American Association for Clinical Chemistry
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March 2009 Clinical Laboratory News: Regulatory Profiles

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March 2009: Volume 35, Number 3

FDA Reform Measure Introduced

The Food and Drug Administration Globalization Act (H.R. 759), introduced by Congressman John Dingell (D-Mich.), would give the agency greater authority and increased funding to deal with new risks posed by a global marketplace. The bill would add registration fees for processing plants to provide increased funding; boost inspections of manufacturing facilities to every 4 years, including unannounced inspections and increased penalties for noncompliance; and add whistleblower protections. The legislation also gives FDA increased authority to recall products believed to pose a risk to consumers. Congressman Bart Stupak (D-Mich.), Chair of the House Energy and Commerce Subcommittee on Oversight and Investigations, recently announced that he plans to hold a hearing to discuss regulatory issues involving medical devices. A copy of the bill is available on the congressional website THOMAS.

GAO Examines FDA Device Reviews, Puts Agency on “High Risk” List

GAO’s report on FDA’s medical device review system fell short of recommending significant changes to the agency’s current process, but instead focused on making sure that all high-risk class III devices go through FDA’s most rigorous review method, premarket approval (PMA).

Some industry observers had predicted that GAO would recommend an overhaul of the current medical device review scheme, possibly making it harder to get tests and other devices on the market. Instead, GAO noted that most class III devices—including all but one category of IVD tests—already must go through PMA review, but the report admonished FDA on 20 class III device types on which the agency has yet to issue regulations requiring a PMA.

GAO also put FDA on its 2009 high-risk list, intended to alert Congress to federal programs that are at risk for waste and abuse or in need of reform. The new list cites FDA’s oversight of medical products, commenting that “new laws, the complexity of items submitted to FDA for approval, and the globalization of the medical products industry are challenging FDA’s ability to guarantee the safety and effectiveness of drugs, biologics, and medical devices.”

The GAO report and High Risk List are posted on the GAO website.

                        HHS Recognizes Standards to Coordinate Healthcare IT 

Aiming to help electronic medical records systems from across the country effectively share information, HHS formally adopted three new interoperability standards covering three areas: allowing emergency responders to access patient data; exchanging information between patients and providers via secure email; and monitoring quality indicators. The idea behind the standards is that the most important pieces of information common to all databases can be tagged in a uniform way, thereby making critical data searchable and accessible to a variety of stakeholders. These conventions essentially make it easier for different kinds of software to ‘talk’ to each other. HHS also announced updates to previously adopted interoperability standards, including a new version of the standard covering laboratory result reporting.

The standards were put together by the Healthcare Information Technology Standards Panel (HITSP), a private-sector group that inherited the mission of the now defunct HHS advisory committee called the American Health Information Community. Under a contract from HHS, the American National Standards Institute established HITSP, and this new group includes some 600 healthcare industry organizations and technical experts.

                        Report Gauges Economics of Personalized Medicine

A new analysis of the cost and benefits of personalized medicine found that under each scenario studied, patients benefit from genetic tests that lead to an altered course of therapy or new targeted drug. However, it may take some time for other stakeholders, such as payors, biotech, pharmaceutical, and diagnostic firms, to fully benefit from research and development in this arena. Prepared by the Deloitte Center for Health Solutions in collaboration with the Personalized Medicine Coalition, the report used a literature review of more than 300 articles to predict how long it will take for each stakeholder to achieve a positive return when investing in personalized medicine. The report emphasizes that personalized medicine faces an uphill challenge to document the clinical value of new technologies and recommends more empirical studies, greater involvement by CMS, FDA, and NIH, and evaluating new business models to smooth adoption of new tests and treatments. The report also notes the “disruptive” nature of personalized medicine, such as the paradigm shift from blockbuster treatments to targeted drugs—“more therapies, smaller markets.” The report is available from the Deloitte website.

                                     Survey: Medicaid Rolls are “Surging”

A nationwide survey conducted by the New York Times shows that many states are seeing extraordinary jumps in Medicaid enrollment, much of it coming from children in low-income families. Several states experienced 5% to 10% growth in just the last 12 months, and in some it doubled.

Echoing the bleak picture in the Times survey, the American Hospital Association (AHA) and 15 other healthcare groups recently signed a letter to congressional leaders advocating a substantial increase in the federal Medicaid match rate (FMAP) for states and localities. The letter says an increase of at least $125 billion is needed to protect against cuts in Medicaid as state governments struggle with their budgets in a slow economy. Without the additional help, the groups warn that states may be forced to make changes in eligibility, benefits, provider payments, or access to care.

Under FMAP, the federal government pays at least half of the cost for a state’s Medicaid program, but the actual amount varies from state-to-state and year–to-year based on a complicated formula that takes into account the state’s per capita income relative to that of the nation as a whole. Analysis of the Times survey noted that the recession has forced states to confront a “grim fiscal paradox”: demand for Medicaid tends to peak at the same time that states face shrinking tax revenue.

                        Healthcare Spending Growth Decelerated in ‘07

A final CMS report on healthcare spending for 2007 shows that while spending continued to increase, the pace of overall growth decelerated, increasing only 6.1% compared to 6.7% in 2006. Americans spent a total of $2.2 trillion on healthcare, or about $7,421 per person. This represents 16.2% of the nation’s GDP. The slower growth in 2007 was mainly due to decelerated growth in spending by the federal government and households, while spending by private businesses and state and local governments accelerated slightly.

Businesses and households together paid the biggest share of medical expenses, 25% and 31%, respectively. The single largest payer remained governments at 40%. This breakdown remained unchanged since 2006.

One notable increase was out-of-pocket spending, which grew 5.3% in 2007, up from 3.3% growth in 2006. According to the report, the increase is mainly due to payments for prescription drugs, nursing home services, and non-durable medical supplies. Since 1998, though, out-of-pocket spending as a percentage of national health spending has seen a steady decline, down to 12% in 2007 from 14.7% in 1998. The report is available on the CMS website.