Benefits Strategy

A Closer Look at the 510(k) Pathway: What Employers Should Know

Not all products approved through the FDA 510(k) pathway are created equal. Given various nuances in the pathway’s safety and efficacy criteria, employers may consider taking a closer look at which of these are being covered through their pharmacy plan.

March 24, 2022

In 2021 alone, the U.S. Food and Drug Administration (FDA) cleared nearly 3,000 “medical devices” through the 510(k) pathway.¹ Employers are increasingly paying attention to the potential pitfalls of this pathway, as it can be a vehicle for certain drug-like products to come to market without having undergone a formal and rigorous new drug application (NDA) process and yet still be granted coverage under standard formularies. This article offers additional perspective in light of the increasing variety of products that flow through this channel – prescription digital therapeutics (PDTs) are important among them.

By way of background, the Medical Devices Amendments of 1976 created a three-class, risk-based classification system for all medical devices.² Class II devices, in particular, encompass an incredibly wide range of medical devices, including everything from contact lenses, insulin infusion pumps, nerve stimulators intended to treat pain, and prescription digital therapeutics.³ These devices are most commonly reviewed through the 510(k) premarket submission clearance process which essentially only requires demonstrating that a new device is “at least as safe and effective, that is, substantially equivalent to, a legally marketed device that is not subject to premarket approval”⁴

Beware of Certain Drugs Approved as ‘Medical Devices’

EpiCeram, a topical treatment for eczema and atopic dermatitis, entered the market through the 510(k) approval process. 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. Not too long ago, EpiCeram saw a dramatic increase in average wholesale price (AWP). In 1 month, through the release of new NDC codes, EpiCeram’s per-claim cost spiked from $200 to nearly $5,000!⁵

Because some makers of new devices are not required to perform extensive clinical trials, as is required through the NDA process, the 510(k) pathway may effectively be 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 without supporting clinical data. With manufacturer-assigned National Drug Codes (NDC), these products make their way into drug databases – often the compendia behind a pharmacy benefit manager’s (PBM) adjudication software – and ultimately may secure coverage under an employer’s pharmacy benefit program.

For a full list of 510(k) devices and products cleared last year visit the FDA’s website.

Notably, within the 510(k) review construct, "special controls" are designated for certain product categories. Prescription digital therapeutics (PDTs) ⁶ (software programs or apps that physicians can prescribe as standalone or in combination with pharmacotherapy treatment) are one such example. PDT developers are required by the FDA to demonstrate evidence of clinical effectiveness and patient safety through well-controlled clinical trials. Software verification and validation as well as adequate labeling independently assessed by FDA review must also be provided before market launch. Given the increased scrutiny PDTs face, they should be evaluated differently than certain other products flowing through this approval pathway. PDTs often have manufacturer designed NDC codes and are listed in compendia databases.

PDTs: A Different Kind of Therapy

PDTs are only available via consultation with a health care professional and a prescription. They can help improve clinical and economic outcomes by offering patients additional avenues to overcome treatment access barriers associated with pharmaceutical or in-person therapy, including perceived stigma and logistical and pharmacological hurdles. In addition, PDTs enable clinicians to enhance treatment impact through a larger variety of treatment options and provide the ability to conduct remote monitoring.

As of February 1, 2022, there are 9 PDTs that have received FDA Authorization (Table 1):

Table 1: FDA-Authorized PDTs

PDT Product	Therapeutic Area
reSET	Substance use disorder
Nightware	Posttraumatic stress disorder (PTSD)–driven traumatic nightmares
reSET-O	Opioid use disorder
Somryst	Chronic insomnia
EndeavorRx	Attention deficit hyperactivity disorder
Mahana for IBS	Irritable bowel syndrome (IBS)
EaseVRx	Reduction of pain in patients (18 years and over) with chronic lower back pain (indication)
Luminopia One	Treat amblyopia in children aged 4 to 7 years
Regulora	Abdominal pain associated with IBS in adults

Given the heterogeneity of devices being reviewed through the 510(k) pathway today, especially regarding robustness of evidence and required controls, employers may consider consulting with their partners to evaluate coverage for each of these products based on the evidence available, and benefits and risks for the intended patient population.

The following recommendations identify steps employers can take now to effectively balance patient safety concerns, cost management, and benefit design implications, while still providing desired access to necessary drugs and devices.

Employer Recommendations

1 | Consult the Releasable 510(k) Database and make note of any 510(k)-cleared products currently covered under your pharmacy benefit plan.
2 | Work with your plan and partners to ensure that you understand the difference between the different types of 510(k)-cleared products (e.g., EpiCeram, continuous glucose monitors, PDTs) and the corresponding clinical and regulatory standards.
3 | Ask your PBM how they are monitoring the 510(k) pipeline for drug-like products that may be entering under the guise of medical devices. Ask them to keep you up to date on new FDA authorizations and/or clearances and releases through this pathway and monitor the cost and utilization of these products.
4 | 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 the exclusion of certain products where appropriate.
5 | Specifically, with regard to PDTs, inquire about your PBM’s policy for their inclusion on formulary and ask for routine updates on new approvals and releases of PDTs through this pathway. While most employers are requesting that PDTs be covered under the pharmacy benefit, these solutions may also be covered under the medical benefit.⁷ Talk to your plan partners about defining a coverage pathway that makes the most sense for your organization.

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