Blog Tag: Legislation

FDA Pre-cert Program for Lab-Developed Tests

FDA Pre-cert Program for Lab-Developed Tests

The FDA may begin certifying the laboratories that produce lab-developed tests (“LDTs”) instead of drafting regulatory rules to cover the tests themselves.  The American Clinical Laboratory Association describes LDTs as:

[T]ests that hospitals, academic, and clinical laboratories develop as testing services according to their own procedures.  These tests are often created in response to unmet clinical needs, and are commonly used for early and precise diagnosis, monitoring, and guiding patient treatment.

The organization believes that the ability to innovate and design custom diagnostic tests has been critical to the growth of personalized medicine and keeping pace with the changes in the medical profession.

According to Sean Khozin, associate acting director of the FDA’s Oncology Center of Excellence, the program will be modeled after the FDA’s pilot approval process for digital health products. This process functions as a stamp of approval by the FDA, Mr. Khozin explained that:

The precertification program represents a modern approach to regulation, shifting the focus from the product, to the developer of the product . . . .  That product then doesn’t necessarily have to go through analytical validation process.

This program may be compared to to the Digital Health Software Precertification (“Pre-cert”) Program that was announced in July, 2017.  The agency picked nine companies for the program, including Alphabet Inc. (Google’s parent company), Apple Inc., and Fitbit Inc. Under the Digital Health SOftware Pre-cert program, the FDA will examine the software (rather than the device itself) and inspect facilities to ensure they meets the FDA’s standards.  If the companies pass the audit, the companies will attain pre-certified status and their products will be pre-cleared in lieu of being examined by the FDA’s traditional regulatory framework.

Regulating LDTs has been an issue that the FDA has considered in response to a “boom” in the diagnostics industry and as more physicians demand complex tests to screen for diseases like breast cancer and Alzheimer’s.

The medical device and clinical laboratory industries have been at odds over the question of LDT regulation since 2014, when the FDA first sought to regulate LDTs.  Device makers supported the FDA’s regulation-based approach while clinical labs, which were already regulated by the Clinical Laboratory Improvement Amendments (CLIA) under the Centers for Medicare & Medicaid Services, disagreed.  The FDA dropped its enforcement proposals in 2016.  The American Clinical Laboratory Association, whose members traditionally have been regulated under CLIA, said:

[The ACLA] has consistently maintained that LDTs are not medical devices and cannot be regulated as such. The decision by the FDA last year to not issue final guidance to regulate LDTs was a victory for diagnostic innovation and for patients.

The FDA is now expected to announce a new pilot plan soon to certify laboratories that develop diagnostic tests in lieu of drafting rules for the tests themselves. The plan for the LDTs do not seem to conflict with CLIA rules as the CLIA rules does not concern manufacturers, the CLIA rules concern labs.

 

 

The Medical Device Tax Lives On

For opponents of the 2.3 percent medical device tax, it looked like the repeal/replacement of the Affordable Care Act would alleviate their concerns.  However, following the failure of repeal legislation that would have killed off, or delayed, the tax, the tax is on pace to be reinstated on January 1st, 2018 after a two-year gap.

Regardless of the status of the Affordable Care Act, news articles have indicated that companies and lawmakers opposed to the tax are considering pursuing a number of different options, such as adding tax delay language into other bills.  Accordingly, a group of conservative action groups are pushing Congressional leaders to pursue a repeal of the tax, including preparing a letter to House speaker Paul Ryan and Senate majority leader Mitch McConnell.  Further, the Advanced Medical Technology Association will be running digital and social media ads throughout this month in a number of states, hoping for tax repeal once lawmakers are back in session in September.

While it can be difficult to truly define a correlation between job performance and the medical device tax, a member survey performed by the Medical Device Manufacturers Association found that 70% of companies added jobs in 2016-2017 and R&D increased by 19% on average.  On the other hand, in 2015 the Congressional Research Service found that there were no significant losses due to the tax.

According to news sources, the tax applies to hospital and physician medical equipment, but excludes many consumer medical items (eyeglasses, hearing aids, etc.).

 

Changes to PTAB Practice Proposed by STRONGER Patents Act of 2017

The STRONGER (Support Technology & Research for Our Nation’s Growth and Economic Resilience) Patents Act of 2017 was recently introduced in the Senate by a bipartisan group led by Senator Chris Coons (D-Del.) and co-sponsored by Senators Tom Cotton (R-Ark.), Dick Durbin (D-Ill.), and Mazie Hirono (D-Haw.).  According to a press release by Senator Coons, “[t]he STRONGER Patents Act seeks to strengthen the U.S. Patent system through implementing measures to make it easier and less costly for patent holders to enforce their patents.”  The “Act is based on legislation that Senator Coons introduced last year with the goal of making the post-issuance proceedings before the Patent Trial and Appeal Board (PTAB) more fair and efficient.”  The bill asserts that “unintended consequences of the [AIA] are continuing to become evident, including the strategic filing of post-grant review proceedings to depress stock prices and extort settlements, the filing of repetitive petitions for inter partes and post-grant reviews that have the effect of harassing patent owners, and the unnecessary duplication of work by the district courts of the United States and the Patent Trial and Appeal Board.”

The following table illustrates several key changes proposed by the STRONGER Patents Act compared to the current PTAB practice under the AIA.

  Proposed Changes in STRONGER Patents Act Current Practice Under AIA
Claim Construction Same standard as that used in district court litigation (Phillips) Broadest reasonable interpretation
Burden of Proof Presumption of validity No presumption of validity
Standing IPR Petitioner must have been sued for infringement or have standing to bring declaratory judgment action in Federal Court

 

IPR Petitioner may be any third party who is not time-barred or estopped
Limitation on Reviews Review initiated only once per claim of a patent There is no formal limit, but the PTAB has discretion to deny multiple or follow-on petitions under §§ 314(a), 324(a) or 325(d).
Interlocutory Appeals from Institution Decisions A determination by the Director to institute an IPR may be appealed to the United States Court of Appeals for the Federal Circuit.  Patent owners may not appeal the PTAB’s determination in the institution decision that a challenged claim is likely unpatentable. Institution decisions are not appealable.
Eliminating Repetitive Proceedings Petitioners can only challenge a patent once, unless they are later charged with infringement of additional claims.  If an IPR is instituted, the petitioner cannot bring challenges of the same type in district court to eliminate duplicative proceedings. A petitioner who, in a final written decision, is unsuccessful challenging a claim in an IPR or PGR is estopped from raising or maintaining any ground of challenge for that claim that the petitioner raised or reasonably could have raised during the concluded IPR or PGR proceeding.
Real-Party-In-Interest Defines Real-Party-in-Interest as an entity making financial contributions to the challenge. A Real-Party-in-Interest is typically considered any party who exercises or could exercise control in the proceeding.
Priority of Federal Court Validity Determinations If a district court reviews the validity of a patent before the PTAB, the post-issuance proceeding should not start, or should be paused pending appeal.

Medical Device Industry Organizations Support STRONG Patents Act

(March 3, 2015)  Mark Leahey, President and CEO of the Medical Device Manufacturers Association (MDMA), issued a statement regarding the Support Technology and Research for Our Nation’s Growth (STRONG) Patents Act of 2015.  According to the bill, the STRONG Patents Act aims to “strengthen the position of the United States as the world’s leading innovator by amending title 35, United States Code, to protect property rights of the inventors that grow the country’s economy.”  The STRONG Patents Act was introduced by U.S. Senators Chris Coons (D-Del.) and Dick Durbin (D-Ill.), members of the Senate Judiciary Committee, and Mazie Hirono (D-Hawaii), member of the Senate Committee on Small Business and Entrepreneurship.  According to a press release by Senator Coons:

The STRONG Patents Act would strengthen and combat abuse by:

  • Cracking down on abusive demand letters by empowering the Federal Trade Commission to target firms that abuse startups rather than invent anything;
  • Ensuring that pleading standards for patent-infringement cases match the standards used for all other forms of civil actions, creating a significant barrier to frivolous lawsuits before any funds are spent on discovery;
  • Eliminating fee diversion from the U.S. Patent and Trademark Office (PTO) so we can ensure that those who examine patents have adequate training and dependable funding;
  • Ensuring balance in post-grant proceedings at the PTO, so that this expedited form of patent litigation is both fast and fair; and
  • Analyzing the impact that our patent system has on small businesses, both from the perspective of startups reliant on patents and those small businesses facing allegations of infringement.
According to Mr. Leahey’s statement, the “MDMA applauds the introduction of the ‘STRONG Patents Act’ for its measured approach to address issues facing our nation’s patent system . . . While MDMA supports efforts to deal with patent litigation abuse, we must ensure that any legislation to address this problem does not have the unintended consequences of weakening one’s patent rights. The ‘STRONG Patents Act’ targets the concerns of patent holders to end abusive practices, while establishing balance in post-grant proceedings at the PTO and eliminating fee diversion.” The Biotechnology Industry Organization (BIO) also expressed support for the STRONG Patents Act stating, “BIO supports balanced reforms to reduce abusive patent practices, while maintaining the strong incentives necessary to sustain our nation’s global leadership in biotechnology innovation and the creation of high-wage, high-value jobs throughout our country.  The STRONG Patents Act of 2015 achieves this critical balance.” The STRONG Patents Act provides an alternative vision for the patent system to the Innovation Act submitted in the House by Congressman Bob Goodlatte (R-Va.) last month.