POLICY & REGULATION COMMERCIAL Streamlining ......New tech for benign prostatic hyperplasia, p. 13 POLICY & REGULATION Streamlining Singapore regs, p. 5 COMMERCIAL Wound-care deal,

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

June 18, 2018

Pharma IntelligenceInformaInsight

Medtech Issue 98

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R&D

New tech for benign prostatic hyperplasia, p. 13

POLICY & REGULATION

Streamlining Singapore regs, p. 5

COMMERCIAL

Wound-care deal, p. 6

US And EU Systems For Personalized Medicine: Paths Diverging?AMANDA MAXWELL [email protected]

C hanges in the regulation of IVDs in Europe could result in growing differences between how the EU

and US regulate personalized medicine, including companion diagnostics. That is the view of Hogan Lovells' US-based life-sciences and health-care partner, Randy Prebula.

Prebula, who focuses on US FDA device and IVD issues, said in an interview with Medtech Insight that there is already quite a distinction between the EU and US reg-

ulatory systems for IVDs. It's evident while working with clients.

"I think that the pathways for these types of products, and the new levels of scrutiny under the EU regulatory scheme compared with the less defined rules in the US and the legislative ambiguity are going to cause the two system to differ," he said.

But Prebula would not hazard a statement on whether one framework is ultimately likely to be more restrictive than the other.

CONTINUED ON PAGE 22

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Where Things StandIVDs play a key role in personal-ized medicine in assessing the genetic make-up of a patient to help ensure the selection of the best drug or other therapies for a patient. If a specific IVD is approved to guide therapy for a specific drug, which references the assay as part of its indica-tion, the IVD can be known as a companion diagnostic.

In the US, there is guidance for industry on the development of companion diagnostics, and FDA is working to finalized more detailed guidelines on co-devel-opment and incorporating IVDs into drug clinical trials. About 40 companion diagnostics have been approved by FDA, in addi-tion to other "complimentary" diagnostics that guide therapy but are not as strongly recog-nized in the drug label.

Meanwhile, in the EU, this product category will be regu-lated for first time under the IVD Regulation, which fully applies beginning May 26, 2022.

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inside: Cover / US And EU Systems For Personalized Medicine: Paths

Diverging? – There are changes afoot in the regulation and reimbursement policy for IVDs in the EU and US. When it comes to personalized medicine – and companion diagnostics in particular – are the two markets becoming more polarized? Medtech Insight asked US- and EU-based attorneys at Hogan Lovells.

EDITORS' PICKS

5 Singapore Improves Time To Market For Lower-Risk Devices – The Singapore Health Sciences Authority says regulatory changes that will provide faster market access for class A and many class B devices kicked in on June 1. The requirements for telehealth devices and high-risk cosmetic devices have also been clarified.

6 Acelity Buys Crawford To Create Wound-Care Powerhouse – Acelity has agreed to acquire Crawford Healthcare for an undisclosed price to expand its wound-care portfolio. Crawford's wound-dressing portfolio includes KerraMax Care, KerraFoam and KerraCel brands, complementing Acelity's advanced wound-dressing lineup.

6 Zebra Medical Lands $30M From aMoon, J&J For AI-Driven Imaging Tech – Israeli imaging analytics specialist Zebra Medical Vision has raked in $30m in series C funding to push development and release of its AI-based tools for radiology.

COMMERCIAL

7 M&A Analysis: Acquisitions Come What May – The steady flow of medtech M&A deal-making continued in May. Medtech Insight recorded 16 acquisitions last month, including a global merger of Sivantos and Widex to form the world's third-largest hearing-aid company, ready to challenge market leaders Sonova and William Demant.

9 VC Deals Analysis – Asia investors pour money into Grail, and May's other big deals.

PEOPLE

11 Gelesis Absorbs Clinical Affairs And Commercial Expertise With New Appointments – Gelesis reels in former Walgreens and Boehringer Ingelheim execs as it prepares to take its anti-obesity capsule-based treatment toward regulatory approval.

explore more:exclusive online content

Australia regs https://bit.ly/2MkiSY7

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FDA guidancehttps://bit.ly/2l55mec

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The US agency issued guidance spelling out "probable benefits" for the humanitarian device exemption standard and anticipated documents on manufacturer communications.

Starts & Stopshttps://bit.ly/2t5fRlt

The latest edition of Starts & Stops includes clinical trial announcements from Medtronic, MicroPort, NovoCure and Theraclion.

Medtech Money Flowhttps://bit.ly/2LHS1nm

A roundup of recent M&A deals and venture financing rounds recorded in Medtech Insight’s M&A and VC Deal Trackers.

Device Weekhttps://bit.ly/2y4lpgk

Check out the latest episode of our weekly podcast, where we discuss the latest M&A deals, including the global merger of hearing-aid companies Sivantos and Widex.

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4 | Medtech Insight | June 18, 2018 © Informa UK Ltd 2018

Medtech insightDAVID FILMORE @[email protected] TAN @[email protected] M. SCHMITT @[email protected] MILLER @[email protected] MAXWELL @MEDTECHAMANDA [email protected] WEBB @[email protected] DARCEY @MEDTECH_INSIGHT [email protected] AL-FARUQUE @[email protected] ORR @[email protected] LONGWORTH @[email protected] YEO @[email protected] KENNY @[email protected] BRIZMOHUN @[email protected] SHARMA @[email protected] HANIAK SENIOR DESIGNERGAYLE REMBOLD FURBERT DESIGN SUPERVISORRICHARD FAINT HEAD OF [email protected] JARVIS MANAGING DIRECTOR

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11 Englert, Crouse Rise Up As Vortex Biosciences Reshuffles Top Team – Vortex Biosciences announced two promotions within its top executive team, including naming a new CEO.

R&D 12 Quanta Prepares For Launch Of SC+ Personal Dialysis

Machine – The UK company recently finished a pilot trial of the SC+ personal dialysis system to support a launch in Europe this year and earn US FDA clearance in 2019.

13 Procept BioRobotics Looks To Dominate BPH Treatment – Trial results confirm that Aquablation is a safe and effective treatment of benign prostate hyperplasia for large prostates, and Procept BioRobotics is confident the procedure will eventually displace all other prostate resection techniques.

15 New NEST Subcommittees Include Industry – Device company experts are joining academics and US FDA officials on two new subcommittees formed by the National Evaluation System for health Technology Coordinating Center.

POLICY & REGULATION 16 Compliance Corner: Keep These 5 Supplier Control Tips

In Mind, FDA Officials Say – From cautioning against relying too heavily on a vendor's Certificates of Analysis, to advocating for more robust supplier audits, two US FDA investigators and the agency's national device expert offer device-makers advice for keeping vendors in line.

17 Calling A Q-Sub: New Guidance On Seeking Feedback From FDA – A new US FDA draft guidance on the "Q-Submission Program" (Q-Sub) spotlights certain mechanisms, including pre-submissions, available to sponsors to interact with the agency.

18 Hospitals Say Device Manufacturers Should Carry More Cybersecurity Burden – Too much of the current burden to ensure device cybersecurity falls on hospitals, the American Hospital Association tells congressional leaders.

19 CMS Will Require Prior Authorization For 31 Power Wheelchair Types – The US Medicare agency is expanding use of prior authorization as a condition of payment for power wheelchairs.

20 CMS Could Streamline Coverage For Breakthrough Medtech Under House Proposal – A newly introduced bill would seek to smooth the Medicare coverage and reimbursement pathway for breakthrough devices.

20 Could EU's New HTA Proposal Promote EU-Wide Reimbursement Of Personalized Medicine? – Personalized medicine has yet to really take off in the EU. Could the European Commission's health technology assessment proposal help?

mailto:[email protected]

















� E D I T O R S ’ P I C K S �

Singapore Improves Time To Market For Lower-Risk DevicesASHLEY YEO [email protected]

C hanges for low-risk class A and low-to-mid-risk class B medical de-vice submissions were announced

by Singapore's Health Sciences Authority (HSA) on May 22, and took effect June 1.

The changes had been signaled earlier in the year, and were key talking points at the 6th ASEAN Medical Device Com-mittee (AMDC) meeting, in Singapore in April. (Also see "Next ASEAN Device Com-mittee Meeting Looms, But National Regs Top Priorities " - Medtech Insight, 4 Apr, 2018.) The basis for the reforms is HSA's desire to respond better to different op-erational and emerging business models in the device industry, and to facilitate pa-tients' access to innovation.

As of June 1, class A sterile medical de-vices, such as sterile examination gloves and sterile intravenous sets, will no longer need to be registered with the HSA. Safety and post-market surveillance (PMS) and monitoring needs will be met by ensuring that importers and manufacturers list all their class A medical devices on the HSA's public online class A database with HSA.

Products hitherto using the 60-day "Ex-pedited Class B" registration route will fall directly under the new "Immediate Class B Evaluation Route." Qualifying products will have no associated safety issues glob-ally and have either been approved by two independent regulatory agencies or have approval from one reference agency and three years of marketing history. It is esti-mated that 75% of class B applications will now be granted immediate market access.

Class B and C standalone mobile medi-cal applications (for example, standalone applications for the calculation of insu-lin dosage, or live monitoring of ECG for cardiac patients) will be eligible for im-mediate market access under the new registration route, provided that they are approved by at least one of the five refer-ence regulatory agencies (Health Canada, Japan’s MHLW, US FDA, Australian TGA and EU Notified Body) and that they have no safety issues globally.

But as pre-market pathways are stream-lined, checks and monitoring of product compliance will be stepped up in the post-market phase. This will ensure a bal-anced life cycle regulatory approach, the agency says. HSA will also horizon scan more intensively for overseas alerts and local safety signals.

Allowing immediate entry to lower-risk devices will enable the HSA to focus atten-tion on newer, higher-risk devices, says Chan Cheng Leng, group director of the agency's Health Products Regulation Group. Eugene Yoo, chairman of the Singapore Manufac-turing Federation's Medical Technology Industry Group (MTIG) adds, "These amend-ments simplify the work flow for the indus-try and accelerate patients’ access to inno-vative therapy and technologies."

TELEHEALTH, COSMETIC DEVICE CLARIFICATIONS HSA also stipulates that telehealth devices intended by the manufacturer to fulfill a medical purpose will be regulated as a medical device. But those aimed at well-being or lifestyle parameters (heart rate smart watches or smart phone monitors for fitness purposes) will not be subjected to regulatory controls. Makers of products in the latter category, however, must in-clude wording on labels or in advertising that the product is not meant for medical purposes, that is, the detection, diagnosis, monitoring, management or treatment of a medical condition or disease.

The agency will also grant faster market access to standalone software/software as a medical device (SaMD) and mobile apps for products that have been cleared by a reference regulatory agency.

High-risk devices used for the modifica-tion of a person's appearance or anatomy are subject to regulatory controls. Implants, injectable dermal or mucous membrane fillers, and invasive devices for fat removal or fat degradation are examples of such products, the full range of which is shown on a new HSA positive-identification list.

The regulator also specifies that manu-facturers of devices that require the user to have particular skills and knowledge for their safe use will have to provide rel-evant training.

More regulatory reforms are in the works in Singapore, including an effort to streamline submission requirements for post-approval changes to registered medical devices and to prescribe quality management system requirements for the licensing of manufacturers, import-ers and wholesalers. At the 6th AMDC meeting, in April agency officials also pre-viewed medical device guidance set to release later in 2018, including a focus on:

• Essential principles for safety and performance;

• Labeling; • Product registration; and • Change notification.

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Acelity Buys Crawford To Create Wound-Care PowerhouseREED MILLER [email protected]

Acelity LP Inc. expects its acquisition of Crawford Health-care to create the most comprehensive line of advanced wound-care devices available and consolidate leading

positions in several rapidly growing sub-segments of that rap-idly-growing market, the company said in its announcement of the deal on June 8.

Terms of the deal were not disclosed. Acelity's press release notes the deal includes Crawford's R&D capabilities and manu-facturing operations in Cheshire, UK, as well as its product lines. Crawford also has a office just outside Philadelphia devoted to marketing Crawford's wound-management products in the US. Crawford CEO and founder Richard Anderson will continue to lead the Crawford organization as the two companies work-out the integration plan throughout the rest of 2018.

"This transaction solidifies our ability to offer the most compre-hensive line of wound-care solutions and will enable us to create and consolidate leading positions in high-growth market seg-ments, expand and strengthen our customer relationships, and enhance our innovation expertise for the benefit of clinicians and patients around the world," Acelity CEO Andrew Eckert says.

Acelity's advanced wound-care portfolio includes Promogran Prisma, a collagen and cellulose matrix indicated for the manage-ment of exuding wounds that currently leads the collagen dress-ing market, according to the San Antonio-based company. Acelity also markets the Tielle range of hydropolymer foams with the pro-prietary LiquaLock technology for both non-exuding and exuding wounds and the Adaptic line of non-adhering knitted cellulose ac-etate mesh dressings. These dressing products are complemented by Acelity's negative would pressure therapy tools. The company also sells products for open abdomen and incision management during surgery, epidermal harvesting, and animal health.

Crawford sells the KerraMax Care range of absorbent wound dressings, KerraFoam foam wound-dressing, and KerraCel antimi-crobial gelling fiber. The company is especially excited about the

potential of KerraCel Ag carboxymethyl cellulose gelling fiber, the first wound dressing with silver oxysalt technology, which the FDA cleared in early 2017.

Anderson said "The rapid growth of the business has been pos-sible due to our focused investment in innovative products which are clinically proven to improve patient outcomes. Becoming part of the world’s largest wound-care company will provide us with the scale to optimize our potential within the US, the largest global mar-ket, and the ability to further access and grow in other international markets with our best-in-class advanced wound-care products.”

Privately-held Acelity was created in 2014 by Centaur Guernsey LP Inc as a new brand merging the KCI, LifeCell Corp., and Sys-tagenix subsidiaries. At the time, Acelity was reporting roughly $2bn in annual revenue. (Also see "Acquisitions, New Technologies Reshaping Advanced Wound Care" - Medtech Insight, 30 Sep, 2014.) Acelity sold LifeCell to Allergan for $2.9bn in 2017.

Crawford is a 15-year-old company historically focused pri-marily on supplying specialist dermatology products to the UK's National Health Service. Crawford is also a specialist pharmaceu-tical company marketing dermatology products like Ego Phar-maceuticals SunSense sunscreen line and QV emollient cleansers and moisturizers. For the year ended March 2017, the most re-cent reported, the company's revenues were £25.2 million and, in November, the company reported that it had achieved 156% compound annual growth over the previous three years.

The global wound-care market is projected to be worth $22bn by 2022, dominated by the North American market. Acelity's main competitors include Smith & Nephew PLC, Mölnlycke Health Care AB, ConvaTec Group PLC, Baxter International Inc., Coloplast AS, and BSN Medical GMBH. (Also see "Start-Up Spotlight: Pertinax Pharma, Closing In On Wound Care With Slow-Release CHX Tech" - Medtech Insight, 23 Mar, 2018.)


Zebra Medical Lands $30M From aMoon, J&J For AI-Driven Imaging TechCATHERINE LONGWORTH [email protected]

Z ebra Medical Vision has raised $30m in series C funding to expand commercialization of its software for enabling artificial intelligence-driven diagnostic imaging and to

advance its pipeline products. Israeli health-tech fund aMoon Ventures led the round, led the

round, with the participation of strategic healthcare investors Au- Shut

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rum, Johnson & Johnson Innovation JJDC Inc. and Intermountain Healthcare. Other new investors in the round included AI scientists Fei Fei Lee and Richard Socher, while existing shareholders - Kho-sla Ventures, NVIDIA, Marc Benioff, OurCrowd and Dolby Ventures - also contributed. aMoon said it believed $30m to be on the "higher end" of financing deal sizes for a digital health company. This series C brings the total investment in Zebra to $50m.

Zebra's Imaging Analytics platform uses machine learning and AI algorithms to analyse medical imaging data and identify patients at risk of disease. The company has received CE marking for seven of its products across various medical conditions including bones, cardiovascular disease, liver and lung indications, and breast can-cer. Current and future selection of AI algorithms is bundled into a unique $1-per-scan offering to hospitals. "We expect customers will find Zebra’s broad offerings and pipeline highly compelling (together with the $1 per scan pricing model), ensuring Zebra a first-mover advantage in a new market opportunity that Accen-ture estimates will reach around $3 billion by 2026," Tomer Berkov-itz, managing director at aMoon, told Medtech Insight.

In addition to the funding, Zebra announced new research

on chest X-rays, using its TextRay chest X-ray AI-driven analytics product. The tool was trained, using nearly two million images, to identify 40 common clinical findings in chest X-rays. The re-sults of the study showed high rates of agreement between the algorithm and human radiologist experts. In a statement, Zebra said the study was the "most comprehensive AI research con-ducted on chest X-rays to date" and provided an insight into the company's future automated chest C-ray analysis product which is currently under development.

Berkovitz said that one of the key success factors for Zebra’s AI algorithm "is the access to large, high quality datasets." WThrough its agreements with Clalit and Intermountain, Zebra has developed the largest medical imaging study database in private hands (20+ million scans globally, with full patient history)," he added."Zebra’s suite of product offerings [algorithmic tools] is the broadest in the space, with expected coverage of 50% of all imaging performed globally by 2019, much of which is already approved in major ex-US markets and pending FDA approval."


M&A Analysis – Acquisitions Come What MayCATHERINE LONGWORTH [email protected]

T he steady flow of medtech M&A activity seen so far this year contin-ued in May with a total of 16 trans-

actions agreed to and/or completed. Deal volume was on par with the levels record-ed in May last year and, on a consecutive month-over-month basis, was up from the 12 deals recorded in April 2018.

In one of the most significant deals in May, hearing-aid makers Sivantos and Wi-dex signed an agreement to merge and form a company worth more than $8.3bn. The combined German and Danish busi-ness will generate annual revenues of approximately €1.6bn and enable the en-larged company to invest more in R&D and supply chain. The combined company will rise up the ranks to become the hearing aid market's number three, behind current leaders Sonova and William Demant.

Marcus Brennecke, partner at EQT Part-ners, the private equity firm that owns Sivantos, said the purpose of the merger was to create a "game-changer" for the future of hearing. "The combined com-pany presents a unique opportunity for EQT to extend the investment horizon in

Sivantos and take part of the next phase of transforming the hearing aid industry," said Brennecke. "With nearly 170 years of combined experience, Sivantos and Widex will take the lead in developing hearing-aid technology for future generations."

Of the 16 acquisitions announced in May, only five disclosed financial terms. In the biggest value deal of the month, service provider Medplast paid $600m to buy Integer's advanced surgical and orthopedic (AS&O) assets. Integer’s

AS&O product lines adds a broad range of manufacturing capabilities to Med-plast's portfolio including machining, stamping, coating and metal-forming, and is expected to strengthen the com-pany’s front-end design, development and prototyping services. The acquisi-tion will double MedPlast’s size to nearly $1bn in sales and expand its global foot-print and presence in Europe.

Also in the orthopedics space, DePuy Synthes paid an undisclosed amount to

� C O M M E R C I A L �

M&A Deal Volume May 18 vs Apr. 18 vs May 17M&A Deal Volume May 18 vs Apr. 18 vs May 1716

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acquire the assets of Medical Enterpris-es Distribution, a surgical instrumenta-tion firm. The agreement is expected to close in the second quarter of 2018, according to a press release. The deal includes acquisition of the company's ME1000 surgical impactor, a battery-powered device that automates bone preparation, implant assembly and po-sitioning in total hip arthroplasty. The device can be used with various surgi-cal approaches.

WOMENS' NEEDSMyriad Genetics struck a sizeable deal to acquire molecular diagnostics business Counsyl. Myriad paid $375m in cash and common stock to secure the reproduc-tive-testing company. The deal marks Myriad's largest acquisition to date and entry into the reproductive testing mar-ket. In an investor call, Myriad's CEO, Mark Capone said Counsyl will be merged into Myriad's Preventive Care business to cre-ate a new business unit called Myriad Women's Health. The business unit will focus solely on Ob/Gyn and reproductive medicine health-care providers. (Also see "Myriad Genetics Grows Women's Health Biz With Counsyl Acquisition " - Medtech In-sight, 29 May, 2018.)

The deal is yet another example of the growing women's health market. In recent months, a handful of medical device companies have announced their intentions to grow their businesses to serve women's health needs. Earlier this year, Philips and Hologic struck a global, multiyear deal that will see them pool together their respective diagnostic imaging capabilities to offer hospitals a more complete portfolio for breast care. Additionally, Siemens is partnering with ScreenPoint Medical – and taking a stra-tegic minority stake in the latter – to en-hance its mammography systems with artificial intelligence capabilities and im-prove image analysis. (Also see "Siemens Taps Dutch Start-Up ScreenPoint For AI Know-How In Breast Imaging" - Medtech Insight, 30 May, 2018.)

Also in women's health, in April, Boston Scientific paid $265m to buy NVision, the developer of the only US FDA-approved

device to collect cells from fallopian tubes used for early detection of ovarian cancer. Following the acquisition, Boston Scientific's executive VP and president said it estimated the near-term market opportunity to be $500m, with the po-tential to grow to $2bn.

Oncology company Varian racked up its fourth acquisition of the year in May, buying Cooperative CL Enterprises, a Taiwanese distributor of radiotherapy equipment. "With the acquisition of COOP, Varian will be able to work and collaborate more closely with our cus-tomers in Taiwan, as well as providing more efficient and comprehensive ser-vices," Varian President Kevin O’Reilly said in a statement. Financial details for the deal were not disclosed. So far this year Varian has boosted its oncology segment with the acquisitions of Mobius Medical Systems and Evinance. It also has a pending acquisition deal for Aus-tralian firm Sirtex, but that transaction is currently in jeopardy, with a Chinese investment group looking to lure Sirtex away with a sweeter offer. (Also see "Vari-an Stands Firm Against Rival Bid For SirTex; What Next If It All Falls Down?" - Medtech Insight, 23 May, 2018.)

MAIDEN PURCHASES OF THE YEARPhilips Healthcare made its first acquisi-tion of the year, acquiring NightBalance, a Dutch digital-health company, which developed the Sleep Position Trainer (SPT) device to treat positional obstruc-tive sleep apnea and positional snoring.

The device is CE-marked and currently marketed in select countries in Europe. Financial details of the transaction were not disclosed. Philips was the one of the more prolific shoppers in 2017, scoring a total of 11 acquisitions across a variety of sectors. The group looks to be taking it more slowly on the acquisition trail this year, although it has already made its second acquisition in June with heart imaging specialist EPD Solutions. (Also see "Philips Buys Heart Imaging Tech Firm Set Up By Biosense Founder" - Medtech In-sight, 5 Jun, 2018.)

Stryker also made its first acquisition of 2018. The company's Sustainability Solutions division announced it was ac-quiring Hygia Health Services, a third party reprocesser of single-use devices (SUDs) in the US. Stryker said the acquisi-tion broadens its reprocessed single-use device portfolio and helps deliver ad-ditional savings to hospitals and health systems. "In line with our commitment to help hospitals and health systems in-crease the value their SUD reprocessing programs deliver, this acquisition will enhance our ability to deliver savings to our customers,” Brian White, president of Stryker’s Sustainability Solutions divi-sion, said in a statement. “Furthermore, our broader product portfolio will help customers elevate their sustainability goals and set a higher bar for sustainable health-care delivery."


Cardiology

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VC Deals Analysis: Asia Investors Pour Money Into Grail, And May's Other Big DealsTINA TAN [email protected]

C hina further consolidated its reputation as a big investor in the global life-sciences scene in

May when a consortium of Chinese pri-vate equity firms placed their money on early cancer detection firm Grail Inc. in a $300m series C round. It is this year's big-gest venture financing deal so far.

The Illumina spin-out had already at-tracted a Chinese investor, the multinational investment holding conglomerate Tencent, in its whopping $900m series B last March (which was extended to $1.2bn by Novem-ber). Since then, Grail has merged with Cirina, Ltd, a Hong Kong-based company specializ-ing in non-invasive blood-based diagnostics, giving Grail a springboard into Asia and into the investment community there.

The investors in Grail's series C last month were all China-affiliated organizations; the round was led by Ally Bridge Group, and co-led by Hillhouse Capital Group and 6 Di-mensions Capital. Other participants includ-ed Blue Pool Capital, China Merchant Securi-ties International, CRF Investment, HuangPu River Capital, ICBC International, Sequoia Capital China, and WuXi NextCODE.

Commenting on the now very pertinent Asian skew of Grail's investor base, company president Ken Drazan said this was "a natu-ral fit" with Grail's plans to grow its capabili-ties and operations in the region, following the planned launch of its first product for

early detection of nasopharyngeal cancer in Hong Kong this year. (Also see "Grail Encour-aged By New Circulating Cell-free Genome At-las Data" - Medtech Insight, 5 Jun, 2018.)

Grail's Series C was the biggest round in May but it wasn't the only nine-figure deal. Beijing-based Unisound also bagged $100m in investment from local strategic and institutional investors, proving that the Chinese yuan isn't just moving outside of China but is also going into boosting the country's domestic innovators. (See Table 1.) Unisound specializes in develop-ing "smart" voice-recognition, language

processing and data analytics solutions that are driven by machine learning algo-rithms. These solutions are then incorpo-rated into appliances across different in-dustries, including medical devices.

In total, Medtech Insight recorded 37 medtech VC deals in May, the highest deal volume this year to date. Of those deals, 11 involved one or more Asian in-vestors in the round, three of which are in the top five list – Grail, Unisound and Akili Interactive. Areas of interest to these investors in May appear to be in IVD, digi-tal health, cardiovascular disease, stroke

TABLE 1

Top 5 VC Deals By Amount Raised, May 2018

RANKING COMPANY BASED INPRODUCT/ THERAPY SECTOR

AMOUNT RAISED

FINANCING ROUND

TOTAL INVESTMENT

1 Grail CA, US IVD $300m Series C Over $2.2bn

2 Unisound Beijing, China Health IT $100m Series C Undisclosed

3 Akili Interactive MA, US Digital health $55m Series C Undisclosed

4 Ava Zurich, Switzerland Women's health $30m Series B Undisclosed

5 Avedro MA, US Ophthalmology $25m Undisclosed Undisclosed

FIGURE 1

No. Of Deals By Amount Raised, May 2018 vs April 2018 vs May 201718

16

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0≤$10m $10m≤$20m $20m≤$30m $30m≤$40m $40m≤$50m >$50m Undisclosed

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Deal value range

May-18 Apr-18 May-17




management, ENT and ophthalmology.During a discussion on investment trends

at the recent AngloNordic partnering con-ference, held on May 24 in London, the panelists – a mix of representatives from venture arms of drug companies like Merck and GlaxoSmithKline and from institutional investors – noted this growing influx of money from Asia over the last year or so. Start-ups are likely to welcome any source of capital, but panelists warned that these Chinese investors may not necessarily be willing to stick with them for the long-term. Start-ups, the paneliststold delegates, need investors who will stick around long term to help build the business.

SECOND FOR DEAL VALUEOf the 37 deals recorded, 31 disclosed finan-cial information and these rounds raised a total of $775m approximately. This is the second-highest monthly deal value this year to date, behind January which raked in $962.5m, boosted by a bumper crop of mega-raises and supported by a solid num-ber of mid-sized deals. (Also see "VC Deals Analysis: 2018 Off To A Flying Start" - Medtech Insight, 12 Feb, 2018.) While May did have two nine-figure rounds, there was an ab-sence of deals in the $30m-50m range and the vast majority of transactions – 24 out of the 31 that disclosed financial details – were in the lower dollar range. (See Figure 1.)

Looking at the bigger picture, total deal value for each of the five months this year is well above the monthly average over the last five years. (See Figure 2.)

May also saw a much more diverse range of technologies attracting inves-tors attention. IVD, the perennial favor-ite, came fourth down the list in terms of number of VC deals it scored. (See Figure 3.) Instead, it was beaten by digital health, which scored six deals, cardiology/vascu-lar which came second with five and oph-thalmology with four VC deals.

The plays in digital health were mainly around technologies that enabled con-nectivity of devices, which in turn allow im-proved remote monitoring of patients. This includes iBeat, a Californian company that has developed a cellular smartwatch that continuously monitors users' heart activity and sends out an alert when it detects a

life-threatening emergency. The watch also has an emergency help button that can be pressed for real-time response. iBeat raised a very modest $5.5m series C, including ChinaRock Capital Management.

Another digitalized patient monitoring solution that received funding in May was Propeller Health, which has developed a sensor-based therapy management plat-form to monitor patients' response to drug therapy. The firm has already attracted stra-

tegic investors from the pharma side, no-tably GlaxoSmithKline and Aptar Pharma. Aptar had initially partnered with Propeller back in 2016 to work on a connected me-tered dose inhaler; with this latest funding, the two companies will be expanding their partnership to work on a digital medicine platform that spans inhaled, injectable, na-sal, and dermal medicine delivery forms.


FIGURE 2

5-Year Trend: Total Monthly Deal Value, Jan-May 2014-2018

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FIGURE 3

No. Of Deals By Product/Therapy Sector, May 2018Digital health

Cardiology/Vascular

Ophthalmology

IVD

Imaging

Cancer management

Diagnostics

ENT

Neurology

Surgery

Aesthetics/Dermatology

Critical care

Health IT

Patient monitoring

Regenerative medicine

Women's health

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6

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No. of deals


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Gelesis Absorbs Clinical Affairs And Commercial Expertise With New AppointmentsTINA TAN [email protected]

H arry Leider, the former Chief Medical Officer and Group Vice-President of US retail pharmacy giant Walgreens, has joined Gelesis Inc., the Boston-based developer of

the Gelesis100 anti-obesity capsules. Leider will assume similar roles and job titles at Gelesis, and

be responsible for leading the company's overall medical strat-egy, including oversight of all medical affairs functions and pro-gramming with medical associations, patient advocacy groups, and other healthcare organizations. He will also help to advance Gelesis' product pipeline. Leider replaces Hassan Heshmati, who founded Gelesis; Heshmati will continue to oversee a range of clinical activities at the company, in the capacity of Executive Vice President, Endocrinology, and Metabolism.

In addition to a new CMO, Gelesis has also brought in more commercial expertise with the appointment of Paul Fonteyne, Chairman and former CEO of drug company Boehringer Ingel-heim USA, to its board of directors. According to Gelesis, Fonteyn was instrumental in several launches of Boehringer Ingelheim's type 2 diabetes products.

The appointments of Leider and Fonteyne come as Gelesis gets the ball rolling on filing EU and US regulatory approv-als for Gelesis100. The product is a capsule containing small hydrogel particles, which are made from two natural com-ponents that form a novel 3D structure. The capsule is taken with water prior to a meal and the hydrogel particles released in the stomach. They absorb the water rapidly and increase around 100 times their size, inducing a feeling of satiety. The particles degrade and releases the water once they reach the large intestine and is eliminated from the body the same way as food waste.

In September 2017, Gelesis completed a pivotal trial of Gele-sis100 for weight loss. The company is also conducting a proof-of-concept study for its second candidate, Gelesis200, which is designed for weight loss and glycaemic control in patients with type 2 diabetes and prediabetes.


Englert, Crouse Rise Up As Vortex Biosciences Reshuffles Top TeamTINA TAN [email protected]

Vortex Biosciences Inc., which specializes in circulating tumor cell harvesting for cancer diagnostics, has pro-moted Chief Technology Officer Bob Englert to the role

of Chief Executive Officer. Englert replaces Gene Walther, who has resigned from his

position after two years to pursue other interests, according to the Menlo Park, California firm.

Englert has also been at Vortex since 2016. He has over 25 years of global experience in medical devices and life-sciences, with a particular focus on in vitro diagnostics, point-of-care testing, and digital health solutions. Before joining Vortex, he founded and led a diabetes data management company, Biomedtrics Inc., where he raised funding and commercialized a mobile medical data device. Prior to that he was COO of Pelikan Technologies, a point-of-care blood glucose testing company.

In addition to Englert's appointment, Vortex has also promot-ed Chief Commercial Officer Steve Crouse to Chief Operating Officer. Crouse has significant experience in medical diagnos-tics, instruments development, and medical marketing, and

will help drive Vortex's R&D and commercialization strategies. Vortex's VTX-1 instrument harvests intact circulating tumor

cells from whole blood samples for use in downstream research and clinical applications such as patient stratification, monitor-ing disease progression and drug treatment effectiveness. The instrument is CE marked and FDA-cleared for research use. The company made its first commercial sale in November 2017.


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� R & D �

Quanta Prepares For Launch Of SC+ Personal Dialysis MachineREED MILLER [email protected]

Q uanta Dialysis Technologies Ltd., formerly known as Quanta Fluid Solutions Ltd., is preparing to launch its SC+ personal dialysis system in Europe later this year

and then earn FDA clearance to bring it into the US in 2019.SC+ is a small, lightweight dialysis system designed around

Quanta's proprietary disposable cartridge technology. SC+ earned a CE mark in 2015, and the Alcester, UK, company

formally unveiled it at the UK Annual Dialysis Conference in Man-chester in September 2017.

"We understand what we have to do [to rollout SC+ in more European countries], so we won't have to do any more clinical studies. We've done this several times now, so we know what we need to do," CEO John Milad told Medtech Insight. "The US is different, so we've been spending a lot of time over the past 18 months to really understand that. [Now] we know what we need to do there, so we're pretty confident that we'll get our first FDA clearance in the first half of 2019."

The company has been working with the UK National Health Service to pilot the system, with more than 1,400 successful pa-tient treatments in the UK so far, the company says. And, at the end of April, the company announced the completion of a successful clinical pilot of SC+ with five patients at Hôpital Necker in Paris, led by local nursing staff trained by Quanta. The pilot trial in France represents the first clinical use of the system outside the UK.

"It's something that no one else has ever done – the abil-ity to match the classical in-center prescription of three times a week while still delivering strong clearance and a high dose and achieving adequacy of dialysis. No one has ever been able to do that," Quanta Dialysis Technologies CEO John Milad says.

In the French pilot study, SC+ performed consistently across all treatments and affirmed the safety and efficacy of the system, ac-cording to Quanta. There were no significant usability issues or de-vice-related adverse events, and the feedback from the medical staff participating in the pilot was positive, according to the company.

"There is a lot of practical stuff we have to get right to actu-ally conduct therapy in another country – from the localization of the language of the device and the instructions and getting the right capabilities and to interface with the way things are done in French hospitals," Milad said. "This was just a little demonstrator to show that those things are coming together and point the way to the broader offering that we'll need to construct to address the needs of the French market."

QUANTA HAS FAITH IN ITS TECHNOLOGY "The last couple of years, we've been really just been doing clini-cal validation, showing that with our unique technology, some-thing so small can be so powerful," Milad said. "It's something

that no one else has ever done – the ability to match the classical in-center prescription of three times a week while still delivering strong clearance and a high dose and achieving adequacy of di-alysis. No one has ever been able to do that."

Milad explained that while there are other small dialysis systems on the market, they are low-dose systems that require the patient to be on them longer per dialysis session or have more frequent sessions. "We have the world's first small high-dose system," he said. "We've been keen to prove that, clinically, [and that] is what we've done."

Milad said the company is now setting up an industrialization production line to manufacture SC+ and running some other pilot trials in other geographies. "We've been working on build-ing into the device some of the things we've learned through our market pilots so that we have the best possible offering and a truly best in class solution that we'll bring to market later this year," Milad said. "We'll not be selling a product in a box, but a therapy solution. We'll be making sure we have all the other ca-pabilities assembled to do that in the best way."

Milad said the company is also developing a digital-health solution that will "wrap around" SC+ and take advantage of the emerging "Internet of Things."

"There's a lot going on in dialysis. Historically, it's been a space that hasn't seen a lot of change or innovation," Milad said. He credits NxStage Medical Inc., developer of the Solo home dialy-sis system, for doing a "a good job of promoting dialysis in the US and creating awareness, but other than that, innovation has been really limited." "We're starting to see that that's all chang-ing" Milad said.

In addition to companies developing new dialysis devices, there are massive companies like CVS Health Corp. looking to build a dialysis service as part of a broader strategy in chronic kidney disease management. (Also see "CVS/Aetna To Merge In Defensive Play To Reshape Healthcare Delivery" - Scrip, 4 Dec, 2017.)

Quanta is confident that its technology will keep it competi-tive in this increasingly crowded market. "It's a big industry with big opportunity and a lot of unmet need and eventually, when you have those dynamics, that tends to draw in new play-ers who want to build a business around meeting that unmet need," Milad said.

These major investments in dialysis are "a massive validation of the dynamics that we've been identifying and calling out for a long time." he said. "I'm confident that we have a great product and are best in class and no matter how this industry shapes up, I expect there will be demand for SC+ from an increasing number of customers who are looking for a differentiated offering."



� R & D �

Procept BioRobotics Believes Aquablation Could Dominate BPH Treatment…If It Gets CoverageREED MILLER [email protected]

Procept BioRobotics Corp. has be-gun a limited launch of its Aqua-Beam Aquablation system in 30

centers in Europe and North America as it convinces both surgeons and third-party payers that Aquablation deserves to be the standard-of-care method for prostate resection in patients with be-nign prostate hyperplasia.

AquaBeam precisely cuts tissue with a thin jet of water guided by intraopera-tive ultrasound and a cystoscopic cam-era. US FDA cleared AquaBeam via the de novo pathway in late 2017 for the re-section and removal of prostate tissue in males suffering from lower urinary tract symptoms due to benign prostatic hy-perplasia (BPH).

"It's going to be a very targeted ap-proach this year, and we really only plan to go to 30 specific accounts this year, [so we] make sure we really define what 'good' [outcomes] look like and then expand next year," Procept BioRobot-ics founder and CEO Nikolai Aljuri told Medtech Insight. In February, the compa-ny raised $118m to pay for the commer-cialization of Aquablation. This equity financing is led by new investor Viking Global Investors LP, with participation from Perceptive Advisors, and additional funds from existing investors, including CPMG Inc.

"We want a very controlled launch as we navigate the next 18 months in terms of reimbursement," he said. Aquablation currently has a Category III CPT code from the American Medical Association – Category III codes are temporary codes for emergent or experimental tech-nologies and procedures. The company is seeking a Category I CPT code that would make it possible for Aquablation to be reimbursed at a higher rate than older resection techniques like electro-surgical transurethral resection of the prostate (TURP), which is currently the

standard treatment for cases of BPH that require resection.

"That process itself will take some time," Aljuri said. "We'll have to be pre-pared to navigate through that market in the next 18 months, and that's not going to be an easy thing because, at this point, this procedure is not cov-ered and we have to work with the regional [US Medicare Administrative Contractors], as well with as all the dif-ferent payers so they start changing their policies of non-coverage to cov-erage, as they start to see that there is demand from the doctors to use Aqua-blation, [and] as we are providing the clinical evidence that they will need to be able to change that coverage.

"We decided to go with our own code because we knew that showing a ben-efit over the existing procedures would put us in a great position to have a bet-ter payment than all the existing tech-nologies," he noted. "That's something companies don't do; they just want to fit into an existing code, but once you do that you get boxed into a certain kind of payment. Here, given that we provide so many benefits, we were very confident that we should have our own code with a greater payment."

Procept BioRobotics has asked the US Centers for Medicare and Medicaid Ser-vices for a bonus payment. In its fiscal year 2019 inpatient prospective pay-ment system (IPPS) proposed rule an-nounced April 24, CMS asks for public comment on whether the AquaBeam system meets the substantial clinical improvement criteria required for a new tech add-on payment. According to the proposed rule, the average case-weight-ed standardized charge per Aquablation case is $69,662. (Also see "Medicare Bo-nus Payments: CMS Plans To End Three, But Considers Seven New-Tech Add-On Payments For FY 2019" - Medtech Insight, 1 May, 2018.)

EVIDENCE-BASE FOR AQUABLATION GROWSThe clinical evidence supporting Aqua-blation includes results of the results from the WATER I and WATER II trials. Results from WATER I, announced last May, showed AquaBeam therapy is as effective as TURP, but safer, in BPH pa-tients aged 45 to 80 years. Results from 101-patient, single-arm WATER II trial, presented at the AUA meeting in May, show that Aquablation in men with prostate volumes ranging from 80mL to

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� R & D �

150mL led to significant improvements in both symptom scores and urinary flow rates. The safety outcomes met its predefined targets.

Mihir Desai, of the University of Southern California, who presented the WATER II results at AUA, said: "On the heels of the WATER Study, the results of the WATER II Study confirmed Aqua-blation delivers predictable and repro-ducible results regardless of the size of the prostate. These results suggest that Aquablation can be a minimally inva-sive, transurethral option for patients with larger prostates who would oth-erwise only be candidates for simple prostatectomy."

Desai also presented a pooled analysis of 364 men with prostates ranging from 20mL to 150mL who were treated with Aquablation in five trials in six countries. The analysis was designed to assess mul-tiple hemostasis techniques, with and without heat, following Aquablation, and how those hemostasis techniques influenced bleeding outcomes. The analysis determined that Aquablation yields a very low rate of major bleeding events, with a peri-operative transfusion rate of 3% in prostates up to 150mL in volume. The analysis also showed the rate of overall bleeding events was the same with heat-free hemostasis tech-niques or cautery.

"The pooled analysis demonstrated that, despite the increased prostate size in WATER II, hemostasis can be success-fully achieved following Aquablation without the use of heat," Desai said. "Giv-en the range of prostate sizes treated and studied, the procedural consistency and overall safety profile of Aquablation is unlike any other single surgical tech-nique for BPH."

US FDA already cleared AquaBeam without any restrictions on prostate size, patient age, or patient anatomy based on the WATER I results. Aljuri said WATER II was conducted so that the urological community could clearly see how well Aquablation works in large prostates that would otherwise likely require open prostatectomy surgery requiring a long hospital stay.

The results of WATER II and the pooled analysis are "very important, because what it shows is that Aquablation has the ability to span a very wide spectrum and there is no other technology in the market that can do that," he said. "Usu-ally, the technologies that can resect tis-sue can only do that with a prostate that is up to 80 grams, and prostates over 80 grams require that you do it in a different fashion. With Aquablation, the surgeon could do it in a very predictable manor within a certain period of time."

Aljuri also pointed out that relatively few surgeons have enough skill and ex-perience to operate on large prostates without an unacceptably high risk of major bleeding. He says Aquablation has a short learning curve for surgeons com-pared to older techniques.

"As a surgeon, you can, without any prior experience with Aquablation, un-dertake these very challenging prostates and provide optimal outcomes," he said. "This is something that, to this date, has never happened before."

The company is also running a post-market registry called OPEN WATER. Aljuri expects OPEN WATER will "contin-ue to bolster the body of evidence that we have with all kinds of prostates with doctors with different kinds of experi-ence and varying skills."

"I predict that, within five to 10 years, and once this technology has further penetrated the market, it's going to be almost like a natural process for all the academic centers, that are teaching all the urologists of the future, to probably have an emphasis on Aquablation," he said. It's not going to make much sense for any resident to really do anything else but Aquablation, because any other modality that they learn in their careers takes a tremendous amount of effort. When they graduate they won't have the skill necessary to really sur-vive in the marketplace. Therefore, I can imagine that the urologists of the future in the next five to ten years will really only know Aquablation and noth-ing else."


"We decided to get our own code because we knew that showing a benefit over the

existing procedures would put us in a great position to have a better payment than all the existing technologies,"

Procept BioRobotics CEO Nikolai Aljuri

says.


� R & D �

New NEST Subcommittees Include IndustryDAVID FILMORE [email protected]

S ix data scientists and epidemiology experts from the medical device in-dustry are joining academics and US

FDA officials on two new subcommittees formed by the National Evaluation System for health Technology Coordinating Center.

NESTcc announced its new Data Quali-ty Subcommittee and Methods Subcom-mittee on June 6 to support the group's efforts to establish a robust network of real-world evidence to support regula-tory decisions. Medtronic PLC and Cook Group Inc. will be represented on both committees, and there are also John-son & Johnson and Becton Dickinson & Co. employees sitting on the new Meth-ods Subcommittee.

We look forward to [the subcom-mittees'] counsel and collaboration as NESTcc prepares to launch its first set of industry test cases to demonstrate the functionality of the NESTcc Data Network and we prepare to open the NESTcc Front Door for public inquiries for collaborating with the NESTcc Data Network,” NESTcc Executive Director Rachael L. Fleurence said. (Also see "NEST Coordinating Center At Year One: Device Data-Sharing Network In Its Sights" - Medtech Insight, 26 Jan, 2018.)

The Data Quality group will be chaired by Lesley Curtis from the Duke University School of Medicine, and the Methods Sub-committee will be chaired by Sharon-Lise Normand from Harvard Medical School.

Industry members selected for the sub-committees include:DATA QUALITY

• Sarah Horn, senior manager, Corpo-rate Data Science, Medtronic

• Aaron Lottes, Cook Research METHODS

• Jesse Berlin, VP, pharmacoepidemi-ology, J&J

• Joao Monteiro, principal clinical data scientist, Medtronic

• Didier Morel, staff statistician, Bec-ton Dickinson

• Scott Snyder, director of clinical af-fairs, Cook Research


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COMPLIANCE CORNER:

Keep These 5 Supplier Control Tips In Mind, FDA Officials SaySHAWN M. SCHMITT [email protected]

U S FDA investigators Laureen Geniusz and Ben Dastoli, and the agency's national device expert, Phil Pontikos, offered manufacturers five tips for controlling suppliers

at MedCon 2018 in Cincinnati in May.

1. It's important to know if suppliers are validating their man-ufacturing processes.

Laureen Geniusz: Device-makers "need to know [if vendors are validating manufacturing processes], and if they're not, then what are you doing to do? So, you need to understand how much validation [suppliers are] actually doing. Please don't assume they've validated any process, because [FDA investigators have] seen a lot of times where the manufac-turer thought the supplier did the validation, and the supplier thought the manufacturer did the validation. So, they were pointing fingers at each other."

2. When a supplier changes a seemingly minor process, it could have a big impact on your product.

Geniusz: "Recalls can happen when a supplier makes some sort of minor change that they thought would not affect your product or process. I was just inspecting a firm where they changed the solder – they went from no-clean solder to a regular solder – and it affected the process, and it affected the product, and resulted in complaints. Then they had to investi-gate and figure out what the issue was. So, the supplier made the change on their own because they thought it was no big deal. So, be careful of this."

3. Pay close attention to no-change agreements with suppliers.

Geniusz: "Most firms will have some sort of no-change agree-ments with critical suppliers. Be careful when you're writing those. Choose your words carefully. Both you and your suppli-er should know what that agreement means, and understand that agreement, and just go forward from there."

4. Relying too heavily on Certificates of Analysis, which show that vendors make products to spec, could spell trouble.

Ben Dastoli: "Do you really know what the CoA is telling you? The argument [from device-makers] typically is, 'It says right there in the CoA that they made this product to specification.' Well, there's a lot goes behind that. So, did [the CoA issuer] ac-tually measure your critical-to-quality values at your supplier? What level of control do they have? You can't just blindly ac-

cept a CoA and assume that [the CoA issuer is] measuring and testing every area that's important to you.

"This is something I see a lot: Someone will present a CoA and say to me, 'Yes, it's built perfectly to spec.' Well, do you know how they're sampling it? Are they sampling it correctly? And a reminder: This is all the manufacturer's responsibility. The burden is on you to make sure you're getting the correct product or service you need.

"Also, I've seen CoA's that were exact copies of each other. Every shipment used the same CoA. I don't even think they changed the date on it. So, it really was a meaningless CoA."

5. Vendor audits should be robust.

Geniusz: "You shouldn't make it just a checklist activity – cover this, this and this, and go home. Rather, take some time so your supplier audits are meaningful and appropriate. Use this time to look at their nonconformances, process changes, process deviations – anything that could affect your prod-uct. Take the time to [audit] so you can develop a good rela-tionship and understanding of what they're doing, and how they're controlling their processes and your product."Phil Pontikos: During a supplier audit, "you're going in there with a limited amount of time, and a checklist could easily help you as a memory-jogger, if you will, to understand what elements may need to be covered. But one thing we do see as investigators is, there's no beef behind [those audit check-lists]. What does it mean if [a particular] element is being met? What did you really do to verify it?

"Because we as FDA have to look at your supplier control and say, 'Does this look adequate?' If you just filled out a checklist with a bunch of checks on it, and signed off on it, I'm still not sure what you did. I mean, I know you checked the box, but I don't know how you met that criteria during the audit of the supplier."


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CALLING A Q-SUB:

New Guidance On Seeking Feedback From FDADAVID FILMORE [email protected]

U S FDA posted a draft guidance June 6 fleshing out procedures, timelines and tips for companies

seeking agency feedback in advance of a pre-market submission or after the re-view process has begun.

The new document on the "Q-Submis-sion Program" (Q-Sub) attempts to pro-vide a lay of the land on certain mecha-nisms available to sponsors to interact with the agency at times other than when actually submitting a 510(k), PMA, IDE or other specific submission. It responds to a commitment made by FDA as part of the current MDUFA IV user-fee program.

Q-Sub can refer to dozens of differ-ent types of interactions with FDA at various points in the development or review process – it is essentially a pro-gram for organized tracking (with a "Q" number) of sponsor interactions with FDA. But perhaps the most popular Q-Subs are pre-submissions, where spon-sors formally seek advice (either written or in a meeting) from FDA about an up-coming submission.

The pre-sub program has existed in some form for many years, but its use has picked up significantly in the past decade as FDA has encouraged more and more companies to leverage pre-subs to assist in complicated develop-ment projects. In parallel, the agency has increasingly formalized the protocols for pre-subs and is holding itself and spon-sors to efficiency measure.

The draft guidance spells out the lat-est commitments, including its goal to provide written feedback on a sponsor's inquiry within 70 days of the original re-quest or at least five days prior to a sched-uled meeting. It also clarifies proper pro-tocols for making a request and engaging in a meeting with FDA.

Further, the guidance spells out char-acteristics and examples of "productive" pre-sub questions and interactions. For instance, the agency says, questions

should request specific feedback and should "clearly articulate a desired out-come including indications for use or la-beled uses." But, they should not ask for approval predictions based on planned data and should not request a formal regulatory designation, such as a risk clas-sification, FDA says.

The other three main types of Q-Subs addressed in the guidance are:

• Submission information requests, which are opportunities for spon-sors to get feedback after FDA has issued some type of hold letter on a submission (e.g., additional infor-mation letter to a 510(k) or a major deficiency letter to a PMA);

• Study risk determination requests, in which a company seeks information on whether a planned study is sig-nificant risk (SR), non-significant risk (NSR), or exempt from investigational device exemption; and

• Informational meetings, which are opportunities for sponsors to pres-ent information to FDA, perhaps more general discussion on, for example, a string of upcoming sub-missions, without expecting specific feedback from the agency.

The guidance emphasizes a standard-ized approach to all Q-Sub requests in

terms of what information is required and proper protocol, and it also clarifies spe-cial needs for each of the different types of request.

FDA commits to certain timelines in the guideline, but it also puts the onus on companies to do the same. For instance, for submission information requests (SIRs), FDA says its response time will di-rectly depend on a sponsor's pace: if a company submits the SIR within 30 days of receiving a hold letter from

FDA, the agency will aim to provide feedback within 21 days. But if a company lags beyond the 30-day window, FDA says it will aim to provide feedback within 70 days of receipt.

The agency identifies a range of other mechanisms that fall under the Q-Sub heading but aren't addressed procedur-ally in this latest guidance. These include PMA Day 100 meetings; "agreement and determination" meetings; breakthrough designation requests; and accessory classification requests. Sponsors can also leverage the Q-Sub process generi-cally for other types of interactions as well, FDA says.

Public comments on the draft guidance are due Aug. 7.





Hospitals Say Device Manufacturers Should Carry More Cybersecurity BurdenFERDOUS AL-FARUQUE [email protected]

D evice-makers need to take more responsibility for cybersecurity risks on their products, and regu-

lators need to step in to make it clear that manufacturers must protect legacy de-vices. That's the message from the Ameri-can Hospital Association in a letter to US lawmakers looking for feedback on how to tackle medical device cybersecurity.

In late April, the House Energy and Commerce Committee put out a request for information from health-care indus-try stakeholders and the public on what should be done to protect patients from getting harmed by potential cybersecuri-ty vulnerabilities on medical devices, par-ticularly ones have been in use for years. The committee's initiative, "Supporting Lifetimes," states that the obvious solu-tion would be to require legacy medical devices be replaced by newer more se-cure products, but the reality is often that that's not clinically or financially feasible. (Also see "US Congress Asks For Input On Fighting Medtech Cybersecurity Threats" - Medtech Insight, 20 Apr, 2018.)

Comments were due May 31. While the committee says it is still reviewing comments it has received and will eventually post them online, several stakeholders, including AHA, have already made comments public.

There have been growing concerns about vulnerabilities on medical devices potentially harming patients and giving unauthorized parties access to patient data. But the biggest target has been on hospi-tal IT systems. Malware and, more specifi-cally, ransomware such as "WannaCry" and "Petya," have infected hospitals, in many cases crippling their operations and com-promising patient data. (Also see "Security Firm Confirms 'Petya' Has Affected Medical Devices" - Medtech Insight, 4 Jul, 2017.)

AHA points out that the House Commit-tee's information request centers around legacy devices, which have often not been designed with cybersecurity in mind. The

group says manufacturers must support end-users by adding security tools to mitigate risks and allow auditing capabili-ties to ensure a record of how the device performs. Echoing the committee, the group says that replacing legacy devices may seem like an easy solution, but it's not financially feasible and the problem will persist, as today's devices will become to-morrow's legacy products.

"A health system can have tens of thou-sands of devices from hundreds of manu-facturers connected to its network, lead-ing to significant security management challenges," said AHA. "For most hospi-tals and health systems, replacing these technologies is not financially feasible, with many hospitals only able to replace about 10% of devices in a given year."

They also said manufacturers need to en-sure they provide regular updates and patch-es, and let providers know about security vulnerabilities through consistent channels.

"Too often, such supports are lacking and end-users must create their own cus-tom security controls, many of which are expensive, inefficient, do not scale, and create operational challenges," said AHA.

"While there is recognition of 'shared re-sponsibility' for security, the reality today is that the end-user carries a much heavi-er load for securing devices."

FOCUS ON 'USEFUL LIFE'The group argues security tools and procedures provided by device manu-facturers should aim to limit the burden on end-users and should be designed so they easily integrate into the standard practices and tools that hospitals and health systems already use.

AHA says that when thinking about the cybersecurity strength of a medical device, it should be based on the useful life of the product. They also argue manufacturers should be responsible for ensuring security on medical devices during their useful life.

"Beyond the expected useful life, a pro-vider may reasonably be expected to de-velop wraparound solutions based on a risk-cost-benefit analysis," said the group. "Unfortunately, with most devices, this is not the norm, and end-users are forced to undertake significant work to secure de-vices during their useful life."

AHA also asks that device-makers let

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providers know about the support they intend to provide in mitigating cyberse-curity risks during the lifetime of the prod-uct, which would be helpful for hospital planning and risk management purposes.

The group also notes there currently is no single source for responding to medical device cybersecurity threats; hospitals, it says, often need to coordi-nate responses with the manufacturers, regulators and others.

"Health-care providers need a single source of information on what steps to take to secure devices," said AHA. "It is challeng-ing to work with each company separately, and possibly with multiple parties within each company. One possibility could be for the FDA to create and maintain a coordi-nated home for this information."

The hospital group commended FDA for issuing pre- and post-market cyber-security guidances over the past few years to clarify its position on the issue, but says the concerns with legacy devise continue and have not been resolved.

"Given that legacy devices have al-ready been sold, there is little incentive for manufacturers to address the security of their installed base of products," said AHA. "The FDA must make clear that se-curity measures to protect legacy devices are required, not optional. Unfortunately, the health-care sector, including the de-vice sector, continues to be confused as to whether FDA guidance on post-mar-ket cybersecurity is binding."


CMS Will Require Prior Authorization For 31 Power Wheelchair TypesSUE DARCEY [email protected]

T he US Centers for Medicare and Medicaid Services is adding 31 power wheelchair types to its list

of DMEPOS devices for which providers must obtain prior authorization before the chairs are eligible for reimbursement under Medicare. CMS announced the up-date in a June 1 notice.

Among the 31 wheelchair types that will be subject to prior authorization require-ments starting Sept. 1 are the following de-vices and corresponding HCPCS payment codes: power wheelchair, group 1 stan-dard, portable, sling/solid seat and back, patient weight capacity up to and includ-ing 300 pounds (K0813); power wheelchair, group 2 heavy duty, multiple power option, sling/solid seat/back, patient weight capac-ity 301 to 450 pounds (K0843); and power wheelchair, group 3 extra heavy duty, cap-tains’ chair, patient weight capacity 601 pounds or more (K0855).

Claims for power wheelchairs for benefi-ciaries have a long history of abuse under the Medicare program, and “are frequently sub-ject to unnecessary utilization,” the agency stated in its notice. (Also see "DMEPOS Prior Authorization Rule Aims To Tackle Fraud, Un-necessary Use" - Medtech Insight, 30 Dec, 2015.) In a recent example, in October 2016, Valery Bogomolny, owner of Royal Medical Sup-ply, Los Angeles, California, was sentenced to 60 months in prison after reportedly bill-ing Medicare between 2006 and 2009 for $4m in power wheelchairs, back braces and knee braces that were not medically neces-sary. (Also see "Medical Equipment Supplier

Owner Gets 60 Months For Medicare Fraud" - Medtech Insight, 7 Oct, 2016.)

“We believe prior authorizations of these codes will help further our program integrity goals of reducing fraud, waste and abuse, while protecting access to care,” the CMS stated.

STATE DEMO PROGRAMS CMS has initiated demonstration pro-grams in selected states to require prior authorization for the power mobility de-vices (PMDs), such as the Sept. 1, 2012 – Aug. 31, 2015 “Medicare Prior Authoriza-tion for PMDs Demonstration” program, that ran in California, Florida, Illinois, Michigan, New York, North Carolina and Texas. That program was later extended to 12 additional states that also showed high expenditures and improper payments for PMDs. In July 2015, CMS extended the demo program for all 19 of the states for three years, through Aug. 31, 2018.

Under the demonstration programs, provisionally affirmed prior authorization requests were accepted by CMS, and claims submitted for payment were subject to pre-payment review. Claims were assessed a 25% Medicare payment reduction if no prior authorization was obtained.

Under the June 1 notice, the power wheelchairs on the list will require prior authorization as a condition of payment in all 50 states, and provisionally offered prior authorization requests “will result in a claim denial,” CMS stated.

The agency is asking providers to sub-mit prior authorization requests for the power wheelchairs including evidence that the item complies with all applicable Medicare coverage, coding, and payment rules, including the physician order, rel-evant information from the beneficiary’s medical record, and relevant supplier-produced documentation.


"Unfortunately, the health-care sector, including the device

sector, continues to be confused as to whether FDA guidance on post-market cybersecurity

is binding."

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CMS Could Streamline Coverage For Breakthrough Medtech Under House ProposalSUE DARCEY [email protected]

N ewly proposed legislation in the US House could help innovative medtech products get market pick-up more quickly by permitting three years of transitional cov-

erage by Medicare for products designated by FDA as “break-through devices."

The “Ensuring Patient Access To Critical Breakthrough Products Act,” H.R. 5997, introduced June 5 by Reps. Suzan Delbene, D-Washington, and Jackie Walorski, R-Indiana, and co-sponsored by Reps. Tony Cardenas, D-California, Gus Bilirakis, R-Florida, and Terri Sewell, D-Alabama, allows for immediate reimbursement for the breakthrough products – a process that can currently take many years for sponsors to secure.

The three-year transition period of coverage for breakthrough devices is intended to give CMS time to call for any additional data they need from sponsors to secure more permanent reim-bursement of the products.

The proposal relies on FDA's already established Breakthrough Devices program, which grants sponsors of select innovative devices extra access to FDA scientists during the development process, priority review and other benefits. But industry says approval is not enough to support adoption of new, innovative technologies.

“Medicare patients must often wait years to benefit from breakthrough products, due to frequent coverage and reim-bursement delays,” AdvaMed President and CEO Scott Whitaker said. “American patients deserve better, and the legislation will help ensure they get better,” he added.

Industry has been in direct discussions with CMS about a simi-lar type of approach for several years, though so far without suc-

cess. (Also see "Medicare Will Look To Informal Pathways For Faster Medtech Reimbursement" - Medtech Insight, 30 Jan, 2018.)

H.R. 5997 would also reform CMS’s new technology add-on payments (NTAP) program, which is intended to provide a tem-porary bonus payment to cover the costs of new technology while CMS calculates the correct long-term level based on real-world use. Industry has long complained that the agency is over-ly restrictive in its application the program.

The bill would increase the potential amount of the bonus pay-ment and reduce the cost threshold of the new technology to qualify. It would also permit product sponsors to appeal rejected applications for add-on payments.

The NTAP reforms would “reduce disincentives that limit prompt patient access to innovative technologies,” AdvaMed’s Whitaker said.

Both the breakthrough and NTAP provisions have circulated through Congress for several years, but have yet to gain momen-tum due to a mixture of fiscal and procedural challenges.


Could EU's New HTA Proposal Promote EU-Wide Reimbursement Of Personalized Medicine?AMANDA MAXWELL [email protected]

T he European Commission's health technology assessment proposal is broad in its intention and may offer future op-portunities toward EU-wide consideration of the value

of personalized medicine, promoting the cooperation between national agencies and avoiding a duplication of work and inef-ficient use of resources by national bodies.

That is the view of Hogan Lovells' Riccardo Fruscalzo, expressed in a recent interview with Medtech Insight. However, says his col-

league Elisabethann Wright, it is too early to say if and how this will happen. Fruscalzo is a life-sciences and health-care counsel in the law firm's Milan office, and Wright is a life-sciences and health-care partner in Brussels.

HTA is the first step in decision-making on how to make technology available to patients (at the reimbursement stage). The process is heavily influenced by budgetary con-straints and also depends on political preferences that may

“Medicare patients must often wait years to benefit from breakthrough products, due to frequent coverage and reimbursement

delays," says AdvaMed CEO Scott Whitaker.



substantially differ among EU member states. These member state differences are here to stay and likely for a long period ahead, the two lawyers agreed.

However, enhanced coordination in the EU, even if only within the scope of HTA (for example, joint clinical assessments, joint scientific consultations, horizon scanning), may influence na-tional and EU-wide future decision-making on the reimburse-ment of products used in personalized medicine, Fruscalzo and Wright said.

The focus of the HTA proposal is not on personalized medi-cine, but the topic is addressed briefly. Reference is made to the voluntary cooperation between member states, which may take advantage of the outputs from research on HTA. In particular, the proposal points to horizon scanning initiatives, which would be in the scope of the HTA regulation, and to the importance of defining methods (e.g., digital health, personal-ized medicine) for collecting real-world evidence to reduce the uncertainty surrounding the effectiveness and the evaluation of innovative technologies and the assessment of non-clinical domains, such as the impact of medical devices on the organi-zation of care.

Due to these provisions, the two EU lawyers says, the potential may be there to make progress in personalized medicine.

They also point out that the proposal encourages coordination between member states around the evaluation of products that are innovative and/or transformative and address unmet patient needs in disease areas where appropriate clinical and economic evidence has been or can be generated. Personalized medicine certainly fits these criteria.

So could the HTA proposal prove to be the vehicle that, at last, opens up the potential of personalized medicine in the EU? It's a market that has been stymied so far by huge challenges, not only because technology is generally evaluated on a country-by-country basis and reimbursement decisions are made very much at the national level too, but also because personalized medicine crosses into both the drug and device areas – which are usually dealt with by different departments within member state HTA and reimbursement structures.

The Hogan Lovells lawyers say it is important not to get over-excited at this stage, as there are many hurdles yet to overcome – not least given that different countries wish to retain control over their health-care budgets and how they choose to provide health care. But the attorneys believe the HTA proposal – should it be adopted despite the significant opposition – could act as a catalyst for greater efforts toward coordination and acceptance by national funds of reimburse-ment for personalized medicine.

Despite the lack of mention of personalized medicine in the HTA proposal, hopes are pinned on the fact that, in article 5, the proposal says that the scope of HTA joint clinical assessments should include not only high risk medical devices and medicines but also class D (high-risk) IVDs for which the relevant expert panels have provided their views.

"If you have an assessment from a reputed body that could be considered in other countries, this could be important including because that assessment could have an impact in different juris-dictions," Fruscalzo said, adding that such developments should be monitored by companies.

But neither Fruscalzo nor Wright expect progress to go as far as to assimilate reimbursement for personalized medi-cine – the budget and funding differences between member states are too big. "Each country is able to afford different lev-els of health-care assistance for their citizens, Fruscalzo said. "So it would be impossible to have the same reimbursement rules for everyone."

This topic of consolidation between member states "has been going on forever," Wright added. "We do not know if HTA will cause greater assimilation between the member states. It is too early to say."


EU Seeks HTA CooperationThe HTA proposal was published at the end of Janu-ary 2018. (Also see "Revolutionary EU HTA Cooperation Proposal Will Use MDR/IVDR Platforms" - Medtech Insight, 1 Feb, 2018.) It seeks to reinforce cooperation among EU member states in the area of evaluating medicines and medtech products and to introduce mandatory coop-eration in areas including joint clinical assessments of high-risk and innovative products.

The proposal is intended to avoid duplication of ef-forts and costs. But the medtech industry opposes the measure out of concerns that it will lead to delays and reduced investment in new technologies. (Also see "Q&A: EU Medtech Industry Joins Growing Opposition To HTA Regulation Proposal" - Medtech Insight, 27 Apr, 2018.) Multiple national authorities within the EU have also push against the proposal. (Also see "German Medtech Industry Takes Aim At EU-Wide HTA Bid" - Medtech Insight, 17 Apr, 2018.))

"We do not know if HTA will cause greater assimilation between the

member states. It is too early to say," says Elisabethan Wright.



� C O V E R S T O R Y �

Medtech Insight: How does reimbursement in the US for person-alized medicine work? And how are traditional models of labo-ratory regulations melding with diagnostics product regulatory requirements?

Randy Prebula: First you need to understand how IVDs are regulated overall. In the US, clinical laboratories which carry out diagnostic testing and sometimes offer them as services have been regulated by the Centers for Medicare and Medic-aid Services (CMS), while diagnostic devices have been regu-lated by the FDA for the best part of 20 years. More recently the FDA has been seeking to regulate and create a regulatory framework for many laboratory-developed tests, including those used in personalized medicine. Indeed, in late 2016/early 2017, the FDA made a commitment to seek congressio-nal authority to propose new legislation that would clarify the overlap area between where the US IVD regulations apply and where the regulations for clinical laboratories apply. (Also see "FDA Passes The Buck On LDTs, But Floats Ideas" - Medtech In-sight, 13 Jan, 2017.) So, a bi-partisan bill on a diagnostics test-ing type of approach was proposed over a year ago; it is still in committee. It has been reviewed by numerous stakeholders, including the FDA, and Representatives Buschon and DeGette in the U.S. House of Representatives have been discussing proposals with the stakeholders. (Also see "Diagnostics Reg Overhaul Floated In US House" - Medtech Insight, 21 Mar, 2017.) Last month a large group of interested stakeholders and in-dustry experts issued a letter publicly supporting this initia-tive which would try to delineate where FDA and where CMS has authority over any new class of products. It is still very ear-ly in the discussion phases and very difficult to say whether any of this will ever become legislation. (Also see " Labs, Test Makers Urge Congress To Pass Diagnostic Reforms" - Medtech Insight, 11 May, 2018.) Also, specifically in the area of personal-ized medicine, in the US there have been several recent initia-tives. These have been primarily in the area of next generation sequencing where CMS is providing guidance on how it will reach national coverage decisions in particular areas within the personalized medicine field. (Also see "Medicare Final-izes NGS Test Coverage For Advanced Cancers, Drops Evidence-Collection Provision" - Medtech Insight, 16 Mar, 2018.) It is also

worth noting that the FDA's enforcement discretion position of allowing laboratories to develop tests and offer those tests as services still exists and is being pursued by many enti-ties – and this includes tests in the context of personalized medicine. FDA also has been open to flexible approaches to regulation, identifying pathways and allowing software that performs both FDA regulated and unregulated tasks to exist in the same product, defining when products support gen-eral wellness (and can be regulated less intrusively) versus diagnostic products (which warrant heightened oversight). FDA also has better defined through product classification what performance is needed and what claims are appropriate when a product is made available directly to consumers. We expect that FDA will continue to be thoughtful about when flexible approaches can be outsourced, and when product risks will require greater regulatory oversight.

You have said that the novel regulatory and reimbursement issues required forward thinking collaborative agreements between the companies working in this space. Are you sug-gesting that companies need to prioritize working around the regulations and reimbursement situation rather than develop-ing products that they think are most needed in the market? What needs to change to make sure the products most needed are reaching the market effectively?

Riccardo Fruscalzo: It is very important to take into ac-count the reimbursement issue when you are developing a new product, because, of course, at least in Europe, in the case of complex and expensive medical devices, if the prod-uct is not reimbursed, it could be very difficult to create a worthwhile market. A good legal framework is essential to create the right conditions that allow companies to com-pensate the investment they are making in developing new products. I think we have a lot of work to do in this respect – especially in personalized medicine. In Italy, for example, and in many other countries too, the reimbursement process for medicinal products is carried out by different authorities than that for medical devices. This is a problem; we need a more coordinated approach for medical devices/IVDs and medicinal products, particularly when they are combined,

It will be interesting to see if the dispar-ity between the systems increases as the new Medical Device and IVD Regulations, in the EU, and as other new EU rules, such as those associated with privacy and con-sent, are implemented, Prebula noted.

DELVING DEEPERTo better understand the differences,

now and going forward, Medtech In-sight spoke to Prebula and two of Hogan Lovells' EU-based attorneys, Elisabeth-ann Wright, life-sciences and health-care partner, based in Brussels, and Riccardo Fruscalzo, life-sciences and health-care counsel, based in Milan, WE asked how the attorneys they perceive the direction of regulation and reimbursement of per-sonalized medicine.

Bearing in mind that personalized medicine, and companion diagnostics in particular, is not regulated under the current EU directives, and that the EU regulation of this field has yet to be worked out through delegated and im-plementing acts within the context of the IVD Regulation, the first and funda-mental question of how the US system operates was directed to Prebula.

CONTINUED FROM PAGE 1


as for example with personalized medicines products. The Italian medicines agency was one of the first in Europe to adopt innovative pricing strategies (cost sharing, payment by result, risk sharing and caps etc) in the pricing and reim-bursement context, and being recognized as a tough nego-tiator by pharmaceutical companies. This enabled material cost reductions to the Italian NHS as compared to other EU jurisdictions, while allowing access to innovative medicines in the context of universal health coverage. However, per-sonalized medicine may put a strain on the Italian system as the Italian medicines agency is not competent in medical devices, and sometimes might be reluctant to assess and ac-knowledge in the reimbursed price the value of the device, which is used in combination with the medicinal product.

Prebula: In the US, it is complicated as some products are privately paid, some are reimbursed and some are avail-able for non-diagnostic uses (such as for epidemiological or site-specific mapping of disease prevalence). In terms of developing medicinal products, we work with companies who are developing products that are sometimes orphan status, for humanitarian uses, and for more common diag-nostic purposes. I think this area, where you have both the medicinal product company and the IVD company collabo-rating, is complicated by issues such as who owns the data, and how they collaborate with each other. It is about under-standing how the regulations impact which pathway you go down and how a product is then reimbursed according to that pathway.

Could the slow pace of finding some solutions around the re-imbursement of personalized medicine put small companies out of business? Is reimbursement such a deal-breaker that companies cannot afford to move forward without first under-standing the impact that reimbursement policies will have on their products?

Prebula: Not understanding how a product is reimbursed could definitely complicate its development.

How do you predict things will evolve in the EU?

Elisabethann Wright: It is taking us up to 2020 to get a new medical device regulation in the EU. The same lengthy process could arise with the HTA proposal and its impact on assessing products. (Also see "Could EU's New HTA Proposal Promote EU-Wide Reimbursement Of Personalized Medicine?" - Medtech Insight, 8 Jun, 2018.) We could find ourselves in a situation again where one area of legislation – in this case the regulation of medical devices and IVDs – evolves much more quickly than the legislation for pricing and reimbursement. It is like a vicious circle. We have a completely new approach to medical devices and now we will have to see how pricing and reimbursement catches up. Hopefully, both the MDR and the HTA proposal will ultimately improve products and their avail-ability. Of course, because of the nature of reimbursement, the differences between member states will persist. What we hope for is that the HTA proposal may offer some positives in building some kind of consistency.

Fruscalzo: Products are becoming more complex and more expensive. It is very challenging to succeed in making new technologies available to patients. I think the HTA proposal tries to go some way to addressing the challenges of how to make new technologies more affordable for all those who need them.


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