Note: Regulatory approval by FDA is considered a critical goal by manufacturers and their investors, which is understandable, since there can be no commercialization without it. However, adequate payer reimbursement is clearly the final goal. Without it, commercialization stalls. The following blog is the fourth in a series of posts that examines the relationship between reimbursement and regulatory approval. Last month’s blog focused on the HCT/P process. The following discussion focuses on the FDA Humanitarian Device Exemption (HDE) process.

FDA defines a humanitarian use device (HUD) as one that is “intended to benefit patients by treating or diagnosing a disease or condition that affects or is manifested in fewer than 4,000 individuals in the United States per year.” The Safe Medical Devices Act of 1990 created a separate regulatory pathway for such devices, referred to as the Humanitarian Device Exemption (HDE), which recognized that “a device manufacturer’s research and development costs could exceed its market returns for diseases or conditions affecting (a limited) patient population.” The HUD provision of the regulation provides an incentive for the development of devices for use in the treatment or diagnosis of diseases affecting these populations.”

Final regulations for the HDE pathway were completed in 1996. The application for a HDE is similar in both form and content to a premarket approval (PMA) application, but is exempt from the effectiveness requirements of a PMA. The focus of the FDA review is on the safety of the HUD, not its effectiveness. Specifically, the HDE application is not required to include the results of scientifically valid clinical investigations demonstrating device efficacy. For example, devices approved through the PMA process are described in an FDA document titled, “Summary of Safety and Effectiveness Document” (SSED). In contrast, the corresponding document for HUD devices is titled “Summary of Safety and Probable Benefit.”

The key reimbursement questions are: how do payers respond to this regulatory pathway? Considering the rarity of the associated conditions, will payers seek to develop specific policies? If they do develop policies, will they provide coverage for HUDs and participate with FDA in providing an incentive to develop technologies for these rare conditions? How flexible are payers in setting their evidence requirements? Do they recognize the limitations in researching rare diseases? Does providing coverage for HUDs create a problematic double standard in evidence requirements? By default, will payers consider HUDs as investigational?

Development of a payer policy requires resources to conduct the initial research and to implement and maintain the policy. Thus, payers carefully consider market activity and budget impact in their decisions to develop policies. For example, some HUDs can be used as part of a larger surgical procedure. In this situation, the payer may not seek to create a specific policy since the device may be included in the negotiated facility rate and not billed separately. On an individual basis, laboratory tests may be considered low cost and thus not warrant a policy. However, if used multiple times in the same patient, the test could be considered high cost. Coding considerations may also come into play. A specific CPT code, particularly a category III CPT code, is easily identified on a claim form and facilitates policy implementation.

Some HUDs, such as the artificial retina, may only be offered at limited institutions outside of a payer’s market, and the payer may decide that it is more efficient to consider these rare events on a case by case basis. This situation provides more flexibility in the evidence requirement and thus can benefit the patient and manufacturer. Other high cost implantable HUDs that are more readily available warrant policy development. Medtronic’s deep brain stimulation (DBS) for obsessive compulsive disorder or dystonia, both cleared through the HDE process, are examples of this situation. With minimal additional resources, payers can simply add these indications to the already existing policy on DBS for Parkinson disease.

If the payers decide to create a specific policy, they must consider their contractual definition of the word “investigational.” The Blue Cross Blue Shield (BCBS) plans have generally adopted a set of five criteria, all of which must be met for a technology to NOT be considered investigational. The second of these criteria states, “The scientific evidence must permit conclusions concerning the effect of this technology on health outcomes.” In theory, this definition should be consistently applied to all technologies regardless of the FDA regulatory pathway. HUDs do not have data validating the effectiveness of the technology, and thus by default all HUDs would be considered investigational according to the BCBS contractual definition.

A review of BCBS plan policies suggests that, in general, most HUD devices are considered investigational at the time of initial FDA clearance. As one example, the HeartsBreath laboratory test, indicated for the diagnosis of heart transplant rejection, received FDA approval in 2004 through the HDE pathway. It was proposed that this noninvasive test could be used to deselect patients from an endomyocardial biopsy. The Blue Cross Blue Shield Association (BCBSA) prioritized this test for policy development, perhaps because it was uniquely identified by a category III CPT code, and also because the test was performed multiple times on the same transplant recipient.

The BCBSA policy, as represented in the Anthem policy, indicates that this is an investigational test. The rationale section of the Anthem policy reviews the published literature, which includes a discussion of the pivotal HARDBALL study. This multicenter three year study, sponsored by the National Heart Lung and Blood Institute, evaluated 1,061 tests from 539 heart transplant recipients, and suggested that a negative breath test could reduce the overall number of endomyocardial biopsies by 50 percent.

The Anthem policy dismissed the results of this study with the following statement, “Large trials are needed to further define the role of this technology and demonstrate how use of this test will impact treatment management.” This boilerplate statement suggests that Anthem rejected the challenges of conducting a large trial in a rare disease and implicitly rejected the notion that a flexible evidence standard could be appropriate for rare conditions.

However, some policies do suggest a little “wiggle room.” It is interesting to note that the Anthem policy considers deep brain stimulation for dystonia medically necessary based on the collective results of 201 patients reported in 34 different publications, none of them large or randomized studies. The rationale section of the Anthem policy does suggest that this less stringent evidence requirement may be related to the fact that the only alternative procedure for these patients is an irreversible neurodestructive procedure.

As another example, the Anthem policy on intracranial aneurysms indicates that stenting would be considered medically necessary for wide neck aneurysms. The rationale section of the policy notes that many of the devices have been cleared through the HDE process. In the review of the literature, the policy states:

“Although cleared by the FDA, the clinical effectiveness of these intracranial stent systems has not been clearly established. Preliminary findings, on which the FDA clearances were based, need further validation in large randomized controlled trials.”

Here again is the boilerplate statement requiring questionably feasible large trials for rare patient populations. However, the rationale section goes on to state “clinical feedback has been consistent regarding the clinical use of stents as part of the endovascular treatment of intracranial aneurysms.” The inference is that it is this clinical feedback, and not the literature, that is the basis of the positive policy statement. The context of this clinical feedback is not described, i.e., whether it represents a consistent pattern of overturned denials, or whether it is the result of a payer questionnaire. However, at the very least, this policy suggests some flexibility in the evidence requirement.

In conclusion, a review of payer policies suggests that in general, when payers elect to develop a specific policy on an HUD, they will apply the same evidence standards to HUDs as other devices and demand high quality clinical trials. In this sense, the approach is similar to the PMA or 510(k) regulatory pathways, where payers frequently impose a higher evidence standard than FDA. The bottom line is that payers first and foremost consider the clinical data and not the FDA regulatory pathway. However, across the board, whether the device is a HUD, PMA or 510(k) device, an evidence requirement can be modified by clinical input. A ground-up approach of physician acceptance can always complement the top-down approach of clinical studies.