FDA Breakthrough Designation: ROI and Considerations With Shifts in Coverage | LSI USA ‘24

Etienne Nichols  0:00  
So excited to get started with this. To introduce the panel, we'll just go down the line. Maybe we'll start with you, Lishan, just to give a a one minute or less introduction to ourselves and who we are less.

Lishan Aklog  0:16  
So I'm Lishan Aklog. I'm chairman and CEO of Lucid Diagnostics, which is a cancer prevention medical molecular diagnostic company, that commercializes a molecular diagnostic test for esophageal pre cancer to prevent esophageal cancer. I also happen to our product isa guard did receive breakthrough device designation just prior to the pandemic. I also serve on the Board of abdomen so I've been quite active in a lot of the advocacy work and legislative activity around the transition from handset to T sat and I had the really interesting experience of testifying in front of Congress on on this rule and one of the subcommittee's

Nate Beaver  0:53  
interesting, that's one word for it right. Nate beaver I'm a partner with Foley and Lardner in our Washington DC office. I also co chair our medical device area focus. My practice is really an FDA regulatory based practice working with life science companies, as well as med tech companies sort of navigating the FDA process and then post approval I deal with everything from compliance issues, advertising, promotion issues, and other FDA related enforcement issues. So happy to be here today. Thanks, everybody.

Carolina Aguilar  1:22  
Carolina Aguilar, co founder and CEO of INBRAIN electronics. We are a graphene based high resolution neural platform for central nervous system and peripheral nervous system applications.

Kwame Ulmer  1:35  
I'm Kwame    Ulmer, I'm the managing partner of MedTech Impact partners where regulatory strategy consulting firm, I'm also fortunate enough to have collaborated with Assembleia, which is a regulatory intelligence software platform was a researcher who were we looked at some 2023 breakthrough through designation data, and we have some hot off the presses, results for that. I

Etienne Nichols  1:56  
can't wait to hear that hot off the press. He kind of teased it before we got up here. So now we're all wondering what it is. But before we get into it too far, I think let's talk just about what breakthrough designation is. And Nate, I know you wanted to kind of introduce the topic of what it even is, do you want to kind of give a rundown? Yeah, sure,

Nate Beaver  2:12  
I'll hit the high points. And I know Tyler threw a lot of acronyms at you to start here. We're going to try and decode some of those throughout the talk. But just to sort of high level, you know, even for those who may not really be familiar with breakthrough designation, in the process on the device side, it actually started as as on the on the therapeutic side as part of the overall accelerated approval process with FDA. So you had everything from accelerated approval, priority review, Fast Track designation, and then and then breakthrough designation on the therapeutic side. In 2015, that was also through legislation shifted over to the device side. And, you know, we've seen designations since that time. Now, what is it basically, there's two criteria you have to meet. The first is that the device provides for a more effective treatment or diagnosis of a life threatening or irreversibly debilitating human disease or condition. So condition, first criteria, everyone has to meet that. And then the second criteria, there are a couple of buckets you can fall into. And you have to meet at least one of these criteria, which include representing a breakthrough technology, no approved or cleared alternatives exist in the marketplace. The product offers a significant advantages over existing, approved or already cleared alternatives. And then the fourth is a little bit of a catch all that the device availability is in the best interest of patients. So again, have to meet one of those two criteria in order to in order to qualify. From a timing perspective, very broadly, once you submit your request for designation has to be before you submit your application of either a PMA or a 510 que de novo application anytime before you've made that type of submission, you can submit for breakthrough designation, FDA will get back to you within 30 days, if they have additional questions, and then they will get back to you within 60 days as to whether you've been granted or approved or denied. So relatively short timeframe in order to be able to do it. Now very broadly, and we'll get more into the specifics of this. But what do I get from breakthrough designation? Well, you get more and faster feedback, right. So FDA, more collaboration, more intense collaboration, and generally faster collaboration with FDA, you also get priority review. So you know, get put to the top of the queue as opposed to first in first out for normal review. And some additional resources. You know, some of that's a little bit vague. But you know, again, the intent from an FDA perspective is let's push these through the process as quickly as we can. Now caveat, that doesn't necessarily mean faster. And in fact, when Kwame talks about some of the timeframes, it's not the case that's simply because you have a breakthrough designation, you're going to get cleared or approved more quickly than, you know, a typical device going through the 510. K, FDA acknowledges many of these types of devices are more novel, perhaps more challenging. So it doesn't mean it's a fast process. Hopefully it's a faster or at least a more collaborative process. For PMA is you can get either expedited review of a pre approval, or in some instances, that pre inspection review will actually be pushed to post post approval or post clearance. And then regular status updates, again, just how do we move this process faster? Last two things I'll talk about briefly, because we're going to talk about them a little more eligibility for the TAP program. And I think Carolina is going to talk about that. And then as as was teed up early on, potential for collaboration with CMS through what's now called the T C E T program, which is different from the MC it program. And we'll decode those and

Etienne Nichols  6:03  
yeah, why don't why don't we just jump into those NEC and then LaShawn has been pretty intense in the legislature, you've been involved in that you want to break some of those down.

Lishan Aklog  6:11  
I don't pretend to be a government advocacy expert, but I was asked to in my role on abdomen to participate in led to the little bit of the history with that going to so M. CIT, is medical coverage of innovative technologies. And that and the previous administration was all set to come into effect. And it was fairly broad. And from a company's we'll talk about some of the advantages, what what it offered effectively was a period of national coverage under CMS for breakthrough devices that actually completed and got approved Upon approval,

Nate Beaver  6:45  
right. So automatically, essentially, you got approval, super attractive for those of

Lishan Aklog  6:49  
you who are dealing with, like, as we're dealing with reimbursement right now, that got pulled when the new administration came on, and a new process called tea set, which is transitional coverage for emerging technologies, replaced it and that has some similar themes. But it's much weaker, let's just be that Be frank about it in terms of the types of the types of technologies. There was a sense, maybe without going into all of the history, there was a sense that that CMS did not want to be a rubber stamp, there was issues around Medicare, the applicability of the efforts that went to FDA approval in a Medicare beneficiary population and a variety of other objections that the new admin CMS under the new administration came up with. And they put forth a proposed rule that's now moving forward extremely slowly. And it was the subject of a hearing. Because there's legislation that is HR 1691. I should know this because I was that hearing that seeking to basically capture the broader, more attractive elements of instead of the MCITP. And so there's this tension between the executive branch activities and the legislative activities putting pressure on them. The rule is not it's it's moving slowly, I have not put forth a somewhat toughly worded letter recently saying, What's up guys, do you think this should have been done already. And so we'll see what comes out of it. And we can talk about some of the details of the deficiencies and why it's much less useful and interesting for companies. And therefore, since that's the pot of one of the pots at the end of the rainbow, it may make it has an impact on the impetus to pursue breakthrough designation.

Nate Beaver  8:35  
Yep. And one really simple thing on one of the one of the other issues or one of the less attractive parts on it is CMS has been clear that there are going to be only a certain number of devices that qualify. So it's a much much smaller cohort that we be potentially looking at

Lishan Aklog  8:50  
as part of a year which is basically a lottery. It completely transforms the instead of when

Etienne Nichols  8:55  
it comes to when it comes to the benefits. I think that's one of the things most people are interested in, if you want to reveal some of the benefits that you found from that study.

Kwame Ulmer  9:04  
So and my colleague Christian Johnson is in the back with additional information with the full report. But essentially if you have breakthrough designation, and receipt and go through the 510 K path top pathway, the median FDA review time is the same whether you are breakthrough designation or not. The time savings Christian is if you're de novo or PMA, three months for de novo seven musts for PMA and I've been thinking about this a little bit if you are well capitalized, let's just say you have just closed your series A and you're debating whether to apply for breakthrough and you believe you're you know, your PMA to Novo and you have data hungry investors, maybe you want to apply for breakthrough. But if you're a 510 K, I think the jury is in First of all, there are only five slots. A lottery. Yeah, it's a lottery. If you're going through the 510 K pathway, I don't think there's a lot of benefit.

Etienne Nichols  10:12  
Okay, Karolina, maybe we can shift slight gears because I know you wanted to bring up the TAP program or that tap, I guess I should call it Do you want to break down what that is briefly and then talk about how it could tie in.

Carolina Aguilar  10:26  
Yeah. So if you have FDA breakthrough designation, the FDA, it's piloting a program, which is called total life cycle Advisory Program, where actually you could qualify, and if you are part of, you get also more support, not only on clinical reviews, and technology reviews, but also in areas like market access, connectivity with patient advocacy groups, user needs, things like that. And we we meet FDA, so we are part of that, and we meet FDA every month. So it's really regularly and planning in advance the different topics that you want to discuss, they bring the relevant experts to have a deeper discussion, you can also pre submit information for them to review and be more prepared. And actually, it's been only a couple of meetings. So I can I cannot say much yet. But a couple of minutes that we had were very substantial and very promising. So I hope that I think it serves also as an incentive for the team to be ready. So I use it as well internally to push topics that we anyway need to discuss and be ready for those meetings and have effective outcomes.

Lishan Aklog  11:44  
Let's have a couple of things to that. Because because the TAP program was initiated as part of Medusa five, which is how our FDA gets paid by US industry through user fees. And it was a very, I was had some visibility into that negotiation. And Doug, if any of you know Doug Kelley, who was what's his title, he's like, second to Jeff shirt at CDRH. He comes from this world, he comes from the VC world and from the industry world. And if you talk to him, when they were conceiving this, this really is what breakthrough should be in many ways. It's it has the spirit of it is to bring more of an entrepreneurial spirit for FDA to think more like we do to bring in outside experts. And and move it forward. It started as a pilot in cardiovascular and I guess neuro was now. So I think it's interesting to bring that up in this context. Because, you know, breakthrough has certain advantages, that data is mixed in certain levels. This is really intended to be a more you know, that on steroids in terms of the collaborative nature, that you're there's even talk of bringing payers in as they're these advisors that have that are actually outside of FDA that are hired with special expertise to basically inform the process moving forward, which is really unheard of, and it's meant to be as a pilot, but it's actually, you know, just surance vision is for this to be in some ways where the where the future of how the process would be moving forward, which would be great.

Nate Beaver  13:00  
Right, sort of more of the model. My take on it, it's sort of super breakthrough designation. Right. Right, right. It's like super, super right. You know, you get higher, you know, the the review, division level, involvement, you know, more involvement, quicker involvement and more feedback and the outside

Lishan Aklog  13:18  
and the external experts. Exactly internal you're bringing in people, again, from the physician community, the payer community and others, to actually opine on it, which is pretty unprecedented. Right? So

Nate Beaver  13:30  
hopefully, that actually gets rolled out more generally. Yeah, I

Lishan Aklog  13:32  
think there there was five cardiac, I think it's 15. This year, and the plan is to continue through Madhu five, which is a five year cycle. To move it forward. I think the expectations is if it's successful, it'll be permanent in the next cycle.

Nate Beaver  13:45  
Right? The numbers I had I had read was that as of March of this year, FDA is enrolled 36 devices in the tap project.

Etienne Nichols  13:54  
So if we go back to the breakthrough designation, I guess, since we're supposed to be talking about that, but I wanted to bring that up because you wanted to Carolina's great topic, what are some ways people can really get the most out of it? If we have some people in the audience who, who have achieved that breakthrough designation? What, how can you get the most out of that, whether it's through insurance and reimbursement, never wants to hit the buzzer. So

Carolina Aguilar  14:17  
I think it's very important to have a roadmap that you want to discuss. And for instance, we do machine learning and, you know, there's a whole debate about how to do machine learning in med tech. So, this is one of for instance, the topics that we bring on the table and we show how we have been doing things, how we build our algorithms, what is the vision for the future, and of course, the idea is that they bounce back with what is allowed and what is not but also how to build the future of machine learning when it comes to implantable smart devices. But we have also biocompatibility right graphene is a new materials and novel material that that falls anyway under the FDA breakthrough conversations. But here we can deepen a little bit more about it. We recently asked them for patient advocacy groups, because we are rebuilding some of our new user needs with expanded feedback. And we wanted to actually get to know other groups within the United States. And they got us in touch with some of these patient advocacy groups. And of course, market access will come very quickly because we have just finished a reimbursement landscape. And now we are ready also to present that data to them and verify if we were thinking asset roadmaps make sense and they validated. So they will also bring around the table those kinds of experts. So I think it's quite random as a programmer, it seems. So next year, I can report more.

Kwame Ulmer  15:49  
So Chris, and I have been talking about early stage companies and these major milestones, but then there are several meaningful mini milestones. We got feedback and buy in from the FDA on our first in human study, we got feedback from FDA on the pivotal, we got feedback from FDA on our accuracy, study, et cetera, et cetera, et cetera. And if you're well capitalized, if you raise and let's just say, a very large seed, and you have patience, and runway 1280 miles, you can give these meaningful mini updates to multiple stakeholders, not just your investors, but your Kol is your advocacy groups. It's a wonderful, structured way to really get it get impact from each step along that roadmap and give these meaningful updates. Because you have the validation from the FDA.

Lishan Aklog  16:49  
Yeah, sure, I can, I can, my experience is going to be focused on the stage that primary mentioned, which is, you know, thinking about whether you want to pursue this, and I think you'll understand in a second why that is. So we in 2019, when we had licensed this technology, we were planning on launching it as a laboratory developed tests. So there's a unique aspect of what we're doing that we have, that we're in the diagnostic space. And so our plan was to launch it as a laboratory developed tests but then pursue PMA approval as an in vitro diagnostics. So that was where how we engage with FDA, we had a plan on our our pivotal study for the PMA and right a little bit what's cool about it was actually in the same setting the same these were in person meetings, re COVID, we had our pre we had our preset for the PMA, and then the same people. Basically, the meeting, one meeting ended, and the next meeting started. And we had our breakthrough conversations. And it was great. Our motivation at that time, given that at that point in time, we were planning on proceeding full steam ahead with the PMA, for the IV D, the, the primary motivations were, I would say 95% Was the pathway to coverage, because coverage for diagnostics is pretty brutal. And, and so that was the part of the end of the rainbow. We also are a public company. So we felt that, you know, the buzz around, you know, the FDA thinks you've got a cool breakthrough device was we'd have some value. And I think that had a bit of it was fairly short lived. I don't think really after the initial announcement. It helped us much in terms of our capital raising. So what happened then was two things. One, we just, you know, capital was tight, and we decided we would post with it. And we were able to commercialize this is a laboratory developed, tested, we decided to push off the AIVD. But even if we hadn't COVID head, and because of the the swarm of work in the O HT seven branch, which does diagnostics, they completely shut down a hall, all breakthrough. So every there were many, many breakthrough diagnostics that had zero benefit for the entirety of the pandemic. And so by the time it ended, we were well on our way, and so we haven't utilized it. So now that the prospect of national coverage, automatic coverage at the end and sort of the M set more attractive model is shaky. And it's non existent for diagnostics because T said diagnostics. So not only is that the five you have to sort of I'm not going to win the lottery of five, five for the year. They explicitly exclude diagnostics, the House bill doesn't but the but the tea set role as proposed. So without coverage, I don't I'm with Kwame at every level. It's it's it's likely not worth it. And it's not it's not definitely not worth it for diagnostics at this point.

Etienne Nichols  19:45  
When you say it's not worth it, so there's there's multiple benefits, I suppose. And regulatory strategy is one of those is it would you agree that that across the board whether it's marketing and so forth, or or have you thought about the additional benefits

Kwame Ulmer  19:59  
so I do think just like the shot in terms of, does it impact your FDA timeline, then? Does it impact your reimbursement? The answer pretty much is no, with T set. And then do you get any brand value out of it? The only other unique benefit? And we probably should come up with a checklist or an algo for this? Is it worth it? Then you just pop out? Yes, it is. Let's go. We're gonna trademark that Christian, go and build the ark. The other one besides brand, value time, calm? Oh, your comments really struck me about bringing your different stakeholder groups together and keeping them informed along this journey, because it's a long journey. The last thing I'll bring up, and my colleague worked at the FDA together as in the audience, Allison Komiyama, I'd be I think sometimes about potential variability across these offices. And review times. And I don't know if anyone has really cracked the code on that or really could say one office is more or less consistent than the others, but it's, it's always some top of mind for that early stage CEO. Are we getting like a fair shake? Is this a slow group of fast group etc. And you can never really know. Okay,

Etienne Nichols  21:15  
so for class two, still maybe not worth it? Yeah. PMA class three de novo? Maybe? Okay, okay. Well, maybe we'll go down the line. I'm curious what everybody thinks Carolina, what did you experience it?

Carolina Aguilar  21:30  
I'm happy I would do it. I mean, I would do it again and 1000 times more, you know, because I think as you said, this is a long journey. And knowing our, your, your stakeholders and understanding their opinions, and getting early input about what is going to work and is not going to work, I believe is going to save us time. Sometimes we have these internal debates, and we hire consultants. And until we have the answer, I don't know, months have passed. And this is the straight way to test. I might go the right way without spending all this money on consultants. Not that I don't. I love consultants, so and we love you more. Oh, when I mean is that sometimes? Sometimes you have to be practical. And for me, this is a validating way, then that makes you understand. Even with consultants, am I on the right path? Right. So I think it's totally worth it. But again, I will come back next year and let you more let you know more. But so far it's been it's been great. I

Etienne Nichols  22:34  
love a panel that doesn't agree. But I know you want to

Lishan Aklog  22:36  
say so I'm gonna I'm gonna backtrack my naysayer comment in one respect, which is breakthrough plus tap, Sign me up. And actually, I think I think Adam had lobbied for the first the first half group to be diagnostics to be HD seven, and they went with cardiac, but that I definitely agree with I think breakthrough alone, you know, for us was a pretty straightforward clinical trial strategy. You know, it was without without the reimbursement. It's just wasn't wasn't.

Nate Beaver  23:06  
Right. And I think to Shawn's point here is that if you'd asked this question prior to 2001, when we were under MCT, you know, the, as everyone knows, you know, the FDA process is not an easy process. But at least when you talk to people, would you rather go through the FDA process or deal with CMS? I think there's a pretty clear answer on that that reimbursement continues to be the larger challenge, right? So if you would ask this prior to 2021. When we were under an MCITP, you'd say, well, absolutely. If breakthrough gets me that gets me guaranteed four years of coverage, then sign me up every day to week. Right. But we're not in that that situation anymore. And because the rule for TCT, you know, still still not final limited and a lot of different ways the value on that side just really isn't there. So I think at this point, you really have to ask yourself, if the only value I'm getting is from the FDA side, is there value to that or not? And I think it depends on a couple of factors, as Kwame was talking about, you know, if you have a relatively straightforward 510 K, the answer might be you know, we just want to do our pre sub we want to get this in, there's no reason to go through the breakthrough designation process, because that's just going to add more time here. Yes, there's a little bit of sexiness to it, you do get that bump on a press release. But ultimately, you know, the value of it is, is it's a little bit squishy, because there was not a lot of structure around what precisely you get in terms of, you know, timeframes and those sorts of things. It's supposed to be, you know, more collaborative, more sort of warm and fuzzy. And part of it is what what you make of it right? You do need to be interactive with FDA, you do need to be more on top of things, I think, and you really kind of have to press FDA to make sure you're getting the value out of it. Because if you're just going to sort of sit back and say Well, you know, we're not going to push this, then there really isn't so much value to it, I

Carolina Aguilar  25:05  
think let me add something there. That's precisely what the debate internally was about. And actually, if you have a 510 K, getting an FDA FDA breakthrough, it's kind of contradictory, because you are doing a preserve for you know, like, exactly, it's a special equivalence with a predicate, and then you are saying, You are breakthrough. So it didn't felt right. And therefore, we went priests up. But then on the on the rest on the class three is a driven agenda. Right, right. As you said, if you show up with no content, you're gonna have zero benefit. But if you prepare well, and you squeeze the lemon in the good sense, you know, it's going to be effective. And the teams usually feel energized, because they got something out of that. And they got their some of their questions resolved. So

Lishan Aklog  25:59  
there's just one one data point, I think it's worth adding that will reflect on the the lack of sexiness as well as the one of the reasons why tea set is so weak, which is there a lot of breakthrough device, I think the number I heard was 400 or so. So your denominator, you know, when when it comes to sort of the sexiness part that it's more common than then you might think, and that was actually one of the fundamental reasons why CMS objected is that well, we got 400 That it was insincere honestly, in my opinion, because there are 400 designations, but that's not the number of actual device actual devices that would get cleared and would be entrance into the, into the program. But the lottery aspect of it, if you're doing five a year, and let's just say, I don't know, 80 of them, or 50 of them get get get a get to ultimately get approval, I think that's should be at least that. That's the That's your denominator in the lottery, that's your chances of getting a being one of five, five out of what should be dozens,

Nate Beaver  27:01  
right. And I actually I have the numbers here. So as of June 30 2023, which is the most recent data that I could find. Combination of CDRH and CBRE had granted 839 designations, but a total of 81 devices that have received marketing authorization in that time. Yeah,

Kwame Ulmer  27:21  
I so Christian, and I, in concert with Dr. Jennifer McCain, he did some research, and interviewed over 100 medical device companies. And one of the quotes when we asked them about breakthrough at the time was they're given away breakthrough like candy. Right? So

Nate Beaver  27:39  
doesn't mean you're gonna get approval, though,

Kwame Ulmer  27:41  
does not mean you're gonna get approval that that is so true. So get into the shots earlier point. My senses breakthrough has been around for a while there is a branding bump. But is that enough? I don't know,

Lishan Aklog  27:55  
there's one contradiction of that the one thing I think I was scratching my head when you said that number because the overall rates of approval for PMA devices is quite high. It just takes a while. And from our experience, the bar that we are preset meeting for the DVD was much lower with regard to the requirements was a 900 patient study versus what we had the bar that we had to reach to show that we were you know the criteria that you mentioned, were sticking out. But essentially a breakthrough was a much much larger study. So some that that actually explains to me why those numbers 80 out of 800 is you know, is more consistent. It's not inconsistent with the fact that PMA is ultimately most of them to get approved.

Nate Beaver  28:35  
Right? And there there are, there had been a lot of breakthrough designations the last couple years, but again, doesn't necessarily mean your approval is going to be that accelerated. So it's not to say they're crashing and burning, but there's just a long, a large backlog and products that are still in the queue still being reviewed.

Etienne Nichols  28:53  
We have just a few minutes left and whether we advise them to do this or not, you know, they're gonna people want to do it anyway. They're not gonna listen to what you say. So if they're going to try to pursue it, let's just give one piece of advice if you're pursuing breakthrough designation, what do you have a piece of advice? Yeah,

Kwame Ulmer  29:09  
I get the juice out of that lemon squeezy, be very structured, and set up those sprint meetings. Just just take the bull by the horns and proactively set them up and know what you want to get out of every single sprint meeting.

Carolina Aguilar  29:22  
Caroline, I agree. The other piece is that you don't need human data. We we actually got it with large animal preclinical data, but of course it has to be solid well structure and, and meaningful, but it's possible.

Nate Beaver  29:40  
Advice, go in with a design and advocacy in your submission as to why you qualify. Right? You really have to think about it in advance. Why do I need the credit the criteria? What's the data that I have to support it? And the data can you know, you're making an argument that there's essentially a reasonable price ability that you can meet these standards, right? You don't necessarily have to show to be able to demonstrate that's what the approval process is for. But you've got to go in with a strategy of, you know, what's your argument for why we qualify? And make sure you know, in your own mind that that you're ready to take advantage of the benefits that can be there?

Lishan Aklog  30:18  
Yeah, I guess I'll answer that same question about what should you do to get it if you're determined to get it, I would say have have a well thought out plan but bring the right people to the meeting. So we had alberto gutierrez, who used to actually run the division of sitting at the table across from people he he used to, who used to work for him, and we have the leading gastroenterologist in the space. And that really, that really clinched it, but also be careful that you're not in the pursuit of just reiterating something I just said and pursued a breakthrough device, you're not increasing your bar the bar for your PMA, you might have to do both. You might have to have an ID a regular path, and then the pathway for the that would get your coverage was there would be a higher bar. My

Carolina Aguilar  31:03  
Way had a great consultant on the process

Etienne Nichols  31:07  
will tell you who that was later. So breakthrough breakthrough plus tabs. Thank you so much. If those of you you probably have additional questions. We'll be outside for a few minutes. If anybody has additional questions would you say and we'll let you all get back to the next session. Thank you so much. Thank you, everyone. Thank you