Response Letter to Centers for Medicare & Medicaid Services: Avoiding the “Valley of Death”

Oct 22, 2020

McCracken Alliance Partners, led by partner Bob Dickson, drafts and coordinates response to the Centers for Medicare & Medicaid Coverage of Innovative Technology proposed rule. 

A group of senior executives from the Pittsburgh life science community responded to a proposed rule issued by the Centers for Medicare & Medicaid Coverage that deals with reimbursement of innovative medical devices. The proposed rule would establish a Medicare coverage pathway to provide Medicare beneficiaries with faster access to new, innovative medical devices. The proposed rule is a win/win for patients and the medical device industry and would eliminate the so-called “Valley of Death”. The Valley of Death refers to the period between when approval is obtained from the Food & Drug Administration and when reimbursement for the device is approved by the Centers for Medicare & Medicaid Coverage.

Centers for Medicare & Medicaid Services
Department of Health and Human Services
P.O. Box 8013
Baltimore, MD  21244-8013

RE: Comment on Proposed Rule:  Medicare Coverage of Innovative Technology and Definition of “Reasonable and Necessary”

            We are a group of current and former executives of, investors in or advisors to start-up and smaller life science and medical device companies with an interest in new and innovative medical devices. Individuals are indicated at the end of this letter.

            We are responding to the entry in the Federal Register requesting comments on the Centers for Medicare & Medicaid Services Proposed Rule on Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary”. 

This proposed rule would establish a Medicare coverage pathway to provide Medicare beneficiaries nationwide with faster access to new, innovative medical devices designated as breakthrough by the Food and Drug Administration (FDA). After the final rule is effective, the Medicare Coverage of Innovative Technology (MCIT) pathway would begin national Medicare coverage on the date of FDA market authorization and would continue for 4 years.   Regulatory standards are also being proposed to be used in making reasonable and necessary determinations for use of such devices.

We applaud the leadership on this matter and urge CMS to move expeditiously to finalize and implement this important proposal.  Technologies that receive a Breakthrough Designation from the FDA are those that produce a meaningful improvement in quality of care and public health. Accordingly, this proposed rule is important for patients, particularly, senior citizens, and start-up and smaller medical device companies because:

  • Start-up and smaller medical device companies have often spent years and millions of dollars developing their product and having it approved by the Food & Drug Administration (FDA).  The companies have relied on personal investments and financial support from friends and family and angel investors, often with substantial personal sacrifice, because they believed in the product and the positive impact it could have on patients.
  • Getting to the point of FDA approval, after investing years of effort and millions of dollars, sometimes results in the company’s financial position requiring quick approval for reimbursement of the medical device to bring the product to market, to benefit patients and to stabilize the company.
  • Unless Medicare or other reimbursement is in place, medical providers will not purchase and use the new medical device.  As a result, patients in need of the device may miss the opportunity to be adequately medically treated and the medical device company’s financial position weakens, risking the future commercialization and advancement of the innovative, potentially life-saving technology.
  • If a patient does need the medical device and reimbursement does not exist, the patient must pay for the device, which may be unaffordable.  The patient may need to choose between lack of adequate medical treatment or severe financial consequences, creating a needless double jeopardy.

The current lag Between FDA approval and Medicare reimbursement is often referred to as “The Valley of Death”.  During this Valley of Death period a patient may go untreated and potentially die and the medical device company may not be able to financially survive.

We understand that historically decisions to use medical devices have been made by the patient and/or doctors, under the guidance of their medical institution, professional associations, and the American Medical Association.   We recommend continuing leaving the decision making on reasonable and necessary use to the patient’s doctor and the patient since they are familiar with the specifics of the patient’s condition and the risk of using or not using a medical device.   The doctor at the patient’s bedside is best able to determine what is “reasonable and necessary”. 

This proposed rule would accelerate providing new, breakthrough medical device technology to patients in need and would avoid “The Valley of Death”.  Accordingly, we believe that this proposed rule is a win/win for patients and the medical device industry, and we support the approval and adoption of the proposed rule. 

Sincerely yours,

Robert Dickson
Retired CFO
CardiacAssist, Inc. (dba TandemLife)
Partner, McCracken Alliance Partners

Peter Stephans
Chairman and CEO
Trigon Holding, Inc.

Pete DeComo
Chairman and CEO
ALung Technologies, Inc.

Louis H. Miller Jr.
Managing Director, Life Sciences
Innovation Works

James Jordan
President and CEO
Pittsburgh Life Sciences Greenhouse

Ernest K. Manders, MD
Chief Executive Officer
Promethean LifeSciences, Inc.

Christian Manders
Chief Operating Officer
Promethean LifeSciences, Inc.

J. Howison Schroeder
Chief Executive Officer
RZ Acquisition, Inc.

Jim Browne
Chairman of the Board
PECA Labs, Inc.

Ned Laubacher
Chair and CEO
PhotoPhage Systems, LLC
and Director Intelomed, Inc.

John Friel
Retired CEO
Medrad, Inc.

Robert Svitek, PhD
VP of R&D, CTO TandemLife
CardiacAssist, Inc. dba TandemLife

Doug Bernstein
Chief Executive Officer
PECA Labs, Inc.

Jamie Quinterno
Chief Operating Officer
PECA Labs, Inc.

Matt Burlando
Principal & CFO
Matthew Burlando Advisors MBA LLC

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