FDA's Breakthrough Devices Program continues to gain traction, with the number of devices granted this designation continuing to increase. While the benefits for the FDA clearance/approval process are attractive, the primary driver seems to be the reimbursement benefits, which are of substantial interest to investors driving innovation.

The program is intended to speed development and review of devices which provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions. Features of the program include increased interaction with FDA, including mechanisms for quicker interaction like "Sprint Discussions" and prioritization of the submission in the review queue. Importantly, based on our analysis, for the first time since FDA introduced priority review programs (previously called the "Expedited Access Pathway" or "Priority Review"), the program may result in faster review times for class III (PMA) devices, generally without advisory panel meetings, even for first-of-a-kind devices.

However, it is apparent that FDA cannot grant breakthrough status to all eligible devices, especially in review groups where most devices would qualify (e.g., cardiovascular, neurology). Given the increased competition to obtain breakthrough status, it is critical that companies present their strongest case in their application. More often than not, and particularly in highly competitive review groups, FDA is requiring some clinical data (e.g., literature, pilot studies) to support breakthrough requests. Other key considerations include the timing of the breakthrough request in the development program, and justification for meeting eligibility factors, especially showing the device is reasonably expected to be "more effective" than the standard of care.

Obtaining breakthrough device designation has tangible benefits from a Medicare coverage and payment perspective for certain types of devices. For other devices where the special Medicare payment and coverage statuses afforded by breakthrough do not apply, the greatest benefit comes from promoting the device as a breakthrough. From a Medicare payment perspective, breakthrough designation eases qualification for special, additional reimbursement. Hospitals may receive extra Medicare payment for technologies that qualify for new technology add-on payments (NTAP). Similarly, devices are eligible for separate payment under Medicare if they qualify for pass-through status, which pertains to devices that are inserted or implanted into the body.

From a coverage perspective, CMS has implemented the Transitional Coverage for Emerging Technologies (TCET) program, which provides a pathway to time-limited national coverage while a manufacturer generates additional clinical evidence in accordance with an agreed-upon evidence development plan. To date, the TCET program has been extremely limited, and is effectively a modified version of Coverage with Evidence Development (CED). However, there is broad support for providing expanded coverage for breakthrough devices, and legislative efforts are underway to make that happen.

Given the FDA regulatory and reimbursement benefits, we only expect competition to increase for breakthrough status in the coming years.