The Food and Drug Administration (FDA) uses the “breakthrough” designation to fast-track the development and review of drugs and devices aimed at treating severe conditions, with potential improvements over existing therapies. Despite similar development processes involving significant investment and clinical trials, breakthrough devices face a notably less predictable and longer path to reimbursement compared to breakthrough drugs. Devices generally lack specific payment rates under Medicare and are typically reimbursed as part of a broader medical procedure, varying by clinical setting. Their coverage depends on national or local determinations of medical necessity by the Centers for Medicare and Medicaid Services, which can take years, unlike drugs that are almost always covered based on their FDA-approved indications.
The inherent uncertainty regarding Medicare coverage for devices hinders investment into novel device development and delays patient access to new therapies. Over the next decade, devices utilizing emerging technologies such as bioelectronic medicine and neuromodulation are expected to play an increasingly critical role in treating serious diseases, offering potential advantages over pharmaceutical options in terms of safety, effectiveness, and cost.
From my experience co-founding and leading a company focused on a breakthrough-declared neuromodulation system for Alzheimer’s disease, stark differences in clinical development, regulatory processes, and especially coverage and reimbursement between devices and drugs are evident. A study published by Stanford in 2023 supported my observations, showing a significant delay—average of 5.7 years—in Medicare coverage for breakthrough-designated devices compared to a swift coverage of new drugs within a year of FDA approval. These disparities restrict access to capital and financial incentives for further development of innovative devices.
The regulatory landscape also features challenges of competitive timing for medical device companies. Devices can be overtaken by “fast followers” through the 510(k) pathway, enabling competitors to quickly enter the market with a similar product, reducing the original device’s commercial viability and lifecycle compared to new drugs enjoying extended exclusivity periods.
Previously, the Medicare Coverage of Innovative Technology (MCIT) rule, rescinded a few months after its January 2021 finalization, promised automatic four-year coverage for cleared breakthrough devices. Its repeal was a significant setback. In its place, the proposed Transitional Coverage for Emerging Technologies (TCET) pathway aims to improve the situation. Since June 2023, TCET has been under evaluation through congressional hearings and a public comment period that attracted substantial feedback from stakeholders advocating for a better-designed coverage system to ensure timely access for breakthrough devices.
Despite proposed changes, the current form of TCET lacks sufficient flexibility and definitive timelines, necessitating further enhancements to meet the needs of patients and the medical device sector. An optimized pathway should support rapid implementation of coding and payment alongside coverage and should not be limited to only a handful of devices annually.
CMS rescinded MCIT primarily due to concerns about whether a device’s clinical data adequately demonstrated safety and efficacy for the Medicare population and improved health outcomes. The ongoing development of the TCET program represents an opportunity for CMS to streamline complexities in its coverage and payment processes, promoting timely patient access to new device-based therapies.
As the medical device industry awaits a robust replacement for MCIT, it is crucial for CMS and legislative actions to provide clarity and create equitable opportunities for devices and drugs. This will foster a healthier investment landscape and advance patient care by ensuring quicker access to groundbreaking medical technologies. Such advancements are essential for treating severe conditions like Alzheimer’s, where device-based therapies may offer significant benefits over existing treatments.
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