FDA and CMS Take First Step to Establish Parallel Review

Three months after the Food and Drug Administration and the Centers for Medicare & Medicaid Services signed a Memorandum of Understanding (MOU 225-10-0010 ) to formalize communications and data sharing, the agencies jointly published a notice and request for comments Sept. 17, 2010, to establish a process for parallel review of pre-market, FDA-regulated medical products (75 Fed. Reg. 57045).

The speed with which this notice followed the MOU signing suggests the agencies’ mutual interest to establish a parallel review process was the primary driver behind getting the politically-sensitive MOU completed in the first instance.

Speeding Consumer Access

The agencies state that the goal of parallel review is to reduce the time between FDA marketing approval or clearance decisions and CMS national coverage decisions to speed consumer access to new, reliable, safe and effective medical products. The agencies want to create incentives for increased investment in innovative medical products.

The solicitation, which poses more than 20 questions for public comment, recognizes there are several difficult issues that must be addressed before initiating a parallel review process. After considering the public comments, which are due Dec. 16, the agencies plan to publish a joint draft guidance describing the parallel review process and to create a pilot program providing for the parallel review of medical devices.

The notice states that the proposed parallel review process is intended to be voluntary and will occur at the request of a manufacturer with the agreement of both FDA and CMS. CMS would begin its NCD-related review at some point during the FDA’s approval process (we do not expect 510(k) cleared products will be appropriate for parallel review given one of its primary purposes to spur innovation).

As part of the review, manufacturers could meet with FDA and CMS together to develop clinical trial protocols designed to meet both agencies’ standards. FDA’s approval decision would occur before CMS releases its coverage determination.

This staged approach is necessary, as CMS does not want to cover products before the FDA takes final action. In addition, the CMS coverage process is fully transparent, with a requirement to seek public comment. This is unlike the FDA process, which maintains total privacy of data. Each agency would make decisions based on its respective authority and standards.

Several Concerns

FDA and CMS believe that parallel review should decrease the time it takes for medical products to reach the public by reducing the time between market approval and national coverage determinations. The agencies are clearly focused on the time in between FDA approval and CMS coverage.

What remains unclear is how much additional up-front time it will take, with CMS and FDA input, to design, implement, and carry out a more comprehensive clinical trial that intends to collect data relevant to each agency’s standard and mission.

Investors, who focus on the time use of money and the time it takes to realize a return on investment, may not be overwhelmed by the time differential between the historic and proposed approach, if indeed there is one. The parallel review process would not be seen as advantageous if it would increase the cost or delay the FDA approval process.

This could be the case since an integral part of CMS’s coverage determination is the applicability of clinical trials to a broad population including individuals over 65, women, and minorities. There are often significant impediments to expanded enrollment in trials and no assurance that the costs of care provided during trials will be adequately reimbursed.

It is also important to note that the parallel review will not include CMS’s coding or payment decisions, both of which are part of CMS’s own multi-step process. When investors and manufacturers consider the pros and cons of volunteering for a parallel review, they need to consider the overall timing of getting the medical product approved, covered, and paid for. The payment step is a complex one that alone can add considerable time to the “get to market” calculus.

The solicitation is silent on the role of Medicare’s local coverage determination process in the parallel review context. It appears to presume a national coverage determination, but does not provide any insight on whether local carriers could pay for a product approved by FDA but still under consideration for national coverage under parallel review.

Historically, new technologies have entered the market upon FDA approval and have been covered by local Medicare carriers as well as private insurers without a specific coverage policy. It is questionable if this would occur if insurers are aware that the technology is under parallel review.

This also puts the technology’s market viability at great risk if CMS were to issue a national non-coverage decision, and it also would limit patient access to medical products otherwise approved by the FDA.

Data privacy is also a key factor. For example, under FDA statutes and regulations, the pre-market application itself is considered confidential commercial information prior to approval. Compare this to CMS’s policy and practice, which is to inform the public, and solicit its input, when it begins a national coverage determination process.

Simple publication of CMS’s national coverage determination process of an unapproved medical product would alert competitors that a product is at least in the FDA pipeline nearing an agency decision. The agencies request ideas for how to comport CMS’s transparency needs with the manufacturer’s need for confidentiality of proprietary information during and after the FDA review process.

The agencies also seek comment on whether FDA and CMS should have access to the same data and information about the product during parallel review.

A real question is whether CMS has the resources or expertise to undertake parallel review. Presuming there will be no additional funds available to support this activity, will there be fewer standard national coverage determinations as a result? All stakeholders must consider the fact that our nation’s significant budget deficit may very well result in no new funding for this effort.

Other Questions and Challenges

As noted above, the agencies envision the parallel review process as completely voluntary, with the manufacturer requesting parallel review and both agencies consenting to participate in the process.

However, the agencies ask the public whether anyone other than the product sponsor, e.g., FDA, CMS, or a third party, should be able to initiate a parallel review.

Should the agencies be empowered to compel a parallel review, just as CMS can now unilaterally initiate the national coverage determination process? This would not be ideal for industry, as a negative or limited national coverage decision can be the death knell for a new technology.

The greatest unknown is how the sharing of information and increased dialogue will impact each agency’s decision-making. CMS will bring to the table an interest in patient outcomes and comparative effectiveness, which are outside of FDA’s purview of assessing safety and efficacy.

CMS also is very interested in understanding the off-label uses of new technologies—Medicare has permitted coverage for technologies used in an off-label manner. If a product, however, is under parallel review, it may be more likely that a coverage decision would be limited to the labeled indication.

The FDA often approves or clears new technologies with indications that are not always disease or patient specific. Medicare’s national coverage determinations, however, typically limit coverage to specific uses or types of patients.

Further, many Medicare coverage decisions are for the service in which the technology may be used, but not for the technology itself. The less overlap between indicated use and coverage, the more likely a company will be faced with an approved product with limited Medicare coverage.

How the two agencies modify their practices to produce consistent approval and coverage decisions remains to be seen. Will the FDA, for instance, be inclined to narrow further the approved indication to be in line with a CMS coverage determination? This is just one question among many that are likely to arise.

This dynamic will be a challenge for industry but an opportunity, too, as the agencies will be working in concert, presumably mindful of the other’s focus and framework at the time it is making its decision.

The latest challenge to the FDA-CMS parallel review paradigm comes to us in the form of the midterm elections. With Republicans regaining the majority in the House and narrowing the Democrats’ control of the Senate, several Republican members are beginning to ask questions about parallel review.

This topic appears to be on the Republicans’ short list of FDA oversight issues it intends to hold hearings on during the 112^th Congress.

It has been reported recently that House Republican aides met behind closed doors with FDA officials during which time they raised concerns about the contemplated parallel review process. They expressed concern about the parallel review process resulting in the FDA seeking and evaluating comparative effectiveness data, which is really CMS’s new gold standard for judging medical necessity for coverage purposes.

The scope and use of comparative effectiveness research and data were hotly debated during debate over the health care reform legislation. It is unclear how the issues of clinical, cost, and comparative effectiveness will influence the parallel review process.

Medical Device Companies Should Provide Input

A parallel review system will certainly pose both opportunities and challenges for industry. Medical device companies would be well-served, therefore, to participate in the process to ensure their voices are heard.

It is essential that they study all of the questions posed in the solicitation notice with care and submit comments on those issues most important to them by the Dec. 16 deadline.