Health,  Wealth

2024 Medical Device & Pharma Regulatory Shakeup: US LDT Rules, UKCA Push, & Drug Price Intervention

Recently, the extranet disclosed significant regulatory amendments within the medical device and pharmaceutical domains in both the United States and the United Kingdom, meriting attention throughout 2024.

In the United States, noteworthy is the inclusion of LDT (laboratory-developed testing) within the ambit of FDA oversight, alongside the Biden administration’s proposition of invoking March-in rights.

In the United Kingdom, attention is drawn to the VPAG (Voluntary Scheme for the Pricing, Access, and Growth of Branded Medicines), positioned to supplant the CE marking, UKCA certification, and the VPAS (Voluntary Scheme for the Pricing and Access to Branded Medicines).

The regulation of LDTs typically pertains to test methodologies crafted, authenticated, and utilized exclusively within medical laboratory departments, devoid of commercial sale to other medical entities or individuals.

In September 2023, the FDA unveiled a proposed ruling aimed at amending its regulations to clarify that in vitro diagnostic (IVD) devices fall within the purview of medical devices under the Federal Food, Drug, and Cosmetic Act, irrespective of the IVD manufacturer being a laboratory entity.

The consultation period for the proposed rule concluded on December 4, 2023, with the FDA receiving in excess of 6,500 comments over the three-month duration.

The resultant legal revisions are slated to take effect in 2024.

Why the FDA’s expeditiousness in regulating LDTs? Let’s delve into the trajectory.

When the FDA commenced regulating medical devices under the Medical Device Amendment during the 1970s, it opted against enforcing applicable regulatory requisites owing to the relative simplicity of LDTs, often confined to local laboratories and predominantly serving rare conditions.

Nevertheless, as temporal progression unfolded, LDTs grew in complexity and availability, now frequently deployed in diagnosing prevalent serious ailments, encompassing cancer and cardiovascular diseases, thus potentially exerting greater impact on patients sans stringent regulation.

Concerned with the possibility of patients undergoing unnecessary treatments based on inaccurate test outcomes (e.g., ovarian cancer misdiagnosis leading to unwarranted ovary removal) or, conversely, forgoing or delaying appropriate treatments (e.g., breast cancer patients with undetected elevated HER2 levels missing the optimal treatment window), the FDA seeks to overhaul antiquated regulations.

Numerous entities have contested this paradigm shift, with ARUP Labs expressing dissent, deeming it unnecessary. ARUP posits that a study, delineated in the American Journal of Clinical Pathology, elucidates that 93.9% of tests conducted in 2021 were FDA-approved.

David Rosen, a former FDA advisor and partner at Foley & Lardner, opined: “LDT products have long been prevalent in the market. I perceive the FDA’s initiative as a means to amass more data and instill confidence in the reliability of these tests, thus enabling practitioners to place reliance on their outcomes.”

Moreover, Rosen underscored the necessity for the FDA to augment its workforce for this transition. Given the proliferation of LDT products in the market, the FDA must diligently discern which companies’ LDT products merit approval for market entry, with the expeditiousness of approvals also looming as a concern.

Torrey Cope, a partner at Sidley, a distinguished US law firm, remarked: “Irrespective, I foresee this bearing substantial ramifications for pharmaceutical enterprises, as these entities increasingly grapple with diagnostics integral to product development, often encountering hurdles due to reliance on LDTs in their processes.”

# Proposal to Utilize the Right to Intervene

Initially, let us delve into the essence of the right to intervene. This prerogative, not of recent coinage under the Biden administration, finds its genesis in a provision enshrined within the Bayh-Dole Act, legislated by the U.S. Congress in 1980. This provision empowers the government to confer the privilege of producing a government-funded patent upon a third party in instances where a particular product remains elusive to public access.

The Biden administration’s envisaged utilization of the right to intervene is precipitated by the persistently exorbitant drug prices prevailing in the United States as of the denouement of the preceding year, with escalations in pricing spiraling beyond containment. Consequently, the government has found it imperative to wield the dormant authority of intervention, thereby coercing the pharmaceutical titans into compliance.

This regulatory paradigm, if sanctioned, ostensibly holds the potential for application across a myriad of brand-name pharmaceuticals, given that the lion’s share of these entities draws sustenance from government-funded research and developmental endeavors.

For pharmaceutical enterprises, the forfeiture of patents portends a commensurate diminution in fortunes, as an impending proliferation of manufacturers vying for market share through price wars looms large.

In the pronouncement of this initiative, the White House further stipulated that the exercise of interventionist authority is contingent upon a scrupulous consideration of prevailing factual circumstances.

Subsequent to this announcement, the Biden administration delineated supplementary measures, including the renegotiation of pricing terms for select pharmaceuticals with pertinent companies, in an endeavor to align them with the inflationary trajectory. The government underscored that, in the fourth quarter of 2023, the price escalation of 48 medications within the Medicare plan outpaced the inflation rate.

The invocation of this right is poised to precipitate multifarious controversies, encompassing debates over the government’s legitimate authority to commandeer patents and the potential stifling effect of intervention upon the research and development landscape in the United States.

David Rosen, a former advisor to the FDA aforementioned, opined that the government’s intercession and appropriation of patent rights are liable to exert an adverse impact upon the ongoing drug development initiatives underwritten by the National Institutes of Health (NIH).

# Advocacy for UKCA Certification

UKCA certification, an abbreviation denoting UK Conformity Assessed, represents a prerequisite accreditation for products, inclusive but not limited to medical apparatus, to gain official market access in England, Wales, and Scotland.

Nevertheless, it bears elucidation that UKCA certification lacks recognition within the domains of the EU, EEA, or Northern Ireland markets, necessitating the continued reliance upon CE certification for the vending of relevant products within these realms.

The impetus behind the advocacy for UKCA certification stems, unequivocally, from the ramifications of Britain’s divergence from the European Union. Post-Brexit, the erstwhile recognition accorded to EU CE certification has been rescinded, with CE certification retaining its validity within the UK until June 2024, owing to the one-year deferment extended by the MHRA.

Louise Fullwood, legal luminary and director at UK law firm Pinsent Masons, remarked that the deferment in the obsolescence of CE marking within the UK has dampened the ardor for UKCA certification among manufacturers, with indications suggesting a protracted continuation of this deferment.

Fullwood expounded at the time, “One plausible rationale behind this deferment may be attributable to the paucity of accredited bodies tasked with conducting conformity assessments within the UK. Certain entities are yet to conclude the approval process, whilst the MHRA remains engaged in deliberations with numerous prospective candidates.”

List of Approved Institutions as of Press Date (significantly expanded)

# Transition from VPAS to VPAG

VPAG (Voluntary Scheme for the Pricing, Access, and Growth of Branded Medicines) constitutes a novel accord governing drug pricing and accessibility, jointly promulgated by the NHS and the Association of the Pharmaceutical Industry (ABPI) in November 2023, envisaged to endure for a quinquennial term commencing this year. VPAG supersedes its antecedent, VPAS (Voluntary Scheme for Pricing and Access to Branded Medicines), which took effect in 2019, emanating from negotiations conducted across the expanse of the industry.

In contradistinction to a singular rebate rate annually delineated, VPAG introduces a dichotomy, prescribing distinct rebate rates for “novel” and “legacy” pharmaceuticals. Moreover, the agreement institutes an augmentation in the permissible annual growth rate for branded drug sales, scaling from 2% in 2024 to 4% by 2027.

However, the pact is not bereft of contention. For instance, notwithstanding the fact that the novel agreement raises the threshold requisite for triggering an escalation in rebate amounts, it simultaneously augments the quantum of rebates incumbent upon pharmaceutical corporations post-threshold attainment. Furthermore, the accord introduces a tiered treatment mechanism for expired patents, mandating price reduction for medications whose patents have lapsed, whilst extending preferential treatment to innovative pharmaceuticals. These provisions may instigate pharmaceutical entities to fortify the labyrinth of patents, thereby impeding the advent of generic medications.

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