Regulatory Approvals of LDTs: The Diagnostic Accuracy and Innovation Act (DAIA)
The team at Boston Healthcare have heard from diagnostic innovators seeking information on the Diagnostics Accuracy and Innovation Act (“DAIA”), with specific regard to recent advice provided by the US Food and Drug Administration (FDA). In August, the FDA responded to the draft legislation with formal comments, which included the addition of a precertification program that would exempt certain diagnostics from the premarket approval pathway.
The DAIA would eliminate the distinction between FDA-approved or cleared tests and laboratory developed tests. Instead, all tests would be designated as vitro clinical tests (IVCT), which will include both finished products (e.g., test kits and platforms) and laboratory test protocols (i.e., LDTs). IVCTs will be a new category and regulatory structure under the Food, Drug, and Cosmetic Act, and will not be regulated as devices, drugs, or biologics. Under the DAIA, laboratory operations will be regulated exclusively by the Centers for Medicare & Medicaid Services (CMS) and Clinical Laboratory Improvement Amendments (CLIA), while the FDA will evaluate tests for market entry.
The potential changes could allow existing tests to be grandfathered, avoiding additional regulatory hurdles for LDTs that are already on the market. Under the draft bill, IVCTs will require a report stating the test was developed and first introduced 90 days prior to enactment of the legislation and has not been reviewed by the FDA. However, if the test is modified in such a way that it becomes a new test, it will not be eligible for ‘grandfathering’ and will need to be reviewed according to the new regulatory processes that will be established.
The risk-level of each assay will drive the approval pathway for that test: each assay will be designated as low, medium, or high risk, based on its potential impact on patient care. Lower risk assays could be exempt from approval or be eligible for a precertification pathway, whereas higher-risk assays will likely need to move through the premarket approval pathway.
The draft bill also outlines specific criteria for tests for rare diseases, and custom and low volume tests.
Even though the legislation is still in draft form, the likelihood that the current regulatory regime will change is high, given the heightened FDA coordination with Congress.
Diagnostics innovators should consider the bill and its implications on commercialization strategies for products that are currently available and those that are in development.
Digital health expands in Germany, providing new opportunities for global medical device and diagnostics innovators
Health information systems have the potential to not only improve access to health care but also improve quality, with Electronic Health Records (EHR) playing a pivotal role in the development of digital health services. Germany has introduced two different approaches to increase digital health access for patients, providers, and health insurance companies – the Electronic Health Card Network and the Patient Accessible Electronic Health Records.
Electronic Health Card network
Germany has been developing the national digital health care network since the early 2000s. Even with the project subject to controversies and delays, the system will be operating in 2019. The Electronic Health Card network (elektronische Gesundheitskarte or eGK) will connect all public health stakeholders, including patients, doctors, pharmacists, therapists, health insurance companies, and hospitals. The network will improve efficiency in the delivery of health care services, enhance patient safety, increase access to health care services and reduce medical expenditure.
Unfortunately, the development and implementation of the eGK has not kept pace with technical developments and rising patient expectations to manage their health data through smartphone applications, and connecting medical with further health-related information, for example, activity trackers and other health apps. With patients responsible for their data through the eGK, decisions on the types of data saved and who has access to it should also be managed by the patient.
The telematics infrastructure and data protection requirements will initially affect accessibility to the eGK for patients, requiring some modifications in the future.
Patient Accessible Electronic Health Records
Some German health insurance funds have developed and implemented Patient Accessible Electronic Health Records (PAEHR), with the largest PAEHR (Vivy) employed in mid-September by 13 Statutory Health Insurance (SHI) funds.
These funds have partnered with two private health insurance companies to provide PAEHR, enabling 13.5 million patients to manage their health data via a smartphone application.
The PAEHR provides an opportunity for private health insurers to become more involved in patient healthcare management. When all systems are operational, 70 percent of patients will be able to manage health-related data on their own through smartphone applications.
It is important to note that this is not a stand-alone solution to patient data management and interfaces for data transfer between physicians and labs, along with the integration of data with medical office software is agreed. With rising acceptance by patients and providers, the need for integration in the eGK system will emerge.
Opportunities for the medical device and diagnostic industry
With the increased availability of PAEHR in Germany, the management and communication of health data is changing towards a more patient-related approach. Manufacturers should consider these developments by capturing patient-friendly outcome data, which can be transferred into PAEHR and empower patients’ involvement in decision-making.
In addition, health care services and apps, which utilize the new infrastructure, improve efficiency and increase cost saving, are favored by both SHI and the private health insurance system, providing exciting business opportunities for the industry.
Learn more about our capabilities in Europe here.
Health Policy Insights: Germany
Digital Health in Germany
Earlier this year, the German Medical Assembly removed restrictions on the use of telemedicine, paving the way for greater innovation in the provision of health services in Germany. This move, along with new calls by Germany’s Health Minister, Jens Spahn to increase access to digital health infrastructure, including the reimbursement of health apps through statutory health insurance (SHI), present growth opportunities for the German healthcare market.
Health Ministry Rejects Results of NUB HTAs
Since the beginning of 2017, notably invasive or active implants in risk classes IIb or III must undergo a benefit assessment by the G-BA before being granted a New Methods for Treatment and Screening (NUB) add-on payment.
During the first year of this new requirement, none of the eight products assessed provided sufficient evidence for reimbursement through the NUB process. Two of the eight products were assigned a “potential” benefit, resulting in the government co-sponsoring studies to evaluate the benefit. The other six products were excluded primarily due to lack of clinical evidence. However, the Federal Ministry of Health filed an office action against this decision and contested the assessment criteria, indicating that the evidence requirements for being a “potential alternative” were too high.
The court’s decision will affect the entire benefit assessment for medical devices and diagnostics in Germany, creating uncertainty of coverage for innovative therapies. A decision of the office action is expected in early 2020.
Laboratory Reimbursement Reform
Although Germany has the lowest prices for laboratory tests and a competitive laboratory landscape, cost-containment practices continue.
With a rise in spending on diagnostics tests (5% annual increase), the regional association of SHI accredited physicians (KV) agreed to a reform to keep test costs within budget. The reform has enhanced options available to the KV to control the costs of medical diagnostic tests, including:
- The ability to set individual laboratory budgets and reduce reimbursement amounts, and
- Incentives for physicians to order fewer tests than other comparable medical practices.
Pathology lab services are not currently affected by the reform.
New developments across Germany’s healthcare industry provide significant opportunities for global digital health, medical device, and diagnostics innovators, however many hurdles and barriers to entry still exist. If you are interested in learning more about gaining access to Germany’s healthcare market, please contact us.
Boston Healthcare Associates President and CEO, Joseph Ferrara and Director, Shivang Doshi led sessions in the Business Program at the Next Generation Dx Summit in Washington, D.C. in August 2018.
Focusing on key industry trends and challenges, Ferrara and Doshi discussed approaches that pharmaceutical and diagnostic partners can employ to achieve commercial success for a companion diagnostic, and strategies to achieve coverage for diagnostics under new PLA codes.
Request a copy of the presentations here!
China’s new policy to speed up international drug approvals by accepting overseas data
On 10 July 2018, the China Drug Administration (CFDA) released a new guiding principle to allow companies to use overseas clinical trial data in their applications for new drug approvals. Read more here.
Brazil: Health System Update
Both the public and private sectors deliver healthcare in Brazil, with over 70 percent of the population accessing care through the government led National Healthcare System, known as the Universal Health System. The private system covers approximately 23 percent of the population and is usually funded by employers. Currently, both systems are facing financial difficulties creating challenges for innovators seeking to introduce new health technologies into the market.
Health Technology Assessments
Led by the federal Commission for Incorporation of Technologies (CONITEC), the public health system uses Health Technology Assessments to incorporate new technologies and drugs. In the private sector, the Permanent Committee for Regulation of Health Attention evaluates new procedures for incorporation in the list of mandatory coverage for private payers and has recently released an update on the incorporation process – currently under public consultation.
Clinical and economic data of the new technologies are mandatory for incorporation requests. Additionally, if new incorporated procedures demand the use of a specific medical device, its coverage is granted. COSAUDE does not define the reimbursement price for specific procedures, device, or brand. This is negotiated between payers and providers.
Medical device pricing and purchasing
Medical device manufacturers are continuing to face criticisms over prices and use of devices following a 2015 investigation that uncovered widespread misconduct amongst stakeholders, including financial incentives for uptake of specific products. These activities left stakeholders questioning the optimal purchasing method for medical devices, leading to a shift from fee for service models to a Diagnosis-Related Group (DRG). More recently, a police investigation in Rio de Janeiro has uncovered a number of fraudulent tenders for public sales of medical equipment since 1996, leading to estimated losses to the public system of R$ 600 million. The image of medical devices and equipment manufacturers compromised due to these recent scandals.
Changes in purchasing practices for medical devices have also disrupted the supply chain. Group purchasing for medical devices in the public sector is being flagged as a way to centralize the process and combat malpractice.
Introducing a new health technology or drug into Brazil’s healthcare system is a complex and interactive process involving many stakeholders, demanding in-country expertise. Contact us for more information.