Federal Circuit Decision in Medical Device Case Sheds Light on “Exceptionality” Analysis for Attorney Fees

In Stone Basket Innovations, LLC v. Cook Medical LLC, a recent case involving the enforcement of a medical device patent, the Federal Circuit affirmed a district court’s denial of attorney fees under 35 U.S.C. § 285. In its opinion, the court provided helpful guidance regarding the factors that impact a potential award of attorney fees and how a party can position itself for success on a § 285 motion.

In April 2015, Stone Basket Innovations (Stone Basket) filed a patent infringement lawsuit against Cook Medical (Cook), alleging infringement of U.S. Patent No. 6,551,327, a patent directed to a basket-type device used to remove stones from biological systems. In March 2016, Cook filed a petition for inter partes review (IPR) of all claims of the patent. The IPR was instituted as to all claims of the patent and the district litigation was stayed pending the IPR. In December 2016, Stone Basket filed a motion requesting an adverse judgment in the IPR proceeding. The PTAB granted the motion and cancelled all claims of the ‘327 patent. At Stone Basket’s request, the district court litigation was dismissed with prejudice. Following the dismissal, Cook filed a § 285 motion, which was denied because the district court determined that the case was not “exceptional.” The Federal Circuit affirmed. Continue Reading

CMS Announces Enforcement Discretion for New Laboratory Date of Service Exception

This week, the Centers for Medicare & Medicaid Services (CMS) announced (see announcement here) that it is exercising enforcement discretion until January 2, 2019 for its new Medicare laboratory billing rule on the date of service exception. This agency action allows hospitals to continue to bill for affected advanced diagnostic laboratory tests (ADLTs) and molecular pathology tests until the hospitals and those laboratories that would otherwise be responsible for billing under the new rule have developed a billing system that enables the performing laboratory to bill for the tests. CMS made its enforcement discretion decision in response to industry feedback, which suggested that additional time was needed to meet the new rule’s July 2, 2018 implementation date. Continue Reading

CNDA Releases New Rules on the Inspection of Medical Device Clinical Trials for Comment

Last month, the China Nation Drug Administration (CNDA, formerly known as China Food and Drug Administration or CFDA), released a draft rule on Inspection Key Points and Guiding Principles of Medical Device Clinical Trials (“New Draft”). This is the third draft rule related to medical device clinical trial inspections that CNDA has issued in the last two years. The draft rules cover site inspections by CNDA, which began in 2016, of clinical trials for devices that are in the process of product registration. The purpose of the inspections is to evaluate the compliance of these trials with good clinical practices (GCP) and ensure data integrity, which has been a significant concern for CNDA in the drug and device spaces. The drafts refer to the inspections as assessing “authenticity” and “compliance.” Continue Reading

Gottlieb Sees “Vast Potential” Ahead for Digital Health

Advancing digital health technologies is one of FDA’s strategic priorities for 2018.  FDA’s Center for Devices and Radiological Health (CDRH) has traditionally taken a leading role in establishing FDA’s regulatory policies toward digital health technologies, and recent FDA announcements on digital health indicate that CDRH will continue efforts to develop new agency approaches toward digital health.  In a recent post on our Digital Health blog, Covington’s Digital Health team described the FDA’s latest announcements. Key updates include: Continue Reading

CMS Finalizes Medicare National Coverage for Diagnostic Next Generation Sequencing Tests

On March 16, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a National Coverage Determination (NCD) for Next Generation Sequencing (NGS) as a diagnostic laboratory test for patients with certain advanced stages of cancer. The NCD process was initiated by Foundation Medicine, Inc.’s request for Medicare coverage for its FoundationOne CDx test, the first FDA companion diagnostic that can detect genetic mutations in solid tumors. The NCD provides for Medicare coverage of NGS tests that have been FDA-approved or cleared as a companion diagnostic for patients with certain stage III or IV cancers. In addition, the NCD delegates authority to Medicare Administrative Contractors (MACs) to determine local coverage for tests that do not meet the NCD’s FDA criteria.

Holding a key role in the area of precision medicine, NGS is the second technology, and also the second category of vitro laboratory tests, to have successfully completed the FDA-CMS Parallel Review Program. The first in vitro diagnostic to be approved and covered under the Parallel Review Program was Cologuard®, a multi-target sDNA colorectal cancer screening test for which CMS finalized a NCD in October 2014. The Parallel Program was designed to reduce the time between FDA approvals and Medicare national coverage and, here, CMS issued its proposed NCD determination on November 30, 2017, the same date that FDA extended approval for the FoundationOne CDx test and within six months of the FDA’s receipt of the product application. Continue Reading

CFDA and CMDE Issue Draft Guidance on Medical Devices for Rare Diseases

On February 6, 2018, the China Food and Drug Administration (CFDA) and its Center for Medical Device Evaluation (CMDE) issued a draft guidance entitled “Guidance on the Review of Medical Devices for Preventing and Treating Rare Diseases.” The draft guidance is based on the reform measures recently outlined in the government’s broad blueprint for drug and device reform—the Opinion on Strengthening the Reform of the Drug and Medical Device Review and Approval Process to Encourage Drug and Medical Device Innovation (“Opinion 42”)(See our prior alert here).

The draft guidance provides regulatory expectations for medical device companies to conduct preclinical studies and clinical trials for medical devices intended to prevent or treat rare diseases, i.e., orphan medical devices. The draft guidance also proposes expedited programs for orphan medical devices, including a conditional approval program and a possible exemption from clinical trials, which were previously outlined in the Opinion 42.

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FCC Considers a Waiver Request for Medical Imaging System

On February 9, 2018, the FCC released a Public Notice seeking comment on a request by Sensible Medical Innovations Ltd. (Sensible) for a waiver of certain FCC rules to permit its marketing and operation of a medical imaging and diagnostic device that provides accurate lung-fluid measurements in a non-invasive way for congestive heart failure patients. 

 The device works by attaching two sensors to the body, one on the chest and one on the back, positioned so that the patient’s lung is between the two sensors.  Each sensor consists of an antenna for transmitting and receiving electromagnetic waves that are transferred through the pulmonary tissue.  The dielectric properties of the lung alter the transmitted electromagnetic waves, and these changes are measured by the system and used to calculate fluid concentration.

 Because the device operates over a certain frequency range, it must comply with certain FCC regulations.  Although Sensible claims that the device generally complies with most applicable FCC regulations governing this frequency range, it acknowledges that it does not comply with two:  (1) a requirement that emissions above 960 MHz be made with root square mean average detector over 1 MHz resolution bandwidth, with an average time of one millisecond or less; and (2) a requirement that ultra wide-band imaging devices coordinate the their deployment with the NTIA, which is part of the Department of Commerce.  Sensible is seeking a waiver of the first rule because its system could comply with the average emission limit only if the averaging time interval were increased to 50 milliseconds, and it is seeking a waiver of the second rule on the theory that coordination with NTIA is impractical for a body-worn device that will operate intermittently indoors. Continue Reading

With Government Funding Deal, Medical Device Tax Delayed For Another Two Years

On January 22, 2018, President Trump signed legislation delaying implementation of the medical device excise tax for two years.  This delay was included as part of a resolution to fund the federal government until February 8 of this year.  With broad bipartisan support, the bill passed the Senate (81-18) and the House of Representatives (266-15).

The device tax, enacted as part of the Affordable Care Act (ACA) in 2010, imposes a 2.3 percent tax on many medical devices.  The tax applies broadly to a variety of products, including pacemakers, surgical gloves, and artificial joints, and affects both imported and domestically-produced devices.  While enacted to offset costs from the ACA, many in the medical device industry have argued that the tax presents a significant barrier to innovation.

Congress first imposed the tax for devices sold after January 1, 2013, but the Consolidated Appropriations Act of 2016 (Pub. L. 114-113), enacted December 18, 2015, instituted a two-year moratorium.  Under the moratorium, devices sold from January 1, 2016 to December 31, 2017 were not subject to the tax.  The first post-moratorium tax payments were due at the end of this month.  The January 22 spending deal amends the Internal Revenue Code and retroactively delays the tax beginning on December 31, 2017.

The medical device industry had advocated for and appears further committed to pushing for the complete repeal of the device tax.  We will continue to monitor further developments related to the tax.

FDA Publishes Draft Guidance on Investigational IVDs Used in Therapeutic Product Clinical Trials

On December 18, 2017, FDA announced the availability of a new draft guidance, titled “Investigational IVDs Used in Clinical Investigations of Therapeutic Products.”  The draft guidance is intended to inform both product sponsors and IRBs regarding the application of the Investigational Device Exemption (IDE) regulation to investigational in vitro diagnostic devices (IVDs) used in therapeutic product clinical trials.  The guidance expands on elements of the agency’s July 2016 draft guidance document for product sponsors, titled “Principles for Codevelopment of an In Vitro Companion Diagnostic Device with a Therapeutic Product,” which we addressed in a previous blog post.

With the growing focus on personalized medicine, IVDs are increasingly used in clinical investigations of therapeutic products to guide the management of subjects in such investigations, for example, to select or classify subjects, assign subjects to therapeutic product arms or doses, or monitor responses to treatment.  FDA stated that it was issuing the new draft guidance because the agency is concerned that sponsors and IRBs may not understand that the IVDs used in therapeutic product clinical trials are also often investigational and are subject to the IDE regulation in addition to the Investigational New Drug (IND) requirements applicable to the therapeutic product.  The guidance clarifies that an investigational IVD is subject to the IDE regulation even if the therapeutic product is exempt from the IND regulation and even if the manufacturer does not intend to seek FDA clearance or approval for commercial distribution of the IVD.

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FDA Issues Draft Guidances Outlining Digital Health and Decision Support Software Regulatory Approaches

FDA has described its evolving approach to regulating digital health and decision support software in two new draft guidance documents:  Clinical and Patient Decision Support Software and Changes to Existing Medical Software Policies Resulting From Section 3060 of the 21st Century Cures Act.  These draft guidances announce the agency’s initial interpretation of the health software provisions enacted as part of last year’s 21st Century Cures Act and describe which digital health technologies FDA will regulate as “devices.”

Our alert discusses key takeaways from the draft guidances and implications for digital health technologies, including clinical decision support and patient decision support software, technologies that incorporate machine learning or AI, and digital health products marketed by pharmaceutical companies.

Here are a few noteworthy items from the draft guidance documents:

  • Under FDA’s initial interpretation of the Cures Act, many clinical decision support (CDS) software functions could remain subject to FDA regulation.
  • Dynamic digital health solutions, such as those that incorporate machine learning or artificial intelligence (AI), are not directly addressed in the drafts.
  • FDA has proposed an enforcement discretion approach for decision support software aimed at patients, even though patient decision software (PDS) was not addressed directly in the Cures Act.
  • Consistent with the Cures Act, many software functions that were previously subject to FDA enforcement discretion (i.e., not actively regulated as devices) no longer meet the definition of “device.”
  • Pharmaceutical companies should note that CDER joined one of the draft guidances, which states that FDA requirements beyond those outlined in the draft guidance may apply to digital health products disseminated by or on behalf of a drug sponsor.
  • FDA indicates that its regulatory oversight of CDS software that analyzes physiological signals to provide diagnostic, prognostic and predictive functionalities could include algorithms that analyze and interpret genomic variations to determine a patient’s risk for a particular disease.

As discussed in our alert, companies who are marketing or developing digital health products should assess how FDA’s proposed policies may impact their product portfolio and consider submitting comments on the draft guidances.  The FDA docket is open for comments until February 6, 2018.

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