President Trump and Paul Ryan (R-Wis) have not yet successfully replaced the Affordable Care Act with the American Health Care Act (“AHCA”). The medical device industry had been paying particular attention to the proposed reform because the 2.3% excise tax that was suspended for 2016 and 2017 is scheduled to go back into effect on January 1, 2018. The tax, which has already required the payment of billions of dollars by device manufacturers, has an outsized impact because it is assessed on gross sales, not profits.
The fight is far from over for repeal proponents. The trade lobby plans to continue its ‘aggressive’ push to capitalize on the bipartisan support for repealing the tax. We cannot allow this tax to be reimposed on a vibrant and innovative American industry and look forward to working with Congress and the administration to end this tax once and for all.
AdvaMed plans to huddle with longtime Capitol Hill supporters of repealing the tax, including Reps. Erik Paulsen (R-Minn.), Ron Kind (D-Wis.), Sens. Orrin Hatch (R-Utah), and Amy Klobuchar (D-Minn.).
Whitaker believes there are several options to make the excise tax go away permanently, including stand-alone legislation. The Republican-controlled House has approved repeal of the excise tax four separate times in the past three years, including most recently in January 2017. The repeal “is probably going to get put into a budget reconciliation that only needs a simple majority vote in the Senate,” said Steve Parente, a professor and director of the Medical Industry Leadership Institute at the University of Minnesota. According to Parente, proponents feel that this time around, the chances of passing such a bill are much better with a Republican controlled House, Senate, and Presidency.
Despite the setbacks, the medical device industry continues to lobby both sides of the aisle to fight the excise tax. An estimated $158 million was spent on lobbying in Washington since 2012 by medical device manufactures, according to OpenSecrets.org, a nonprofit group that tracks and reports on money’s impact in politics. According to Opensecrets.org, in 2016 there was a reported $22.3 million spent on lobbying with more than $8 million have been spent on political campaigns.
Regardless of the failure of the AHCA bill, and the previous repeal legislation, news articles note that the medical device industry continues to look for supporters and ways to keep the excise tax suspended with potentially millions more being spent in lobbying this year.
On April 12, 2017, the Federal Circuit affirmed the determination by the US Patent and Trademark Office (USPTO), Patent Trial and Appeal Board (Board) that the claims of U.S. Patent No. 8,324,283 (“the ’283 patent”) were invalid as obvious.
US Patent No. 8,324,283
According to public databases, Novartis AG is the assignee of the ’283 patent, directed to pharmaceutical compositions for the treatment of multiple sclerosis. The ’283 patent, according to its abstract, relates to sphingosine-1 phosphate (S1P) receptor agonists and a sugar alcohol suitable for oral administration. According to its label, Gilenya acts by internalizing S1P receptors, which sequesters lymphocytes in the lymph node, to prevent relapse of multiple sclerosis. According to the Food and Drug Administration (FDA), Gilenya, approved in 2010, became the first oral disease-modifying drug approved by the Food and Drug Administration (FDA) to reduce relapses and delay disability progression in patients with relapsing forms of multiple sclerosis. A Novartis website states that Gilenya had over $3 billion in sales in 2016.
According to the Federal Circuit Decision, Torrent Pharmaceuticals Limited filed inter partes review (IPR) proceedings of the ’283 patent in 2014. The Board determined that the claims of the ’283 patent were invalid as obvious in its Final Written Decision of September 24, 2015. Novartis appealed the decision to the Federal Circuit, and the Federal Circuit affirmed the Board’s decision.
Federal Circuit Decision
According to the Federal Circuit’s decision, Novartis argued on appeal that the Board “erred in its motivation to combine analysis because it failed to read the prior art as a whole and overlooked critical evidence of . . . known disadvantages” of a claimed active ingredient. However, the Federal Circuit affirmed the Board’s finding, concluding that “substantial evidence supports the Board’s finding that . . . a person of skill in the art would have been motivated to combine” the features of the cited art.
Luminar Media Group recently announced that, after completing development of a working prototype device, the Jenex Corporation has signed an agreement with the Techna Institute at the University Health Network to begin testing the TherOZap™ device’s efficacy against the West Nile and Zika viruses.
The Jenex Corporation describes itself as a progressive medical technology company involved in the creation of an array of dermatological medical device products. Aside from TherOZap™, Jenex’s website indicates that it currently markets the Intercept CS device which is said to prevent cold sore outbreaks using the device’s thermal heat conductivity.
Jenex and the Techna Institute are developing a series of protocols for the initial testing of the TherOZap™ device. Regarding the current stage of development of the device, Rob Fia, CEO of the Jenex Corporation, stated:
We are pleased to test our patent pending TherOZap™ technology against both the Zika and West Nile virus’ especially given the wide spread of the Zika virus around the world. Jenex has engaged a world-renowned lab to initiate testing of the technology to determine if it can be effective in inactivating the virus. We look forward to providing an update on the initial results of the tests in the near future.
According to Novocure’s press release, the final results of the EF-14 clinical trial indicated a two-year survival rate of 43% for patients treated with the Optune device in addition to conventional temozolomide (TMZ) chemotherapy, versus a two-year survival rate of 30% for patients treated with TMZ alone. Novocure also reported that the addition of the Optune device to the standard TMZ treatment resulted in a five-year survival rate increase from 5% to 13% and a median overall survival extension from 15 months to 21 months. The press release noted that these results were seen across all patient subgroups, including young versus elderly patients, patients with methylated versus unmethylated MGMT promoter and patients who underwent any extent of tumor resection.
EF-14 Principal Investigator Roger Stupp, M.D., stated:
Now, we see a meaningful improvement in survival at two years and beyond. With the combination of Optune and temozolomide, one out of seven patients is living longer than five years.
Optune is advertised as being a wearable device that uses transducer arrays adhered to the scalp to deliver tumor treating fields (TTFields), a form of alternating electric field therapy, to inhibit division of GBM cells. According to Novocure, Optune has been FDA approved for treatment of newly diagnosed GBM since 2015, and for treatment of recurrent GBM since 2011. According to Novocure CEO Asaf Danziger, the “efficacy shown in EF-14 for GBM gives us hope that TTFields used in combination with other cancer treatments may increase survival without significantly increasing side effects for a variety of solid tumors.” Dr. Stupp added that TTFields “may well be suited for combination with conventional treatments for many other cancer types.”
The Washington State Supreme Court recently released its decision in Taylor v. Intuitive Surgical, Inc. where it held that Washington law requires medical device manufacturers to warn hospitals that purchase their products of dangers associated with those products. According to Bloomberg BNA, Washington is the first state to impose such a requirement. As a result, the decision may have a significant effect on medical device manufacturers and their practices. SciPol reports that industry groups, such as the Medical Device Manufacturers Association and the National Association of Manufacturers, believe that the decision may increase the risk for device manufacturers to introduce new products and may lead to reduced innovation in the medical device space.
The case involved Intuitive Surgical‘s da Vinci robotic surgical system, which Intuitive explains enables surgeons to perform delicate and complex operations through a few small incisions. da Vinci is powered by robotic technology that allows the surgeon’s hand movements to be scaled, filtered and translated into precise movements of the EndoWrist instruments working inside the patient’s body.
The Plaintiff in the case, Mr. Taylor, claimed to have suffered complications during and as a result of surgery in which the da Vinci surgical system was used. As a result of those complications, Mr. Taylor sued his surgeon and his medical practice and Intuitive Surgical on various theories including “product defect, breach of warranty, breach of contract, violation of Washington’s Consumer Protection Act . . . , negligence, and product liability.” Mr. Taylor claimed that Intuitive Surgical had a duty to warn the hospital about the dangers that are associated with the da Vinci System. However, during trial, the court refused to instruct the jury that Intuitive Surgical had any such duty to warn the hospital. Mr. Taylor appealed the jury’s verdict for Intuitive Surgical.
On appeal, the Washington Supreme Court did not decide the merits of many of Mr. Taylor’s claims. Instead, it held that, pursuant to the Washington Product Liability Act (“WPLA”), manufacturers have a duty to warn hospitals about the dangers of their products and that, as such, the lower court erred when it did not instruct the jury on that duty. According to the Court, warnings must be provided to the purchaser of a product, which in Mr. Taylor’s case was the hospital. The Court vacated and remanded the case for further consideration consistent with its holdings.
The ruling has been met with mixed reactions. According to Mr. Taylor’s attorney, the decision “brings the law in line with the reality of modern medicine.” But, as Bloomberg notes, both the Medical Device Manufacturers Association and the National Association of Manufacturers cautioned that adopting a new warning requirement could chill medical innovation and harm patients overall. It remains to be seen whether other states will adopt similar rules.
MedPlast, Inc. recently announced that it has completed its acquisition of Vention Medical‘s device manufacturing services arm. The press release states that the acquisition “broadens MedPlast’s manufacturing capabilities and bolsters its position as a leading services provider to the worlds’ largest original equipment manufacturers.”
According to its website, Tempe, Arizona-based MedPlast is a global provider of plastic processing and manufacturing for medical devices. The company services thermoplastic and elastomeric materials and plastic processing. Vention Medical describes itself as a medical device design, engineering, and manufacturing company. The company specializes in molded components and finished device assembly and packaging of interventional and minimally invasive surgical products.
This acquisition is a first and important step in our strategic plan to expand our offering to customers [and o]ur goal is to build on our core manufacturing and engineering capabilities to provide our customers with a comprehensive portfolio of end-to-end product solutions.
The president of Vention Medical’s device manufacturing service arm, Bill Flaherty, shares Mr. Faig’s enthusiasm
We are excited to come together with MedPlast. We serve many of the same customers who will benefit from our combined offerings and shared commitment to providing the highest quality standards and facilities in the industry.
The acquisition was initially announced in late February, 2017. According to the press release, the acquisition:
[W]ill extend MedPlast’s global footprint to 22 manufacturing facilities located in key markets through North and Central America, Asia and Europe. Once complete, the acquisition will more than double MedPlast’s size.
MedPlast’s current acquisition may foreshadow the strategic direction of the company. Kevin Swan, a partner at Water Street Healthcare Partners, a Chicago-based private equity firm backing MedPlast recently stated that “[t]his is the first of what we expect will be more strategic acquisitions to build MedPlast into a market leader.” Indeed, before the acquisition, MedPlast was ranked by Plastic News as the 27th largest injection molder in North America, by revenue, in a $40 billion market for medical device services. At the time, the company had an estimated $275 million in annual sales and 800 employees at 7 manufacturing locations. The company now operates 11 manufacturing facilities.
Boston Scientific Corporation recently announced an agreement to purchase Swiss medical device maker Symetis SA for $435 million in up-front cash. The acquisition is expected to close in the second quarter of 2017.
Symetis describes itself as the leading European developer of innovative, minimally invasive heart valve replacement devices. Its transcatheter aortic valve implantation (TAVI) products, ACURATE TA™ and ACURATE neo™, and their delivery systems, are currently marketed and sold in Europe.
The agreement to acquire Symetis follows Boston Scientific’s acquisition of certain Neovasc, Inc. manufacturing assets, which closed in December 2016. Regarding its acquisition of Symetis, Ian Meredith, M.D., executive vice president and global chief medical officer of Boston Scientific says:
The steps we are taking reflect our commitment to being a leader in TAVI and structural heart technologies now and over the long-term, as we broaden our portfolio and pipeline to address the needs of our global health care providers and their patients. The ACURATE family of valve products is strongly complementary to our cornerstone Lotus™ valve platform, and this compelling combination of technologies will allow us to provide interventional cardiologists and cardiac surgeons with multiple TAVI offerings for varying patient pathologies and anatomy.
The acquisition also follows Boston Scientific’s recent voluntary recall of its Lotus heart valve devices in February 2017. As reported by Reuters, Needham & Co analyst Mike Matson said in a client note that “[t]his [acquisition] is an offensive rather than a defensive move and not simply a ‘stop-gap’ to address the Lotus recall, shortcomings with Lotus, or IP issues.”
Stents, which are typically inserted into a blood vessel in order to expand the vessel to prevent or alleviate a blockage, have traditionally been made from metal mesh and remained in the body permanently (or until later removed by surgical intervention). Recently, biodegradable stents (also called bioresorbable or bioabsorbable stents) have been developed. These stents serve the same purpose as traditional stents but are manufactured from materials that may dissolve or be absorbed in the body.
The Food and Drug Administration (FDA) announced in mid-2016 that it had approved the first fully absorbable stent to treat coronary artery disease. According to the FDA, the stent (ABSORB GT1 BVS, which is manufactured by Abbott Vascular and pictured below) is gradually absorbed by the body in approximately three years following implantation. Abbott reportedly received European approval for the ABSORB BVS product in 2011.
According to some commentators, biodegradable stents, like the ABSORB BVS, are the way of the future and will eventually replace conventional metallic stents. This hypothesis is consistent with research conducted by Transparency Market Research. Transparency Market Research recently published a report (Biodegradable Stents Market – Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2016 – 2024) which projects the global market for biodegradable stents to grow from $18 Million US dollars in 2015 to $1.7 Billion US dollars by 2024 (a short 9 years). This amounts to a compound annual growth rate (CAGR) of over 30%. According to the report:
[t]he biggest advantage of [biodegradable] stents is that they get entirely absorbed in the vessels over a period of time, reducing the risk of complications or infections. This advantage is the primary reason for the growth of the global biodegradable stents market.
The report goes on to state that:
[a]s compared to predecessors of biodegradable stents, the newer technology has significantly reduced the risk of thrombosis, . . . in-stent restenosis, dual anti-platelet therapy, and second surgery for removal of the stent. These factors have played a pivotal role in shaping the trajectory of the global market in a positive direction over the past few years. The efficiency of biodegradable stents has won the market numerous consumers in the recent past. Thus, several patients and cardiologists have shown a keen interest in the uptake of biodegradable stents in the treatment of coronary and peripheral artery diseases.
Other manufacturers of biodegradable stents reportedly include Elixir Medical, Biotronik, Kyoto Medical Planning, Micell Technologies, and Reva Medical. Based on this industry’s projected growth, it appears that additional companies are likely to enter the biodegradable stent market and the United States Patent Office may see a marked increase in the number of patent application filings that are directed to biodegradable stents and other biodegradable medical devices.
A research team from Trinity College Dublin has recently discovered a way to reduce the incidence of medical device-associated infection resulting from biofilms. The term “biofilms” refers to organized colonies of bacteria that can adhere to any natural or manmade surface. MedicalNewsToday explains that the accumulation of bacteria into biofilms on medical devices is a common problem that arises after medical devices are implanted in the human body. Infections caused by biofilms are particularly difficult to treat because they are strongly resistant to antibiotics and immune attack, which means that the development of biofilms often requires healthcare professionals to remove and replace the implanted device. According to a press release from Trinity College Dublin, each incident of biofilm infection costs the healthcare system €50,000 – €90,000.
The research team from Trinity College Dublin, in collaboration with atomic force microscopy expert Professor Yves Dufrêne and his team at the Université Catholique de Louvain, discovered a way to disrupt the activity of a protein that plays a key role in biofilm formation using a small blocking molecule. The researchers identified a protein, called SdrC, which contributes to biofilm formation by promoting adhesion between bacterial cells and attachment of the cells to surfaces. Using a small molecule derived from β-neurexin, the researchers found that they could block the SdrC interactions between cells, thereby preventing biofilm formation.
These new findings show that it is possible to stop bacteria from building communities using molecules that specifically target proteins attached to the surface of the bacteria. This exciting breakthrough will inform the design of new, targeted approaches to prevent biofilm formation by staphylococci and reduce the incidence of medical device-related infection.
Medtronic recently announced that its Melody® Transcatheter Pulmonary Valve (TPV) is the first transcatheter pulmonary valve to receive FDA approval for implantation in patients with failed surgical bioprosthetic pulmonary heart valves. Medtronic touts the Melody TPV as providing these patients with a minimally invasive treatment option as an alternative to additional open-heart surgery.
The Melody TPV was previously approved under the FDA’s Humanitarian Device Exemption (HDE), a program for technologies that may treat fewer than 4,000 patients a year, subject to additional regulations, without meeting all of the traditional pre-market approval rules.
Commenting on the approval, Dr. Jeremy Asnes of the Yale School of Medicine said:
As the 1st commercially available transcatheter heart valve, the Melody TPV brought a breakthrough non-surgical option to treat failing pulmonary valve conduits. Thousands of congenital patients globally have benefited from this therapy in the past decade. With this expanded indication, we can further reduce the need for obtrusive open-heart surgery and allow even more patients to benefit from this minimally invasive treatment option.
Grand View Research predicts that the global transcatheter valve market is expected to reach a worth of $8.62 billion by 2024. According to the Centers for Disease Control and Prevention, congenital heart defects are the most common birth defect in America and the top killer of infants with birth defects. An estimated 40,000 babies are born with congenital heart defects in the United States every year.