January 09, 2020
In 2017 alone, the U.S. Food and Drug Administration cleared 3,173 medical “devices” through the 510(k) pathway, or 82 percent of the total devices cleared or approved for market use that year.1 The catch? Many of these approvals were not devices at all, but rather drug-like products that have escaped the rigor of a formal new drug application process (NDA) and are now likely being covered on your benefit plan.
By way of background, the U.S. Food and Drug Administration (FDA) requires that a medical device (Class I, II, or III where a premarket approval application (PMA) is not required) be reviewed under 510(k) premarket submission requirements – essentially demonstrating that it is “at least as safe and effective, that is, substantially equivalent to, a legally marketed device that is not subject to PMA”.2
Because makers of new devices are not required to perform extensive clinical trials, as is required through the NDA process, the 510(k) pathway is significantly faster, cheaper and less cumbersome. Nuances within its construct have made it possible for drug-like products, many in the dermatologic space, to qualify for submission and approval through this pathway. With manufacturer-assigned National Drug Codes (NDC), these products make their way into either the Medispan or FirstDataBank drug database – the compendia behind your pharmacy benefit manager’s (PBM) adjudication software – and ultimately secure coverage under your pharmacy benefit program.
This undoubtedly becomes an issue from a cost and plan design perspective, but also raises significant patient safety concerns. While there are general FDA approval requirements for drug prescribing and dispensing, it is unlikely that every drug prescribed by a physician or filled by a retail pharmacist will be inspected for a corresponding NDA, abbreviated NDA (ANDA), or biologics license application (BLA) number, especially when dealing with off-label prescribing and compounded drugs. The PBM would essentially be the last line of defense here, with access to an indicator on the drug file as to whether or not the drug is FDA approved. Currently, PBMs have no incentive to manage or exclude these products from coverage.
This scenario is strikingly reminiscent of another that involves combining one or more generic or over-the-counter (OTC) drugs and repackaging them as higher-priced brands in order to secure coverage under benefit plans (e.g., Duexis).
Although the FDA has indicated a desire to modernize the 510(k) pathway, making it more difficult for this practice to take place, guidance may not be issued until the spring and implementation dates have not been targeted. The FDA website has a list of 510(k) devices and products cleared last year.
EpiCeram, a topical treatment for eczema and atopic dermatitis, is one such product that has entered the market through the 510(k) approval process.3 Given that it is listed as a “wound dressing”, it is technically categorized by the FDA as a “medical device”. The topical cream, largely a blend of oils, contains zero active approved pharmaceutical ingredients. Recently, EpiCeram has seen a dramatic increase in average wholesale price (AWP). In one month, through the release of new NDC codes, EpiCeram’s per-claim cost spiked from $200 to nearly $5,000!
- Employee utilization of 510(k) products may not be entirely obtrusive until one of these products experiences a dramatic price hike. There are steps employers can take now to stay out ahead of this.
- Consult the Releasable 510(k) Database and make note of any 510(k) products currently covered under your benefit plan.
- Inquire about your PBM’s policy for formulary inclusion of these drugs and whether they are subject to utilization management programs that encourage other less expensive and clinically equivalent options. Consider excluding these products from coverage where appropriate.
- Ask your PBM to keep you up to date on new approvals and releases through this pathway and implement a way to track and monitor the cost of these products.
Content support provided by Solid Benefit Guidance.
- 1 | LaVito, A (November 26, 2018). FDA to overhaul 510(k) medical device approval process. https://www.cnbc.com/2018/11/26/fda-to-overhaul-510k-medical-device-approval-process.html. Accessed January 22, 2019.
- 2 | U.S. Food and Drug Administration (September 2018). Premarket notification 510(k). https://www.fda.gov/medical-devices/how-study-and-market-your-device/premarket-submissions. Accessed January 4, 2019.
- 3 | U.S. Food and Drug Administration (January 2019). 510(k) premarket notification: Epiceram.