Blog Tag: Medical Device
Alpha Tau Medical Ltd. (“Alpha Tau”) is a medical technology start-up focused on the research, development, and commercialization of its Alpha DaRT (Diffusing Alpha-emitters Radiation Therapy) treatment for solid cancerous tumors. On October 8, 2021, Alpha Tau announced that it received FDA Breakthrough Device Designation for using Alpha DaRT to treat recurrent glioblastoma multiforme (GBM). GBM is an aggressive, often incurable form of cancer responsible for malignant brain tumors.
According to the FDA, the goal of its Breakthrough Devices Program is to “provide patients and health care providers with timely access to  medical devices by speeding up their development, assessment, and review.”
“As GBM is such a terrible disease, it is critical that we find new solutions for these patients, and we are thrilled that receipt of the FDA’s Breakthrough Device Designation will allow us to expedite our clinical collaborations with leading cancer centers in the U.S. and across the world, and to bring new hope for GBM patients. I am very proud of our team and our collaborators who have worked hard to extend the use of Alpha DaRT to GBM and have already accomplished so many amazing things. This is fantastic news for Alpha Tau and fantastic news for so many GBM patients around the world.”
Alpha DaRT works by first inserting a “seed” into a cancerous tumor. The seed then releases high-energy alpha particles that destroy the tumor while sparing the healthy tissue around it.
This is the second FDA Breakthrough Device Designation Alpha Tau has received. In June 2021, Alpha Tau announced the FDA’s designation of Alpha DaRT for treating squamous cell carcinoma, a type of skin cancer.
The United States Department of Justice announced that medical device company Affordable Healthcare Solutions, LLC has pleaded guilty to charges related to unapproved prescription hyaluronic acid medical devices, as reported by a press release dated September 28, 2021. The devices are “intended for the treatment of pain in osteoarthritis of the knee that must be injected by a doctor or other qualified health care professional.” The company was sentenced for “Receiving Adulterated Devices in Interstate Commerce and Delivery for Pay with Intent to Defraud or Mislead, in violation of 21 U.S.C. §§ 331(c) and 333(a)(2).”
21 U.S.C. § 331(c) prohibits “[t]he receipt in interstate commerce of any food, drug, device, tobacco product, or cosmetic that is adulterated or misbranded, and the delivery or proffered delivery thereof for pay or otherwise.” According to the facts admitted during the plea, special agents with the United States Food and Drug Administration (FDA) located and seized foreign-market Supartz, Euflexxa, Synvisc, Synvisc-One, and Orthovisc that were adulterated for lacking FDA approval for distribution and use in the United States.
According to the press release, a review of the devices seized from Affordable Healthcare Care Solutions confirmed various differences between the outer box and carton labels, patient information brochures, and instructions for use between the FDA-approved labeling for Supartz, Orthovisc, Synvisc, Synvisc-One, and Euflexxa versus the labeling included with the unapproved versions being distributed by Affordable Healthcare Solutions. While discussing the seizure, Special Agent in Charge, Justin C. Fielder, emphasized that the “FDA regulates the manufacturing and distribution of medical devices to help ensure the safety of American patients.”
As a result of the plea agreement, Affordable Healthcare Solutions pleaded guilty to a felony, was fined, and was ordered to forfeit $837,000 worth of devices seized by the special agents. Juan Antonio Gonzalez, Acting United States Attorney for the Southern District of Florida, announced the felony guilty plea and stated:
Medical device suppliers whose greed leads them to disregard FDA protocols and approval processes put the public in danger. . . . These are serious crimes and, in our district, companies that put profit over patient safety will be held accountable.
Boston Scientific Corp. has agreed to acquire Devoro Medical Inc. in a deal expected to close this year. Boston Scientific previously held a 16% equity stake in Devoro Medical and now agrees to acquire the remaining 84% stake for $269M. Boston Scientific also agrees to pay up to $67M more if Devoro Medical clears certain regulatory and clinical milestones.
Devoro Medical is the developer of the WOLF Thrombectomy® Platform–a technology platform that “targets and rapidly captures blood clots using finger-link prongs that retrieve and remove thrombi in the arterial and venous systems.”
According to Boston Scientific’s press release:
“The addition of the WOLF platform advances our efforts to ensure physicians have the right tools to improve procedural efficiencies,” said Jeff Mirviss, executive vice president and president, Peripheral Interventions at Boston Scientific. “Clot management remains a core focus of our business, and upon commercialization, this highly differentiated technology will complement and expand our offerings to a full suite of interventional strategies for thromboemboli, which also includes the EkoSonic™ Endovascular System (EKOS) and the AngioJet™ Thrombectomy System.”
Boston Scientific plans to accelerate development of the WOLF platform following its acquisition of Devoro Medical, according to Michael R. Jaff, D.O., its Chief Medical Officer and Vice President of Clinical Affairs, Technology and Innovation, Peripheral Interventions.
This deal is the latest in a series of acquisitions this year by Boston Scientific. In January, Boston Scientific agreed to acquire cardiac wearables company Preventice Solutions for $925M. In March, Boston Scientific agreed to acquire the global surgical business of Lumenis LTD for $1.07B. And, in June, Boston Scientific agreed to acquire cardiac ablation device maker Farapulse for $295M.
The orthopedic industry traditionally sees significant levels of intellectual property litigation activity, and this year has been no different. One source of this activity comes from Conformis who has continued to assert patents directed towards surgical planning and patient specific instruments and implants. In 2021, Conformis filed three new complaints, settled one case, and continued another litigation. These cases have involved various companies, including DePuy Synthes, Exactech, Bodycad, Wright Medical, and Medacta.
Decisions and settlements have also been reached in several additional lawsuits relating to diverse technologies, such as bone plates, knee implants, and pedicle screws. TriMed, Arthrex, Medacta, and Zimmer are some of the companies that have been parties to these lawsuits. Alternative forums, including the use of Inter Partes Review, have also continued to play significant roles for both patent holders and challengers.
Several attorneys from Knobbe Martens – including Andrew Douglas, Jessica Achtsam, Michael Christensen, Kregg Koch, Christy Lea and Sabing Lee – presented a webinar on August 26, 2021, to discuss notable decisions from recent orthopedic and spine intellectual property litigations. The webinar was prepared in anticipation of the 2021 Annual Meeting of the American Academy of Orthopaedic Surgeons and the 36th Annual Meeting of the National Association of Spine Specialists and included topics such as:
- an analysis of claim types asserted by Conformis against patient specific implant and instrument technologies and how these claims have been enforced against and challenged by many prominent orthopedic companies;
- how statements made by a patent holder can limit the scope of their claims in litigation;
- how small companies can leverage their patents to derive licensing revenue;
- trade secret issues that can arise at industry meetings;
- how prolific doctor inventors have built and enforced large patent portfolios;
- remedies for IP disputes outside the United States; and
- strategies for using patents defensively as part of a countersuit strategy.
The full webinar is available for viewing at this web link.
According to an article published in Nature Biotechnology, Harvard and MIT researchers invented a face mask for detecting SARS-CoV-2, the virus that causes COVID-19, via a user’s breath. Instead of relying on a lab, the personal device uses sensors that use wearable freeze-dried cell-free (wFDCF) technology. This technology contains the same molecules that cells use to recognize and manipulate nucleic acids and proteins. According to MedGadget, unlike previous iterations of this technology which store living cells in “tiny aquariums”, wFDCF technology prevents any issues with leakage due to breakage.
To use the mask, a user presses a button on the mask to release water onto reactive wFDCF sensors. MedGadget reports that results are given within 90 minutes and can be displayed on the inside of the mask for privacy purposes. According to the scientific article, the wFDCF technology first cleaves viral particle samples in order to release the viral RNA. Next, target genes located in the viral RNA are amplified via reverse transcription–recombinase polymerase amplification, in order to amplify the sequence that encodes for the spike protein. A lateral flow assay strip is then used to display visual results similar to a pregnancy test.
“We have essentially shrunk an entire diagnostic laboratory down into a small, synthetic biology-based sensor that works with any face mask, and combines the high accuracy of PCR tests with the speed and low cost of antigen tests,” said researcher Peter Nguyen. “In addition to face masks, our programmable biosensors can be integrated into other garments [e.g., lab coats] to provide on-the-go detection of dangerous substances including viruses, bacteria, toxins, and chemical agents.”
MIT News reports that the device can also swap in sensors for other pathogens, including influenza, Ebola, and Zika, or sensors they have developed to detect organophosphate nerve agents.
Genetic Engineering and Biotechnology News reports that the research team is “actively searching for manufacturing partners who are interested in helping to enable the mass production of the face mask diagnostic for use during the COVID-19 pandemic, as well as for detecting other biological and environmental hazards.” The article reports that the authors have already submitted provisional patent applications for the technology.
The original article was published in Nature Biotechnology on June 28, 2021, and is available here.
According to the FDA, the medical device industry experienced significant supply chain disruptions during the COVID-19 pandemic. Such disruptions caused shortages of PPE, ventilators, diagnostic testing, and other medical devices. As Janet Woodcock, M.D., the Acting Commissioner of Food and Drugs, acknowledges in her July 21, 2021 statement:
“the pandemic has exposed great weaknesses in the medical device supply chain and its dependence on foreign medical devices.”
Woodcock also explains the steps being taken by the FDA to avoid such shortages in the future. One step includes a request for $21.6 million to fund a new Resilient Supply Chain and Shortages Prevention Program (RSCSPP). This funding request is part of the FDA’s request for $97 million to support its core safety programs. Woodcock explains “the funding will provide, for the first time, resources to establish a permanent program for U.S. supply chain resilience for medical devices.” RSCSPP’s goal is to prevent and mitigate the supply chain issues like those experienced during the pandemic while reducing dependence on foreign medical devices.
Additionally, the FDA is looking to expand its authority to prevent future shortages. The FDA seeks broader authority “to obtain supply disruption notifications for critical devices.” Broader authority has also been requested to require manufacturers to develop and share risk management plans. The FDA plans to work with Congress to ensure the FDA has the resources and authority needed to advance these initiatives.
Shutdown orders due to the COVID-19 virus pandemic have created economic disruption, causing companies to scale back on intellectual property (IP) expense. This creates an opportunity to move ahead of the competition. This is especially true because the U.S. patent system, and many others around the world, reward the first inventor to file.
Below are some suggestions for protecting your IP on a reduced budget. This is not an exhaustive list. It is also not right for everyone. You should consult with legal counsel about your IP and what is right for your company.
Further, obtaining the best protection for your IP may involve filing for a utility patent, which is a long process. It involves, for example, understanding the client’s business and its goals; studying the technology; meeting with the inventors; discussing the invention, its genesis, and design alternatives; identifying target concepts to protect; meticulously drafting the claims and the written description; preparing the figures; and reviewing and revising the draft documents many times until they are right, among many other tasks.
By most measures, a pandemic is not an ideal time for many things, including companies trying to protect their IP. Consider discussing the following options with IP counsel to see if any of these might be right for you. For fuller discussion of these and other techniques, see this webinar presented to the Association of Corporate Counsel.1. Get your place in line – On a reduced budget
The U.S. and many non-U.S. patent systems reward the first inventor to file. It is therefore important to stake your place in line before the competition. Below are some suggestions for reserving your place in line – your “priority date” – while keeping expenses down.
A. Consider a U.S. provisional patent application filing.
A U.S. provisional patent application holds your place in line at the Patent Office for up to one year. The government filing fee is currently 280 USD (potentially discounted for “small entities” or “micro entities”).
Provisional applications do not require the same level of formality as a non-provisional application. For example, a sketch, a slide deck, or an informal set of notes from an inventor can be filed as a provisional application. While you will only get credit, for priority purposes, for the amount of detail you file, it may be beneficial to file something rather than nothing.
Within one year of the first provisional application filing, you can supplement it with one or more “follow-on” provisional filings. This may be useful, for example, to file a follow-on later when IP budgets are subsequently increased.
All of the filed provisional applications within that one year can then be “rolled up” into a single non-provisional application. If you ultimately decide to do nothing with the one or more filed provisional applications, they will never publish.
B. Consider “coaching” preparation of the patent application.
While ideally a patent attorney will draft your application, this involves additional expense. One option may be to have your attorney “coach” you through the preparation process.
Trademarks Require “Use in Commerce” – But What If You Need Regulatory Approval Before Selling Your Medical Device?
The U.S. Patent and Trademark Office (USPTO) allows for a trademark application to be filed on an “Intent to Use” basis to establish a priority date before the mark is actually “used in commerce.” However, such use in commerce must happen before the trademark application will register with the USPTO. If your company markets medical devices or related goods that require regulatory approval, the use in commerce requirement presents unique issues.
Typically, use in commerce is established when the goods affiliated with the trademark application are shipped between two states or to a foreign country, and with a label or packaging showing the trademark on the goods. For most industries, use of a trademark “in preparation” of sales will not suffice to satisfy the use in commerce requirement. Additionally, a trademark owner is only given three years to use the mark in commerce and provide evidence of such use after the USPTO determines the application is otherwise ready for registration. If the owner does not submit proof that it has used the mark by the deadline, the application is deemed abandoned. Three years seems like ample time for many trademark owners, but anyone who has needed regulatory approval for a product knows the process can stretch well beyond these three years. How does one deal with this conundrum?
You may think that you should wait to file your trademark application so that you don’t run out the three-year clock. But this may allow competitors to swoop in and file intervening trademark applications. If the USPTO believes your mark is confusingly similar to the mark in a competitors’ prior application or registration, it could prevent you from being able to register your mark.
With few exceptions, the best strategy is to file your trademark application as soon as possible. Fortunately, the law provides an accommodation for trademark registrants with goods and services that require regulatory approval. Legislators recognized the fact that “commerce” varies in different industries. For instance, while some companies can sell products as soon as they are ready for market, others must undergo testing to get a stamp of approval prior to marketing or selling their products. This latter group typically includes medical device companies. These and other devices may require pre-market approval (PMA) or a 510(k) clearance from the U.S. Food and Drug Administration (FDA), which can take many years.
Lawmakers revised the definition of “use in commerce” to state that such requirement:
be interpreted to mean commercial use which is typical in a particular industry. Additionally, the definition should be interpreted with flexibility so as to encompass various genuine, but less traditional, trademark uses, such as those made in test markets, infrequent sales of large or expensive items, or ongoing shipments of a new drug to clinical investigators by a company awaiting FDA approval (Senate Judiciary Committee Report on S. 1883, S. Rep. No. 100-515, p. 44-45 (Sept. 15, 1988))
This expanded meaning of “use in commerce” has been generally adopted by the USPTO and the courts.
The U.S. Food and Drug Administration (FDA) has issued two new guidance documents related respectively to an “abbreviated” and a “special” approach to the typical 510(K) process for medical devices.
The FDA describes the usual 510(K) process as “a premarket submission made to FDA to demonstrate that the device to be marketed is at least as safe and effective, that is, substantially equivalent, to a legally marketed device…that is not subject to premarket approval.” According to the FDA, “Each person who wants to market in the U.S., a Class I, II, and III device intended for human use, for which a Premarket Approval application (PMA) is not required, must submit a 510(k) to FDA unless the device is exempt from 510(k) requirements of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) .”
Now, two recent guidance documents issued by the FDA allow for altered 510(K) approaches for certain medical devices. The first guidance, issued September 13, 2019, is for a “Special 510(K) Program.” The FDA describes this program as “an optional pathway for certain well-defined device modifications where a manufacturer modifies its own legally marketed device, and design control procedures produce reliable results that can form, in addition to other 510(k) content requirements, the basis for substantial equivalence (SE).” The guidance is intended to clarify “the types of technological changes appropriate for review as Special 510(k)s.” The new guidance also supersedes prior FDA guidance from 1998 regarding Special 510(k) policy in “The New 510(k) Paradigm: Alternate Approaches to Demonstrating Substantial Equivalence in Premarket Notifications.”
This MDDI article purports to offer a “handy checklist” to determine “if changes made to your medical device can be reviewed under the [Special 510(K)] program.” Some of the questions listed on the article’s checklist include the following:
- Is it a change to the manufacturer’s own device?
- Are performance data needed to evaluate the change?
- Is there a well-established method to evaluate the change?
- Can the data be reviewed in a summary or risk analysis format?
The second FDA guidance, also issued September 13, 2019, is for the “Abbreviated 510(K) Program.” The FDA describes the program as “an optional approach that may be used to demonstrate substantial equivalence in premarket notifications (510(k)s)” and that “uses guidance documents, special controls, and/or voluntary consensus standards to facilitate FDA’s premarket review of 510(k) submissions.” The guidance is “intended to facilitate 510(k) submission preparation by manufacturers and review by FDA.”
A copy of the guidance for the Special 510(K) Program can be found here, and a copy of the guidance for the Abbreviated 510(K) Program can be found here. The FDA currently states that comments on either guidance may be submitted at any time. Public comments on the guidance for the Special 510(K) Program may be submitted here and for the Abbreviated 510(K) Program here.
On November 9, 2018, Cook Medical LLC filed a petition with the Patent Trial and Appeal Board requesting inter partes review (IPR) of U.S. Patent No. 6,306,141, assigned to Medtronic Vascular, Inc. The ‘141 Patent is entitled “Medical Devices Incorporating SIM Alloy Elements.” The ‘141 Patent states that it relates to “a medical device containing a shape memory alloy element.”
The ‘141 patent discloses using stress and temperatures below body temperature to restrain a metal alloy. The alloy expands to its original shape after being released from its restraint and exposed to body temperature. In one example, the ‘141 Patent describes that the disclosed device enables doctors to treat damaged or diseased heart valves with a less invasive transcatheter heart valve procedure. Figures 3 and 4 of the ‘141 Patent, shown below, illustrate a “side elevation view of a partial section of a catheter” in stressed (Figure 3) and unstressed (Figure 4) configurations.
The petition seeks to review all claims of the ‘141 Patent. Cook Medical’s petition submits two grounds on which the claims of the ‘141 Patent should be found invalid due to obviousness. The status of the proceeding can be examined by searching for the patent on the Patent Trial and Appeal Board website.
This is not the first time that the ‘141 patent has been subject to a petition for inter partes review. On January 17, 2014, Edwards Lifesciences Corporation filed a petition with the Patent Trial and Appeal Board requesting inter partes review of the patent for review of all claims of the ‘141 Patent. According to a Medtronic press release, on May 20, 2014, Medtronic and Edwards reached a “global settlement agreement” to “dismiss all of the pending litigation matters and patent office actions between them.”
In May 2013, Lombard Medical filed a petition for inter partes review of Claims 1-10 and 18-22 of the ‘141 Patent. Lombard Medical’s products, according to its website, include the AORFIX™ endovascular stent graft. According to a Lombard press release, on October 17, 2013, Lombard was granted a non-exclusive license by Medtronic to the ‘141 Patent, and Lombard formally requested a withdrawal of its inter partes review petition with the USPTO.
The ‘141 Patent has also been previously litigated. The ’141 Patent, among others, was previously asserted by Medtronic against W.L. Gore & Associates, Inc. in 2006; Gore’s EXCLUDER® AAA, TAG, and VIABAHN SFA® endoprosthesis devices were at issue. The parties entered into a confidential settlement in 2009.
Medtronic also previously asserted the ’141 Patent, among others, against AGA Medical in 2007. AGA’s AMPLATZER® Septal Occluder, Duct Occluder, and Vascular Plug devices were at issue. The parties entered into a settlement in 2010 in which AGA received a non-exclusive license to patents including the ’141 Patent in exchange for $35 million. AGA Medical was subsequently purchased by St. Jude Medical in October 2010 for $1 billion.
The U.S. Food and Drug Administration (FDA) announced an agreement with the U.S. Department of Homeland Security (DHS) to strengthen the partnership between the agencies and “stay a step ahead of constantly evolving medical device cybersecurity vulnerabilities.”
The agreement formalizes a long-standing relationship by developing a new framework for greater coordination and cooperation. As part of the new framework, specific responsibilities have been assigned to the FDA and the National Protection and Programs Directorate (NPPD), a component of the DHS. The following table provides a breakdown of the responsibilities outlined in the agreement:
|FDA Responsibilities||NPPD Responsibilities|
|1. Coordinate and participate in regular, ad hoc, and emergency coordination calls to enhance mutual awareness of vulnerabilities and threats||1. Serve as central medical device vulnerability coordination center|
|2. Provide NPPD with draft public releases to facilitate coordination of messaging||2. Participate in regular, ad hoc, and emergency coordination calls with FDA to enhance mutual awareness of vulnerabilities and threats|
|3. Comment in a timely manner on NPPD draft advisories and alerts||3. Confer with entities providing sensitive information prior to sharing any CCI, trade secret, or PCII-protected vulnerability or product information with the FDA|
|4. Assess the risk to health and patient harm when potential impact is disputed||4. Coordinate with FDA on the content of alerts and advisories to be published by DHS|
|5. Submit requests to NPPD for independent third-party technical assistance to analyze and test medical systems||5. Maintain technical capabilities to support requests for independent third-party analysis regarding the impact of vulnerabilities|
|6. Share non-trade secret information to resolve disputes of risk, impacts, and communication||6. Publish healthcare and public health related alerts and advisories|
In summary, the DHS will serve as the central coordination center and interface with appropriate stakeholders, and the FDA will provide technical and clinical expertise regarding medical devices.
FDA Commissioner Scott Gottlieb, M.D., during his discussion of the new agreement, addressed the FDA’s continued commitment to confront cybersecurity risk, while also recognizing the need for increased coordination between government agencies:
The FDA has been proactive in developing a robust program to address medical device cybersecurity concerns . . . But we also know that securing medical devices from cybersecurity threats cannot be achieved by one government agency alone. Every stakeholder has a unique role to play in addressing these modern challenges. That’s why this announcement is so important.
This agreement is not the first time a government agency has reached out to the FDA in an effort to strengthen medical device cybersecurity. As previously reported on the KnobbeMedical blog, the U.S. Department of Health & Human Services (HHS) Office of the Inspector General recommended earlier this year that the FDA include cybersecurity review as a greater part of the premarket review process for medical devices (e.g., through the inclusion of a Refuse-To-Accept checklists). This new FDA-DHS agreement is another example of continuing attempts to address ongoing medical device cybersecurity risks.
In a recent report, the U.S. Department of Health & Human Services (HHS) Office of the Inspector General (OIG) recommended that the U.S. Food & Drug Administration (FDA) include cybersecurity review as a greater part of the premarket review process for medical devices. In particular, the report suggests including cybersecurity documentation as a criterion in the FDA’s Refuse-To-Accept (RTA) checklist, using presubmission meetings to address cybersecurity questions, and including cybersecurity as an element of the FDA’s Smart template.
The FDA has been ramping up its cybersecurity review lately to deal with increased cybersecurity concerns. For example, a ransomware attack caused an Indiana hospital to shut down its system. Other cyberattacks may have gone undetected.
Currently, the FDA reviews documentation that manufacturers submit regarding cybersecurity as part of the premarket submissions. The FDA uses this information to consider known cybersecurity risks and threats when reviewing submissions that deal with networked medical devices. The FDA may request additional information from applicants when submissions require clarification or when cybersecurity documentation is lacking. In view of these requests, the FDA regularly approves manufacturers on cybersecurity issues when sufficient documentation is provided.
For example, in one review of a glucose monitoring system, an FDA reviewer did not find “any information on how the manufacturer included cybersecurity in the device’s design,” according to the report. “The FDA reviewer explained that the device relied heavily on users to protect against cybersecurity threats by using antivirus software and enabling firewalls. The FDA reviewer requested that the manufacturer update its hazard analysis to address the missing information. The manufacturer did so, and FDA found the update to be acceptable.”
Because of examples like this, the report suggests using cybersecurity documentation as an element in the FDA’s RTA checklist. The RTA checklist is a screen against incomplete applications. Were cybersecurity part of these checklists, failure by a manufacturer to provide adequate cybersecurity documentation could prevent the FDA to accept the submission for substantive review.
The report also suggests that the FDA use presubmission meetings to address cybersecurity-related questions. These meetings serve as a way for manufacturers to ask the FDA specific questions, such as whether the submission satisfies the FDA’s standards. During these meetings, the FDA can include cybersecurity as part of the discussion, which may reduce the amount of time for the FDA review.
Finally, the report recommended that cybersecurity be a stand-alone element in the FDA’s Smart template. A dedicated section on cybersecurity could allow FDA reviewers to explain the results of their review regarding cybersecurity in a standard format.
The FDA has agreed with these recommendations and has begun taking steps to implement them, such as by including cybersecurity in the Smart template. The FDA also said that it “intends to update the RTA checklist and the accompanying guidance to specifically identify cybersecurity as an item in the checklist during the next update of these items.” The FDA is also currently considering new rules that may require submission of software as part of a premarket submission.
The medical device and related markets have shown some growth recently. For example, IHI, an iShares U.S. Medical Devices ETF, has a total return of about 24% year-to-date in 2018. In the same time period, the S&P 500 has a return of about 8%. The IHI fund has an average annual return in the last ten years of about 14% compared to about 10.7% for the S&P 500. According to MarketWatch, the IHI fund invests in “medical-products companies that deliver the tubes, pumps and tools that are necessary to make medical facilities function. . . . While some of the products offered by these companies are indeed high-tech, such as artificial heart valves, many are less glamorous, such as catheters and blood-pressure cuffs. But despite their flash, these items are staples, and medical offices and hospitals nationwide remain big revenue sources for these companies.”
MarketWatch further reports that ETFs related to healthcare in general have “more than tripled the returns of the S&P 500 this year.” For example, the largest healthcare ETF by funds, XLV, is reportedly up 10% this year, and the IBB fund is up about 330% over the last ten years. Other healthcare-related funds reported to be outperforming the S&P 500 year-to-date in 2018 include the following:
- Janus Henderson Obesity ETF “SLIM,” up 20%;
- iShares U.S. Healthcare Providers ETF “IHF,” up 22%,
- Invesco DWA Healthcare Momentum ETF “PTH,” up 23%;
- the Ark Genomic Revolution Multi-Sector ETF “ARKG,” up 23%;
- the SPDR S&P Health Care Equipment ETF “XHE,” up 27%; and
- the Invesco S&P SmallCap Health Care ETF “PSCH,” up 40%.
There has been some activity and forecasts in the medical device market recently reported. Some forecasts include the market for medical device connectivity projected to reach about $2.6 billion by the year 2023. The global market for “IoT” (internet of things) medical devices is projected to grow at a compound annualized growth rate (CAGR) of about 25% from 2018 to 2023. For the same period, the market for anesthesia-related devices is expected to have a CAGR of about 6.4%. The global market for retinal surgery devices is reported as “likely to exceed $3 Billion by 2025, almost double from its current level in 2017.” The global market for brachytherapy devices is reportedly predicted to rise at 4.2% CAGR from 2017 to 2022.
Some examples of recent medtech funding and M&A activity have included: CytoSorbents, a critical-care immunotherapy company that specializes in blood purification, received a research award of up to $3 million from the NIH. Irvine-based Endologix, provider of solutions for aortic disorders, reportedly recently took out a $210.5 million convertible loan facility. Urotronic, developer of a drug-coated balloon catheter for treating urethral strictures in men, reportedly raised $20 million in an equity offering involving 7 investors. 410 Medical Inc. a Durham, North Carolina-based company focused on technologies for resuscitation of critically ill patients, reportedly recently raised $3.1 million in financing.
Boston Scientific recently announced an agreement to acquire privately-held VENITI, Inc. for $160 million. According to the press release, VENITI submitted a pre-market approval application with the U.S. Food and Drug Administration in June 2018 for the VICI stent system for treating obstructive venous disease. The VICI stent system received CE Mark approval in 2013.
According to the press release, venous obstructive disease affects more than 1.1 million people in the United States and Western Europe annually. Jeff Mirviss, Senior Vice President and President of Peripheral Interventions at Boston Scientific, commented:
Along with our leading AngioJet thrombectomy platform and venous product pipeline, we look forward to meeting the needs of physicians treating both chronic and acute venous disease.
According to the Worcester Business Journal, Boston Scientific announced over $1.5 billion in acquisitions this year alone. Other notable Boston Scientific acquisitions in 2018 include Millipede ($540m), NxThera ($306m), nVision Medical Corporation ($275m), Claret Medical ($270m), and Cryterion Medical ($202m).
Boston Scientific expects the acquisition of VENITI to be immaterial to adjusted earnings per share (EPS) in 2018 and 2019, and accretive thereafter. Nonetheless, shares of Boston Scientific opened trading the day of the announcement up more than 3 percent.
The Food and Drug Administration (FDA) has announced a medical device innovation challenge to help address opioid abuse and misuse. With the FDA Innovation Challenge: Devices to Prevent and Treat Opioid Use Disorder, the FDA intends to encourage development of medical devices that will help to combat the ongoing opioid crisis.
According to the announcement, diagnostic and therapeutic devices at any stage of development are eligible for submission to the Challenge. The FDA also indicates that currently marketed devices may be submitted if developers are interested in demonstrating that their device has an improved benefit-risk profile as compared to opioids in the management of pain. Non-limiting examples of suitable medical devices provided by the FDA include diagnostic devices that identify patients at increased risk for addiction, opioid-sparing or opioid-replacement therapies for acute or chronic pain, and devices that monitor the use and prevent diversion of prescription opioids.
According to the announcement, Challenge submissions should describe:
- The novelty of the medical device/concept,
- The development plan for the medical device,
- The development team, and
- The anticipated benefit of the device used by patients and the impact on public health as compared to other available alternatives.
The FDA has indicated that they will work directly with selected applicants during a collaboration phase to accelerate the development and review of new devices, similar to the process under the existing Breakthrough Devices Program. The announcement also reports that selected devices will also be granted Breakthrough Device designation without requiring a separate application. Challenge applications will be accepted through September 30, 2018. The FDA will be hosting a webinar on July 25, 2018 to provide further information.
J&J Accepts Platinum Equity’s $2.1B Offer for its LifeScan Subsidiary; Receives Offer for Advanced Sterilization Products Subsidiary
On June 12, 2018, Johnson & Johnson announced acceptance of an offer from Platinum Equity, a private investment firm, to acquire its diabetic monitoring unit, LifeScan, for approximately $2.1 billion. In response to the acquisition, Platinum Equity Chairman and CEO Tom Gores said
We are committed to putting our financial resources and global operating expertise to work in support of the company’s core mission to improve the quality of life for people living with diabetes.
LifeScan offers blood glucose monitoring products to patients for the care of diabetes under the OneTouch brand. According to the press release, LifeScan business earned approximately $1.5 billion in revenue in 2017. Platinum Equity previously reported that LifeScan President Valerie Asbury would continue leading the business.
In February 2018, Bloomberg reported that Johnson & Johnson was seeking to sell off its sterilization products division for as much as $2 billion. The selling price has increased as Johnson & Johnson announced on June 6, 2018, receipt of a binding offer from Fortive Corp. to acquire Advanced Sterilization Products (ASP), a division of Ethicon Inc., for approximately $2.8 billion. If accepted, Johnson & Johnson indicated it expects the proposed transaction to close no later than early 2019.
ASP sells sterilization products under the STERRAD and CYCLESURE brands. ASP’s high level disinfection products are sold under the EVOTECH brand. Johnson & Johnson reported that ASP earned approximately $775 million in revenue in 2017.
The U.S. Food and Drug Administration (FDA) recently updated its software Precertification Program. A working program was originally rolled out in April 2018, but the program was updated in response to requested public input. The FDA expects to roll out a finalized version of the program by December 2018 and to have a pilot test available in 2019.
With the precertification program, the FDA hopes to streamline the certification of “mobile apps” and other software that is used to “treat, diagnose, cure, mitigate, or prevent disease or other conditions,” or so-called software as a medical device (SaMD), according to the updated program description. While software in a medical device (SiMD) is not currently part of the program, the FDA hopes to include SiMD and software that is an accessory to hardware in the future. The program will allow certain organizations that can demonstrate a “culture of quality and organizational excellence” to streamline their oversight of SaMD.
The update clarifies that not all software is subject to regulatory review even if it has some connection to the medical industry. In particular, the update notes that non-device software is exempt, such as software that is intended for (1) for administrative support, (2) for maintaining or encouraging a healthy lifestyle, (3) to serve as electronic patient records, (4) for transferring, storing, converting formats, or for displaying data, or (5) to provide certain limited clinical decision support.
According to the update, organizations “of all sizes” can qualify. The FDA makes clear that startups and smaller companies can apply and receive precertification. Two levels of precertification exist. Level 1 precertification allows an organization to develop and market “lower risk” software without review while also streamlining review of higher risk software. This level would be awarded to an organization that demonstrates excellence in product development but may have a “limited track record” in “developing, delivering, and maintaining” products in the healthcare market. Level 2 precertification allows “lower and moderate risk” software to be developed and marketed without review and allowing streamlined review of other software. This level is awarded to those organizations with a track record in demonstrating high quality software products.
In determining what amount of review is required for “lower risk” and “moderate risk” SaMD, the FDA looks at (1) the risk category of the product, (2) the level of precertification of the organization, and (3) the extent of the changes the software relative to an existing device. Under either level of precertification, “minor changes” require no review by the FDA.
The FDA is looking to update additional aspects of the precertification program, including how it relates to substantially equivalent device review. The FDA is currently requesting comments on the program.
The market for medical device connectivity is projected to reach about $2.6 billion by the year 2023, according to a report published in April 2018 by several publishers. The report states that the connectivity market for 2018 is expected to be about $940 million. This equates to a compound annual growth rate (CAGR) from 2018 to 2023 of 23.2%.
According to news articles, the report states that “[t]he growth in this market is attributed to the increasing penetration of [electronic health records] and health information exchange systems in healthcare organizations, growing focus on care quality and patient safety, healthcare IT initiatives driving the integration of medical devices with hospital information systems, and the growing need to curtail healthcare costs through a connected healthcare environment.”
From 2018 to 2023, the medical device connectivity market CAGR is estimated to be 23.2%
The report further states the medical device connectivity services segment, as opposed to the device connectivity solutions segment, is anticipated to grow at the maximal CAGR during the “outlook period” from 2018 to 2023. The report divides the technology sectors into wired, wireless, and hybrid technologies. The wireless segment is projected to register the highest CAGR during the outlook period.
The report also breaks down the relevant markets into hospitals, home healthcare, ambulatory care settings, and imaging & diagnostic centers. It finds in 2017 hospitals controlled the medical device connectivity market. The report also finds that North America is expected to grow at the highest CAGR during the outlook period, followed by Europe.
The increase in the market is attributed in the report to “growing funding towards innovative projects in the medical market, [the] need to curtail the escalating healthcare costs in the USA, the presence of a big number of healthcare IT firms, rising investments in the healthcare sector by top market players, and increasing awareness about advanced technologies.”
DePuy Synthes, a part of the Johnson & Johnson Medical Devices Companies, announced recently that it has signed a definitive agreement to acquire the assets of Medical Enterprises Distribution, LLC, which includes the automated ME1000™ Surgical Impactor tool used in hip replacement surgery. The two companies had previously formed an exclusive agreement to co-market the hip application of the ME1000™. The financial terms of the acquisition are not being disclosed. The transaction is expected to close in the second quarter of 2018.
According to Medical Enterprises, the ME1000™ delivers constant, stable energy that is designed to automate bone preparation, implant assembly and positioning in total hip arthroplasty (THA). DePuy Synthes said that the company plans to develop and broaden the surgical impactor technology for a range of orthopaedic surgery procedures.
“The acquisition of assets of Medical Enterprises Distribution is a key example of going beyond the implant to provide complete solutions to achieve better outcomes.” – Ciro Roemer, Company Group Chairman of DePuy Synthes
The hip replacement global market was $6.5 billion in 2015 and is predicted to reach $9.1 billion by 2025. The global market for all joint replacements is expected to reach $30 billion by 2025. Other companies in the joint replacement markets include Zimmer Biomet, Smith & Nephew, and Stryker.
In the recent press release, DePuy Synthes also announced an exclusive marketing agreement with JointPoint Inc. to co-market a hip navigation system for analysis of implant selection during THA. Earlier this year, DePuy Synthes announced the acquisition of Orthotaxy, a privately-held developer of software-enabled surgery for total and partial knee replacement. In discussing the Orthotaxy acquisition, Ciro Roemer, Company Group Chairman of DePuy Synthes, said “Our goal is to bring to market a robotic-assisted surgery technology that is an integral part of a comprehensive orthopedics platform, delivering value to patients, physicians and healthcare providers across the episode of care.” Other companies in the joint replacement market are likely seeking to create comprehensive orthopedic platforms as well.
More than two and a half years after the China Food and Drug Administration (CFDA) formally approved its first three-dimensional (3D) printed medical device for mass production, a hip implant co-developed by Peking University’s Third Hospital and AK Medical, the agency has issued a draft guidance on the regulatory requirements for approval of 3D printed devices. The new guidance, titled “Guidelines for the Technical Review of Custom Additive Manufacturing Medical Device Registration,” proposes that “[t]he process of production and verification of custom-built additive-produced medical devices should, in particular, control the testing of printing equipment, processes, post-processing, raw materials and final products, as well as cleaning, packaging and sterilization.”
Although the CFDA is open to consultation on the guidance until March 30, the existing draft would require 3D device applicants to provide at least (1) a product name according to its scope and design for classification and standardization purposes; (2) a description of the product including the chemical composition of each component; (3) clinically relevant model specifications; (4) the scope of the application and contraindications; (5) the product’s research and development background with a comparison to similar products; and (6) research data on product performance with supplementary material characterization.
This development is in line with increased attention to 3D printing technology by regulatory authorities worldwide. In December 2017, the U.S. Food and Drug Administration (FDA) published its guidance titled “Technical Considerations for Additive Manufactured Medical Devices,” which provided the agency’s initial thoughts on 3D printing, including important considerations for design, manufacturing, device testing, and premarket approval. This initial non-binding document was published as “a type of guidance that serves as a mechanism by which the Agency can share initial thoughts regarding emerging technologies that are likely to be of public health importance,” and identified the significant issues that the FDA was likely to emphasize in future regulations. Similarly, Australia’s Therapeutic Goods Administration (TGA) opened consultation on the topic in November 2017.