FDA Picks First Company to Sell Unapproved Device to Medicare Patients

WASHINGTON — The U.S. Food and Drug Administration has announced its first selection of a company authorized to sell an unapproved medical device to Medicare beneficiaries, a decision that dramatically expands the reach of a controversial fast-track program. Under the new "Innovation Access Pilot," California-based NovaThera Inc. is now permitted to market its CortiLink brain-responsive neurostimulator to Medicare patients with treatment-resistant epilepsy, even though the device has not received premarket approval from the agency.

A Shift in Decades-Old Policy

For nearly half a century, Medicare has strictly limited coverage to medical products that have received FDA's prior approval or clearance after extensive clinical study. That foundational public health guarantee is now being altered, as the FDA and the Centers for Medicare & Medicaid Services jointly unveiled the Innovation Access Pilot (IAP) — a federally funded experiment allowing a device manufacturer to begin commercial sales to Medicare patients while still in the early stages of the regulatory process.

The first beneficiary of this new pathway is NovaThera, which has been given permission to sell its "CortiLink" neurostimulation platform to Medicare-eligible adults living with status epilepticus that has not responded to standard therapies. The device is not FDA-approved; it has only received a Breakthrough Device Designation, a title indicating the agency believes it has the potential to address an unmet medical need.

Under the terms of the pilot, NovaThera can charge Medicare for the device itself, the surgical procedure needed for implantation, and the clinician follow-up visits, while data on outcomes are collected in a conditional registry. Similar agreements exist in the field of pharmaceuticals for "accelerated approval," but this is the first time in history that a durable medical device has been granted conditional commercial access for a broad, federal patient population before marketing authorization.

This mechanism was made possible by a provision in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which gives the Secretary of Health and Human Services broad leeway to experiment with innovative payment models. In 2024, CMS passed the Transitional Coverage for Emerging Technologies rule, but the new Innovation Access Pilot goes one step further — specifically allowing the FDA to select companies that will receive reimbursement during the premarket phase, rather than waiting for the agency to finish its review.

A Double-Edged Breakthrough Designation

The Breakthrough Devices Program was designed in 2015 to accelerate the development, evaluation, and review of medical devices that could offer a decisive advantage over existing options. Until now, that designation only affected how quickly the FDA would review an application. It did not create a right to sell or be reimbursed. Today's announcement transforms that designation from an internal review shortcut into a commercial license, albeit with certain requirements.

NovaThera's CortiLink is a brain-responsive neurostimulator intended to detect and interrupt abnormal electrical activity in the epileptic brain. According to the company, more than 3 million Americans live with epilepsy, and roughly 30% do not achieve seizure control with medication. The device delivers a targeted electrical pulse to overactive neural pathways within milliseconds of an oncoming seizure. While early evidence from a 30-patient single-site study indicated a 45% median reduction in seizure frequency, the data are still considered interim and the device carries risks including intracranial bleeding, infection, and perioperative stroke.

The FDA's decision allows Medicare to pay NovaThera approximately $48,000 per device, plus up to $27,000 for hospital and surgical fees — even though the premarket approval application has not been submitted, let alone reviewed. In internal documents, the agency noted that the device has "the potential to fulfill a significant unmet need" but acknowledged "incomplete evidence on long-term mortality and quality-of-life endpoints."

Experts Question the Precedent

The move has rattled some medical and health policy communities. Dr. Marisa Goldstein, a professor of health policy at Harvard T.H. Chan School of Public Health, told our publication: "The statutory architecture of Medicare was created to ensure that the government does not spend taxpayer dollars on products that lack rigorous proof of efficacy. The FDA does not 'pick' companies to sell unapproved devices — that is not a function granted by Congress. If this pilot is allowed to proceed, it will create a dangerous precedent in which patients become de facto research subjects, while firms collect revenue before serving a legitimate evidentiary requirement."

Other critics point to a historical parallel: In the 1990s, the agency allowed off-label sales of certain cardiac catheters under medical necessity exceptions, leading to an estimated one billion dollars of avoidable procedures and patient injuries before the FDA tightened the rules. "We've seen how quickly medical innovation can be corrupted when financial incentives are introduced before the science is settled," said James Callahan, a patient safety advocate at the Center for Promoting Medical Integrity.

However, supporters of the new arrangement counter that hundreds of devices with breakthrough status take more than a decade to reach patients, and the existing process is not agnostic to suffering. Sam Waterston, a neurosurgeon at Johns Hopkins University (who has no affiliation with NovaThera), emphasized that "some patients with intractable epilepsy are dying, and in treatment-resistant conditions, 'standard' and 'safe' are not necessarily the same. The status quo has an opportunity cost of its own. Cautious flexibility, rather than caution alone, might be the right principle."

Implications for the Medical Device Ecosystem

The selection of NovaThera is, in the FDA's own language, "a test case in a co-development framework that aligns healthcare coverage with device development from the beginning rather than the end." The agency has said it plans to select up to fifteen additional devices from diverse therapeutic categories — including chronic heart failure, type 1 diabetes, and advanced Alzheimer's disease — over the next two years.

For device manufacturers, the incentive is obvious: early commercial access to Medicare — a program that covers about 65 million Americans — could be the difference between survival and bankruptcy for a startup, particularly in a capital-intensive sector where funding for long-term clinical studies is scarce. It may also entice firms to relocate research and manufacturing to the United States, as the federal payer becomes, in effect, an early-stage venture investor.

But this new advantage comes with a blurred boundary. The word "unapproved" in the FDA's own release does careful work. It signals, lawfully, that the device has not yet been deemed safe and effective under 21 CFR Part 814, but that the administration has nonetheless determined that "the public health need justifies conditional commercial distribution under a risk-based framework." That is not a phrase commonly associated with the consumer protection tradition of the agency.

Ethically, the provision may constitute a form of "therapeutic misconception," where patients assume that a billable, physician-prescribed treatment is standard of care. Because Medicare will heavily advertise coverage for CortiLink, beneficiaries with epilepsy may be unable to distinguish between what is proven and what is experimental. Advocacy groups for epilepsy patients are split: the Epilepsy Foundation fully supports the pilot, while the National Association of Rare Neurological Disorders has expressed relief that a safety protocol to audit powered implants has been included, but has questioned the necessity of the speed.

A Calendar of Risks Ahead

The FDA and CMS have specified that NovaThera must enroll at least 10,000 Medicare patients into a real-world evidence registry over the next three years, with careful tracking of device failures and unanticipated adverse events. If 0.5% or more of recipients experience a serious device-related complication in any six-month interval, the pilot will be suspended for all patients, pending review. In addition, the agency retains the right to withdraw the company's conditional marketing letter at any time, and to issue a public recall notice.

Yet to many in the regulatory field, the absence of an institutional check is troubling. Under the U.S. Constitution and the Federal Food, Drug, and Cosmetic Act, a manufacturer may only introduce into interstate commerce a device that is "safe and effective" per the statutory definition — barring a legally authorized exception. Here, the FDA's selection is itself the exception, and the FDA cannot both write and enforce the law without clear congressional authorization. Legal scholars already predict lawsuits against the Department of Health and Human Services on the grounds that the agency has exceeded its administrative authority.

NovaThera's stock, surprisingly, fell by 8% after the announcement — likely on investor fear that liability exposure and ethical scandals could hamper uptake and push the company into an extended, high-cost period of post-market research.

What Happens Next

Medicare patients will be able to receive the CortiLink from a network of seven academic medical centers beginning Oct. 1, 2025. The FDA will host a two-day public advisory committee meeting in July to review the interim evidence and solicit input from expert panels and the public. Meanwhile, the Government Accountability Office is preparing a report on regulatory precedent and patient safety, demanded by two senators from the Senate Finance Committee.

Whether the pilot will survive legal and political headwinds is unclear. But one thing is now certain: the old assumption that FDA approval and Medicare coverage are inseparable has been quietly retired. The next few years will reveal whether this is an act of regulatory creativity or an oversight failure in the making. For millions of Americans, the answer could not be more consequential.