa

March 26, 2018 medtech.pharmaintelligence.informa.comInsight

ness and help customers relying on Ani- J&J Offloads LifeScan To Private mas Vibe or the OneTouch Ping insulin pump find a suitable Medtronic pump. Equity Firm For $2.1bn (Also see "Medtronic Stands To Be Biggest Beneficiary Of J&J's Exit From Insulin Pump REED MILLER [email protected] Market" - Medtech Insight, 8 Oct, 2017.) During J&J's Jan. 23 fourth-quarter latinum Equity, a Southern Cali- across a variety of industries. Platinum 2017 earnings call, Gorsky reiterated that fornia private equity firm, will buy Equity does not have any other medical the company was actively looking for P Johnson & Johnson's LifeScan Inc. device companies in its current portfo- strategic options for its diabetes busi- blood glucose monitoring device busi- lio, according to its website, but since its nesses, which have been a significant ness for $2.1bn. The move, announced founding in 1995, the firm has helped a drag on the company's overall device March 16, comes as no surprise. J&J an- many other large publicly traded corpo- revenues in recent years. In 2017, rev- nounced in the beginning of 2017 that rations – including Bayer, IBM and AT&T enue from J&J's diabetes care device it was exploring strategic options for its – divest underperforming units maintain- business declined 10.5% year-over-year shrinking diabetes businesses. (Also see ing business continuity and operational – including a 17.2% slide in the US – to "Earnings Winners & Losers: Billion-Dollar- stability during the transition. $1.61bn. J&J's overall device business Revenue Players JNJ, ABT, GE, PHG, BAX" - "We have worked closely with Johnson grew 5.7% to $26.6bn during the same Medtech Insight, 8 Feb, 2018.) & Johnson to craft a divestiture solution period. But excluding the impact of ac- "This initiative is part of our ongoing, for LifeScan that would create a global quisitions and divestitures, J&J's world- disciplined approach to portfolio man- standalone business and set the stage for wide device sales increased 1.5% and US agement to focus on our most promising continued investment in growth and in- sales were flat. opportunities to help patients and drive novation," Platinum Equity Partner Jacob J&J says the 2018 sales and earnings growth," Ashley McEvoy, J&J's company Kotzubei said in a release. projections it provided in January ac- group chairman for consumer medical The deal still must be accepted by the counted for the likely sale of LifeScan, devices, said in a release. relevant works councils representing Lif- although the company did not precisely LifeScan is headquartered just outside eScan employees, but Platinum Equity ex- quantify the impact of the deal. The com- Philadelphia and also has a facility in Zug, pects the deal to close by the end of 2018. pany predicts 2018 full-year sales will be Switzerland. It serves 20 million patients in In January 2017, J&J CEO Alex Gorsky said between $80.6bn and $81.4bn, reflecting more than 90 countries with the OneTouch that, despite the optimism surrounding the operational growth of 3.5% to 4.5%, with brand of blood glucose meters, testing launch of the Animas Vibe insulin pump in earnings per share of $8 to $8.20. strips, lancets, point-of-care testing sys- 2014, it was losing faith in its diabetes de- In a March 16 note, Wells Fargo analyst tems, and integrated digital systems. LifeS- vice businesses, as pricing pressure and Larry Biegelsen wrote that the LifeScan can president Valerie Asbury will continue competition – especially with market leader divestiture will boost J&J's medtech sales to lead the business during the change in Medtronic – has made it difficult for J&J to growth and pretax margin by at least 50 ownership, according to Platinum Equity. grow diabetes device revenues. basis points. Platinum Equity has $13bn in assets and In October, the company announced a portfolio of more than 30 companies plans to terminate its Animas Corp. busi- Published online 03/18/19

FROM THE EDITORS OF: THE GRAY SHEET, CLINICA, START-UP AND MEDTECH INSIGHT NEWSLETTER

POLICY & REGULATION COMMERCIAL R&D Saudi FDA seeks feedback, p. 9 Exec chat with Zimmer Biomet's Prognos' AI disease-prediction EMEA head, p. 10 platform, p. 14 2018

Plan to attend MDMA’s 2018 Annual Meeting in our Nation’s Capital, May 2nd – May 4th, 2018. MDMA’s Annual Meeting will cover key issues impacting the United States’ leadership position in med-tech innovation, and how we can all help shape the regulatory and legislative agendas.

This year’s Opening Address will be given by FDA Commissioner Scott Gottlieb, M.D. who will discuss his vision for the agency, and the latest reforms he and his team are working on. Commissioner Gottlieb is one of many leading policy makers and industry experts who will share their insights and priorities with medical technology innovators at this premier MDMA event.

Value of Attending • Engage industry executives, government officials For more information and and expert panelists on critical issues to register, please visit • Hear first-hand updates on the latest news and medicaldevices.org/events. must have information for med-tech CEOs • Build relationships while networking with over 200 med-tech CEOs and senior executives

2018_AM_One Pager_RTP.indd 1 2/22/18 2:13 PM 6 7 17 inside: explore more: Cover / J&J Offloads LifeScan To Private Equity Firm For exclusive online content $2.1bn – Following a strategic review of the business, Johnson & Johnson, as expected, sold its LifeScan blood EU competent authorities glucose monitoring device business. http://bit.ly/2pz9RAH EDITORS' PICKS It's a vital entity now, but we explore what the longer- 5 Siemens Healthineers Floats On Frankfurt Stock term future might be for the EU's Competent Authorities Exchange – The health unit is now an independent for Medical Devices group as industry transitions to the publicly listed company. The initial public offering is one of new Medical Device and IVD Regulations. Germany's biggest listings in the last few years.

Registry of registries 5 Theranos Execs Slammed By SEC For "Massive Fraud" – The http://bit.ly/2DIChwh US Securities and Exchange Commission came down hard US FDA is working with manufacturers, researchers on Theranos CEO Elizabeth Holmes and former company and other stakeholders to assemble a comprehensive President Ramesh Balwani for allegedly defrauding investors. network of registries of cardiac device data. But 6 New Report Spotlights Intensifying Rivalry Between cardiologists and device firms say the project faces Tech And Health-Care Companies – Life-science and multiple challenges. medtech companies with a single focus on developing products risk being outpaced and outsmarted by the rising Orthofix doubles down crop of tech companies. http://bit.ly/2HMyGje 7 mHealth Developer Works Around Traditional Orthofix is investing in the high-growth cervical spine Reimbursement Barriers – Diabetes-management-app firm implant market with the acquisition of Spinal Kinetics. Glooko is looking to bypass the traditional reimbursement How is this bet going to play out? path by partnering with self-insured employers and working with payers in different ways to get their app directly to Finger on the pulse patients. It's one model for the digital-health sector. http://bit.ly/2G08bpG Find out what is driving demand for pulse oximetry POLICY & REGULATION devices in and out of hospitals, and how big players, 9 Saudi FDA Consults On Regulating Device Software, including Medtronic, Philips and Masimo, are capitalizing Distribution Requirements – The Saudi Arabia authority is on the growth. inviting stakeholder feedback on two draft guidelines – one on the regulation of software as a medical device, and the other specifying requirements for the storage, handling and Device Week transportation of medical devices. http://bit.ly/2y4lpgk Check our latest podcast discussion focusing on 9 China Overhauls Regulatory Bodies – China's State confusions surrounding the impact of Brexit on device Council has proposed a reorganization plan that will regulations in Europe. reduce the number of state agencies overseeing drug and device regulation.

medtech.pharmaintelligence.informa.com 17 Brexit To Force Large-Scale Review Of Medtech Contractual Arrangements Throughout EU – If there is a

medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 3 Medtech insight hard Brexit and no mutual recognition agreement between DAVID FILMORE @MEDTECHDAVID the UK and the EU, the dynamic between UK manufacturers [email protected] and their product distributors in the EU27 will change to a TINA TAN @MEDTECHTINATAN more formal exporter-importer relationship. [email protected] SHAWN M. SCHMITT @MEDTECHSHAWN 20 Medicare Finalizes NGS Test Coverage – CMS expanded [email protected] its final coverage determination from an earlier proposal REED MILLER @MEDTECHREED to cover next-generation sequencing diagnostics for more [email protected] stages of cancer, and it did away with coverage-with- AMANDA MAXWELL @MEDTECHAMANDA evidence-development data-collection responsibilities. [email protected] MARION WEBB @MEDTECHMARION 21 Abbott, Merck Like FDA's Plan To Amass More Summary [email protected] Adverse Event Reports, But P&G Says There's A Better SUE DARCEY @MEDTECH_INSIGHT Way – While a handful of large device firms and combination [email protected] product-makers are supporting the US agency's proposed FERDOUS AL-FARUQUE @MEDTECH_DANNY Voluntary Malfunction Summary Reporting Program, Procter [email protected] & Gamble is urging FDA to think twice. ELIZABETH ORR @ELIZABETHJORR [email protected] 23 Health Canada Changes The Rules For Device CATHERINE LONGWORTH @MEDTECHCATE Disinfectants And Sterilants – Health Canada has [email protected] reclassified high-level disinfectant and sterilant solutions ASHLEY YEO @ASHLEYPYEO that are intended for use on medtech products as medical [email protected] devices. They were previously considered to be drugs. MAUREEN KENNY @SCRIPREGMAUREEN [email protected] COMPANIES NEENA BRIZMOHUN @SCRIPREGNEENA 10 Exec Chat: Zimmer Biomet's EMEA Head On Facing The [email protected] New Reality In Health Care – Katarzyna Mazur-Hofsäss VIBHA SHARMA @SCRIPREGVIBHA chats with Medtech Insight about device companies trying [email protected] to cope with the new European regulatory environment JANET HANIAK SENIOR DESIGNER and about how her firm is responding to new demands GAYLE REMBOLD FURBERT DESIGN SUPERVISOR from health-care providers. RICHARD FAINT HEAD OF MEDTECH [email protected] 12 Medtronic Announces End To Shareholder Infuse Case – PHIL JARVIS MANAGING DIRECTOR A securities lawsuit linked to Medtronic's launch and Editorial office: promotion of the Infuse spine device is over after the US 52 Vanderbilt Avenue, 11th Floor, New York, NY 10017 Supreme Court declined to hear the case. phone 240-221-4500, fax 240-221-2561 CUSTOMER CARE: 13 Abiomed Settles Kickback Allegation – An alleged habit 1-888-670-8900 OR 1-908-547-2200 of treating doctors to expensive meals has led to a $3.1m FAX 646-666-9878 settlement. [email protected] © 2018 Informa Business Intelligence, Inc., an Informa company. R&D All rights reserved. 13 Stryker Pushes For Changes To Stroke Care After DAWN – No part of this publication may be reproduced in any form or Stryker wants to be a leader in changing how acute stroke is incorporated into any information retrieval system without the written permission of the copyright owner. treated in the US, moving it from a time-based approach to determine which patients can be treated with thrombectomy, to a physiology-based strategy.

START-UP SPOTLIGHT  join the conversation 14 Payers, Pharma Clients Bank On Prognos' AI To Predict Disease – Prognos recently raised $20.5m to use its artificial We are tweeting, chatting, liking and sharing the latest intelligence capabilities to help insurers predict diseases industry news and insights from our global team of and help pharmaceutical companies to better target drugs editors and analysts ­— join us! to providers and their patients. @Medtech_Insight

4 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � EDITORS’ PICKS� Siemens Healthineers Floats On Frankfurt Stock Exchange TINA TAN [email protected]

iemens Healthineers is now an independent publicly cy and entrepreneurial flexibility" to achieve specific "strategic listed company, with its shares trading on the Frankfurt thrusts" to upgrade the business and drive growth in the mid- S Stock Exchange on Mar. 16 under the ticker symbol SHL. and longer-term. The initial public offering is one of Germany's biggest listings in These so-called strategic thrusts include, among other things: the last few years. • Leveraging digital data and artificial intelligence (DDAI) Earlier this month, Siemens set the price range at €26-€31 per technologies as a horizontal platform; share; up to 150 million shares – about 15% of Siemens' stake in • Focusing on precision medicine and combining all avail- Healthineers – were floated. The offer period ran from March 6-15, able in vitro and in vivo approaches to foster individualized and the final price was set at €28, on the lower side of the guidance. diagnosis in therapy; This valued Siemens Healthineers at around €28bn, much less than • Focusing on coordinating the patient's care pathway and the €35bn-40bn that was previously speculated, and brought in technology-enabled services to offer next-generation, €4.2bn for the parent group. However,when the market opened for technology-based services and solutions; and trading, SHL shares rallied with the first price quote being €29.10. • Building on its core strength in imaging and lab diagnostics. Investor reception to the IPO has been somewhat lackluster The IPO marks yet another key milestone in the 120-plus-year due to the slight deterioration of market conditions and uncer- history of the German group's medical business, which has had tainty over how well Siemen's new automated lab diagnostics to overcome some hurdles, particularly in its IVD segment. It platform, Atellica, is doing against IVD competitors like Roche or ranked fifth in the most recent overall MTI 100 ranking, while it is Abbott Laboratories Inc., according to Reuters. second behind GE Healthcare in the imaging sector, and fourth Siemens had said in August, when it finally confirmed months in the IVD space. of rumors about the IPO, that the move to making Healthineers a publicly listed entity will give the business "the required curren- Published online 03/15/18

Theranos' Holmes, Balwani Slammed By SEC For 'Massive Fraud'

FERDOUS AL-FARUQUE [email protected]

he US Securities and Exchange Commission came down for Medicare and Medicaid Services (CMS) on all its laboratory hard on Theranos CEO Elizabeth Holmes and former com- operators after they found testing deficiencies at Therano's New- T pany President Ramesh Balwani for allegedly defrauding ark, Calif., laboratory. investors. As part of a settlement with SEC announced March 14, "The Theranos story is an important lesson for Silicon Valley," Holmes has given up majority control of the company that she co- said Jina Choi, director of SEC’s San Francisco office. "Innovators founded. SEC says the charges send a message that nonpublic com- who seek to revolutionize and disrupt an industry must tell inves- panies are not above its oversight if lying to investors to raise funds. tors the truth about what their technology can do today, not just The agency says the duo have been charged with "massive what they hope it might do someday." fraud" for raising more than $700m from investors by misleading Steven Peikin, co-director of the SEC’s enforcement division, em- them about the effectiveness of their portable blood analyzer. phasized that investors have a right to know the truth about the com- As a result, Holmes and Theranos have agreed to settle the fraud panies they are putting their money into, regardless of trading status. charges brought against them. "The charges against Theranos, Holmes and Balwani make Holmes says she will pay back $500,000 in penalties and won't be clear that there is no exemption from the anti-fraud provisions allowed to serve as an officer or director of a public company for the of the federal securities laws simply because a company is non- next decade. She will also return the remaining 18.9 million shares public, development-stage, or the subject of exuberant media that she obtained during the fraud period and relinquish her voting attention," he said. control of Theranos by changing the status of her remaining shares. The deal with Theranos and Holmes is pending court approval; Holmes was already not allowed to own, operate or direct a neither party is admitting or denying any guilt once approved. clinical laboratory due to a two-year ban imposed by the Centers The agency says it will separately litigate its claims against Bal-

medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 5 � EDITORS’ PICKS�

wani in a California federal district court. from its status as a Silicon Valley star valued at as much as $9bn, In the charges brought by SEC, the agency alleges Holmes and to a firm that is struggling to survive. Balwani lied to investors and the news media about the capability Scrutiny on Theranos increased following Wall Street Journal re- of their blood analyzer by stating their product could run compre- porting in 2015 that questioned the firm's technology and claims. hensive blood tests from just a few drops of blood, which would In 2015, US FDA came down on the company for marketing its have revolutionized and disrupted the blood diagnostic industry. Nanotainer blood specimen collection tubes without a 510(k). "In truth, according to the SEC’s complaint, Theranos’ propri- (Also see "US FDA Tags Theranos Sample Tubes As Uncleared Devic- etary analyzer could complete only a small number of tests, and es" - Medtech Insight, 28 Oct, 2015.) the company conducted the vast majority of patient tests on The following year it was forced to issue a correction plan to CMS modified and industry-standard commercial analyzers manufac- due to uncorrected testing deficiencies. That agency proposed, tured by others," said the SEC. "The complaints further charge and eventually imposed, sanctions on Theranos and threatened that Theranos, Holmes and Balwani claimed that Theranos’ to revoke its Clinical Laboratory Improvement Amendment (CLIA) products were deployed by the US Department of Defense on certificate. (Also see "Theranos' Correction Plan For Lab Not Enough the battlefield in Afghanistan and on medevac helicopters, and To Stop CMS Threat" - Medtech Insight, 15 Apr, 2016.) that the company would generate more than $100m in revenue Soon thereafter, Theranos was also hit by two class-action law- in 2014. In truth, Theranos’ technology was never deployed by suits claiming it used false and misleading marketing practices the US Department of Defense, and generated a little more than to dupe consumers. (Also see "Theranos Faces Two Potential Class $100,000 in revenue from operations in 2014." Action Suits" - Medtech Insight, 27 May, 2016.) This is just the latest in a series of government actions and me- dia reports in recent years that have brought down the company Published online 03/14/18

New Report Spotlights Intensifying Rivalry Between Tech And Health-Care Companies

MARION WEBB [email protected]

look beyond developing novel drugs and devices, to create busi- ness models that also provide data-driven health services that are more convenient and consumer-focused. The report found that three of the largest tech companies alone filed more than 300 health-care patents since 2013, repre- senting a 38% increase in the number of health-related patents filed by these companies every two years. Among the major tech players are Alphabet (Google's parent company), Apple and Microsoft. Alphabet has initiatives with subsidiaries DeepMind and Verily Life Sciences LLC, and has also joined forces with the virtual dia- betes company Onduo, bioelectronics company Galvani Bio- electronics, and is working on creating smart operating rooms

Shutterstock: Wichy Shutterstock: with Verb Surgical (Also see "M&A Analysis: February, Onco And Cardio Deals Invade Frosty Month" - Medtech Insight, 6 Mar, 2018.) n the changing health-care environment where improving (Also see "Sanofi Joins Google’s Verily In Diabetes Venture" - Medtech patient outcomes, saving costs and providing patient-centric Insight, 13 Sep, 2016, and see "Exec Chat: How Verb Surgical Will De- I care is king, life-science and medtech companies with a sin- liver On Surgery 4.0" - Medtech Insight, 14 Nov, 2017.). gle focus on developing products risk being outpaced and out- Apple, meanwhile, has filed patents to turn its phones into med- smarted by the rising crop of tech companies that offer a broad ical devices, capturing biometric data such as blood pressure and spectrum of data-driven health services, according to Ernst & body-fat levels. The tech giant also teamed up with Stanford Uni- Young's new report, "Progressions 2018 Life Sciences 4:0: Secur- versity to develop algorithms to predict abnormal heart rhythms, ing Value Through Data-Driven Platforms." among others. Both Apple and Verily are participating in US FDA's The report states that more than 75% of life-science Fortune pre-certification pilot program for digital health. (Also see "'Excel- 500 companies may fall out of the ranking by 2023 if they don't lence' In Health-Software Design: US FDA Taps Nine Firms To Figure

6 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � EDITORS’ PICKS�

Out What That Means" - Medtech Insight, 26 Sep, 2017.) Meanwhile, patients to better interact with providers or give them access to Microsoft is expanding its artificial intelligence capabilities and de- peripheral services, such as transportation services, will increas- veloping monitoring devices for chronic conditions. ingly become important, the report stated. "The rapid emergence of technology companies in the life- A lot of life-sciences companies have already seized on that sciences space, coupled with changing expectations by con- opportunity. According to the report, health-care companies sumers, is creating a disruptive shift toward a more partici- signed nearly 90 digitally focused deals since 2014 – 50% in- patory health system where consumers are defining value in volved platform capabilities in diabetes or respiratory areas, and terms of the ability to deliver affordable, personalized health 14% involved products or services to support cancer patients. outcomes that advance lifelong health goals," said Pamela (Also see "Market Intel: Advent Of Artificial Pancreas Tech To Galva- Spence, leader of consulting firm EY's Global Life Sciences In- nize Fast-Growing Diabetes Market" - Medtech Insight, 26 Apr, 2017.) dustry group. "To seize the upside of disruption in this trans- The emphasis on new platforms in diabetes and respiratory care formative age, life-sciences companies must look beyond novel is not surprising given the fierce competitive landscape and rising drugs and devices, and invest, participate in or build platforms number of generic drugs, the reported stated. Advances in creat- of care." (Also see "Ernst & Young Bullish On Medtech's Fusion With ing smart, connected devices that capture user-generated data to Innovation" - Medtech Insight, 25 Sep, 2017.) better manage patient care will become increasingly important. One of the ways to create value, the report suggests, is for "These investments are important, but don't go far enough to health-care companies to implement data-centric platforms of eradicate the risks," Spence said. "Further investments need to make care that seamlessly collect, combine and share health data in sure that connective technologies are placed at the heart of any of- real time with different stakeholders to improve outcomes. ferings. Success in this new market paradigm requires the adoption Consumers “want to know why the health-care industry of flexible, platform-based business models that allow life-sciences still requires them to do the same transactions the same way companies to deliver affordable, improved health outcomes and they’ve been doing them for the last 40 years,” Minalkumar Pa- unlock the power of diverse data streams that reside outside the tra- tel, CEO of ABACUS Insights, a data-focused start-up, and for- ditional health ecosystem." (Also see "Market Intel: From AI-Based IVDs merly chief strategy officer at Horizon Blue Cross Blue Shield, To Precision Drug Dosing: Medtech Conference 2017 Gives Insight Into said in the report. Tomorrow's Technologies" - Medtech Insight, 9 Oct, 2017.) In certain therapeutic areas, especially in the treatment of chronic diseases, connected consumer-facing devices that allow Published online 03/13/18

reimbursement path by partnering with mHealth Developer Works Around self-insured employers and working with payers in different ways to get their Traditional Reimbursement Barriers app directly to patients. Glooko calls itself a digital-health solu- FERDOUS AL-FARUQUE [email protected] tion company. It has developed software to help patients with type 2 diabetes track and manage their disease, and share their health data with a care provider, which could be their physician, nurse or a coach. So far, the company says it has more than 7,000 providers who use the product, as well as Certified Diabetes Educators that the company calls coaches. The firm has captured attention on the market, and it counts Medtronic PLC among its in- vestors. (Also see "Bulked-Up Glooko To Launch 'Unified' Diabetes Offering Next Year" - Medtech Insight, 15 Sep, 2016.)

Shutterstock: jijomathaidesigners Shutterstock: "Something interesting happened in the market; there's been this groundswell etting reimbursed for products patients manage and prevent disease of interest from self-insured employers" is a challenge for any medical face unique hurdles. Diabetes-manage- for products like Glooko, said Michelle de G device company, but digital- ment-app firm Glooko Inc. is one com- Haaff, VP of marketing and customer suc- health firms with apps intended to help pany looking to bypass the traditional cess at Glooko.

medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 7 � EDITORS’ PICKS�

STEPPING AROUND REIMBURSEMENT Employers contracting with health insur- Taking Highway 510(k) ers have seen their costs skyrocketing Besides its ability to integrate various devices and transmit data, one important and have been trying to find ways to re- capability built into the Glooko software is it tells patients to contact their pro- duce those costs. In large part, the rising vider when it detects their blood glucose is at a dangerous level. costs are associated with acute care for chronic diseases, including diabetes. "That was really important, particularly for FDA clearance, that we've got to Employers are seeking new approaches notice that and tell them," Glooko's Michelle de Haaff says. to reducing their employee's health-care Another important part of the software is that it includes a population tracker costs. This has created an opportunity for that gives providers and coaches a risk-stratified view of the patients they are mHealth companies like Glooko. The re- overseeing to help monitor patients who face a higher risk of clinical incident. cent announcement by Amazon.com Inc., "That could be a low, a high, that could be a bunch of lower readings; maybe not Berkshire Hathaway and JPMorgan Chase & hypoglycemia but somebody that's trending low, and we flag that," said de Haaff. Co. to form their own health-care company "Now what's really important to know is this isn't a 911 system. It's not designed for their combined employees to reduce to send an emergency message to a doctor if you're having a low right then and costs has, in particular, caught the attention there. But it is designed for that ongoing preventive care." of digital-health firms. (Also see "New Mega Health-Care Trio Offers Opportunity For Digi- FDA has taken a lighter touch to regulating mHealth and has said it would use tal Sector" - Medtech Insight, 30 Jan, 2018.) enforcement discretion for lower-risk products, but Glooko decided to stay on One strategy from makers of digital- the 510(k) track because it knew eventually it wanted to provide services that health products in response has been would tip it over into a higher-risk category. to reach out directly to self-insured em- "We knew we were going to be going further and wanted to stay and have a ployers to offer their product as a way to historical record," said de Haaff. provide preventive care, which, at least theoretically, could bring down costs as- The firm is currently working on a 510(k) path for insulin titration, which helps sociated with acute care. patients calculate out how much insulin they need to take over a certain period Glooko has taken this approach, de of time to keep their blood glucose stable. Haaff says. In addition, the firm is also The calculation done by the app is similar to how bolus calculators are used to pursuing payers, but not for standard re- help patients with type 1 diabetes figure out how much insulin they need to take imbursement policies. based on their level of activity and food intake. She says Glooko has offered their product to some of the big payers in the US, which However, the insulin titration required for patients with type 2 diabetes is for then offer them to their employer base. long-acting insulin, and they typically need to do the calculation every three to "So, they've added us as part of their seven days to figure out how much insulin they need each day. cost-disease management solution pack- De Haaff says part of the problem is that type 2 diabetes patients often don't fol- age that they offer to the employers that low that regimen and it can take up to a year for them to get properly titrated to contract with them," she said. "It's a little the dose of insulin needed to manage their disease. This isn't the last 510(k) the bit different than reimbursement." company plans to apply for as they hope to expand into other areas. Typically, reimbursement means physi- cians prescribe drugs or devices to treat a According to de Haaff, the company plans to keep their product focused on dia- disease and are reimbursed by the payer, betes instead of looking to expand into other areas, such as asthma or even heart but when the product is for preventive disease, where patients aren't required to continuously check their blood pressure. care, it can be more complicated. Clini- "We've seen so much work to be done here that at this point we've chosen not cians who prescribe Glooko may be re- to expand it," she said. imbursed for reviewing the patient data through their software. But that isn't what the company is doing now, de Haaff says. ward mHealth apps have raised interest software in order integrate it with their Instead, it is offering its software to pay- from payers to also look at the apps to try appointments. These are monthly sub- ers, which then offer it to their members to reduce their costs. scriptions for the software that allows to manage their diabetes and reduce inci- physicians to get a better picture of how dents that require acute care. A LONG ROAD patients with diabetes are doing. In general, she says, the positive re- Glooko's revenue comes primarily in two "There's a little piece of hardware that sponse from self-insured employers to- ways. The first is clinics thatbuy their CONTINUED ON PAGE 19

8 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � POLICY & REGULATION � Saudi FDA Consults On Regulating Device Software, Distribution Requirements VIBHA SHARMA [email protected]

he Saudi Food and Drug Authority is inviting stakeholder feedback on two draft guidelines – one on the regulation T of software as a medical device, and the other specifying Saudi FDA's requirements for the storage, handling and transportation of proposal on medical devices. regulating SFDA's draft guideline on the regulation of software as a medi- device cal device (SaMD) is 105 pages long and is a compilation of four software guidance documents issued by the International Medical Device Regulators Forum (IMDRF) on this topic. These pertain to SaMD mirrors IMDRF key definitions, possible framework for risk categorization and guidelines corresponding considerations, application of quality manage- ment system, and clinical evaluation.(Also see "IMDRF Tackles Aleks_Shutter Shutterstock: Confusion Over Clinical Evidence Expectations for Device Software " - Medtech Insight, 17 Mar, 2016.) requires all medtech products to be stored and transported in The Saudi regulator explained it was inviting feedback on the accordance with the manufacturer's instructions, and to be IMDRF guidelines because it has adopted the organization's in- traceable when supplied to the market. ternationally converged principles on SaMD. It clarified, however, The draft guideline includes several annexes that provide addi- that the IMDRF principles do not represent regulatory require- tional guidance on how establishments should: maintain traceabil- ments and are only intended to be “considerations” for SFDA ity records; interpret temperature ranges mentioned on device la- staff, manufacturers and health-care providers. bels; and draft a written procedure to ensure that devices are stored, handled and transported per the manufacturer's instructions. STORAGE AND HANDLING Also, there are additional annexes on documents required for The draft guideline on the storage, handling and transportation quality assurance purposes, common mistakes that establish- of medical devices applies to all establishments (i.e., authorized ments make with respect to storage, handling and distribution representatives, importers, distributors and local manufacturers) requirements, and the types of violations noted by inspectors involved in importation and/or distribution activities. when checking compliance. The guideline, when finalized, will help these establishments to comply with SFDA's Medical Devices Interim Regulation, which Published online 03/19/18 Goodbye CFDA, Hello MRA: China Overhauls Regulatory Bodies BRIAN YANG [email protected]

hina's State Council has proposed a new reorganization Under the new agency, CFDA will become the China Drug Ad- plan that will reduce the number of state agencies over- ministration (CDA), splitting off its foods regulatory function to C seeing drug and device regulation, in a new proposal call- other agencies, while retaining medical device oversight. (All of- ing for the merger of three agencies including China FDA (CFDA). ficial English names of the new bodies have yet to be confirmed.) Per the proposal, CFDA will be merged with its regulation "The responsibilities [of the new combined agency] include: enforcement agency, the State Administration for Industry and overseeing regulatory management; registering products and Commerce Administration (SAIC), and its inspection agency, the makers, and publicizing and sharing information; organizing en- State Administration for Quality, Safety Inspection and Quaran- forcement activities; taking charge of antitrust enforcement; reg- tine (AQSIQ), to become a new agency: the National Regulatory ulating and maintaining market order; and being responsible for and Management Commission. quality and safety," noted a March 13 announcement. "The China medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 9 � POLICY & REGULATION �

Food and Drug Administration will not be kept as it is." for drugs and health services; and setting policies for drug-bidding The State Council is seeking approval for the proposals from and consumable procurement," an official statement said. the ongoing China's National People's Congress, which is being held in Beijing from March 5-18. STRENGTHENING OVERSIGHT Since April 2013, when CFDA was created after the then-State Food NEW MEDICAL REIMBURSEMENT AGENCY and Drug Administration gained independence and separated If realized, the plans also include the formation of a new Medi- from the then-Ministry of Health, the agency has undergone sev- cal Reimbursement Agency (MRA) that will be the first and most eral changes, but nothing on the scale of the new proposals. influential agency directly under the State Council to oversee Analysts say the moves are intended to enhance enforcement medical insurance policymaking in China. and strengthen oversight. "It is potentially a separation of pre- Currently, there are three basic health insurance schemes to cov- market and post-market functions into two agencies," said Kath- er urban employees, township residents and rural residents, which erine Wang, partner at law firm Rope & Gray's Shanghai office. are managed separately by the Ministry of Human Resources and "The potential impact to the industry could be different stan- Social Security (MHRSS), and the National Health and Family Plan- dards in enforcing the regulations." ning Commission (NHFPC). Upon the birth of the new agency, the One of the agencies CFDA is to be merged with is SAIC, which is the three schemes will be consolidated into a single agency. main regulatory enforcer in China.The old CFDA has traditionally not The new MRA will also take over regulation of drug pricing, and been an enforcement agency, lacking the tools and manpower to health service pricing and reimbursement policymaking, from the perform this function. After the merger, the regulation of products' National Reform and Development Commission (NRDC); it will also post-market commercial activities is expected to be enforced by the oversee centralized procurement for medical devices and drugs. former SAIC component operating under the new umbrella body. "The main responsibilities include: making and enforcing poli- SAIC in 2013 shocked the industry by waging a nation-wide cies for medical insurance, childbirth and child support, as well as crackdown on multiple multinational drug-makers. medical aid; improving the cross-regional health insurance reim- bursement payment system; making policies and adjusting prices Published online 03/14/18

� COMPANIES � Exec Chat: Zimmer Biomet's EMEA Head On Facing The New Reality In Health Care TINA TAN @MedtechTinaTan [email protected]

lready the longstanding leader Disappointing Earnings" - Medtech Insight, in the orthopedic reconstructive 12 Jul, 2017.) device market, Zimmer consoli- The arrival of a new CEO, former A Katarzyna Mazur-Hofsäss, dated its top position in hip and knee im- Medtronic senior exec Bryan Hanson, at president, EMEA, Zimmer Biomet plants even further when it merged with the end of 2017 has re-injected optimism Biomet in 2015. among investors. (Also see "Zimmer Biomet Biomet's total sales, affect the company? However, the bulked-up Zimmer Lands Medtronic Exec As Its New CEO" - This, confirmed Katarzyna Mazur-Hofsäss, Biomet Holdings Inc. has since found Medtech Insight, 19 Dec, 2017.) In his first Zimmer Biomet's EMEA president, is a wor- itself stumbling over a few hurdles, in- conference call to discuss the firm's fiscal ry, but not as much as other issues that have cluding integration issues that have led 2017 results in January, Hanson outlined arisen from the EU regulatory overhaul. to supply-chain problems and keeping his strategy to get the company back on In the edited Q&A below, Medtech In- up with demand for its products, includ- track, which, in addition to ironing out the sight chats with Mazur-Hofsäss about the ing their core hips and knees offering. remaining supply-chain issues, included impact of the new EU regulations across This has had a knock-on effect on the pushing more innovation to the market the medtech industry – not just on big company's sales figures and subsequent- and ensuring the series of global product players like Zimmer Biomet – and on how ly its share price over the last 18 months launches it has lined up for 2018 and be- the company is dealing with new de- or so. (Also see "Earnings Winners & Losers: yond are successful. mands from customers. We also dip into Orthopedics Firms, JNJ, NUVA, SNN, SYK, How will the key regulatory changes her past in the in vitro diagnostics sector ZBH" - Medtech Insight, 2 Aug, 2017, and underway in Europe, an important market and compare the particularities of these see "Zimmer Biomet Names New CEO Amid that accounts for nearly a fifth of Zimmer two very important product sectors.

10 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � COMPANIES �

Medtech Insight: With the new, more stringent EU regulations company was probably at its most acquisitive, and made eight being implemented, how do you see that affecting the speed acquisitions in total in 2016. How do these acquired assets fit into of innovative technologies from Zimmer Biomet reaching the Zimmer Biomet? Additionally, your medtech peers are moving in European market? the direction of becoming providers of whole solutions, rather than just products. Is this where Zimmer is heading? Katarzyna Mazur-Hofsäss: Europe did use to have an ad- vantage [over other geographies] in that the path to market Mazur-Hofsäss: We did make quite a few acquisitions post- here for innovation was faster, without there having been any merger and it was a very busy time for business development – in my strong opinion – negative impact on patient safety. growth. All those deals have something in common. They are But this is changing with the new regulations. This advan- all around some interesting technologies or products. The tage is disappearing and, together with the lower pricing biggest deal was [the $1bn acquisition of LDR Holding Corp.] and much more fragmented nature of the market, it makes in spine surgery [a segment where Zimmer Biomet had a very Europe that little bit less attractive and it matters. Yes, I am small global market share of 5% at that time –Ed.] and anoth- concerned about the EU regulations' impact on innovations er deal was [the $130m acquisition of Medtech SA] in robotic reaching the market. But my number one priority now is the spine surgery. So with these deals we were gaining products, existing products that are already on the market and main- but also new technology platforms. taining their regulatory status [within the new framework]. Another common theme is that they are in or around our core The issue is mainly with the notified bodies; whether they business of musculoskeletal health. All of them are augmenting have the capacity to handle this significant workload that is and enhancing our portfolio of products and solutions in mus- related to ensuring existing products comply with the new culoskeletal care. And indeed, a third way of looking into how regulations, and whether they can do it within the window Zimmer Biomet is growing its offering is this solutions-based of time that they have been given. These are products with trend. We are already a provider of solutions to a large extent. years and years of clinical history. This is a concern shared by We are not selling just metal and plastic pieces but providing many members of Medtech Europe [the EU medtech industry a true care solution through our Signature Solutions platform, association], and particularly by smaller SME members. These [which offers a suite of products and services tailored to each SMEs are very vocal about their concerns over their ability to customer.] Even if we were not smart enough to figure out that keep all their existing products on the market; firstly because a business facing such strong product pricing pressures and of the cost of recertifying and the capacity of notified bod- which has reached a certain maturity level would ultimately ies, which will represent a bottleneck in the process. So, going gravitate toward becoming a solutions provider, there is a very back to the question about innovation in Europe, this is a real clear demand for this from the market. The European market and valid concern, how the new regulations will impact the is particularly innovative when it comes to adopting this new time to market for truly value-adding innovative technolo- business model. Our customers are clearly expecting more from gies. But the immediate concern for many is maintaining their us – they see us as more than suppliers and it's a more meaning- current portfolio in the market – and I speak less on behalf of ful and mutually beneficial partnership when it covers all ele- Zimmer, but more on behalf of other market players the SMEs. ments of care – from patient education to patient interaction; from the perioperative stage, looking at efficiencies in the OR, to Is there anything that you believe big medtech multinationals post-op and the long-term contact and data gathering involved like Zimmer can do or be more proactive about to help allevi- in the recovery process of the patient. All those elements along ate this situation? the flow of care in and outside the hospital is something a com- pany like Zimmer Biomet is providing – consultancy, change Mazur-Hofsäss: We are in the process of planning and doing management support, products and technologies. whatever is possible for us. But just the combination of the timeframe given and available notified body capacity makes I see from your biography that you are a qualified doctor. What it on the verge of impossible for it to happen on time. No mat- area did you specialize in and how long were you practicing? ter how well we are prepared, no matter how proactive we are in initiating the re-registration process for currently available Mazur-Hofsäss: I was practicing medicine for eight years. products, it may still end up being quite a serious disruption I specialized in internal disease and my sub-specialty was in to health care in Europe. dermatology. So quite far removed from what I do now but still, in the area of medicine! In-house innovation is obviously very key to Zimmer's strategy, but what about M&A? One concern arising from the wave of con- What new challenges do doctors face today in their role as a solidation among the big players – including the merger between health-care provider that they might not have faced before, Zimmer and Biomet – was that there would be fewer buyers on and how does this tie in with the clear demand that they've put the market. But the year after Zimmer and Biomet merged, the on companies like Zimmer to provide whole solutions? medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 11 � COMPANIES �

Mazur-Hofsäss: The cost pressures, created by changing de- Mazur-Hofsäss: There are some commonalities between mographic and economic factors, have always been present, these two sectors, one being that both diagnostics and ortho- but that reserve of putting pressure on suppliers and carv- pedics are very capital-heavy. This means our operating model ing out some simple efficiencies from the system has already involves a lot of capital equipment; in diagnostics, these would been largely exhausted. So now we have to be smarter. It's not be the analyzers and in orthopedics, these would be our surgi- enough to run it cheap, we have to be smarter as players in this cal instrument sets. It requires a lot of smart decisions to make very complex and very important health-care environment, this capital equipment really productive, so that it not only and this requires a more systemic and more holistic look. This, benefits patients but make economic sense [for the hospitals in turn, can provide opportunity for stronger partnership and to invest in them.] But diagnostics is a much more industrial- that leads to good results. Just focusing on prophylactic mea- ized form of commerce – it’s a very business-to-business type sures, eliminating wasteful, low value-adding activities in the of interaction. The buying decisions are almost 100% taken process of care – all these things can bring substantial sav- through several levels of people; its most likely hospital admin ings and improve quality of care. It all falls under the banner that makes the final call. In orthopedics, because surgeon pro- of value-based health care, and this is the only way forward. ficiency in a certain type of implant or instrument is incredibly A new element in today's health-care paradigm, which 10-15 important to the procedure outcome, our offering is much years ago we might not have predicted could happen to this more individualized, and training and medical education is at a extent, is the lack of qualified personnel. That is a challenge very high level. This is a very important cost driver for our indus- that health care in Europe will be confronted with in years to try but an absolute necessity for good patient outcome. come. This is partly due to demographics and partly to career choices of the younger population – but they point to an in- This time next year, how would you like to see the EMEA busi- creasing scarcity of nurses and technicians in hospital, and ness of Zimmer Biomet evolve? this trend will unfortunately continue. So this further under- lines the call for eliminating unnecessary activities in the care Mazur-Hofsäss: The merger of Zimmer and Biomet has really pathway or automating them to make them more efficient. met the expectations we had from that transaction. We do have very a strong and phenomenal record of serving our customers Prior to joining Zimmer in 2010, you were at Abbott Labs for and the strongest portfolio in the orthopedics industry, and we nearly 10 years as VP-Diagnostics. What challenges, if any, do will continue to play on these strengths to grow. you think the IVD sector faces that are different from the or- tho sector? Published online 03/15/18 Medtronic Announces End To Shareholder Infuse Case ELIZABETH ORR [email protected]

edtronic PLC is continuing to resolve legal issues keting is still pending in Minnesota District Court. The suit arose tied to the company's controversial Infuse bone-ce- from two complaints filed separately in 2013 that have since M ment product, the company said in a March 2 regula- been consolidated. The company couldn't estimate future costs tory filing. associated with that lawsuit. The filing states that a securities lawsuit against Medtronic is Medtronic also announced that it had settled state attorneys over after the US Supreme Court declined to hear the case. Char- general investigations into Infuse in Massachusetts, California, lotte Kokocinski filed the case on March 12, 2012, alleging that Oregon, Illinois and Washington in December 2017. The company Medtronic and some of its executives had violated multiple fi- didn't admit any wrongdoing as part of the settlements. nancial laws in relation to the launch and promotion of Infuse. A Infuse uses a genetically engineered biological product to Minnesota federal court dismissed the original case in 2013 and help stimulate bone fusion after spinal surgery. Medtronic has it dismissed an amended complaint in 2015. been accused of marketing the product off-label. Additionally, Kokocinski then appealed the dismissal to the Eight Circuit researchers have found that some published clinical trial data Court of Appeals, which affirmed the lower court's dismissal on downplayed the risks and overstated the benefits of the product. March 1, 2017. She subsequently asked the Supreme Court to As of July 2017, the company had resolved or announced plans review the decision. On Jan. 18, the Supreme Court indicated it to resolve 10,000 personal injury cases tied to the use of Infuse. would allow the circuit court decision to stand. Because the Min- (Also see "Medtronic Expects Settlements Of Infuse Suits" - Medtech nesota court dismissed the case with prejudice, Kokocinski can- Insight, 12 Jul, 2017.) not reintroduce the suit. However, an additional class-action case tied to Infuse mar- Published online 03/14/18

12 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � COMPANIES � Abiomed Settles Kickback Allegation Tied To Pricey Meals ELIZABETH ORR [email protected]

n alleged habit of treating doctors to expensive meals A former Abiomed employee filed the original complaint in the has led to a $3.1m settlement for Abiomed Inc. case. The whistleblower will receive $542,500 of the settlement. A The US Department of Justice announced the settle- In a statement about the case, Abiomed said fewer than 2% ment March 8. According to the government, Abiomed violated of meals within the four-year period investigated by the gov- the False Claims Act by buying costly meals for physicians the com- ernment cost more than the company's internal standard. The pany hoped would use its flagshipImpella line of heart pumps. settlement doesn't include any admission of liability and will not Abiomed reportedly took the doctors to some of the most ex- require Abiomed to enter into a Corporate Integrity Agreement. pensive restaurants in the country, including Menton in Boston, Additionally, Abiomed will not be held responsible for any false Nobu in Los Angeles, Spago in Beverly Hills, Calif., and Eleven claims associated with the alleged kickbacks. Madison Park in New York City. Further, DoJ says Abiomed paid "The company cooperated in the investigation from its incep- for alcohol "in an amount inconsistent with legitimate scien- tion in 2014, and believes that this settlement agreement avoids tific discussion" and included doctors' spouses at some of the significant additional costs of litigation, and removes legal risks dinners. The costs exceeded Abiomed's own $150-per-meal and uncertainty related to this issue," the statement reads. standard, with costs of one meal coming in at more than $450 Abiomed said it's still fighting the whistleblower's claims of per attendee. Additionally, Abiomed sales staff reportedly pad- employment retaliation in court. ded the count of diners at the meals to make the per-head cost seem lower. Published online 03/16/18

� R&D� Stryker Pushes For Changes To Stroke Care After DAWN REED MILLER [email protected]

tryker Corp. wants to be a leader in changing how acute stroke is treated in the US, moving it from a time-based ap- S proach to determine which patients can be treated with thrombectomy, to a physiology-based strategy that the compa- ny says will bring more effective therapy to more patients. US FDA recently approved new labeling for Stryker’s Trevo Re- triever thrombectomy device, indicating it as front-line treatment for acute ischemic stroke up to 24 hours after symptom onset, 18 hours more than the window in the previously approved labeling. Trevo Retriever is the first stent retriever to earn this indication since The DAWN results were confirmed in DEFUSE 3, which showed the American Heart Association and American Stroke Association that mechanical thrombectomy improved the patients' functional extended the time-window in their guidelines on early manage- outcomes at 90 days. DEFUSE 3 included patients with perfusion- ment of patients with acute ischemic stroke. The guidelines were core mismatch and maximum core size between six hours and 16 updated in January to coincide with the International Stroke Con- hours from the last time the patient was deemed to be well. The ference (ISC) in Los Angeles. (Also see "ISC 2018: DEFUSE 3 Results patients were randomized to thrombectomy with an approved Bring DAWN Of New Stroke Guidelines" - Medtech Insight, 31 Jan, 2018.) device – including Trevo Retriever, Medtronic PLC's Solitaire FR, The guidelines reflect the results of the DAWN and DEFUSE 3 Penumbra Inc.'s Penumbra, and Medtronic/Covidien's MindFrame trials. DAWN randomized acute stroke patients, with a mismatch – or medical therapy alone. At the six-month follow-up, the func- between the severity of their clinical deficit and the volume of the tional outcomes in the thrombectomy group were significantly infarct, to treatment either with Trevo Retriever combined with better than those of the medical therapy group. standard medical care six to 24 hours after the onset of symp- "The guidelines allow systems of care to start to open up to toms, or standard medical care alone. The patients in the Trevo these patients, and we're extremely excited to be able to have Retriever group had better outcomes at 90 days than the control clinical evidence like this," Mark O’Brien, general manager of patients. (Also see "Stryker's DAWN Thrombectomy Trial Could Also global commercialization for Stryker’s neurovascular division, Help Medtronic And Penumbra" - Medtech Insight, 15 Nov, 2017.) told Medtech Insight.

medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 13 � R&D�

The lead investigator for DAWN, Raul Nogueira of Grady Me- cal trials, but through policy work and other areas to make sure we morial Hospital and Emory University in Atlanta, told Medtech continue to have efficient movement of patients from the time we Insight: "Up until now, we were using a very rigid paradigm to recognize a stroke to the right hospital in the right manner. select patients for stroke reperfusion therapy." The time window "From a company standpoint, there's always education we can when tissue plasminogen activator drugs were thought to work push forward and we're doing that," he added. was zero to 4.5 hours after symptoms, and the window for me- "Coming out of the ISC meeting, we've done a lot of awareness chanical thrombectomy was zero to six hours. events for professionals and patients to make sure everybody is "But what we brought to the field [with DAWN] is a more physi- aware of this data and continue to push that forward, trying to ological approach to patient selection, where we're essentially iden- make sure that we get the systems set up to accommodate pa- tifying patients with high clinical severity [with] a small lesion on im- tients to get there in a timely manner," O'Brien said. "There are aging," Nogueira said. "We believed that was a surrogate biomarker efforts from [professional] societies, as well as manufacturers, to of treatment response, regardless of symptom duration or occlusion try to make sure the information is out there around this extend- duration. That's the main novelty here. It's more than opening up ed window. We're pushing forward and we're excited about it." the window from six to 24 hours; it's also another way of thinking Nogueira said the part of acute stroke treatment that needs the about stroke. It's more physiology-based rather than time-based." most attention is the treatment the patient gets before they reach Currently, fewer than 10% of patients suffering from an ischemic the hospital. "That's the area where you can make the most change stroke receive thrombectomy. The extension of the time window to the field in terms of treating more patients," he said. "Bringing the could expand the potential population for mechanical thrombec- right patients at the right time to the right places is very important." tomy by 40%, but few hospitals are ready to treat all the stroke He also identified some important topics for new research. "We patients covered by these new guidelines, Nogueira cautioned. need to understand the limitations in terms of infarct size," he "There will be a need for a big readjustment in the systems of care." said. "We don't know the benefit of treating larger strokes and Most hospitals do not have a standard procedure for treating we definitely don't know the boundary where you lose benefit so-called "wake-up strokes" – strokes that afflict patients while completely because of the size of the stroke. That's the single- they're asleep or patients who present more than six hours af- most important reason why patients aren't treated now that time ter the stroke symptoms started. These "stroke codes" should is not an issue – the size of the stroke upon presentation." be in place at both comprehensive stroke centers and primary- More research is also needed on stroke patients who have a care centers. "There needs to be a big rearrangement in the way big artery occluded, but only display mild symptoms because things are done in order to capitalize on the potential benefits there's still good collateral flow around the occluded vessel. "At patients can have," Nogueira said. this point, most [doctors] are not treating those patients but they "There are centers that wouldn't be necessarily taking [throm- have a high chance of deterioration," Nogueira said. "That would bectomy] on and potentially patients who may not make it to be a good topic for a randomized clinical trial." these centers because they're beyond that window," Stryker's He also called for more research to establish the "minimum" O'Brien said. The new FDA-approved indication and the profes- imaging required to guide thrombectomy, as many centers don't sional guidelines support "our ability to help hospitals change have advanced imaging technology like MRI. "Finding out what protocols to be able to allow for patients – especially in centers you can get away with in that extended window will also be an who aren't doing significant stroke work today." important issue," he explained. Stryker will "continue to go after systems of care" to improve acute-stroke outcomes, O'Brien said. "It may not be through clini- Published online 03/14/18

� START-UP SPOTLIGHT � Payers, Pharma Clients Bank On Prognos' Artificial Intelligence To Predict Disease

MARION WEBB [email protected]

he shift toward value-based health and providers to create better outcomes. to providers whose patients may benefit care has created an ever-growing One of these companies, New York- from a particular drug. T need for technology companies based start-up Prognos, formerly known Since the company was founded in that apply artificial intelligence, or ma- as Medivo, last November raised $20.5m 2010 as Medivo, before changing its chine-learning-enabled algorithms, to in Series C funding to use their AI capa- name to Prognos in 2017, it has raised a large sets of data and extract valuable in- bilities to help insurers predict diseases total of $42m. The funding was used to formation that can be used by companies as well as lead pharmaceutical companies build out a massive registry - made possi-

14 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � START-UP SPOTLIGHT � ble through the company's relationships disease and lung cancer. Access to Prog- with diagnostic laboratories - that amass PROGNOS nos' database is subscriber-based with data on some 180 million patients. 85 Broad Street, pharma clients paying an annual fee to get Prognos' financial backers include a mix 18th Floor weekly updates on requested data and in- of health insurers, pharma companies New York, NY 10004 US surers' paying a member-per-month fee to and VCs: Cigna, GIS Strategic Ventures gain access to member information. (the venture capital arm of the Guardian Contact: Lisa Kerber, Chief Oper- "On the commercial pharma side, we Life Insurance Company); Hermed Alpha ating Officer help them (pharma companies) market Industrial, Hikma Ventures (the venture Industry Segment: Disease pre- their medications to the right doctors, capital arm of Hikma Pharmaceuticals diction/digital health so that the right patients can get on the PLC), Maywic Select Investments, Merck drugs at the right time," Bhan explained. Business: Use health-care AI and Global Health Innovation Fund and Safe- "On the payer side, we help them identify clinical lab diagnostics to predict guard Scientifics Inc. gaps in care and assess risk of individuals disease to drive earlier care deci- Jason Bhan, Prognos' cofounder and under their care that helps them prioritize sions in collaboration with pay- chief medical officer, is a trained fam- outreach that they have for patients and ers, life sciences and diagnostics ily practitioner turned health IT specialist with whom they need to intervene." companies and entrepreneur. He said he plans to use Bhan declined to give revenue figures, the newly raised funding to further build Founded: 2010 but said the company is in growth mode out the company's AI system and hire Co-founders: Jason Bhan and and looking to add to its current team of more talent to grow the company. Sundeep Bhan 100 employees. The company's lofty long-term mission is to use AI and other smart technologies Employees: 100 BUILDING BLOCKS to eradicate disease. Financing To Date: $42m The company has come a long way since it "Our vision is to use the data and the was co-founded as Medivo in 2010 by Jason Investors: Cigna, GIS Strategic product and the capabilities we have to Bhan and Sundeep Bhan, Prognos' CEO. Ventures (the venture capital eradicate disease. In the interim – over At Medivo, Prognos was a participant arm of the Guardian Life Insur- the next five years – we will figure out in StartUp Health's inaugural class whose ance Company); Hermed Alpha how to predict where disease is going to mission was to make it easier for patients Industrial, Hikma Ventures (the occur and enable others to intervene at to access lab data and make it easier for venture capital arm of Hikma those points, so we can help people get them to understand the data. Pharmaceuticals), Maywic Select diagnosed and then treated faster," Bhan Bhan said the company took years to Investments, Merck Global Health told Medtech Insight. build out a clinical registry and develop Innovation Fund and Safeguard Medtech Insight and Bhan caught up relationships with big laboratories such Scientifics Inc. in January this year at the JP Morgan as Quest Diagnostics Inc., LabCorp and Healthcare conference in San Francisco, Board Of Directors: Raymond NeoGenomics Inc. and hundreds of oth- the traditional annual kick-off meeting Hill, Chairman and CEO Corona er labs that did everything from simple for the biopharma industry and a key Holdings; David Stack, President, blood chemistries to very complex mo- venue for company announcements and CEO and Director Pacira Pharma- lecular diagnostics. deal-making. ceuticals; Gary Kurtzman, MD, "The lab industry is pretty fragmented Bhan said he accomplished his goal of Managing Director Safeguard so there is something like 5,000 labs out finding strategic partners at the meeting, Scientifics; Joseph B. Volpe III, there, but the main reference labs have having landed both Cigna and Guardian VP, Managing Director & GM somewhere between 30-50% of all data, Life as investors and new clients. "They Merck Global Health Innovation; if you take the top 10," he said, adding are users of our existing products and cli- Sundeep Bhan, Co-Founder & "We worked with those first and then ents," Bhan said. Chief Executive Officer; Jason worked on the long tail with a focus on To date, Prognos is leveraging informa- Bhan, MD, Co-Founder & Chief oncology or specialty or rare diseases." tion from what Bhan claims is the largest Medical Officer; and Swati Abbot, Bhan said unlike some of their com- aggregated database of lab results in the CEO, Blue Health Intelligence. petitors, the founders decided early on to US for its client base of 20 pharma compa- Scientific Advisory Board (Life focus on laboratory and diagnostic data, nies and six payors. Sciences): Raman Kapur, Viren which he believes will become even more The Prognos AI model uses roughly a Mehta, John Kamp, Vita Cassese, valuable over time for pharma companies thousand machine-learning-enabled al- Michelle Woker and others. gorithms to predict 50 conditions includ- He exemplified, "In places like oncology, ing rare diseases, asthma, diabetes, heart nearly 100 percent of medication choices medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 15 � START-UP SPOTLIGHT � are based on tumor profiling - what is the the registry base and start working with enue in the AI health market is expected to genetics of the tumor? what are the mu- pharmaceutical and insurer clients. climb to $6.6bn by 2021, a CAGR of 40% and tations present? - and by looking at that "One of the gaps in artificial intelligence in the next five years is expected to grow you determine what drug combination or is actually having data – a lot of people ten times. Many of the big pharmaceutical what drug to pick." have the know-how and the computa- companies are expanding their AI capabili- To create predictive analytic mod- tional power – but what a lot of people ties to streamline their drug development els, one needs reliable, accurate data to lack is the actual data to work on," he said. and research efforts (Also see "Market Intel: start out with, which is one of the big- After having amassed billions of test Artificial Intelligence Brings Wave Of Future gest problems in using AI applications in results from more than 100 million pa- Health Care Innovation – Embrace it or be Left health care today. Bhan said he learned tients, Bhan said they hired the chief data Behind" - Medtech Insight, 28 Jul, 2017.) that first-hand. scientist who had the talent to apply AI to In July 2017, GlaxoSmithKline PLC inked Bhan spent three years at Clinovations actually make the data "think forward" or a $42.7m deal with UK-based Exscientia where he managed the implementation predict disease. Ltd. to use its AI capabilities to discover of electronic health systems at large hos- To make the company more relevant, small molecules to treat up to 10 targets pitals and smaller health systems before the team decided to rename the compa- chosen by the pharma giant. Johnson & starting Medivo in 2010. ny Prognos, short for Prognostic, which Johnson, Pfizer Inc. and Novartis AG as "I spent a lot of time implementing is the ability to "anticipate" or "think for- well as medtech giant electronic health records," Bhan said. ward," Bhan said. Medtronic PLC all have teamed up When he and his team were asked to Prognos is one of several companies with IBM's Watson Health to use its cog- evaluate the usefulness of the EMR sys- using algorithms to extract valuable in- nitive computing capabilities. (Also see tem, they realized that the clinical notes formation for health care clients. "New Report Spotlights Intensifying Rivalry doctors put into the system weren't near- Health IT company Symphony Health, Between Tech And Health-Care Companies" ly as reliable as the diagnostic system. based in Conshohocken, Pennsylvania, - Medtech Insight, 13 Mar, 2018.) That's because often doctors incorrectly also offers cloud-based analytics solu- Bhan said that the challenge with AI used the system's clinical notes, which tions to life science companies and health is that it can be applied to solve pretty are part of the medical record system care organizations. The company said on much any problem, but he feels that to that document a patient's clinical status its website that its data base anonymized get value-based solutions one can trust, or progress over the course of treatment. data sets containing claims and prescrip- one should ask specific questions rather Bhan said that problem persists. tion dispensing information for more than than trying to solve complex problems. "If you're using it to take care of your pa- 280 million patients. The analysis shows (Also see "IBM Forms Health Company, tients, that's fine, but when you're trying cohorts of high-deductible patients, Forges Partnerships With Apple, J&J, And to use it for population health or certain which can then be linked to plans and ana- Medtronic" - Medtech Insight, 29 May, 2015.) parties are trying to use it (EMR data) to lyzed year over year to determine shifts in "I think in the next few years, you're go- intervene, then it's not fine," he explained. prescription acquisition trends and behav- ing to see a slow adoption of trusted AI Bhan had already worked with his cous- ioral dynamics, according to the company. implementation before we get to these in, Sundeep Bhan, a serial entrepreneur, According to market research by Accen- massive solutions where we don't really on his previous venture Medsite.com ture, when combined key clinical health AI understand why AI made that determina- Inc., a health tech company that was sold and machine learning applications can po- tion," he said. to WebMD. In 2010, they decided to team tentially create $150bn in annual savings for up again. At Medivo, the goal was to build the US health care economy by 2026. Rev- Published online 03/20/18

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16 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � POLICY & REGULATION � Brexit To Force Large-Scale Review Of Medtech Contractual Arrangements Throughout EU AMANDA MAXWELL [email protected]

e still do not know what the terms of Brexit are going to W be. But if there is a hard Brexit and no mutual recognition agreement (MRA) between the UK and the EU, the dynamic between UK manufacturers and their product distributors in the EU27 will change to a more formal exporter- importer relationship. Such changes in relationships could ne- cessitate entirely new contracts between UK companies, and those companies and other stakeholders with whom they do business in the EU, Alison Dennis, partner, life-sciences at the London offices of law firm Fieldfisher, said during the opening Samot Shutterstock: session of a meeting organized by her firm in London earlier this month. The gather- ing was titled, "Selling Medical Devices: Who's Who Embracing the Challenges and Opportuni- ties of Regulatory and Legal Change." • Economic Operator: Manufacturer, authorized representative, importer, or Dennis' words echoed those of the Eu- distributor. Each have very specific obligations under the MDR and IVDR. ropean Commission, which, in a January • Manufacturer: Entity that manufactures product or has a product manufac- 2018 notice to stakeholders on the with- tured to place on the market under its own name or trademark. Also applies drawal of the UK from the EU, asserts that to persons who change intended use of a product. importers will have to comply with specific • Authorized Representative: EU-based and acting on behalf of a non-EU obligations that differ from those of a dis- manufacturer in the context of the MDR and IVDR. tributor. (Also see "Commission Spells Out • Importer: Entity in the EU that places a product from a non-EU country on Non-Recognition Of UK Organizations In the EU market. Future EU" - Medtech Insight, 17 Jan, 2018.) Also, because UK companies will find • Distributor: Entity in the supply chain that makes a device available on the themselves outside the EU, in the case of market other than the manufacturer or importer. a hard Brexit, they will need to either set up an office or appoint an authorized rep- resentative in the EU27, Dennis said. account for about half of all authorized representatives that need to be worked This could prove difficult. With a hard representative appointments in EU for out with regard to the UK manufacturer. Brexit and no MRA, the demand for au- device companies. Both distributors and importers need to thorized representatives in the EU27 will But it is not only contracts between cur- verify regulatory compliance by the man- escalate. Not only will UK companies need rent UK companies and their EU distribu- ufacturer under the terms of the new EU to make new appointments, but non-EU tors that will change. In all likelihood, EU Medical Device Regulation (MDR) and IVD companies that have been using UK au- companies will also find themselves Regulation (IVDR). It would therefore be a thorized representatives will also have to having to re-establish contracts with UK good idea, Dennis said, for manufactur- appoint a new authorized representative. distributors who will need to act as their ing companies to be prepared to provide According to the European Commission's importers too. the necessary information to the relevant January notice, UK authorized represen- There is also the complexity of the tripar- economic operators at the contracting tatives will no longer be recognized af- tite relationships and relative responsibili- stage. And both entities are required to ter Brexit; those organizations currently ties between the importer and authorized immediately inform the manufacturer medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 17 � POLICY & REGULATION � and the authorized representative in the case of serious risks with devices. UK Law Uncertainty 'SERIOUS RISK' CLAUSE It's still uncertain whether the EU MDR and IVDR are going to be fully imple- NEEDED IN IMPORTER, mented in the UK, and remain UK law. The UK regulatory authority, the MHRA, is DISTRIBUTOR CONTRACTS still saying that it will follow the MDR and the IVDR, but the government has not It is vital, too, that this is addressed in the yet decided whether this truly will be the case. contract, Dennis said, along with a time- line for reporting by distributors and im- Given that much of the MDR/IVDR legislation has still to be drafted in the context porters of "serious risks" from devices to of the implementing and delegated acts, and also that the European Commis- manufacturers. sion is granted a significant range of powers under the new regulations, there The reason for this is that where a de- would need to be a lot of work done to make the MDR and IVDR work for a vice represents a serious risk, distributors sovereign UK, Dennis said. and importers must also immediately in- form the competent authorities of all the relevant member states and the notified can at least be a brief debate before the au- significant upheaval in the EU as 50% body. But the concept of "serious risk" is thorities are notified. Manufacturers could of EU medtech authorized represen- not defined in the MDR and IVDR, and the try and put provisions in any contract to tatives are in the UK. decision of whether to tell the authorities deter a distributor or importer from notify- • The person responsible for regulato- is a subjective one. ing the authorities unnecessarily, including ry compliance does not have to be in This presents a problem. When consid- some sort of indemnity clause, Dennis said, the EU, so they can be situated in the ering adverse events under the current but this could be tricky to negotiate. UK. (This is different to the situation Medical Devices Directives, manufactur- The matter may well deter some com- for pharma whose "qualified per- ers will often have a long internal debate, panies from using distributors and im- sons" are required to be EU-based.) in Fieldfisher's experience, over whether porters, Dennis suggested. But, of course, • The UK government's open letter a risk is indeed a serious risk. It can take UK companies selling to Europe following dated Jan. 26 states that terms of trade weeks or months to decide. a hard Brexit will have no choice but to will remain unchanged – which sug- But this will now be taken out of com- use importers in the EU27. gests that for companies that are com- panies' hands because distributors and plying with EU law at Brexit will also be importers will risk their own businesses BACK TO BREXIT: complying with UK law, even though if they delay in informing the authorities OTHER CONSIDERATIONS it's not clear what the law in the UK will about devices under their responsibility. Other important considerations in the be. (See box, "UK Law Uncertainty.") Distributors and importers are likely to be event of a hard Brexit and no MRA, ac- • Importers will need to have their more inclined to inform the regulatory au- cording to Dennis, are: names on the labels of products. thorities about product risks, compared to • Companies will need to transfer de- • Importers and authorized represen- manufacturers, because they would be in vices certified by a UK notified body tatives are required to be registered a position to lose one or two devices when to an EU27 notified body. with national regulatory authorities. they can choose to sell others. • It seems likely that the UK MHRA will • If you have community trademarks, Such action by the distributor or import- recognize certification through an EU27 they will no longer cover the UK. er will put manufacturers under pressure country; otherwise, the flow of devices • You will have to register a UK to make up their minds more quickly, or into the UK will be severely impacted. national mark, which can be done to have to react promptly once notice has • Any change of notified body can separately and in advance of Brexit. been given to the regulatory authorities. take 13-14 months at least. But Brexit • It is not known if the UK will par- Manufacturers will want to ensure that is due to go forward on March 29, ticipate in the Unified Patent Court, their quality and regulatory teams are at 2019, in less than 13 months. An although the life-sciences branch of all times on top of adverse event data and alternative is to transfer within the the court is meant to be in London always prepared to discuss analysis with same notified body from the UK to and a building has been created to regulatory authorities at short notice. an EU27-located entity, which might house it. The patent treaty still needs There is not a great deal that manufactur- be quicker and less expensive. ratifying by the UK, and there has ers can do to avoid this scenario. But they • Companies from outside the EU been a challenge from an individual can consider ensuring a clause is added to making use of authorized represen- in Germany, which is currently being the relevant contracts with distributors and tatives in the UK will need to use an decided in the German courts. importers stating they should inform the authorized representative based manufacturer of product risks first so there in the EU27. This is likely to cause Published online 03/15/18

18 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � EDITORS’ PICKS�

CONTINUED FROM PAGE 8 enough that we're getting uptake from it will send them a reminder to manually we put in their office that allows them to payers and making it a part of their chronic log that data into the program. suck the data out of all these different de- disease management solution, so that's a Furthermore, the app also has a data- vices and then into the cloud securely, and better business model," she said. "We're base of foods to help patients track their they access our population tracker to sup- pursuing both and currently supporting calorie and sugar intake as well as a goal- port those patients in office," said de Haaff. the business through the payer solution." setting engine to help them improve She also notes some device companies their lifestyle and manage their diabetes. sponsor Glooko when selling their prod- THE GAME HAS CHANGED "Our goal is to help individuals through ucts to clinics, where they give Glooko The situation isn't unique to Glooko, ac- self-management, but what we found is away when their own device is purchased. cording to de Haaff. She says most digital- people do much better if they're able to The second key way the software has health companies have tried to get access connect to their care team as well," noted been sold is directly to patients on a to users and members in nontraditional de Haaff. "The nice thing is providers can monthly subscription. In most cases, the ways. While the US health-care system use it when you're in the [doctor's] office product is offered by insurance carriers to has been moving to a more value-based or remotely, or anytime in between to give their top employers and they only require care model, it still operates to a large de- that support you need as an individual." payment once patients start using the app. gree based on fee-for-service, which is a De Haaff says they are also working on barrier for digital-health companies that TAKING A CHANCE the traditional reimbursement route to get provide preventative care. It's been helpful to Glooko that it has ear- Centers for Medicare and Medicaid Ser- "The mindset wasn't there before," said ly-adopter payers and self-insured em- vices (CMS) codes, but it's a much "longer de Haaff. "So most of us oriented around ployers that, de Haaff says, are more "in- road" and getting their products to patients preventative care had to do something novative" and have been willing to give through employers and payers is helping else, so we started talking to the payers and their software a try. them aggregate the necessary data to prove providing proof of various programs and "I don't know of any other digital-health their product should qualify for those codes. pilots, and talking to doctors that we actu- company that started with that route," said There are codes already out there for ally did make a difference and they started de Haaff. "We actually first started with the remote monitoring, digital health and to see that and started to prescribe it." health systems and we essentially went to telehealth that clinicians can use to bill for "The reason why we are attracted to them and said, 'You've got to be looking at Glooko, but so far there isn't a perfect code payers maybe a little differently than oth- data when treating patients and because that describes what the app does, accord- er players in the market is a lot of players you have data from all these devices; put ing to de Haaff. The closest thing to a code in the digital-health market have come us in your system in your office and look that matches Glooko's intended use is one up with a proprietary piece of hardware," at the data at least when [patients] come for chronic disease management, but it's adds de Haaff. in for an appointment and if it's somebody relatively new and allows clinicians to get re- Often digital-health companies will you want to track while they're away, mon- imbursed for remote monitoring only when create hardware such as their own blood itor them remotely using Glooko.'" patients have two or more chronic diseases. glucose meter or blood pressure moni- There is a growing number of digital "Originally, CMS put all these require- tor to go with their mHealth app to get health products that are intended to help ments for all these codes and essentially around what is offered in formularies. patients manage their chronic disease, but what companies like ours do is that you have Glooko, however, says it gets around the de Haaff says many of them leave the phy- to go and talk to CMS and work with them to formulary by being compatible with a sician out of the equation. For a disease get a code created that kind of fits what you wide range of diabetes care devices. such as diabetes, the doctor's ability to do, particularly for something new," said de "The nice thing about us for the payers monitor their patients on a day-to-day ba- Haaff. "That's a lot of work and it takes time, is that if they say, 'You know what, part of sis is a key part of making sure the patient and we're doing that, but we also wanted to our formulary is the Abbott Freestyle or the is properly taking care of themselves. show value and allow folks to be active in Roche meter, or the OneTouch UltraMini "It's not enough to do just one piece of Glooko before that comes to fruition." from J&J,' we say, 'Great, we support all of the care plane: the diet, the exercise, the It is possible, de Haaff says, that the them," said de Haaff. "So the members can medication. All of the other comorbidi- company could eventually give up on the stay on their formulary, they can still lever- ties come into play in helping somebody traditional reimbursement route if it turns age their savable prices and still access the to improve their diabetes health," said de out it is making enough business simply digital health solution of Glooko." Haaff. "We felt it was important to have an by getting payers and self-insured em- The app also integrates with other offering also for the provider." ployers on board in the current manner. health devices, such as exercise devices, That's why for patients who want to "At some point we might say, 'nah,' be- activity trackers and digital weight scales. share the data from their various diabetes- cause the cost reduction in us just being a If the patient does not have devices to au- and health-monitoring devices with their solution that's provided to a payer is strong tomatically transmit their data to the app, physician, Glooko has an option to do so medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 19 � EDITORS’ PICKS� in the mobile app. According to de Haaff, get excited about. tion technology does so you can get that most patients opt to let their clinician see "We started with a mobile app that pa- proof out there. That's been really im- how they are managing their disease. tients really got excited about and from portant for us to getting the attention of For other digital-health companies, Haaff their proving that value," she said. "The health systems, clinicians, payers – even has some simple suggestions. First, she advice I would have for these companies self-insured employers." recommends firms need to focus on is do clinical studies, do work to prove the building good products that patients can value of what your digital-health solu- Published online 03/16/18

� POLICY & REGULATION � Medicare Finalizes NGS Test Coverage For Advanced Cancers, Drops Evidence-Collection Provision

SUE DARCEY [email protected]

March 16 final Medicare national cer that is ultimately approved by FDA. For stage III cancer, when consistent with the coverage determination (NCD) NGS assays that are not FDA-approved com- FDA-approved or -cleared test," comment- A for next-generation sequencing- panion diagnostics, such as lab-developed ed Don May, AdvaMed's executive VP for based diagnostics for advanced cancers tests, the agency says it will allow its region- payment & health-care delivery policy. should help patients gain wider access to al contractors to determine coverage. "Many commenters reported that they the tests, Centers for Medicare and Medic- A proposed NCD that was issued on are already developing or have devel- aid Services Administrator Seema Verma Nov. 30 stated that the agency planned oped the evidence to demonstrate these says. CMS expanded its final NCD from an to provide coverage for NGS diagnostics diagnostics laboratory tests using NGS earlier proposal to cover more stages of can- when "evidence is sufficient to cover NGS to improve health outcomes for Medi- cer and ultimately did away with coverage- as a diagnostic laboratory tests" for pa- care beneficiaries with cancer – or are with-evidence-development (CED) data- tients with "recurrent, metastatic or ad- equipped to conduct their own stud- collection responsibilities for test sponsors. vanced stage IV cancers." ies to generate evidence that use of the "We want cancer patients to have en- However, after receiving over a thou- test guides management and treatment," hanced access and expanded coverage sand comments on the NCD, CMS took a CMS stated in its final decision. when it comes to innovative diagnostics second look, and decided in its final NCD However, the agency also encouraged that can help them in new and better ways," on March 16 to also cover relapsed, refrac- sponsors to continue any studies on the Verma remarked. The decision will also tory or advanced stage III cancers. (Also see tests and, in particular, to publish results "support laboratories that currently furnish "Lab Industry, Cancer Groups Want Expand- they see on the endpoints of overall sur- tests to the people we serve," she added. ed Medicare Coverage Of NGS For Advanced vival, progression-free survival, objective When used as companion diagnostics, Cancers" - Medtech Insight, 28 Feb, 2018.) response and patient-reported outcomes. the NGS tests can help pinpoint which pa- The proposal also included CED regis- The American Clinical Laboratory Asso- tients with genetic mutations might ben- try requirements for NGS assays that are ciation, which represent commercial lab- efit from FDA-approved therapies, mak- not FDA-approved as a companion diag- oratories, including those that sell non- ing the NCD an important advancement nostic for a cancer drug. But the final ver- FDA-approved laboratory-developed in the field on personalized medicine. sion removed the CED conditions and left tests, said on March 16: "We recognize The decision follows on a parallel re- coverage of such assays up to Medicare that CMS has made significant changes view the Medicare agency conducted Administrative Contractors. from the draft NCD as a result of the with FDA that led to approval and pro- Manufacturers and organizations as concerns expressed by many stakehold- posed coverage of Foundation Medi- varied as AdvaMed, Johnson & Johnson, ers. We are evaluating the final NCD with cine Inc.'s FoundationOne CDx multi- Bayer Corp., the American Society of Clini- our members, and will determine how it drug companion diagnostic test in late cal Oncology and the Friends of Cancer Re- aligns with ACLA’s goals of maintaining November. (Also see "First Expedited NGS search had pushed the agency to expand access to laboratory testing for Medicare Test Breaks Through FDA Review" - Medtech the coverage policy in response to the beneficiaries, and spurring continued in- Insight, 1 Dec, 2017.) November proposal, and thus are likely novation in this cutting-edge and clini- The new Medicare policy allows national to be pleased with some elements of the cally impactful testing." coverage for that test, as well as any other final determination. "Coverage should not NGS-based companion diagnostic for can- be foreclosed for a patient with advanced Published online 03/15/18

20 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � POLICY & REGULATION � Abbott, Merck Like FDA's Plan To Amass More Summary Adverse Event Reports, But P&G Says There's A Better Way SHAWN M. SCHMITT [email protected]

ammoth manufacturers Abbott Laboratories Inc. and Merck & M Co. Inc., along with some device industry advocacy groups, are cheering on US FDA's plan to collect more adverse events in a summarized format. But one device-maker – Procter & Gamble Co. – is urging the agency to rethink its plan. Proposed by FDA in December, the Vol- untary Malfunction Summary Reporting Program will allow companies to submit Medical Device Reports to the agency each quarter in a bundled, line-item fash- ion for a wide array of products. (Also see "FDA Asks For More Summary Adverse Event Reports Under Proposed MDR Pro- gram" - Medtech Insight, 26 Dec, 2017.)

The goal is for FDA to receive fewer Trapezondal Shutterstock: individual MDRs and to lessen the time firms spend preparing the reports. posted online by the agency showed disregarded that requirement with little Most MDRs sent to the agency in 2017 – concern from public-health advocates explanation. (Also see "MDR Reporting: 964,325 – were reported individually on about the plan. (Also see "Stakeholders To FDA Embraces Adverse Event Summaries full MedWatch 3500A reporting forms, an FDA: It's A Bad Idea To Ask For More Adverse Under MDUFA IV, But Flouts Similar FDAAA 11% increase from the previous year. (Also Events In Quarterly Summary Reports" - Mandate" - Medtech Insight, 5 Jan, 2017.) see "FDA Awash In Adverse Events: All-Time Medtech Insight, 6 Mar, 2018.) The agency should "reconsider the pro- High Of 1.5 Million MDRs Reported In 2017" Yet in newly posted letters to FDA, Merck, posed approach and instead implement - Medtech Insight, 21 Feb, 2018.) Abbott and one anonymous device compa- the FDAAA amendments regarding a The upcoming program addresses goals ny said they backed the agency's scheme. more streamlined reporting of class I and outlined in a 2016 MDUFA IV commitment "We support FDA's efforts to increase effi- class II malfunctions," P&G Principal Sci- letter, which was the result of yearlong ne- ciency through use of summary reports in entist Michael Kaminski writes. gotiations between the agency and trade lieu of filing individual reports," wrote April "The implementation of summary organizations, including AdvaMed and the Veoukas, director of regulatory affairs in Ab- quarterly reporting for … malfunctions Medical Imaging & Technology Alliance. It bott's quality & regulatory group. is a welcomed improvement [yet] we could take a year or so for the program to be But Procter & Gamble sees things differ- encourage FDA to reconsider how they put in place because FDA, per the commit- ently. While the firm says in a letter to FDA intend to implement this program such ment letter, has until early 2019 to publish that it supports efforts to expand sum- that both industry and FDA can begin to a list of eligible product codes. The final list mary reporting, it wants the agency to in- realize the efficiencies and improvements of devices qualified for the program will in- stead follow an 11-year-old congressional that this program will afford," he adds. clude high-risk class II and class III products. mandate for FDA to collect more adverse The proposed summary reporting pro- The agency stresses that adverse events events in summaries. gram is the result of a successful 2015 FDA linked to devices that fall under a procode The Food and Drug Administration pilot that allowed enrolled device-makers that has been in existence for fewer than Amendments Act of 2007 (FDAAA) in- to submit MDRs in a summary format on a two years, or events involving deaths or structed the agency to accept quarterly quarterly basis for class I and class II prod- serious injuries, cannot be reported in summary reports from makers of all class ucts that aren't permanently implantable, summaries under the plan. I devices, and class II products that aren't life-supporting or life-sustaining. That pi- FDA asked for comments from stake- permanently implantable, life-support- lot revealed several notable findings, in- holders on the program; early-on remarks ing or life-sustaining – but FDA basically cluding that "participants were able to re-

medtech.pharmaintelligence.informa.com March 26, 2018 | Medtech Insight | 21 � POLICY & REGULATION � duce the volume of reports by over 87% … ment, FDA asked for input from stakehold- and CAPAs [corrective and preventive while preserving the essential information ers about how combination device/drug actions] within each due to the different regarding the context around malfunction products should be handled under the reporting periods," Ware writes. events. This increased efficiency in report- proposed program. Merck, which makes "To have the same due date for every ing, and in the agency review and process- combo products such as the pre-filled sy- summary report for each device product ing of malfunction reports," the agency ringe formulation of the HPV (human pap- code for each medical device and combi- claims in a Federal Register notice. illomavirus) vaccine Gardasil, weighed in. nation product, every quarter, may be dif- In his letter, Kaminski questions why "While we agree that combination prod- ficult to manage for companies that now FDA should take a year to collect eligible ucts should be included in the proposed have many of these products," she adds. procodes and launch the program, espe- alternative that would permit summary cially when the agency already has the malfunction reporting, we feel alternate INDUSTRY GROUPS WORRY authority to collect more summary re- submission and timing options should be ABOUT SUBMISSION FORMS, ports via the ignored FDAAA mandate. considered to assure successful electronic RECALL LANGUAGE "With such a gain in efficiency for both submissions, to minimize redundancies, AdvaMed also chimed in with mostly FDA and industry, and without compromis- and to maximize utility and clarity of the positive remarks on FDA's proposed sum- ing public health, why does FDA intend to data," wrote Jayne Ware, director of global mary reporting program – a product of delay the implementation of this program regulatory policy for the firm's global reg- the industry group's work on the MDUFA for up to 12 months, as explained in the ulatory affairs and clinical safety group. IV commitment letter. MDUFA IV commitment letter, to produce a Ware explains that for combo products "Summary malfunction reports will list of product codes?" Kaminski asks. approved under a New Drug Application greatly reduce the volume of reports that "P&G recommends that FDA proceed (NDA) or Biologic License Application manufacturers would need to submit to with the implementation [of the summa- (BLA), malfunction reports are sent elec- FDA, streamline the information FDA re- ry reporting program] without first going tronically to FDA via an Individual Case ceives, which will facilitate more efficient through the process of gathering prod- Safety Report. An ICSR must include an understanding of potential malfunction uct codes," he writes, adding that "imple- identifiable patient, an identifiable report- issues, and for the public, will allow event menting the program as stated in the er, a suspected drug and an adverse event. trends for a particular device to be more [FDAAA] statute will eliminate the delay." Meanwhile, FDA wants to use a slightly readily transparent," commented Zach- Kaminski also believes that compiling a modified version of the MedWatch 3500A ary Rothstein, AdvaMed's associate VP for list of procodes is unnecessary. "It is pre- form for its summary reporting program. technology and regulatory affairs. sumed that FDA is aware of specific devices "The format proposed by FDA for the The group does have a few reservations, and device malfunctions that they would summary [program] is not compatible with though. AdvaMed is urging the agency to deem inappropriate for this voluntary pro- [the ICSR] format, as there would be no pa- develop a new reporting form for the pro- gram," he writes. "It would be a better use tient or reporter information associated," gram, rather than using a rejiggered Med- of both FDA and industry resources to im- Ware writes. Therefore, "in lieu of filing MDR Watch 3500A form as a mechanism for re- plement the [FDAAA] statutory mandate, summary reports for combination products porting adverse events in summaries. which allows class I and some class II de- via an ICSR, we propose that these summa- "In the interest of implementing this vices to report quarterly, and specifically ries be provided to FDA via the periodic re- program within the MDUFA IV commit- exclude ineligible devices from inclusion." ports required under 21 CFR 4.102(d)(1)," ment timeframe, we support FDA's use of In related comments, Jeffrey Shapiro, 21 CFR Part 4 is FDA's regulation gov- Form 3500A for information submission an attorney with law firm Hyman, Phelps erning combination products; Sec. 4.102 purposes," Rothstein wrote. "However, and McNamara, agreed that FDA should outlines reporting requirements. we do not believe Form 3500A represents follow the FDAAA mandate. Ware also suggests that the agency ac- the most appropriate mechanism to sub- Shapiro, who represents device firms in cept summary reports from combo prod- mit summary malfunction information. regulatory matters, wrote that FDA's pro- uct manufacturers during a "single report- "As a result, we ask that FDA work with posed program "represents continued ing period" because those firms already industry to develop a more tailored re- defiance of the law and a refusal to imple- must submit periodic safety reports to FDA porting form that will better convey the ment a statute. FDA should not create the under 21 CFR 4.102(d)(1) that include a sum- reportable information." proposed program. Rather, it should im- mary and analysis of malfunction reports. Further, AdvaMed is concerned about the mediately implement summary quarterly "Malfunction data are being compiled agency's view that companies can't report reporting as required" by FDAAA. and assessed on a periodic basis. Perform- in summaries if a reportable malfunction is ing a separate assessment of the same the subject of an ongoing device recall. COMBO PRODUCT SUGGESTIONS data with different cutoff periods would "All reportable malfunction events of FROM MERCK be inefficient and potentially confusing, the same nature that involve the same When it made its December announce- as there could be different conclusions device or a similar device marketed by the

22 | Medtech Insight | March 26, 2018 © Informa UK Ltd 2018 � POLICY & REGULATION �

manufacturer must be submitted as indi- recalls language because the agency's Governance and Evaluation – is made vidual MDRs to FDA until 90 days past the "proposal, should it apply to voluntary up of device firms "dedicated to patient date the recall is terminated," the agency recalls or low-risk class III recalls, may health and to the promotion of efficient, says in its December FR notice. discourage some manufacturers from rational regulation of medical devices," That doesn't sit well with Rothstein. performing such field actions to further according to Hall's letter. "This provision should be removed for reduce residual risk in the field." several reasons," he wrote. "First, it will be THE OPPOSITION very difficult for manufacturers to man- GROUPS: EXTEND PROGRAM Of the 24 comments posted online by age this requirement because new event FDA does not plan to extend the proposed FDA about the proposed summary re- details may be uncovered during a prod- summary reporting program to import- porting program, 19 of them were critical uct investigation, leading to confusion ers or user facilities. That decision is be- of the plan. Most of the negative remarks and multiple reports for the incident. ing questioned by not only AdvaMed and were from public-health advocates. "Second, nowhere in the MDUFA IV com- MITA, but by the BRIDGE Coalition, too. Michael Carome, director of Public Citi- mitment letter is this concept mentioned," "The coalition believes that more infor- zen's Health Research Group, wrote that Rothstein adds. "And third, during a recall mation is needed to ascertain why im- the group "strongly opposes the FDA's FDA would receive all relevant informa- porters and user facilities are treated dif- proposal. Allowing such summary reports tion, making this requirement duplicative." ferently in the program; without further for these moderate- and high-risk devices In comments to the agency, the Medi- information, it seems arbitrary to treat could allow device manufacturers to ob- cal Imaging & Technology Alliance agreed them differently," Ralph Hall, principal at scure – either intentionally or uninten- with AdvaMed's assessments of the 3500A consulting firm Leavitt Partners, and a co- tionally – important information about submission form and the recalls language. alition advisor, wrote in comments to FDA. individual device malfunction events, "The agency should work with industry "The advantages of summary reporting which could undermine the ability of the to establish optimal reporting protocols would seem to apply equally to devices FDA and the public to fully understand and develop appropriate report formats being distributed by importers or export- the root causes and safety implications of for these quarterly submissions," MITA Ex- ers," he adds. these events." ecutive Director Patrick Hope wrote. The coalition – whose acronym stands He added that FDA should remove the for Bringing Real-world Insight for Device Published online 03/15/18

Health Canada Changes The Rules For Device Disinfectants And Sterilants NEENA BRIZMOHUN [email protected]

ealth Canada has reclassified to be Class II medical devices. Health from drugs to medical devices Canada said it intended to pursue an H high-level disinfectant and steril- amendment to the MDR that would re- TRphotos Shutterstock: ant solutions that are intended for use on classify these products as class III medi- medtech products. cal devices. This would better align the The reclassification of disinfectant and The move, which came into force on device risk classification with the nature sterilant solutions from drugs to medical March 16, is designed to better align the and intended use of these products, the devices is an initiative under the Canada- regulatory requirements of Canada and government department explained. United States Regulatory Cooperation those of the US. Manufacturers of already authorized Council (RCC) Work Plan for Medical De- Disinfectants and sterilants (including disinfectants and sterilants have been vices. RCC initiatives are intended to bet- contact lens disinfectants) that do not given an 18-month transition period ter align the regulatory requirements of meet the definition of an antimicrobial to meet the new rule and obtain the Canada with those of the US. agent under the Canadian Food and Drug necessary quality management system Disinfectants that meet the definition Regulations are now no longer regulated certificate. They will also need to com- of an antimicrobial agent continue to be under the FDR. plete and submit an application and fee regulated as drugs and are subject to the Instead, they are subject to the re- for a class II medical device licence and requirements of the FDR. quirements of the Medical Devices Reg- ensure their device label complies with ulations and, for now, are considered the MDR. Published online 03/19/18

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