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Two indexes tracking medical-device companies posted small gains last week while outperforming a declining Standard & Poor’s 500 index, reports Dow Jones. The modest upturn seems to be in response to several variables according to J.P. Morgan analyst Michael Weinstein. “Investors have begun to appreciate the challenges facing Congress and the likelihood that any bill that comes out of Washington is watered down in compromises and potentially lacking in teeth.”

Weinstein said he expects a second-half rally in health-care stocks in general and medical-technology stocks in particular.

Thomas Gunderson, of Piper Jaffray says that a full recovery won’t be seen until certain factors are reversed. “There are several factors that contribute to the lower ratio, and therefore the lower prices,” he says.

Such factors start at point with the downturn in the economy, which affects potential patient copays that are pressured by tightened personal budget. “Copays have risen in the last few years,” Gunderson says.

He also points to unemployment and under employment as cause for the reduction in elective surgeries. The lower traffic, delayed payments, difficult loan processes, and decreased hospital endowments are hurting hospital’s operating margins, which Gunderson describes as already “razor thin.”

Major product lines have matured, resulting in slow revenue growth of some large cap medtech companies. And investors are worried about the implications regarding  healthcare reform.

All these difficulties must be reversed, says Gunderson, to fully bring back medtech stock prices. “Economy and hospital financials must normalize, we have to see some successes in new product launches among the mid-and small cap medtech companies, and a resolution on the expected reform should remove the investors’ uncertainty risk.”

Oliver-Tolas Health Care Packaging announced today that Carl Marotta, longtime former owner of Tolas Healthcare Packaging (Feasterville, PA), passed away on June 24, 2009.

Here is what the release said:

“Carl quietly and deliberately built a highly successful business by combining state-of-the-art processes with innovative ideas. His accomplishments can be attributed to a strong commitment to quality, service and performance as well as his solid technological capability and leadership.  Carl’s developments in adhesive technology and packaging innovation had a significant impact on the medical device packaging industry.  All Carl’s friends at Oliver-Tolas will miss him not only for his technical expertise, but for his kind and gentle nature.”

At MD&DI, we will miss his expertise as well as his friendship. He was named as an industry pioneer in our 25th Anniversary issue in 2004. Our sincerest condolences to family and friends.

For the first time, a self-contained artificial heart was successfully implanted in a patient. The procedure was performed on June 15 at the Robert Wood Johnson University Hospital in New Brunswick, New Jersey.

According to Abiomed Inc., its AbioCor Total Replacement Heart was implanted in a patient with congestive, end-state heart failure. Because the 76-year old man did not qualify for a transplant, he was eligible for the implant. The patient is showing signs of a stable recovery, says Abiomed.

FDA approved AbioCor in 2006. In addition to a built-in battery, the heart has a microprocessor that communicates with a computer monitoring the patient’s health via radio signals. The device is designed to extend the lives of dying patients–not to keep them alive indefinitely, says the Boston Globe.

The Department of Justice has issued a subpoena to Medtronic in its quest to find out more about the relationship between the company and one of its consultants. Timothy Kuklo, a former Army doctor and consultant for the device company, has been accused of falsifying an article in the British edition of The Journal of Bone and Joint Surgery. Specifically, the article lauded Medtronic’s Infuse bone growth product and said it performed “strikingly” better than traditional bone grafts in the treatment of leg injuries sustained by American soldiers in Iraq. The Army alleged that Kuklo forged the names of other military doctors and cited medical data in the article that were inconsistent with study records. Last week, Medtronic revealed that it has paid Kuklo more than $800,000 in consulting fees, with the majority of the funds coming in the last few years.

Medtronic was told about the allegations at the end of 2008, but Kuklo continued to receive thousands of dollars in consulting fees and continued to discuss Infuse with other doctors. His consulting contract was suspended last month after the New York Times and Senator Charles Grassley pressed the issue. The company has declined to comment beyond its SEC filing.

Preliminary findings for the Multicenter Automatic Defibrillator Implantation Trial–Cardiac Resynchronization Therapy study have been released. The study found that implanted cardiac resynchronization defibrillators (CRT-Ds) can be effective in patients with mild (Class I and II) heart failure.

The trial is the world’s largest randomized NYHA Class I/II CRT-D trial, with more than 1800 patients enrolled at 110 centers in 14 countries. Results showed a 29% reduction (p = 0.003) in death or heart failure interventions from CRT-Ds when compared with traditional implantable cardioverter defibrillators (ICDs).

Boston Scientific Corp. sponsored the four-year study which was conducted by Arthur J. Moss, MD, of the University of Rochester Medical Center. The company said the full report is expected to be presented and published later this year.

For a 70-year-old company that has only been in the medical business for about 6 years, convincing customers that plastic is a better and stronger alternative to metal has been a challenge. Quebec-based IPL uses a process called gas-assist injection molding to make larger pieces of medical equipment and furniture such as hospital bed rails and footboards, but it hopes to become even more involved in the device industry. The biggest hurdle thus far has been getting medical device companies to recognize that plastic is as strong as metal. “Changing the mentality is going to be hard,” Eric Godin, account manager at IPL, told MD&DI at MD&M East. In addition to the strength of plastic, Godin said the material provides practical advantages like ease of cleaning, because the injection molding process produces no seams in the finished product. This means bodily fluids can’t seep into cracks in a bed rail, for example, and instead can be simply wiped off the surface and the area disinfected. Godin is confident that the company’s ability to offer customers upfront engineering expertise from prototyping to production will help push IPL further into the medical device market.

Part of IPL’s strategy was one seen by many exhibitors at MD&M East this year. These days, more and more device companies want to work with contract manufacturers that can not only make custom products, but can offer a full range of services in-house. As a result, many suppliers are promoting themselves as a one-stop shop to attract future customers. Working with one supplier as opposed to several is not only more convenient for companies, but it’s oftentimes more cost efficient as well.

A panel of medical industry experts testified before a congressional hearing, telling Congress that FDA needs to add teeth to its approval process for medical devices to better protect patients.

For example, Beth Israel Deaconess Medical Center cardiologist William Maisel, who also heads up the Medical Devices Safety Institute, said recalls for Medtronic pacemakers and leads raise questions about the FDA’s ability to swiftly identify safety problems.

“Additional consumer safeguards are needed. Only by demanding more-thorough, scientific device evaluations can FDA hope to reestablish consumer confidence in its ability to protect the public’s health,” Maisel told the panel, adding that the agency is too reliant on the device industry’s ability to police itself.

Marcia Crosse, health care director for GAO also spoke. She said that FDA seemed unable to thoroughly review medical devices before they are approved and continue to monitor them for problems once they are put into use.

However, AdvaMed spoke up to defend the regulations that govern the agency. “FDA has comprehensive authority to regulate medical devices through a combination of premarket and postmarket controls,” Stephen Ubl, president of AdvaMed, said in a release from the association.

So, there are several questions being raised:

1. Is FDA doing its job?

2. Does the agency already have the regulatory weight to properly oversee medical device approvals?

3. If so, what are they lacking to properly do the job?

4. If not, what new legislation would solve the problem?

What do you think?

A hearing has been scheduled for today to examine how FDA approves medical devices. Congress will hear from a variety of parties, but one witness is causing friction between Democrats and Republicans: Philip Phillips. Previously with FDA, Phillips has apparently been called on to support the effectiveness of the current device approval process. But Democrats allege that Phillips has some involvement with ReGen Biologics Inc.—the maker of a knee device whose approval epitomizes what’s wrong with the current process. (You can read more about ReGen’s device in Jim Dickinson’s Washington Wrap-Up column.)

Adding fuel to the fire, the chair of today’s hearing is Representative Frank Pallone Jr. (D–NJ), who contacted FDA to talk about the knee device on ReGen’s behalf. The Wall Street Journal points out that last year he received $8,900 in campaign contributions from the firm’s executives. No word yet on whether Pallone would recuse himself if the company was a topic at the hearing.

Newly appointed FDA commissioner Margaret Hamburg says that she wants to increase transparency at the agency and place an emphasis on its public health mission. She tells The Washington Post, “I think it’s really important to restore confidence, to restore faith that FDA is going to use the best available science, and has real integrity.”

One of the areas that seems to be suffering from a loss of confidence is the Center for Devices and Radiological Health. In a separate interview with the Wall Street Journal, Hamburg says that she plans to examine the division’s 510(k) process, which has been attacked by critics both inside and outside the agency.

To learn more about Hamburg’s priorities, check out a video posted on Wall Street Journal’s Health Blog by Alicia Mundy. She says that Hamburg is deeply influenced by her family’s activist roots.

Sparta Systems Inc., the maker of TrackWise software, has outlined recommendations to help companies prepare for electronic Medical Device Reporting (eMDR) regulations.

1. Thought - Before any system can be designed, a self-evaluation is required for companies to understand the scope and nature of their businesses’ eMDR needs. Initially considering vital questions will lay the foundation for a successful transition before any planning or design has been implemented.
2. Planning - After the current MDR methodology has been reviewed and a needs-analysis has been conducted, the next step is to plan the transition from the old system to the new one. During this review, common processes should be leveraged and divergent processes isolated and documented. At the end, the actual method and means of receiving, transmitting, and auditing data are critical.
3. Design - Design of an eMDR system should bring together all the elements discussed and reviewed throughout the thought and planning phases. Designing an effective system that includes these elements working in proper order and alignment will result in reduced time and costs spent testing and, finally, implementing the final eMDR solution.
4. Testing - Once a system has been designed that will theoretically satisfy eMDR requirements, the next step is to test it. Possible failure scenarios should also be tested to ensure that the appropriate action takes place in the system when the failure is identified.
5. Implementation - Finally, when all the necessary steps have been completed, and the system has been thoroughly tested, implementation can occur. Careful observation of eMDR users and approvers is important to ascertain that they are adhering to correct procedures and that reports are being submitted and filed in a timely manner.

Sparta Systems says it has been in close communication with the FDA as the proposed legislation has been refined, and wants to provide its customers with an enterprise-wide quality management system that allows for a seamless transition from the current paper-based system to an electronic submission model. The company says the suggestions for eMDR compliance will not only help reduce associated compliance costs, but should also serve to streamline manufacturing processes, and help ensure the safety of medical devices.

To learn more about eMDR and receive thorough preparation guidelines, click here.