April 4, Division of Dockets Management (HFA-305) Food and Drug Administration 5630 Fishers Lane, Room 1061 Rockville, MD 20852

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1 701 Pennsylvania Avenue, NW Suite 800 Washington, D.C Tel: Fax: Division of Dockets Management (HFA-305) Food and Drug Administration 5630 Fishers Lane, Room 1061 Rockville, MD Re: FDA-2016-D-0199: Enforcement Policy on National Health Related Item Code and National Drug Code Numbers Assigned to Devices; Draft Guidance for Industry and Food and Drug Administration Staff; Availability and Request for Comments To Whom It May Concern: The Advanced Medical Technology Association ( AdvaMed ) appreciates the opportunity to provide comments in response to the Food and Drug Administration s ( FDA ) Enforcement Policy on National Health Related Item Code ( NHRIC ) and National Drug Code ( NDC ) Numbers Assigned to Devices; Draft Guidance for Industry and Food and Drug Administration Staff ( Draft Guidance ). 1 AdvaMed represents manufacturers of medical devices, diagnostic products, and health information systems that are transforming health care through earlier disease detection, less invasive procedures, and more effective treatment. Our members range from the smallest to the largest medical technology innovators and companies. As an initial matter, we question the stated goals of 21 C.F.R FDA has stated that the rule s purpose is to minimize confusion in the marketplace concerning the identification of a particular product. However, the Agency does not cite any evidence to suggest such confusion would occur if both an NHRIC or NDC number and a UDI are placed on a device label. Instead, the agency has determined that placing both identifiers on a device label could potentially be confusing. Draft Guidance at p. 7. Nevertheless, as we explain below, a two-year transition period is insufficient. Instead, we and other healthcare industry stakeholders impacted by this transition believe a ten-year transition period is necessary to ensure a smooth and safe conversion from the use of NDCs to UDI. Furthermore, the Agency should not adopt the proposed three-year depletion period for product inventory because devices sold at retail may have shelf lives of up to five years. Lastly, we recommend FDA evaluate the underlying legal rationale for the prohibition 1 Available at pdf. Bringing innovation to patient care worldwide

2 Page 2 of 8 against device manufacturers including NDCs on their product labels because this policy may not pass First Amendment review. 1. A Two-Year Transition Period is Insufficient We appreciate FDA s decision to extend by two years the effective date for 21 C.F.R (a). This provision of the rule prohibits a device manufacturer from including on a device label or package any NHRIC or NDC number assigned to that device. As the Draft Guidance correctly notes, pharmacies and payers rely on NHRIC and NDC numbers for device reimbursement in the pharmacy setting. Draft Guidance at p. 6. Moreover, these affected stakeholders have expressed significant concern that pharmacies, payers, and other entities are not prepared to transition away from use of NHRIC or NDC numbers in their systems. Should a transition from NHRIC and NDC numbers occur before these stakeholders are prepared, significant disruption to existing reimbursement, supply chain, and procurement processes would undoubtedly ensue. It is therefore imperative that FDA extend the effective date for 21 C.F.R (a) beyond the proposed two years. During an in-person meeting of numerous representatives of device manufacturers, supply chain participants, retailers, pharmacies, payers, processors, IT support personnel, compendia, and FDA (collectively referred to as the Multi-Stakeholder Group ), 2 affected stakeholders made clear that the transition from NDCs to UDI would likely take about ten years to fully implement. The proposed two-year extension is insufficient given the statements of the Multi-Stakeholder Group. As a result, we recommend the Agency extend the effective date for 21 C.F.R (a) to September 24, Doing so will ensure that a smooth and successful transition will occur, which will greatly minimize the threat of disrupting reimbursement, supply chain, and procurement processes which could ultimately interfere with patient access to devices. One of the primary obstacles to switching from NDCs to UDI is that the current 11-digit NDC product identifier represents a common denominator across the broader healthcare industry. The NDC has been the basis of reimbursement for medical devices sold at retail and mail-order for over 30 years, as medical devices share the same systems used by drugs for pharmacy systems and Pharmacy Benefit Management ( PBM )/Managed Care Plan systems. These systems utilize an 11-digit NDC key to identify products across systems. A UDI, in contrast, will contain significantly more digits than an NDC, requiring a complete overhaul of these healthcare systems to accommodate the transition. Below we describe at a basic level the immense scope of work required to transition the broader healthcare system from the use of NDCs to UDI. 1. Device Manufacturers 2 The Multi-Stakeholder Group met in-person on February 2, 2016 in San Antonio, Texas, to discuss issues surrounding the transition from NHRIC and NDC numbers to UDI.

3 Page 3 of 8 At a practical level, device manufacturers can remove NDCs from product labels within the two-year period proposed by FDA. 3 However, doing so at a premature juncture will invariably disrupt patient access to critical therapies and cause significant issues for the manufacturer s downstream processes. These disruptions have the potential to impact patient safety (e.g., the patient may not receive the right product) and patient access (e.g., the device may not be dispensed or reimbursed). Furthermore, although FDA regulates medical devices and may have the ability to require manufacturers to move away from the use of NDCs, neither the Agency nor device manufacturers have the ability to force the broader healthcare community away from its use of NDCs. Medical device manufacturers customers who rely on NDCs include private entities, such as pharmacies, wholesalers, payers, and hospitals, and public entities, such as the Centers for Medicare and Medicaid Services ( CMS ) and the Department of Veterans Affairs ( VA ). The majority of these entities are not subject to FDA oversight. A transition from NDCs before the broader healthcare community is prepared to do so will also disrupt numerous systems that manufacturers have in place that enhance device surveillance and patient safety. For example, patient-specific communications through switches (e.g., RelayHealth) and communications with retailers and wholesalers currently rely on the use of NDCs. 2. Pharmacy Benefit Management PBMs administer prescription drug plans under health coverage provided by employers, health insurance plans, labor unions, and Government programs such as Medicare Part D. 4 At a basic level, PBMs will have to update their systems and applications in order to accurately communicate and exchange UDI data both within their internal systems as well as with external industry partners. This, of course, requires standards be in place for the exchange of the data among disparate systems (e.g., interoperability). NDCs are ubiquitous within existing PBM systems and applications, and appropriate standards are in place for the seamless sharing of such information across various platforms. However, a transition to UDI 3 We note that label changes do require significant resources, including: (1) Adding the UDI (establish new policies and procedures/change existing policies and procedures; create new labels with UDI information and internally review artwork; control internal part numbers; educate internal employees about label changes; add production identifier information in a bar code); (2) Updates to production (prepare for disruptions to product production because the line will be down for several days for equipment changes; train employees on new packaging component layouts); and (3) removing the NDC (change artwork and update artwork files for each SKU; internal reviews; create production-ready artwork; manage inventory of old and new parts; establish new policies and procedures/change existing policies and procedures). 4 Some of the core components of PBM systems include: (1) Benefit design contracts, which outline covered and excluded benefits; (2) pharmacy provider networks and point-of-sale computer adjudication systems; (3) drug formularies and prior authorization processes; (4) manufacturer discounts and rebates; (5) copayment/coinsurance systems; (6) patient safety and clinical programs; (7) claims processing and administration; and, (8) reports that support PBM performance.

4 Page 4 of 8 for medical devices will require a significant effort to adequately convert and migrate all systems to accommodate UDIs. The following is a summary of the various PBM systems and applications that will require updating to accommodate UDIs in order to process transactions: 1. Data dictionaries 2. Financial information reporting 3. Batch Medicaid subrogation 4. Paper submitted claims systems 5. Retail pharmacy transactions (batch and electronic) 6. Mail pharmacy transactions 7. Specialty pharmacy electronic submissions 8. Claims status back to pharmacies (and associated messaging and price responses) 9. Quality control for the mock adjudication process 10. Plan benefit systems 11. Formulary systems 12. Utilization management systems 13. Clinical control functions. 14. Price accumulations 15. Enterprise drug file repository 16. Medicare specific systems 17. Adjustments system 18. Clinical systems 19. Claims repository 20. Hardware and servers 21. Extracts for reports and reporting tools 22. Messaging platforms and digital messaging platforms 23. Client online access 24. Client and member portals 25. eprescribing 26. Appeals applications 27. Call center help desk systems 28. Internal PBM operations tools 29. Medicare Part D web systems 30. Manufacturer rebates 31. Information that supports audits 32. User interfaces

5 Page 5 of 8 3. Pharmacies Pharmacies currently rely on 11-digit identifiers for medical devices. As a result, a transition from NDC to UDI will significantly affect pharmacy systems. The transition pharmacies will be required to undertake include complex planning, expensive development costs, and extensive coordination with trading partners. In addition, standards and code sets (including those that are and are not HIPAA compliant) will need to be established for payment, reimbursement, and regulatory reporting. Some, but not necessarily all, of the Pharmacy Practice Management System functions that rely on product identifiers, and which will be impacted by a transition from NDC to UDI, include: 1. Drug search 2. Rx back tag print (information required by regulation) 3. Rx pricing 4. Rx DUR 5. Rx third party set up (e.g., pre-edits, claim formatting and adjudication, and product IDs) 6. Rx label printing (information required by regulation or third party agreement) 7. Rx accuracy scan (automated verification to match bar code to dispensed product ID) 8. RPh verification (manual verification to validate dispensed product detail) 9. Rx system corporate administration, user access and patient safety controls 10. Prescription transfers 11. Pharmacy management system reports (information required by regulation and internal audit) These systems ensure patient safety and compliance with various laws and regulations. Moreover, pharmacy trading partners will be impacted by the transition as well, requiring additional work. These stakeholders include: Rx data sharing arrangements, Prescription Drug Monitoring Program ( PDMP ) reporting, patients, health record reporting (e.g., immunizations), collaborative practice agreements, Rx medication history, long-term facilities, and business partner reporting. As the above discussion demonstrates, healthcare industry stakeholders require systems interoperability to ensure successful patient outcomes. We believe that in order to transition the broader industry from the use of NDCs to UDI, a minimum of 10 years is necessary. In addition to updating systems and applications, the industry will also have to create and verify multiple cross-reference tables to ensure the accuracy of dispensing, reporting, and reimbursement activities. Industry will also be required to establish an interim strategy during the transition period when inventory that includes NDCs will still be available for dispensing.

6 Page 6 of 8 2. A Three-Year Period to Deplete Product Inventory is Insufficient and Illegal While the Draft Guidance extends for two years the effective date for 21 C.F.R (a), this exception expires three years later, or September 24, As a result, devices manufactured and labeled prior to the new effective date, September 24, 2018, but sold after September 24, 2021, would become misbranded under the Federal Food, Drug and Cosmetic Act ( Act ). Unfortunately, this provision of the Draft Guidance follows the limitation of the exception provided by 21 C.F.R (a)(1) (excepting from the requirement of 21 C.F.R [a] finished device manufactured and labeled prior to the compliance date... This exception expires with regard to a particular device 3 years after the compliance date established by FDA for the device. ). As an initial matter, a three-year inventory depletion period is insufficient for devices sold by retail pharmacies. For example, blood glucose meters and lancets have shelf lives of at least five years. Such products may therefore remain in commercial distribution longer than the three-year depletion period offered by the rule and Draft Guidance. Without a change in this position, retailers and pharmacies will be required to send back these devices to the manufacturer, which may cause patient access issues. Furthermore, applying the UDI rule to devices distributed in interstate commerce prior to their compliance date is an illegal retroactive application of the regulation. To sustain its position that the UDI rule may have a retroactive application, FDA must show that Congress specifically intended a retroactive application of UDI to devices commercially distributed in interstate commerce. This FDA cannot do. The United States Supreme Court clearly states that:... the presumption against retroactive legislation is deeply rooted in our jurisprudence and embodies a legal doctrine centuries older than our Republic. (fn omitted). Elementary consideration of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted. (fn omitted). For that reason, the principle that the legal effect of conduct should ordinarily be assessed under the law that existed when the conduct took place has timeless and universal appeal. (Cite omitted). Landgraf v. USI Film Products, et al., 511 U.S. 244, 265 (1994). In this context, the Court went on to say, [s]ince the early days of this Court, we have declined to give retroactive effect to statutes burdening private rights unless Congress had made clear its intent [that a law have a retroactive effect]. Id. at 270. This principle extends to the administrative law context. In Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988), the Supreme Court states: It is axiomatic that an administrative agency s power to promulgate

7 Page 7 of 8 legislative regulations is limited to the authority delegated by Congress.... Retroactivity is not favored in the law. Thus, congressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result. (Cites omitted). Id. at 208. With respect to UDI, the statute does not require a retroactive application of the UDI regulation. Indeed, to the contrary, section 519(f) of the Act requires FDA to promulgate a final regulation not later than 6 months after the close of the comment period. This language expressly delays the implementation date of the UDI regulation for the most significant types of devices for two years. In effect, the statute casts enforcement prospectively, not retroactively. Based on this most fundamental principle of law, and the statutory language authority of the UDI regulation, FDA is barred from applying the UDI regulation to devices that are commercially distributed in interstate commerce. In other words, FDA cannot reach back to require UDI for products that were lawfully distributed prior to the regulation applying to the devices. 3. Removal of NHRIC and NDC Numbers Infringes the First Amendment FDA s prohibition of including an NHRIC or NDC number on a device label or package may also fail First Amendment scrutiny. The U.S. Supreme Court has held that the First Amendment s free speech protections extend to corporations, such as device manufacturers. 5 Furthermore, the Court has held that First Amendment protections extend to the compulsion of speech, 6 and that there is no constitutional significance between compelled speech and compelled silence. 7 In this case, FDA has restricted the ability of device manufacturers to label their devices with information that is purely factual and not deceptive or misleading. Moreover, FDA s rationale is based on no more than a presumed belief that NHRIC and NDC numbers would cause confusion in the marketplace. 8 FDA has not provided evidence to support this assertion, nor have retailers, wholesalers, and other entities involved in the healthcare 5 See, e.g., Citizens United v. Federal Election Commission, 588 U.S. 310 (2010). 6 Hurley v. Irish-American Gay, Lesbian, and Bisexual Grp. Of Boston, 515 U.S. 557, 573 (1995) ((quoting Pacific Gas and Electric Co. v. Pub. Utils. Comm n of California, 475 U.S. 1, 11, 16 (1986) ( one important manifestation of the principle of free speech is that one who chooses to speak may also decide what not to say. )). 7 Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S. 781 (1988) ( There is certainly some difference between compelled speech and compelled silence, but in the context of protected speech, the difference is without constitutional significance, for the First Amendment guarantees freedom of speech, a term necessarily comprising the decision of both what to say and what not to say. ). 8 See Draft Guidance at p. 7 (stating that use of NDCs could potentially be confusing. ); id. at p. 6 ( continued use of NHRIC and NDC numbers on device labels and device packages could cause confusion regarding appropriate identification of the device.... ).

8 Page 8 of 8 distribution chain found reason to believe such confusion would occur. 4. Specific Comments In the below chart we provide several comments specific to the text of the Draft Guidance. Line Proposed Change Rationale In the absence of a standardized, unique identification system for devices, some companies have historically placed NHRIC or NDC numbers on the labels and packages of certain medical devices for reimbursement purposes Our intent is that this enforcement policy will both facilitate a consistent date by which all classes of devices have legacy NHRIC and NDC numbers removed, and make the transition away from using these legacy FDA identification numbers less disruptive and more predictable Labelers who have been granted continued use of an FDA labeler code by FDA shouldmay contact their FDA-accredited issuing agency if they wish to incorporate the FDA labeler code into their UDIs. We believe it is more accurate to state that NHRIC and NDC numbers have been used for reimbursement purposes. FDA does utilize NHRIC and NDC numbers for identification purposes. We believe this change better reflects the Agency s intent. * * * AdvaMed would like to thank FDA for its consideration of these comments. Please do not hesitate to contact me at or zrothstein@advamed.org if you have any questions. Respectfully submitted, /s/ Zachary A. Rothstein, J.D. Associate Vice President Technology and Regulatory Affairs