Policy and Medicine

States Becoming More Aggressive Prosecuting Off Label Promotion

2013-05-24T05:06:00-04:00

For the last several years, we have reported extensively about the government settlements, investigations, and prosecutions of pharmaceutical and medical device companies for various fraud and abuse, FCPA and FDA violations. Almost all of these cases has resulted in multi-billion dollar settlements, corporate integrity agreements and various other legal, regulatory and compliance obligations.

Consequently, a growing concern and trend that companies are now facing are separate and parallel civil and criminal enforcement actions at the state level for the same or similar conduct companies settled with the federal government. According to a recent article from the Wall Street Journal, “some U.S. states have become more aggressive in accusing drug makers of deceptive marketing, widening the potential liability for an industry that has shelled out billions of dollars to settle investigations led by the federal government.”

“For state officials, a key appeal of these cases is that they generally don't have to prove that a drug maker's marketing caused any specific injuries or harm. They need only convince a judge or jury that a drug's promotion was deceptive in some way.” Moreover, “Plaintiffs’ law firms have been pitching new consumer-protection lawsuits to state attorneys general,” according to David Hart, an assistant attorney in charge of the financial fraud and consumer-protection section of the Oregon Justice Department. “Some states have outsourced such litigation to outside counsel after issuing requests for proposals. Houston-based law firm Bailey Perrin Bailey has served as outside counsel for some state,” reported WSJ.

“More states feel empowered to bring these kinds of actions solo,” said Hart. Oregon is one of the most pro-active states leading the state prosecutions. In fact, Oregon is responsible for the oversight of the Consumer and Prescriber Education Grant Program, which funds groups to help reduce fraudulent marketing and other improper life-science related activities.

Examples of Parallel State Consumer Protection Actions

WSJ points out that GlaxoSmithKline (GSK), Sanofi, Bristol-Myers Squibb Co. and Teva Pharmaceutical Industries Ltd. are among the drug companies in the cross hairs of attorneys general of several states. “A key legal weapon at the states' disposal: consumer-protection laws that have traditionally been used to go after abusive debt collectors or deceptive car sellers,” WSJ writes.

Some allegations of consumer-law violations by drug makers have been resolved in multistate settlements—the size of which have grown steadily in recent years. For example, in 2012, Johnson & Johnson agreed to pay $181 million to settle consumer-protection claims by 36 states and the District of Columbia to resolve allegations the company promoted the antipsychotic Risperdal for unapproved uses. The company did not admit wrongdoing or violations of any law or regulation, saying it agreed to the pact to avoid further litigation.

However, “some states have chosen to go it alone, a strategy that has resulted in hefty single-state awards and settlements in recent years,” the author writes.

For instance, J&J is appealing an Arkansas’ judge’s $1.2 billion penalty assessed in 2012 after a jury found the company violated state consumer protection and Medicaid-fraud laws in its marketing of Risperdal. The case was brought by the Arkansas attorney general. The appeal is pending in the Arkansas Supreme Court.

A unique aspect of this case was that a “portion of the Arkansas Risperdal penalty was calculated by applying a fixed amount to each of about 4,570 letters J&J sent to doctors in 2003 containing information about Risperdal’s safety. The FDA concluded these letters didn't adequately convey the risk of elevated blood sugar associated with Risperdal.”

A lawsuit with allegations similar to the Arkansas case resulted in a $258 judgment against J&J in 2010 in Louisiana. The judgment was upheld by one appellate court and is pending before the Louisiana Supreme Court. Additionally, J&J is appealing a $327 million penalty awarded by a state judge in 2011 in a Risperdal lawsuit. The case is pending at the South Carolina Supreme Court, which heard arguments last month.

A J&J spokeswoman noted that claims over Risperdal marketing brought by state officials in West Virginia and Pennsylvania were dismissed. J&J last year also agreed to pay $158 million to settle a Texas lawsuit over Risperdal.

Most recently, the Kentucky Attorney General also filed a lawsuit against J&J regarding its alleged illegal promotion of Risperdal, as reported by Pharmalot.

In February 2013, attorneys general in Kentucky and Maryland filed separate lawsuits against GSK in their respective state courts, alleging the company deceptively marketed the diabetes drug Avandia. The suits say GSK “misrepresented the safety and efficacy of the drug, which has been linked to increased risk for heart attacks and strokes.” And at least five other states, including Utah, continue to pursue similar lawsuits against GSK over Avandia.

They chose to opt out of a 2012 settlement in which GSK agreed to pay $90 million to settle consumer-protection claims by 37 other states and the District of Columbia. “In the case of Avandia, we opted out of the multistate because we felt we could obtain a better result by taking our own action,” said a spokeswoman for the Kentucky Office of the Attorney General. One reason for opting out is that consumer-protection violations “have resulted in some eye-popping monetary judgments and settlements,” WSJ writes.

Other pending state consumer-protection cases include:

Attorneys general of Mississippi and West Virginia sued Bristol-Myers and Sanofi, alleging the companies falsely and deceptively labeled and promoted the blood thinner Plavix to consumer and doctors. The states allege the companies misleadingly marketed Plavix as more effective and safer than aspirin in treating patients at risk for strokes and related cardiovascular events.

The suits also allege the companies knew or should have known since 2003 that Plavix can be less effective in a subgroup of patients who metabolize it poorly. The suits allege the companies failed to disclose that information in a timely manner because they wanted to preserve Plavix sales.

BMS and Sanofi said they believe the state lawsuits over Plavix marketing have no merit, and the companies will defend themselves. The companies said some of the attorneys who have filed the lawsuits on behalf of state attorneys general are also representing private plaintiffs in personal-injury lawsuits related to Plavix. The lawsuit was moved to federal court and is still pending.

South Carolina sued Teva’s Cephalon unit in 2011, alleging it promoted drugs including wakefulness drug Provigil for unapproved uses. Teva is seeking to dismiss the lawsuit, claiming in a court document that the attorney general's hiring of an outside law firm on a contingent-fee basis violates Teva's rights to due process under the U.S. and South Carolina constitutions. The contingent-fee arrangement allows for the outside law firm to be paid a percentage of any monetary settlement or judgment, on a sliding scale. The South Carolina attorney general's office said Teva's request to dismiss the lawsuit has no merit.

Response From Industry

“The industry and its defense lawyers say the state allegations of deceptive marketing amount to overreach because there has been little evidence that patients have been harmed by the alleged conduct,” WSJ writes.

For example, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed a document supporting J&J in its appeal of the Arkansas Risperdal verdict and penalties, “arguing that the state court improperly interpreted an alleged violation of federal prescription-label standards as a violation of a state Medicaid-fraud law.” “Imposing state-law penalties on manufacturers for alleged violations of [federal drug law] raises serious legal and constitutional questions,” said PhRMA.

“I don't think the states should be looking to punish statements about pharmaceutical marketing unless they can prove that somebody was actually injured as a result of relying on the statements,” said Kenneth J. Wilbur, an attorney with Drinker Biddle who has defended drug makers including J&J in the state litigation. Wilbur said the “First Amendment’s free-speech protections should restrict the ability of states to broadly construe consumer-protection statutes against drug marketing.”

Industry defense lawyers also have argued that “federal law authorizing the FDA to regulate drugs should pre-empt state laws concerning the marketing of approved drugs whose safety and efficacy have been reviewed by the FDA.”

ACCME: Proposal for Simplifying and Evolving the Accreditation Requirements and Process for CME

2013-05-23T05:28:00-04:00

This week, the Accreditation Council for Continuing Medical Education (ACCME^®) announced a “Proposal for Simplifying and Evolving the Accreditation Requirements and Process.” The proposed changes seek to streamline the accreditation process and requirements and to strengthen support for continuing medical education (CME) as a strategic asset to health care improvement initiatives.

The proposal is based on the ACCME Board of Directors’ strategic planning, the ACCME’s experience evaluating providers under the 2006 Accreditation Criteria and analysis of accreditation data, and feedback from stakeholders.

The ACCME is asking stakeholders to review the proposal and submit their feedback. The proposal, supporting materials, and a survey have been posted here. Feedback, which can be submitted here, is due by July 2, 2013.

The ACCME will also hold a free webinar today, May 23, from 1:00 to 2:00 PM, EST, to explain the proposal and answer stakeholders’ questions.

The proposal builds on the success of accredited CME providers in achieving the ACCME’s expectations under the current accreditation requirements. These requirements have been in place since 2006 with no substantive changes. When the ACCME released the 2006 Accreditation Criteria, its goal was to position CME as a strategic asset to US health care quality improvement efforts. “Accreditation data shows that providers are facilitating practice-based education that supports health care professionals’ commitment to lifelong learning.” Accredited CME providers are partnering with quality initiatives within their institutions, health systems, and communities. Accredited providers have successfully demonstrated that CME is a Bridge to Quality™.

“This proposal demonstrates the commitment of the ACCME and its stakeholders to continuous improvement. Since its founding in 1981, the ACCME has focused on setting and maintaining accreditation requirements that are relevant to health professionals’ lifelong learning needs and responsive to changes in the health care environment. The proposed changes build upon this strong foundation and continue the evolution of the ACCME accreditation system,” said James F. Burke, MD, Chair, Board of Directors, ACCME.

“The ACCME and its stakeholders believe that it is important to simplify the accreditation requirements and process while maintaining high standards and continuing to respond to the evolving health care environment. There is a growing momentum in the ACCME accreditation system and we want to foster this evolution of accredited CME. We look forward to stakeholders’ responses and our continued dialogue about shaping the future of our CME system,” said Murray Kopelow, MD, President and CEO, ACCME.

“The proposed simplification of the requirements and process will make a real and positive difference to accredited providers. The changes will facilitate the development of CME that matters to patient care,” said Billie Dalrymple, Director, CME Department, Texas Medical Association (TMA). TMA is an ACCME Recognized Accreditor. (Recognized Accreditors are state or territory medical societies that accredit intrastate organizations offering CME. All CME providers within the ACCME accreditation system follow the same requirements).

Standards for Commercial Support

The ACCME made several proposed updates to its Standards for Commercial Support (SCS). Specifically, the ACCME proposed edits to Standard 4.3 and the related edits to Standard for Commercial Support 6.4 and the Commercial Support Acknowledgment Policy. The ACCME is proposing that:

SCS 4.3: Educational materials that are part of a CME activity, such as slides, abstracts and handouts, cannot contain any advertising, corporate logo, trade name or a product-group message of an ACCME-defined commercial interest.

SCS 6.4: ‘Disclosure’ must never include the use of a corporate logo, trade name or a product-group message of an ACCME-defined commercial interest.

Explanation: In 2011, the ACCME decided to prohibit the use of corporate logos of ACCME-defined commercial interests in commercial support acknowledgment. The ACCME issued a formal call for comment, as required by the ACCME’s Rule-making Policy. The Board deferred implementation of the policy change while the ACCME was engaging in discussions with stakeholders regarding simplifying and evolving the accreditation requirements and process. Now that these discussions have progressed, the ACCME is planning to take the necessary steps to ensure that corporate logos, as a form of corporate branding, will not be included in educational materials. With this change, the corporate logos of ACCME-defined commercial interests could not be used in educational materials, disclosure, and acknowledgment of commercial support.

Several CME stakeholders asked for clarification about whether in an exhibit area, a CME provider may use corporate logos on signs thanking exhibitors and supporters. In response, Dr. Murray Kopelow, ACCME Chief Executive, told Sue Pelletier at Meetings.net, that

"Nothing in the exhibit hall can be, or is, part of the program of accredited CME. No sign in the exhibit hall fulfills any ACCME CME requirement. Nothing in the exhibit hall is overseen by the ACCME. As a result, no sign in the exhibit hall would ever be reviewed for compliance with the ACCME’s requirements nor be allowed to fulfill an ACCME requirement. Signs in an exhibit hall announcing, or reporting, commercial support is not an ACCME-required acknowledgement of commercial support.”

Related to this proposed change, the ACCME is also proposing that the “acknowledgement” of commercial support “may not include corporate logos and slogans.”

In addition, the ACCME is proposing using the term “providership” instead of “sponsorship” with regards to CME activities. Specifically, the proposal states that the ACCME defines joint providership as the sponsorship of a CME activity by one accredited and one nonaccredited organization. Therefore, ACCME accredited providers that plan and present one or more activities with non-ACCME accredited providers are engaging in “joint providership.” Please note: the ACCME does not intend to imply that a joint providership relationship is an actual legal partnership. Therefore, the ACCME does not include the words partnership or partners in its definition of joint providership or description of joint providership requirements.

Explanation: In 1998, the ACCME stopped using the term sponsor to refer to accredited providers in the ACCME requirements except when using the term joint sponsorship. In order to be more consistent with our own terminology and with the terminology used by other accreditors, we propose to modify the wording in our requirements. The ACCME edited the policy below as an example of this proposed change. The ACCME proposed updating the terminology using “providership” in several other places as well.

Other Proposed Changes

The ACCME also made several other proposed changes.

CME Activity Formats: the ACCME proposed removing some of the special requirements related to activity formats, which pre-date the current ACCME Accreditation Criteria. This includes removing language and requirements from

Enduring Materials
Internet Material
- The ACCME removed language which stated that all required ACCME information be communicated to the learner prior to the learner beginning the CME activity
- It also proposed removing information about
  - Hardware/Software
  - Provider Contact Informatino
  - Policy on Privacy and Confidentiality; and
  - Copyright
Journal CME
- The ACCME removed language noting that CME content, post-tests, and education evaluation all be communicated before an activity that is journal based
Regularly Scheduled Series (RSS)
- The ACCME also proposed removing language about the required monitoring system for RSS

Application

The ACCME is proposing to change the application process for initial applicants so that providers seeking accreditation would only be required to have a CME activity reviewed before full accreditation, removing the requirement of a survey of a providers administrative office.

Performance-in-Practice Review

In response to requests from the CME community, the ACCME proposed offering an abstract for accredited providers to use when verifying performance-in-practice. This abstract would take the place of labels and facilitate the process of verifying performance-in-practice. ACCME prepared a draft version of the abstract for review, which appears on the last page of the new proposal. It provides instruction and fields to insert narrative; this narrative would replace the submission of additional documentation from activity files. It also includes specific instructions for submitting attachments that are needed for verification. The purpose of this abstract is to clarify and simplify the performance-in-practice review process.

Accreditation with Commendation

The ACCME proposed removing several criterion (4, 13-16, and 18) to remove redundancies and streamline the Criteria while maintaining the continuous improvement model and the high standards that are essential for designing and implementing independent, effective, and relevant CME. These changes would reduce the number of criteria required for accreditation from 15 to 11. ACCME proposed the following replacements:

The provider routinely demonstrates and promotes interprofessional collaborative practice in the operation of its CME program and in the design and implementation of its educational activities.
The provider routinely incorporates patient data (for example, data from registries or electronic health records) into the process for identifying professional practice gaps and educational needs.
The program of CME conducts assessments of the individual’s professional competence and performance and designs and implements individualized learning activities to address the needs that were identified through the assessments

From these new criterion, the ACCME is proposing the creation of a “menu of options.” From this list, accredited providers would choose the specific criteria that they would meet in order to be eligible for Accreditation with Commendation. Different providers could choose different criteria, but all providers would have to meet the same number of criteria. The purpose of a menu of options would be to reflect the strength of the diverse community of CME providers, offer more flexibility, and promote innovation and creativity. The ACCME would need to work out the details:

how many criteria would be included as options,
how many criteria would providers have to meet,
how compliance would be measured.

The ACCME would need to work out a timeframe for implementation enabling providers to continue to be eligible for Accreditation with Commendation under the current criteria during the transition period. Accordingly, the ACCME is asking whether CME providers see value in the concept of a menu of options.

Physician Payment Sunshine Act: Fraud and Abuse Implications of Sunshine

2013-05-22T05:50:00-04:00

A recent article written by Kelly M. Cleary, a lawyer from Akin Gump Strauss Hauer & Feld, discussed some of the potential federal and state healthcare fraud issues that may be implicated by the Sunshine Act. We previously wrote back in 2011 about these risks, but this update is timely and provides added analysis about potential implications for physicians, teaching hospitals, and applicable manufacturers.

Fraud and Abuse Implications of Sunshine

The Sunshine Act or “transparency initiative” is supposed to “allow patients to better understand the financial relationships their doctors may have with the drug and device industry, question whether financial relationships might negatively affect their course of treatment, and, ultimately, make better informed decisions.” However, as Cleary points out, “It remains unclear how, if at all, patients will use this information or alter their behavior based on these disclosures.”

While Charles Ornstein, a reporter at ProPublica who runs the Dollars for Docs campaign recently noted that the database attracted more than 5 million page views, a recent survey from Kaiser shows that “42 percent of the public does not know the Affordable Care Act is still law of the land and is being implemented.” Thus, almost half of America does not even know the Sunshine Act exists, and it is highly unlikely that of the citizens who know the ACA is law, they even have a clue what the Sunshine Act is—particularly since most physicians don’t even know about the Sunshine Act, so how could they even tell their patients?

Additionally, only about one in 10 Americans report getting information about the reform law from federal agencies, such as the U.S. Department of Health & Human Services, so how will anyone even know when these payments are published and how to use the site? There is a high likelihood, however, that the Obama Administration will use funds to educate consumers about the Sunshine Act through its OpenPayments website.

Regardless of whether tax-paying patients will use the database they are paying for, Clearly recognized that others will almost certainly be using this data including “law enforcement entities charged with ferreting out fraud and abuse, lawmakers critical of physician-industry ties, and whistleblowers looking to make a profit.”

“Could the public reporting of these financial relationships invite enhanced scrutiny from state or federal investigators, lawmakers, and even private citizens? How might the public reports be used to combat fraud and abuse in government health care programs?” Her article “explores some of these issues and addresses how this new nationwide reporting system might impact enforcement of state and federal fraud and abuse laws.”

For example, given that the Sunshine Act was drafted by Senator Grassley (R-IA) and former Senator Kohl (D-WI), there is a high likelihood that Grassley and other Senators or Congressmen will use the Sunshine data to continue exposing potential conflicts of interest or inappropriate financial ties—holding more hearings or conducting more investigations.

Consequently, the increased scrutiny and transparency rules may have a negative effect on research and innovation. For example, “medical device companies rely on physician-owned startups for many of the patents that drive innovation at large companies, but rules that govern the relationships between physicians and device makers may cool those relationships, researchers warned.”

A recent study conducted by Wolters Kluwer Health concluded that patents emerging from physician-owned startup companies more frequently supported premarket approval applications filed with the FDA than patents generated by non-physician-owned startups. Various types of financial relationships between physicians and medical device manufacturers are common, but are increasingly subject to policies regarding disclosure of potential conflicts of interest,” according to a press release.

“The new findings raise concerns that, if conflict of interest rules are too tight, they could have the unintended effect of slowing the pace of new advances in the medical device industry.” While “transparency rules may engender more trust among patients and consumers, they could harm innovation if companies drift away from investment in physician-owned startups.”

Anti-Kickback Statute and False Claims Act

Given the increased focus on reducing waste and abuse in the health care system, and fighting fraud, on both the state and federal level, government agencies will use the Sunshine database to “identify unusual billing patterns and provider linkages that may be evidence of fraud.” The government has touted its use of data mining in identifying high-risk practices and the Sunshine Act database will be no exception, particularly with the reporting of physician’s specialty, NPI #, and the product associated with a transaction.

In addition, “Taxing authorities also may look to these reports and compare the information in the reports to what individual physicians are reporting as their income. Because these reports will include both monetary and non-monetary transfers of value, physicians will need to be extra diligent about keeping track of what payments they receive from industry and reporting them as income where appropriate.”

The Sunshine Act does not outlaw physician-industry relationships and CMS made clear in its final rule that “the inclusion of a payment or transfer of value, or an ownership or investment interest, in the public database does not necessarily mean that the parties were engaged in any wrongdoing or illegal conduct.” However, CMS recognized that reporting a payment in compliance with the law will not protect parties from liability under other laws, including the Anti-Kickback Statute (AKS) and the False Claims Act (FCA). “Several states also have similar laws in place aimed at combating fraud and abuse in the health care industry,” Clear notes.

Under the AKS, “otherwise beneficial financial relationships may violate the law … if the providers are being paid as part of an inducement to, or a reward for, referring patients to or recommending the manufacturers’ products.” “The AKS is a criminal statute that prohibits the knowing or willful receipt or payment of anything of value to influence the referral of federal health care program business.”

“The government has recognized that certain types of arrangements are common in the industry and present a low risk of fraud and abuse, and has created a number of safe harbors that offer protection for those arrangements that meet all of the required elements. For example, the safe harbor for personal services safe harbor can protect properly structured physician consulting agreements from scrutiny.”

However, Clearly recognized that “even contractual arrangements that appear to conform to a safe harbor’s requirements can still come under scrutiny if, for instance, the payments exchanged are excessive in amount, there is no legitimate need for the services contracted, or the physician does not perform the services for which he or she is being paid.”

Violations of the AKS are punishable by up to five years in prison, criminal fines up to $25,000 per violation, administrative civil money penalties up to $50,000 per violation, and exclusion from participation in federal health care programs by HHS-OIG. In addition, the Patient Protection and Affordable Care Act (PPACA)—which include the Sunshine Act (Section 6002)—made several significant amendments related to AKS enforcement that strengthened the AKS as an enforcement tool.

“First, PPACA amended the AKS to clarify that in order to violate the AKS, a person need not have specific knowledge of or intent to violate the AKS, arguably making it easier to purse and prove the intent element of an AKS violation. Second, pursuant to the PPACA amendments, any claim submitted to the government that includes items or services resulting from a violation of the AKS now constitutes a false or fraudulent claim for the purposes of the FCA.”

“The FCA imposes penalties on any person who knowingly submits or causes another to submit a false claim to the government, or knowingly makes a false record or statement to get a false claim paid by the government.” Damages can be “substantial” under the FCA, and liable individuals can “face penalties of between $5,000 and $11,000 for each false claim and treble the amount of the government’s damages.”

“Furthermore, the FCA provides a vehicle whereby private citizens can bring lawsuits on behalf of the government, by, for instance, alleging violations of the Anti-Kickback Statute. These private citizens—known as relators—stand to share in the government’s recovery if the lawsuit is a success.”

Whistleblowers and Sunshine

Clearly also explained the Sunshine Act database might make it easier for private citizens or whistleblowers to use the data to bring civil lawsuits against providers and manufacturers. “The FCA allows private citizens with knowledge of fraud to bring suit in the name of the government, and share in up to 30 percent of the government’s recovery.” We have covered numerous settlements under the FCA, such as the $3 billion GlaxoSmithKline settlement.

PPACA made significant amendments to the FCA that will make it easier for some relators to bring and maintain FCA lawsuits. Significantly, the PPACA “relaxed the public disclosure bar for qui tam relators, which prohibits qui tam actions that are based upon allegations or transactions that have been publicly disclosed in a federal civil, criminal or administrative hearing; in a congressional, Government Accountability Office, or other federal report, hearing, audit or investigation; or from the news media, unless the relator is considered to be an “original source” of the information.”

As Clearly explains, “The PPACA effectively made it easier for relators to bring lawsuits based at least in part on information found in the public domain. The old public disclosure bar had required an “original source” to have “direct” knowledge that was “independent” of the publicly disclosed information and to have provided that information to the government prior to filing suit. Under the amended language, a relator need only have independent information that “materially adds” to the public information.”

Despite these changes, Clearly maintained that “data disclosed pursuant to the Sunshine Act will likely not contain enough information to support a whistleblower lawsuit.” Specifically, Clearly explained that “FCA plaintiffs are generally held to the more rigorous pleading standards of Fed. R. of Civ. P. Rule 9(b), which require that allegations of fraud or mistake be stated “with particularity.” As a result, “a relator would need more than simply the names, provider numbers, and the fact that a payment was made. To state a claim, the relator would need some additional specific evidence that the payments themselves were kickbacks and gave rise to false claims that were ultimately submitted to the government.”

However, a former employee of a manufacturer or a colleague at a medical institution or private practice may be able to use the database combined with knowledge of a particular set of transactions, relationships or interactions to establish the required level of particularity. As Clearly noted, “A whistleblower with enough resources, could, of course, manipulate data in the transparency reports to identify potential targets for further investigation.”

Moreover, Clearly recognized that a “bigger threat … may come from those with insider knowledge on physician behavior. For example, an employee with knowledge of a particular physician or group’s prescribing practices might develop suspicions, or have existing suspicions validated, upon seeing the amount of money the physician is receiving from industry.” In these types of situations, “the transparency reports could serve as a catalyst for a potential whistleblower action, and these whistleblowers could potentially collect enough information to state a viable claim.”

Accordingly, “a relator need only have independent information that “materially adds” to the public information, thus opening the door to individuals that can mine and re-package public information in a way that materially assists the government—and, even if the public disclosure bar is violated, the government could oppose dismissal.”

Physician Payment Sunshine Act: 62% of Companies are Capturing Aggregate Spend Information

2013-05-22T05:05:00-04:00

The Center for Business Intelligence (CBI) recently reported that only 62% of companies in a recent survey are capturing aggregate spend information as it relates to Physician Payment Sunshine Act and similar state laws. 30% are only operational as it relates to states, but working on and planning to comply with federal regulations. Interestingly, the survey also showed that only 54% of sales personnel get signatures for non-HCPs (e.g., support staff) when providing a meal in an office or hospital setting.

In addition, the CBI survey showed that when handing out peer-reviewed articles inconsistent with the label due to a truly unsolicited request for such information, and in compliance with the Final FDA Guidance on Good Reprint Practices,

4% of companies required the requesting HCP’s signature prior to tendering the article, but only for sales reps
29% required a signature for both sales reps and MSLs
46% require no signature and just provide the article and document it if requested; and
21% just provide the article.

Maintenance of Certification: American Association of Physicians and Surgeons Files Anti Trust Case against American Board of Medical Specialties – States Rise Up Against Maintenance of Licensure

2013-05-21T05:45:00-04:00

The Association of American Physicians & Surgeons (AAPS) recently filed suit in federal court against the American Board of Medical Specialties (ABMS) for restraining trade and causing a reduction in access by patients to their physicians. The ABMS has entered into agreements with 24 other corporations to impose enormous “recertification” burdens on physicians, which are not justified by any significant improvements in patient care.

The AAPS, founded in 1943, is a non-partisan professional association of physicians in all types of practices and specialties across the country.

AAPS’s lawsuit, filed in the U.S. District Court in Trenton, New Jersey, seeks declaratory and injunctive relief to enjoin ABMS’s continuing violations of antitrust law and misrepresentations about the medical skills of physicians who decline to purchase and spend time on its program. AAPS also seeks a refund of fees paid by its members to ABMS and its 24 other corporations as a result of ABMS’s conduct.

ABMS has a proprietary, trademarked program of recertification, called the “ABMS Maintenance of Certification®” or “ABMS MOC®”, which brings in tens of millions of dollars in revenue to ABMS and the 24 allied corporations. “Though ostensibly non-profit, these corporations pay prodigious salaries to their executives, often in excess of $700,000 per year,” AAPS writes. But their recertification demands take physicians away from their patients, and result in hospitals denying patients access to their physicians.

More than 450,000 physicians participate in the MOC program, which ABMS says is to help assure a doctor has successfully completed a rigorous evaluation process and assures competency. The pool grows by roughly 50,000 physicians a year.

In a case cited in this lawsuit, a physician in New Jersey was excluded from the medical staff at a hospital in New Jersey simply because he had not paid for and spent time on recertification with one of these private corporations. “He runs a charity clinic that has logged more than 30,000 visits, but now none of those patients can see him at the local hospital because of the money-making scheme of recertification.”

Recertification would have exceeded 100 hours for a typical physician, “thousands of dollars in fees and travel expenses,” and time away from patients. Furthermore, the American Board of Internal Medicine earlier this month told physicians it “is requiring more frequent participation in MOC of all board-certified physicians,” the lawsuit noted.

“The suit may face headwinds if a judge follows past court rulings that generally defer to the authority of professional boards, according to a review of case law and one expert who has examined the suit,” reported Reuters. The article noted that “The 2nd U.S. Circuit Court of Appeals in 2005 rejected an antitrust challenge brought by emergency room doctors who opposed the certification requirements of the American Board of Emergency Medicine. Ruling that one purpose of antitrust law was to reduce prices for consumers, the court found that the doctors did not have legal standing to sue because their only purpose in bringing the suit was to get the same "super-competitive pay" as higher-paid, board-certified doctors.”

The Reuters articles also noted that “Two Missouri urologists who were denied hospital staff privileges because of inadequate certification lost an antitrust suit they brought. In 1993, the 8th U.S. Circuit Court of Appeals ruled that the hospital had not illegally restrained trade when it excluded them.”

“There is a worsening doctor shortage in the United States, such that the average physician has the time to spend only 7 minutes with each patient. Roughly half the counties in our nation lack a single OB/GYN physician to care for women. There are long delays to see primary care physicians in Massachusetts, and about half of them are not even taking new patients.”

AAPS maintains that MOC is against public policy and harmful to the timely delivery of medical care. AAPS’s lawsuit states, “There is no justification for requiring the purchase of Defendant’s product as a condition of practicing medicine or being on hospital medical staffs, yet ABMS has agreed with others to cause exclusion of physicians who do not purchase or comply with Defendant’s program.” AAPS adds that ABMS’s “program is a moneymaking, self-enrichment scheme that reduces the supply of hospital-based physicians and decreases the time physicians have available for patients, in violation of Section 1 of the Sherman Act.”

“ABMS does the public an additional disservice by inviting patients to search on which physicians have “recertified” and which ones have not, despite the lack of evidence that there is any difference in malpractice rates between the two categories. ABMS should try to make money by helping patients, rather than disparaging the many thousands of good physicians who spend their time caring for patients rather than on ABMS’s self-serving recertification scheme,” AAPS writes.

A recent survey by AAPS showed that only 9.5% of 167 respondents thought that “maintenance of certification is good; we should support it.” In an earlier survey, only 22% of physicians who had been through the process said they would voluntarily do it again. The same survey showed that pmore than 90% feel that the MOC program is unjustified.

In a MedPage Today survey, 52% of readers said that maintenance of certification is good for patient care, but the rest question its value. “Most of those who commented on our survey question were physicians or other healthcare professionals, which indicates the passion of this topic among healthcare providers -- as does the 2,600-plus votes the survey attracted.” Commenters pointed out “the lack of evidence that certification is associated with consistent competence in patient care by either physicians, physician assistants, nurses, or nurse specialist assistants.”

As reported by Medpage Today, the ABMS defended its MOC program, saying in an eight-page “myths and facts” document posted March 20 on its website that the program is “anchored in evidence-based guidelines, national clinical and quality standards, and specialty best practices.”

“Because the MOC program is relatively new (as it has been introduced gradually during the past decade), we don't yet have evidence that results from decades of gathering data, but the data are emerging,” the ABMS said. “Early studies show a link between MOC and improved clinical performance and outcomes by participating physicians.”

MedPage Today also pointed to a health policy reported published in December 2012 in the New England Journal of Medicine (NEJM), which examined physician concerns about MOC expense and the time-consuming process. “Only 1% of nearly 67,000 such physicians holding only time-unlimited certificates from the American Board of Internal Medicine have been re-certified through MOC, they said in the December piece.”

“MOC fees charged by boards over a 10-year period range from $4,820 from the American Board of Plastic Surgery to $1,250 from the American Board of Surgery,” MedPage reported.

New York and Ohio

In addition to the New Jersey Lawsuit, the AAPS recently reported that New York State opposed the Federation of State Medical Board’s (FSMB) new maintenance of licensure requirements (MOL) which are planned for implementation in all states. At the 2013 Medical Society State of New York (MSSNY) House of Delegates meeting, the following MOC/MOL resolutions were adopted.

Maintenance of Licensure (MOL):

RESOLVED, That MSSNY oppose any efforts by the New York State Education Department, Office of the Professions, to require the Federation of State Medical Boards (FSMB) maintenance of licensure (MOL) program as a condition of medical licensure.

Maintenance of Certification (MOC):

RESOLVED, That the Medical Society of the State of New York acknowledges that the certification requirements within the Maintenance of Certification process are costly, time intensive and result in significant disruptions to the availability of physicians for patient care; and be it further

RESOLVED, That MSSNY acknowledges and affirms the professionalism of individual physicians to self-determine the best means and methods for maintenance of their knowledge and skills; and be it further

RESOLVED, That MSSNY communicate to the American Medical Association (AMA) and American Board of Medical Specialties (ABMS) examples of disproportional fees, onerous time requirements and unnecessary fragmentation of commonly recognized specialties; and be it further

RESOLVED, That MSSNY oppose mandating Maintenance of Certification until such time as evidence-based research demonstrates MOC is linked to improved patient outcomes; and be it further

RESOLVED, That a copy of this resolution be transmitted to the AMA House of Delegates for its consideration.

In Ohio, physicians recently adopted the resolution that the “Ohio State Medical Association (OSMA) insists that lack of specialty board certification does not restrict the ability of the physician to practice medicine in Ohio.” Last year, Ohio Physicians passed a resolution opposing maintenance of licensure, which derailed attempts to impose onerous new MOL requirements on physicians. Michigan and Texas have also passed resolutions.

AAPS said it is currently conducting a survey to collect information on total actual costs imposed on physicians as a result of new MOC requirements.

AAPS encouraged more physicians to work within their local and State Medical Societies to pass resolutions opposing mandatory maintenance of certification and the new onerous FSMB maintenance of licensure requirements. AAPS provided a model letter, which physicians can copy or modify for use in educating other physicians, as well as model resolutions opposing MOC and MOL.

AAPS also has model legislation for use in your state, to prohibit the medical board from imposing new MOL requirements.

In addition, the Benjamin Rush Institute recently held a debate about MOC, held at the University of Pennsylvania, which is available here and a summary is here.

Physician Payment Sunshine Act: Washington Legal Foundation Comments Question the Constitutionality of Reporting for Reprints and Textbooks

2013-05-20T05:29:00-04:00

The Washington Legal Foundation (WLF) submitted comments to the Centers for Medicare & Medicaid Services (CMS) regarding the final rule on the Physician Payment Sunshine Act. Specifically, WLF made extensive comments about CMS’ failure to “include medical textbooks within the definition of ‘educational materials that directly benefit patients,’” raising several issues under the First Amendment.

The WLF is a public interest law and policy center with members and supporters in all 50 States, including many patients and physicians who seek unfettered access to truthful information about well-recognized medical treatments. WLF has devoted substantial resources over the years to promoting the free speech rights of the business community, appearing before numerous federal courts in cases raising First Amendment issues. In fact, WLF played a critical role in the Sorrell v. IMS Health Inc. and United States v. Caronia cases.

Background

On February 8, 2013, CMS announced its determination that medical textbooks do not fall within the statutory exclusion for “educational materials” and thus that gifts of medical textbooks are reportable under the Act.

WLF noted that numerous commenter’s urged CMS to determine that medical textbooks fall within the statutory exclusion and that a number of individuals and textbook publishers have contacted CMS to argue that:

(1) CMS’s interpretation of the educational materials exclusion is based on a misunderstanding of congressional intent;

(2) CMS’s classification of medical textbooks under the Act is inconsistent with its classification of other educational materials;

(3) medical textbooks are impartial and important sources of medical information for doctors and thus are essential for optimal patient care; and

(4) if medical textbooks are deemed reportable under the Act, patient care will suffer because most drug companies will cease providing textbooks as gifts and most doctors will become unwilling to accept such gifts.

WLF agreed with these concerns but also focused on an additional issue: applying the reporting requirements to medical textbooks would constitute a serious infringement on the First Amendment rights of pharmaceutical companies to disseminate medical texts and the First Amendment rights of doctors to receive such information.

“Both groups have strong reason to believe that they will be subject to harassment and/or investigation if forced to report such speech activity to CMS, with the result that their speech will be chilled considerably,” WLF writes. The U.S. Supreme Court has repeatedly held that disclosure requirements of this sort are subject to “exacting scrutiny” and can pass muster under the First Amendment only if shown to serve important government interests that outweigh the burdens they impose on speakers.

WLF has seen no indication that CMS has given any consideration to the First Amendment implication of its interpretation of the Act’s educational materials exclusion. For example, there is no indication that CMS is even aware that the Food and Drug Administration (FDA), as a result of its ill-considered attempts in the 1990s to restrict manufacturer dissemination of medical textbooks, is subject to a permanent federal court injunction that imposes strict limits on any such restrictions. See Washington Legal Found. v. Friedman, 13 F. Supp. 2d 51, 73-74 (D.D.C. 1998) (“WLF I”), appeal dism’d, 202 F.3d 331 (D.C.Cir. 2000) (“WLF III”).

While WLF has no objections to CMS’s decision to begin enforcement of other portions of the Act’s reporting requirements effective August 1, 2013, WLF urges CMS to “delay any decision to apply the reporting requirements to medical textbooks until it has had an opportunity to examine the First Amendment implications of such a decision.” Specifically, they urge CMS to “investigate whether such a decision would (as many observers have predicted) result in a significant reduction in manufacturer dissemination of medical textbooks; if so, then CMS’s policy almost surely could not withstand First Amendment scrutiny.”

Otherwise, WLF warned that CMS will likely find itself the target of a First Amendment lawsuit by affected parties. Below is a brief summary of the comments WLF submitted.

The Distribution of Medical Textbooks Is Speech Protected by the First Amendment

After giving some background on the PhRMA Code of Interactions with Healthcare Professionals, WLF noted that many of the payments reportable under the Sunshine Act, such as meals, travel, etc., have no communicative component, and thus do not implicate First Amendment concerns. On the other hand, “a gift of a medical textbook clearly does implicate such concerns; the sole purpose of disseminating a textbook is to convey the ideas contained therein, and it possesses value solely by virtue of the value of those ideas.”

Citing Sorrell, WLF recognized that the “U.S. Supreme Court has explicitly held that the speech of pharmaceutical companies to doctors – even speech designed solely for the purpose of selling a product – is entitled to First Amendment protection.” WLF emphasized that “federal courts have repeatedly rejected federal government arguments that the First Amendment is inapplicable to its regulation of the expressive activity of a drug company because (the government asserts) its regulation focuses on the company’s commercial conduct, not its speech.

For example, in rejecting that government argument raised in response to WLF’s challenge to FDA restrictions on dissemination of medical textbooks to doctors, a federal district court stated:

[T]he activities at issue in this case are only “conduct” to the extent that moving one’s lips is “conduct,” or to the extent that affixing a stamp and distributing information through the mails is “conduct.” . . . This court is hard-pressed to believe that the agency is seriously contending that “promotion” of an activity is conduct and not speech, or that “promotion” is entitled to no First Amendment protection.

WLF further asserted that the “First Amendment provides particularly strong protection to the speech at issue here because all concede that medical textbooks are truthful and (because they are prepared by reputable, independent medical publishers) are unbiased.” Moreover, citing FDA’s 1996 guidance document on dissemination of textbooks, FDA observed that “[t]hese tests typically discuss a wide range of medical diagnoses and treatments, including drug product utilization, surgical techniques, and other medical topics, and are often useful to clinicians in the practice of medicine.” Accordingly, WLF maintained that “any federal regulations that inhibit distribution of medical textbooks are subject to First Amendment scrutiny.”

“CMS should be aware that the federal courts struck down FDA’s Textbook Guidance on First Amendment grounds and permanently enjoined its enforcement. The district court later clarified that its injunction applied not only to the Textbook Guidance itself but also to any subsequent documents that purported to adopt the policies of that document.”

Moreover, while the Sunshine Act’s intent is to bring transparency to certain payments or transfers of value that may amount to kickbacks or other inappropriate relationships or conflicts of interest, WLF recognized that medical textbooks do not pose such risk. Specifically, WLF cited to FDA’s limited definition of what it deemed to constitute a medical textbook, as follows:

“The reference text should not have been written, edited excerpted, or published specifically for, or at the request of a drug, device, or biologic firm, unless the text was prepared in a manner that results in a balanced presentation of the subject matter,” and “The content of the reference text should not have been reviewed, edited or significantly influenced by a drug, device, or biologic firm, or agent thereof, unless the text was prepared in a manner that results in a balanced presentation of the subject matter.”

Although CMS Is Not Banning Speech, It Is Substantially Burdening Speech, and Such Burdens Are Subject to First Amendment Constraints

Although the Act’s reporting requirement includes an explicit exemption for “educational materials that directly benefit patients,” 42 U.S.C. § 1320a-7h(e)(10(B)(iii), WLF noted that “CMS has interpreted that exemption as being inapplicable to medical textbooks.” While the disclosure requirement does not “flatly prohibit any speech” and manufacturers may still “freely distribute medical textbooks ,” WLF recognized that “courts have repeatedly held that mandatory disclosure of expressive activity imposes a burden on the expressive activity and thus is subject to First Amendment constraints.”

In fact, WLF maintained that the “First Amendment scrutiny is at its highest when, as here, the speech is truthful and seeks to convey information that is of significant public interest – in this case, information critical to the effective delivery of medical care.” Although drug manufacturers are commercial entities, WLF argued that “there is no plausible basis for asserting that their distribution of medical textbooks constitutes “commercial speech” – a category of speech that is entitled to a lessened (but still substantial) degree of First Amendment protection.”

“Moreover, the public importance of the information conveyed in a medical textbook is not reduced simply because a doctor receives the textbook as a gift from a drug company rather than by purchasing it with his own funds” (citing various Supreme Court cases).

WLF then outlined the standard Courts use to determine the constitutionality of a disclosure requirement, which balances (on the one hand) the burdens that the requirement imposes on speakers, against (on the other hand) the government interests allegedly served by the requirement. Specifically, quoting the Supreme Court:

We have repeatedly found that compelled disclosure, in itself, can seriously infringe on privacy of association and belief guaranteed by the First Amendment. As a result, we have closely scrutinized disclosure requirements. . . . To survive this scrutiny, significant encroachments “cannot be justified by a mere showing of some legitimate government interest.” Instead, there must be a “relevant correlation” or “substantial relation” between the governmental interest and the information required to be disclosed, and the government interest “must survive exacting scrutiny.” That is, the strength of the governmental interest must reflect the seriousness of the actual burden on First Amendment rights.

Based on this legal balancing, WLF argued that “the disclosure requirement will severely burden the First Amendment right of drug and device companies to disseminate medical textbooks – even to the point of causing all such dissemination to cease,” and that there is no “substantial government interest that would be served by applying the Act’s disclosure requirement to medical textbooks.”

The Disclosure Requirement Imposes a Substantial Burden on the Right to Speak by Distributing Medical Textbooks

WLF noted that the Sunshine Act will require manufacturers to keep track of every medical textbook they disseminate, because every textbook has a retail value that exceeds the Act’s $10 threshold, and they will have to track such textbooks for the $100 annual aggregate purpose. Doctors will also have to keep detailed records regarding any textbook they are given, so that they can be in a position, if necessary, to dispute HHS reports regarding gifts they have received. This, as the American Medical Association (AMA) noted in its comments on the proposed Sunshine rule, would impose a significant time and resource burden on physicians that CMS “greatly underestimated.” Manufacturers, of course, will face significant penalties—up to $1.15 million per year—for failing to make required reports.

As a result, WLF maintained that this provision will cause a “significant reduction in speech,” as “Manufacturers will be able to reduce compliance costs and potential fines by reducing the number of medical textbooks they disseminate.” Moreover, doctors will reduce compliance costs by declining to accept medical texts and will also decline such texts to avoid inclusion of their names on public lists of doctors who are accused of being on the “payroll” of pharmaceutical companies.

“While many doctors wish to receive the information contained in medical textbooks, their willingness to exercise their First Amendment rights to receive such information is greatly tempered by an unwillingness to expose themselves to the potential harassment and censure that can accompany inclusion on lists of doctors who received payments from drug or device companies,” WLF wrote. For example, doctors will “quickly forgo receipt of [medical textbooks] if they conclude that accepting the information will lead to any amount of harassment”

In addition, WLF argued that the legislative history of the Sunshine Act “confirms that Congress required disclosure not so that patients could use the information as part of a careful evaluation of which doctors to use, but to discourage doctors from accepting gifts that lack an educational purpose.” Further, “[t]here is little evidence that Congress intended to single out textbook dissemination and other expressive activities for special disapprobation, but the effect of the Act (as interpreted by CMS) is to burden this expressive activity to such an extent that much of the activity will cease,” WLF wrote.

WLF emphasized further that the burdens on speech “are also particularly onerous because the Act is being applied to speech whose truthfulness CMS does not contest.” Additionally, WLF recognized that the “burdens that CMS is imposing on speech rights are also subject to special scrutiny” because “Anyone other than a drug or device company is free to distribute medical textbooks to doctors without being burdened by the Act’s reporting requirements. Only the speech of drug and device companies is subjected to special disapprobation.” The Supreme Court has repeatedly subjected such “speaker-based restrictions” to heightened First Amendment scrutiny (citing Sorrell).

Application of the Act to Medical Textbooks Does Not Serve Any Substantial Government Interests

WLF explained that the principal government interest served by the Act is the “prevention of corruption.” CMS, which provides billions of dollars each year to reimburse the costs of medical devices and prescription drugs, “has a strong interest in ensuring that a doctor prescribes use of medical products only when their use is indicated, and not because the doctor has been bribed to write such a prescription.” By requiring drug companies to report to HHS gifts they make to doctors, “the federal government can ascertain which doctors are receiving inordinately large gifts and thus can more easily ascertain whether a doctor’s prescription-writing practices have been corrupted.”

They argued that the “likelihood that a gift of a medical textbook could corrupt a doctor’s prescribing practices is negligible,” noting that even the most expensive medical textbooks supplied by drug companies to doctors cost only a small fraction compared to travel or research. This is important, as WLF noted, because the Supreme Court has generally limited disclosure for purposes of deterring corruption for “large” expenditures that legitimately could be viewed as having the potential to corrupt.

WLF notes that it is “ironic that CMS has interpreted the Act as prohibiting dissemination of a medical text only if it has real medical value. A book has value only to the extent that the book contains valuable information. Thus, a drug company sales representative need not report that, during one of his sales visit to the doctor’s office, he has left off a copy of a promotional brochure regarding one of his company’s drugs or a Harlequin romance novel, because no doctor – or anyone else – would value the material as exceeding the Act’s $10 reporting threshold.”

“It is only because doctors and their patients can actually make use of information contained in bona fide medical textbooks that doctors (and the market in general) assign a sufficiently large value to the textbooks to render them reportable. Yet, CMS has produced no evidence – and WLF is not aware of any – that the modest value of a single copy of a medical textbook is sufficient to tempt a doctor to adopt corrupt prescribing practices.”

Moreover, WLF notes that other than “an interest in preventing fraud, the Act serves no legitimate government interest. Congress never attempted to justify the Act based on its informational value – that is, that patients might use the information contained in HHS reports in deciding which doctor to choose.”

CMS Can Avoid First Amendment Difficulties by Construing the Act as Inapplicable to Medical Textbooks

WLF next maintained that there is no language in the Act that can be construed as a “clear indication” that Congress intended to require that medical textbooks be included in the reporting requirement. Although the Act requires that “payments or other transfers of value” from drug companies to doctors be included in annual reports submitted to HHS, it explicitly excludes from the reporting requirement “educational materials that directly benefit patients or are intended for patient use.”

By all accounts, medical textbooks supplied by drug companies to doctors “directly benefit patients” – doctors regularly use information gleaned from the textbooks in their treatment of patients, and they often show the textbooks to patients while explaining treatment options. At the very least, therefore, there is a plausible statutory basis for exempting medical textbooks from the Act’s reporting requirement. By adopting that construction of the Act, courts could avoid the serious constitutional questions that they would otherwise be required to confront.

WLF argued that “because the only value of information contained in a medical textbook derives from a doctor’s ability to use that information in treating patients, the relationship between a medical textbook and benefits to patients is far closer – and thus is the sort of educational material that most people would consider to be of “direct” benefit to patients.” Thus, CMS’ interpretation was not the most natural reading of “directly benefits patients”, particularly in light of evidence that patients derive numerous benefits from the medical textbooks disseminated to doctors.

Proposed FDA Guidance on Financial Disclosure and the Physician Payment Sunshine Regulations – Divergent Paths and Duplicated Efforts

2013-05-17T05:25:00-04:00

(This article is adapted from a research paper written by Abraham Gitterman, Research Associate at Rockpointe who graduates today from the University of Maryland, Francis King Carey School of Law.)

In 1999, the Food and Drug Administration (FDA) began collecting financial disclosure information of clinical investigators. In 2001, FDA issued a Guidance for Industry: Financial Disclosure by Clinical Investigators to assist manufacturers with determining what to report in FDA applications for product approval. In 2011, FDA released draft guidance to update the 2001 guidance, in response to issues raised by a report from the Office of the Inspector General(OIG) for the Department of Health and Human Services (HHS).

In February of this year, FDA finalized this guidance, after considering 13 comments from individuals and entities. The guidance comes in a question and answer format.

The timing of the final guidance comes at an interesting time: the same month that CMS issued its final rules to implement the Physician Payment Sunshine Act, which will make most, if not all payments to clinical investigators from manufacturers, public—although on a delayed schedule (see our story on Sunshine Research payments). Comments on the final guidance can be submitted here.

Interestingly, the final FDA guidance highlights the unique regulatory regimes that clinical investigator face when it comes to disclosing financial conflicts of interest (FCOI). There are now three sets of regulations and accompanying guidance that researchers must follow—in addition to any institutional or professional disclosure obligations—National Institutes of Health (NIH), FDA, and Sunshine. While FDA’s guidance does not reference NIH or Sunshine regulations, it is likely that federal prosecutors and these agencies will make use of each other’s data once it is publicly available through the Sunshine database.

This article discusses some of the interplaying and overlapping requirements, points out several differences, and highlights implications and problems such differences may create for researchers.

FDA Guidance and Regulations

The guidance describes: (1) The sponsor’s responsibility to collect the financial disclosure information prior to an investigator participating in a study and ensure that all required forms and attachments are submitted in marketing applications, (2) what is meant by “due diligence” in obtaining financial disclosures from investigators, and (3) how FDA will review financial disclosure information. FDA also reiterates its policy on public release of individual clinical investigator financial disclosure information and states its intention to provide summary information about clinical investigator financial interests/arrangements in the new product reviews FDA posts for an approval decision.

FDA’s Financial Disclosure by Clinical Investigators regulation requires applicants who submit a marketing application for a drug, biological product or device to submit certain information concerning the compensation to, and financial interests and arrangements of, any clinical investigator[1] conducting clinical studies covered by the regulation.[2] The regulation applies to any clinical study (foreign or domestic) of a drug, biological product or device in humans submitted in a marketing application or reclassification petition that the applicant or FDA relies on to establish that the product is effective (including studies that show equivalence to an effective product) or any study in which a single investigator makes a significant contribution to the demonstration of safety (such as a safety study designed to address a particular safety concern and conducted by a small number of clinical investigators).[3]

Sponsors are not required to submit such information for clinical investigator financial interests or arrangements in IND or IDE applications, however, they must collect the required information before a clinical investigator participates in a clinical study and submit this information when the applicant submits a marketing application containing the results of the covered clinical study.[4] FDA considers the financial disclosure information and the methods the sponsor used to minimize bias during the review of marketing applications to assess the reliability of the clinical data.[5] FDA promulgated such regulations in 1999 in part because the Office of the Inspector General (OIG) of HHS reported in June 1991[6]that FDA failed to have a mechanism for collecting FCOI information and due to increased public scrutiny.

Under the applicable regulations,[7] an applicant is required to submit to FDA a list of all clinical investigators[8] who conducted covered clinical studies and to identify those who are full-time or part-time employees of the sponsor of each covered study.[9] Sponsors[10] must obtain clinical investigator financial information before allowing the clinical investigator to participate in a covered clinical study.[11] Applicants must certify the absence of certain financial interests and arrangements of clinical investigators that could affect the reliability of data submitted to FDA, or they must disclose the size and nature[12] of those financial interests to FDA and identify steps taken to minimize the potential for study bias resulting from the interest.[13]

For each clinical investigator who was not a full time or part time employee of a sponsor of the clinical study, the applicant must either certify that no financial interests or arrangements described in 21 CFR § 54.4(a)(3) exists, or completely and accurately disclose the nature of those interests and arrangements to the agency and describe any steps taken to minimize the potential for bias resulting from those interests and arrangements.[14] Applicants may certify that they acted with due diligence[15] if they are unable to obtain such information and must explain why.

There are five disclosable financial interests and arrangements that sponsors must report, for investigators (including spouse and dependent children).[16]

Any compensation made to the investigator by any sponsor of the study in which the value of compensation could be affected by study outcome.
A proprietary interest in the tested product including, but not limited to, a patent, trademark, copyright or licensing agreement.
Any equity interest in any sponsor of the study (e.g., stock options), whose value cannot be readily determined through reference to public prices.
Any equity interest in any sponsor of the covered study if the sponsor is a publicly held company and the interest exceeds $50,000 in value.[17] Both the third and fourth requirements apply to interests held during the time the clinical investigator is carrying out the study and for one year following completion of the study.[18]
Finally, significant payments of other sorts (SPOOS), which are payments that have a cumulative monetary value of $25,000 or more made by any sponsor of a covered study to the investigator or the investigator’s institution, during the time the clinical investigator is carrying out the study and for one year following completion of the study, to support activities of the investigator. SPOOS include a grant to the investigator or to the institution to fund ongoing research (e.g., for lab activities and equipment) or compensation in the form of actual equipment for the lab or clinic. SPOOS also includes payments, retainers and honoraria from a sponsor to a clinical investigator for activities such as participating on committees, providing consultation, or serving as a preceptor.[19] These payments do not include payments for the cost of conducting the clinical study of the product under consideration or clinical studies of other products, under a contractual arrangement. Payments made to the institution that are not made on behalf of, and are not specifically targeted towards the investigator, are not reportable.

Similarly, payments that meet the same criteria and are made to other researchers at the institution, who are not part of the covered study, do not need to be reported. Generally, reasonable payments made to investigators to cover reimbursable expenses such as transportation, lodgings and meals would not need to be tracked, whereas entertainment costs would be tracked as SPOOS. Travel costs associated with transporting and/or providing lodgings, entertainment costs, and meals for family members of investigators, as well as other payments that exceed reasonable expectations, should be tracked and reported as SPOOS. Industry ethical codes, however, limit or prohibit many of these payments.[20]

FDA may refuse to file a marketing application that does not contain the required financial information or certifications.[21] If FDA determines that the financial interests of any clinical investigator raise a serious question about the integrity of the data, FDA may (1) initiate an audit of the investigation data derived from the investigator in question; (2) request that the applicant submit further analyses of data; (3) request that the applicant conduct additional independent studies to confirm the results of the questioned study; and (4) refuse to treat the study as providing data that can be the basis for an FDA action.[22]

In addition, an investigators compliance with their institutional policies or procedures “is not a substitute for compliance with 21 CFR Part 54.” Applicants must maintain records of such information for two years after the date of approval of the application and must permit FDA to have access to such records and to copy such records at reasonable times or during a bioresearch monitoring program inspection. Finally, FDA will protect clinical investigators’ financial information, notably their equity interests, from public disclosure unless FDA finds (on a case-by-case basis) a financial interest “so affecting the reliability of a study as to warrant its public disclosure during evaluation of the study by an advisory panel.”[23]

NIH Regulations

In 1995, the Public Health Service (PHS) and the U.S. Department of Health and Human Services (HHS) promulgated regulations designed to promote objectivity in PHS-funded research and to ensure that there was no reasonable expectation that the design, conduct, or reporting of PHS-funded research was biased by any investigator FCOI.[24] The regulations covered institutions that apply for or seek PHS funding for research and to each investigator participating in the research.[25] Because auditing the potential conflicts of each grantee would be impossible, NIH relies on institutions to comply with the regulations, including maintaining a written and enforced FCOI[26]policy; managing, reducing, or eliminating identified FCOIs through written and enforced administrative processes; and reporting identified conflicts and how they have been managed to the PHS Awarding Component prior to the expenditure of any funds.[27] Investigators, on the other hand, are responsible for complying with their institution’s written FCOI policy and for disclosing their significant financial interests (SFIs) to the institution.

As the complexity of medical research and interactions with industry grew, institutions were unable to keep up with the reporting and oversight of such relationships.[28] As a result, NIH amended the 1995 regulations in 2011by expanding and adding transparency to investigators’ disclosure of SFIs and enhancing regulatory compliance and effective institutional oversight and management of investigators’ FCOIs. The finalized rule, defined FCOI as a SFI that could directly and significantly[29]affect the design, conduct, or reporting of PHS-funded research. NIH defined an SFI as a financial interest[30]consisting of one or more of three interests of the investigator (including spouse and dependent children) that reasonably appears to be related to the investigator’s institutional responsibilities.[31]

First, a SFI exists with regard to any publicly traded entity, if the value of any remuneration[32] received from the entity in the twelve months preceding the disclosure and the value of any equity interest in the entity as of the date of disclosure, when aggregated, exceeds $5,000. Second, a SFI exists with regard to any non-publicly traded entity if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or when the investigator (or spouse or dependent children) holds any equity interest (e.g., stock). Finally, a SFI exists with regard to intellectual property rights and interests (e.g., patents), royalties from such rights, and agreements to share in royalties from such rights. Additionally, royalties would be excluded from the SFI definition if the investigator is currently employed or otherwise appointed by the institution.[33]

Investigators must also disclose the occurrence of any reimbursed or sponsored travel, related to their institutional responsibilities.[34] NIH’s final rule requires that the institution’s FCOI policy require the disclosure of at least: (a) the purpose of the trip; (b) the identity of the sponsor/organizer; (c) the destination, and (d) the duration. The regulations do not require disclosure of the monetary value of the sponsored or reimbursed travel. Such information may be required, however, if an institution determines that the source of funding and other circumstances (e.g., destination, duration) of the specific travel is necessary to determine whether the travel constitutes an FCOI. Finally, payments to investigators from private entities, in return for allowing their names to be used as authors on publications for which they had very limited input—“ghostwriting”—may be subject to the disclosure and reporting requirements depending on the circumstances of a given case, such as the amount of payment.”

Investigators must disclose additional remuneration they receive from entities after completing an initial SFI disclosure on an ongoing basis, assuming the monetary threshold is met or exceeded, and update their disclosures annually. Investigators are also required to disclose new SFIs to their institution within 30 days, and if payments received after the initial disclosure give rise to an SFI that is determined to be an FCOI by the institutional official(s), the institution is required to submit an FCOI report to the PHS Awarding Component.

These regulations have particular prominence as several high-profile investigations were conducted by Congress and news organizations into the failure of several prominent academic researchers and their failure to adequately or completely disclose their financial interests.

In 2008, the U.S. Senate Finance Committee, under the direction of Senator Charles Grassley, began investigating the financial relationships that academic researchers in medical institutions had with manufacturers. The investigations uncovered several researchers who had accepted funding from both the NIH and various manufacturers, but failed to fully or properly disclose the extent of their financial ties to their respective institutions, and the institutions failed to monitor their faculty for conflicts. For example, congressional investigators found that three child psychiatrists from Harvard University[35] who were awarded federal research grants received several hundred thousand dollars in consulting fees from manufacturers, which they failed to report to Harvard. Investigations also revealed similar discrepancies at Brown University,[36] Stanford University,[37] University of Texas,[38] University of Cincinnati,[39] and Emory University.[40]

The Physician Payment Sunshine Act

These events led Senators Grassley and Herb Kohl to introduce the Sunshine Act. With respect to research, the Sunshine Actallows CMS to grant a delay in publication for payments related to: (1) research[41] on, or development of, a new drug, device, biological, or medical supply, or a new application of an existing drug, device, biological, or medical supply or (2) clinical investigations regarding a new drug, device, biological, or medical supply. CMS finalized, however, that payments in connection with research related to new applications of existing products will not be subject to delayed publication unless the research activities that resulted in the payment were not within the scope of a “clinical investigation.”[42] Payments for pre-clinical research, which includes “laboratory and animal research that is carried out prior to beginning any studies in humans, including FDA’s defined phases of investigation,” are also eligible for delayed publication, but payments for “business development activities” are not.

For the research payment to qualify for delay, it must be subject to a written agreement,[43] contract or a research protocol. CMS will not publish the payment, and such data will not be subject to disclosure under 5 U.S.C. § 552, or any similar Federal, State, or local law, until FDA approves, licenses, or clears the product under research or four years after the date of payment, whichever comes first. AMs still report the payment, but indicate to CMS annually its eligibility for delay.

Payments will be made public even if a product never received FDA approval, licensure or clearance. AMs must report the: (a) name of the research study; (b) name(s) of any related covered products; and (c) identifying information about each physician investigator.[44] AMs must also report the total amount of the research payment, including costs associated with patient care such as diagnostics, exams, laboratory expenses, time spent by healthcare professionals treating the patient and managing the study, and the provision of study products or other in-kind items.

When reporting research payments, AMs must separately report travel, meals, speaking, or other segregable activities, unless such payments are included in the written agreement and paid for through the large research contract. Finally, AMs may also voluntarily submit contextual information about the research and the ClinicalTrials.gov identifier.

Recommendations and Conclusion

The increased regulation and requirements to disclose FCOIs creates a tremendous burden for researchers and institutions that are repetitive, overlapping but not-identical, and time-consuming. Nevertheless, institutions that receive PHS funding can manage FCOIs in a number of ways: (1) public disclosure of the FCOI (e.g., when presenting or publishing the research); (2) disclosure of the FCOI directly to human participants; (3) appointment of an independent monitor capable of taking measures to protect the design, conduct, and reporting of the research against bias resulting from the FCOI; (4) modification of the research plan; (5) change of personnel or responsibilities, or disqualification of personnel from participation in all or a portion of the research; (6) reduction or elimination of the financial interest (e.g., sale of an equity interest); or (7) severance of relationships that create FCOI.

Institutions that sponsor or oversee clinical trials for marketing applications for an FDA product must also take steps to minimize bias. FDA will consider elements of the study design, including the method of randomization, the level of blinding (e.g., double-blind), the presence or absence of a control group, whether placebo or active, the nature of the primary and secondary endpoints (objective, subjective), the method of endpoint assessment, the method of evaluation (including whether someone other than the disclosing investigator measured the endpoints), and whether non-disclosing investigators participated in the study.[45]

FDA may also consider the total number of investigators and subjects in the study; the number and percentage of subjects enrolled by the disclosing investigator; information obtained from on-site inspections; the data (including adverse events) of the disclosing investigator compared to other investigators in the study, any reanalysis of the data performed by either the applicant or FDA that excludes the disclosing investigator’s results; and whether the results were replicated over multiple studies.[46]

Institutions will also need to resolve the differences between NIH, FDA and Sunshine regulations regarding the reporting of any reimbursed or sponsored travel related to investigators’ institutional responsibilities or other activities (speaking, consulting, etc.). Discrepancies between Sunshine Act, NIH and FDA disclosures could lead to NIH freezing grant money for a particular researcher or entire institution, or FDA delaying or rejecting a product application.

Institutions must also update their own disclosure and FCOI policies. First, FCOI policies must be proportional. Policies should not be overly restrictive or burdensome such that they unnecessarily interfere with the conduct of legitimate research or severely limit research-industry relationships. Second, COI policies must be transparent. Researchers and applicable staff must be able to comprehend and have access to the policies to ensure fair implementation.

Third, COI policies must clearly indicate who is responsible for monitoring, enforcement and revision. Institutions and responsible officials must regularly update COI policies to account for new practices, relationships, arrangements, and to account for past failures or success. Institutions can identify areas of weakness and confusion by evaluating researcher’s understanding of COI policies annually through tests and training. Lastly, COI policies must be fair and apply equally to all relevant groups within an institution, including faculty, medical staff and senior officials, students, residents, fellows, members of institutional committees (e.g., IRBs, formulary, device and purchasing committees, and guideline panels).

Finally, researchers, institutions and manufactures must closely analyze research agreements to ensure compliance with the anti-kickback statute (AKS) and to resolve differences between NIH, FDA and Sunshine disclosure requirements to avoid a product from being delayed or denied. Additionally, researchers must be aware that the new reporting requirements may jeopardize their membership on NIH study groups, FDA advisory committees,[47] professional medical associations (including senior positions, e.g. chairs), and guidelines committees.

Researchers also need to pay close attention to the related covered product associated with a research payment because CMS can share this data with OIG or DOJ, who could begin or enhance investigations into off-label promotion and any related false claims associated with such payments. Additionally, such payments could call into question the sufficiency of research data or journal articles used to support the safety and efficacy of off-label uses, causing FDA to reject a new indication. Such payments could also raise concerns about the data and research submitted to CMS to obtain listings in the medical compendia to establish that off-label uses are medically accepted and thereby eligible for federal healthcare reimbursement.[48]

In light of the increased focus on transparency of physician-industry relationships and the renewed calls for more openness in research transactions, all stakeholders must work together to ensure that patient’s best interest and public health remain at the forefront. At the same time, such transparency must not inhibit scientific discovery and collaboration in ways that could reduce beneficial relationships, stigmatize researchers, and ultimately, harm patients.

*This article is adapted from a research paper written by Abraham Gitterman, Research Associate at Rockpointe and a Recent Law Graduate at the University of Maryland, Francis King Carey School of Law.

[1]Means any listed or identified investigator or subinvestigator who is directly involved in the treatment or evaluation of research subjects. The term also includes the spouse and each dependent child of the investigator or subinvestigator. (21 CFR § 54.2(d)).

[2] See generally21 CFR § 54.1.

[3]21 CFR §§ 54.2(e) and 54.3. This would, in general, not include phase 1 tolerance studies or pharmacokinetic studies, most clinical pharmacology studies (unless they are critical to an efficacy determination), large open safety studies conducted at multiple sites, treatment protocols and expanded access protocols. “covered clinical studies” for purposes of complying with financial disclosure requirements.

[4]IND/IDE sponsors should collect such information to avoid any potentially problematic financial interests or arrangements as early in the product development process as possible in order to minimize the potential for study bias and to facilitate the accurate collection of financial information that may not be submitted until several years later. See FDA Guidance for Clinical Investigators, Industry, and FDA Staff: Financial Disclosure by Clinical Investigators (Feb. 2013) [hereinafter FDA FCOI Guidance].

[5] 21 CFR § 54.1.

[6]Office of the Inspector General (OIG), Department of Health and Human Services (DHHS), Management Advisory Report – Financial Involvement of Clinical Investigators with Sponsors of Research Leading to Food and Drug Administration Marketing Approval, OI-HQ-91-003 (Jun. 1991).

[7]21 CFR parts 54, 312, 314, 320, 330, 601, 807, 812, 814, and 860.

[8]FDA clarified that hospital staff, including nurses, residents, fellows, and office staff who provide ancillary or intermittent care but who do not make direct and significant contribution to the data are not meant to be included under the definition of clinical investigator. Additionally, individuals who only collect specimens or perform routine tests (such as blood pressure, EKG, x-ray) are not meant to be included under the definition of clinical investigator for purposes of financial disclosure. FDA FCOI Guidance at 15.

[9]21 CFR § 54.4.

[10]Sponsor means a party providing support for a particular study at the time it was carried out (21 CFR § 54.2(h)). A covered clinical study may have more than one sponsor for whom financial information will need to be collected.

[11]21 CFR §§ 312.53(c), 812.20(b)(5) and 812.43(c).

[12]In describing financial interests, for example, the applicant might list: stock valued at $77,000, speaking fees of $7,500, consulting fees of $22,000, and a grant of $125,000 and include a discussion of the specific steps taken to minimize potential bias. FDA FCOI Guidance at 11.

[13]21 CFR § 54.4(a).

[14]Under 21 CFR § 54.4(b), each clinical investigator who is not a full-time or part-time employee of the sponsor of the covered clinical study is required to provide the sponsor with sufficient accurate financial information to allow for complete disclosure or certification and to update this information if any relevant changes occur during the study and for one year following its completion.

[15]Applicants should attempt to contact the individual investigator or subinvestigator directly, and try to locate the clinical investigator if they left the study prior to its completion or prior to one year following completion of the study. FDA suggests that more than one attempt at contacting an investigator is appropriate. Each attempt to contact should be documented (e.g., maintain copies of emails or letters and using certified mail or reliable courier services). This may also include contacting the investigators previous institution to find out his/her new location, professional affiliations or associations, and Internet searches. FDA FCOI Guidance at 9.

[16]21 CFR § 54.4(a)(3). If a spouse or dependent child is an employee of a sponsor, that clinical investigator should be identified as an employee for purposes of financial disclosure. Id. at 6.

[17] Given the dollar value of equity holdings is likely to fluctuate during the course of the study, FDA stated that clinical investigators should report an equity interest when the investigator becomes aware that the holding has exceeded the threshold and the investigator should use judgment in updating and reporting on fluctuations in equity interests exceeding $50,000; no reporting is required if the equity interest fluctuates below the threshold. Id. at 11.

[18] During the course of the study refers to the time from the date the clinical investigator entered into an agreement with the sponsor to conduct the study until the completion of the study. Completion of the study means that all study subjects have been enrolled and follow-up of primary endpoint data on all subjects has been completed in accordance with the clinical protocol; it also refers to the part of the study that is being submitted in the application.

[19](21 CFR § 54.2(f). Thus, if an investigator were given equipment or money to purchase equipment for use in the laboratory/clinic but not in relation to the conduct of the clinical study, payment would be considered a significant payment of other sorts. See 21 CFR § 54.4(a)(3)(ii). If, however, the investigator were provided with computer software or money to buy software needed for use in the clinical study, that payment would not need to be reported.

[20]Examples of industry ethical codes would be the “Principles on Conduct of Clinical Trials and Communication of Clinical Trials Results” from the Pharmaceutical Research and Manufacturers of America (PhRMA) and the “Code of Ethics on Interactions with Health Care Professionals” from the Advanced Medical Technology Association.

[21]“[O]ther responsible corporate official or representative” be a senior official who has the authority to ensure the information is collected and reported accurately. Depending on company structure, such an individual could be the person in charge of regulatory or clinical affairs. The chief financial officer or other responsible corporate official of the applicant must sign the financial certification and disclosure forms. FDA FCOI Guidance at 9.

[22]21 CFR § 54.5(c).

[23]FDA FCOI Guidance.

[24] See 42 CFR Part 50, Subpart F and 45 CFR Part 94 (the 1995 regulations).

[25]The regulations except Small Business Innovation Research (SBIR)/Small Business Technology Transfer Research (STTR) Phase I applications.

[26]42 CFR § 50.603. FCOI means a significant financial interest that could directly and significantly affect the design, conduct, or reporting of PHS-funded research.

[27]PHS Awarding Components are responsible for overseeing institutional compliance with the regulations. Any subsequently identified conflicts must be reported and the conflicts must be managed, reduced, or eliminated, at least on an interim basis, within 60 days of identification.

[28]HHS-OIG, Institutional Conflicts of Interest at NIH Grantees (January 2011) available at https://oig.hhs.gov/oei/reports/oei-03-09-00480.pdf.

[29] The term “significantly” in this context means that the financial interest would have a material effect on the research. Responsibility of Applicants for Promoting Objectivity In Research for which Public Health Service Funding is Sought and Responsible Prospective Contractors, Final Rule, 76 Fed. Reg. 53256, 53261 (Aug. 25, 2011) [hereinafter NIH 2011 Final Rule].

[30] Anything of monetary value, whether or not the value is readily ascertainable. Id. at 53283 (42 CFR § 50.603).

[31] Means an investigator’s professional responsibilities on behalf of the Institution, and as defined by the Institution in its policy on financial conflicts of interest, which may include for example (but not limited to): activities such as research, research consultation, teaching, professional practice, institutional committee memberships, and service on panels such as Institutional Review Boards or Data and Safety Monitoring Boards. Id. at 53284.

[32]Remuneration includes salary and any payment for services not otherwise identified as salary (e.g., consulting fees, honoraria, paid authorship); equity interest includes any stock, stock option, or other ownership interest, as determined through reference to public prices or other reasonable measures of fair market value. Id.

[33] The latter includes (1) Intellectual property rights assigned to the Institution and agreements to share in royalties related to such rights; (2) Any ownership interest in the Institution held by the Investigator, if the Institution is a commercial or for-profit organization; (3) Income from investment vehicles, such as mutual funds and retirement accounts, as long as the Investigator does not directly control the investment decisions made in these vehicles; (4) Income from seminars, lectures, or teaching engagements sponsored by a federal, state, or local government agency, an Institution of higher education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an Institution of higher education; or (5) Income from service on advisory committees or review panels for a federal, state, or local government agency, an Institution of higher education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an Institution of higher education. Id.

[34] This includes travel, which is paid on behalf of the Investigator and not reimbursed to the Investigator so that the exact monetary value may not be readily available. Travel that is reimbursed or sponsored by a federal, state, or local government agency, an Institution of higher education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an Institution of higher education is not subject to this disclosure requirement. Id.

[35] Gardiner Harris, Researchers Fail to Reveal Full Drug Pay, New York Times, (Jun. 8, 2008). Dr. Joseph Biederman, a renowned child psychiatrist at Harvard Medical School, and a colleague, Dr. Timothy E. Wilens, had reported to university officials earning several hundred thousand dollars each in consulting fees from drug makers from 2000 to 2007, when in fact they had earned at least $1.6 million each. Another Harvard colleague, Dr. Thomas Spencer, reported earning at least $1 million from drugmakers after Grassley pressed him for the information. The federal grants received by Drs. Biederman and Wilens were administered by Massachusetts General Hospital, which in 2005 won $287 million in such grants.

[36]Brown University’s Martin Keller. Keller, a psychiatrist at Brown University, was a controversial figure for his role in studying Glaxo’s Paxil antidepressant. See Ed Silverman, Grassley Targets Brown’s Keller Over Grants, Pharmalot (Jul. 14, 2008).

[37]Alan Schatzberg, who was president-elect of the American Psychiatric Association, owned about $6 million in stock in Corcept Therapeutics, which was studying the development of mifepristone for treating psychotic depression. He is also a co-patent holder for the drug and he received an NIH grant to oversee the research. See Ed Silverman, Stanford’s Schatzberg Defends His Record, Pharmalot (Sept. 8, 2008).

[38] Karen Wagner and John Rush. See Ed Silverman, Grassley Targets another Academic Over Conflicts, Pharmalot (Sept. 11, 2008); Grassley And Texas Academics: Take Two (Sept. 11, 2008).

[39]Dr. Melissa DelBello told university officials that she earned about $100,000 from 2005 to 2007 from eight drug makers, but AstraZeneca alone paid her $238,000 during the period, Mr. Grassley found. See Ed Silverman, What Conlflict? The NIH And A Bucket of Money, Pharmalot (Apr. 8, 2008).

[40] Gardiner Harris, Top Psychiatrist Didn’t Report Drug Makers’ Pay, New York Times (Oct. 3, 2008). In 2004, Emory’s conflict of interest committee investigated Dr. Charles Nemeroff’s outside consulting arrangements, finding multiple “serious” and “significant” violations of university procedures intended to protect patients. However, the university apparently took little action against Dr. Nemeroff and made no effort to independently audit his consulting income. In 2005, Emory had about $190 million in federal research grants. Nemeroff earned $2.8 million in consulting arrangements with drug makers from 2000 to 2007, however, he failed to report at least $1.2 million of that income to Emory. Dr. Nemeroff was the principal investigator for a five-year $3.9 million grant financed by the National Institute of Mental Health for which GlaxoSmithKline provided drugs. From 2000 through 2006, Nemeroff earned more than $960,000 from GlaxoSmithKline but listed earnings of less than $35,000 for the period on his university disclosure forms. See Ed Silverman, NIH Suspends Big Grant To Emory University, Pharmalot (Oct. 14, 2008). NIH granted Emory more than $251 million in funding in 2008, 61 percent of its total research funds from outside sponsors, according to the paper. Under Nemeroff’s leadership, the Atlanta Journal-Constitution reported that Emory’s psychiatry department pulled in more than $22 million in NIH grants in 2007 alone. Id.

[41]CMS defined research by adopting the same definition used in the PHS Act, section 50.603. Research includes pre-clinical research and FDA Phases I-IV research, as well as investigator-initiated investigations for drugs, biologicals, and approval trials for devices (including medical supplies). CMS also clarified that new generic products will be considered new products, including drugs receiving approval under an ANDA, and devices under the 510(k) process. Id. at 9482.

[42] Material transfers (e.g., provision of a protein) to a researcher for discovery collaboration do not need to be reported when not part of a commercial or marketing plan and precede the development of a new product because such transferred material does not have an independent value at such an early stage of the research process. Id. at 9483.

[43]This includes an unbroken chain of agreements that link an AM with a CR constitutes a research agreement. For example, an agreement between an AM and a contract research organizations (CRO), between a CRO and a site management organization (SMO), and then between an SMO and a teaching hospital would be considered a continuous chain of agreements constituting a research agreement. Id. at 9482.

[44]Including name, NPI, State professional license number(s) for at least one state, specialty and primary business address. The study name and covered product are not required for pre-clinical research. Id. at 9483-84.

[45]FDA FCOI Guidance.

[46] Id.

[47] See FDASIA § 1142.

[48]U.S. Dep’t. of Justice, “Amgen Inc. Pleads Guilty to Federal Charge in Brooklyn, NY.; Pays $762 Million to Resolve Criminal Liability and False Claims Act Allegations” (Dec. 19, 2012), available at http://www.justice.gov/opa/pr/2012/December/12-civ-1523.html.

United Kingdom Office of Fair Trading: Accuses GlaxoSmithKline for Pay for Delay

2013-05-16T06:09:00-04:00

In January of this year, we noted that the U.S. Supreme Court agreed to hear a case to decide whether agreements between brand-name pharmaceutical companies and generic makers to delay the entry of generic drugs to the market—so called “pay for delay” deals—violate antitrust laws. “In a typical case, a generic rival challenges the patent of a brand-name competitor, which then pays the rival a sum of money to drop its challenge,” reported Reuters.

A study by RBC Capital Markets Corp. of 371 cases during 2000-2009 found brand-name companies won 89 at trial compared to 82 won by generic drugmakers. Another 175 ended in settlement deals, and 25 were dropped, reported TimesNews.net.

Oral arguments for the case—FTC v. Actavis—were heard in late March of this year, and there was significant coverage of the case by industry and various stakeholders. A decision against the pharmaceutical industry would further shorten the patent protection period on many branded drugs. Below is a summary of oral arguments and comments from various lawyers and stakeholders.

Forbes reported that while the Supreme Court case is considering the legality of such agreements, AstraZeneca entered into a new agreement with Actavis and its partner Egis Pharmaceuticals, to begin selling a generic copy of Crestor in May 2016, and Actavis will have to pay AstraZeneca a 39 percent royalty on net sales until the end of pediatric exclusivity in July 2016.

Pay-for-Delay Ban in the U.K.?

Interestingly, as pharmaceutical companies in the U.S. wait for the Supreme Court’s decision, regulators in the U.K. have now decided to stop pay-for-delay agreements as well—going after GlaxoSmithKline (GSK) of paying competitors to keep generics off the market, reported FiercePharma.

The drug is Seroxat--Paxil in the U.S.--and the agreement dates to 2001 through 2004, Reuters reports. The accusation come from U.K.’s Office of Fair Trade (OFT) and accuses the U.K. drugmaker of making “substantial payments” to Alpharma Ltd., Generics and a unit of Teva Pharmaceutical Industries to keep their versions of the antidepressant off the market.

The OFT said it had a duty to investigate the case given the importance of generic medicines in keeping a lid on costs for the country's National Health Service (NHS). “The introduction of generic medicines can lead to strong competition on price, which can drive savings for the NHS, to the benefit of patients and, ultimately, taxpayers,” said Ann Pope, senior director of services, infrastructure and public markets at the OFT.

GSK disputes the allegations, which relate to deals that were effective between 2001 and 2004. GSK said it did nothing wrong and points out that European Commission regulators reviewed the old deal in 2005-2006 and decided not to act on it. “GSK supports fair competition and we very strongly believe that we acted within the law,” David Daley, a spokesman for the London-based company, said by e-mail to Bloomberg, adding that the deals resulted in “generic versions of paroxetine entering the market before GSK's patents expired.”

The companies will have an opportunity to respond to the allegations before the OFT decides if competition law has been infringed. If the U.K. does press on, GSK could be fined up to 10% of its £26.4 billion sales in 2012, reported Reuters.

AstraZeneca Plc, the U.K.’s second-biggest drugmaker, and Sanofi are also among companies the Brussels- based commission has queried as part of its probes into the companies’ tactics to keep copies of their medicines off the market, reported Bloomberg. Johnson & Johnson and Novartis AG in January were also sent charge sheets by the EU over a pay-for-delay deal that may have hampered the sale of generic versions of pain killer fentanyl in the Netherlands. Drug developers use a variety of techniques to delay generics, the EU said in a 2009 report.

FTC v. Actavis

As noted by John Kamp, Executive Director of the Coalition for Healthcare Communication, “The biopharma industry seems to have the legal advantage. The Federal Trade Commission (FTC) has struggled for over a decade just to get this case to the Supreme Court and has lost more challenges on the way than it has won. The law supports settlements over litigation, even in antitrust cases. Further, one Justice (Alito) recused himself, requiring the FTC to get five votes out of eight to prevail.”

Kamp also pointed out that “The legal struggle is over three legal principles” and “Laws favor all three -- patent protection, settlements over litigation, and vigorous competition.”

FTC argued for the Court to start with a presumption that all pay-for-delay agreements are illegal, however, Justice Stephen G. Breyer called that test “rigid,” according to the Washington Post.

MedPage Today noted that Deputy Solicitor General Malcolm Stewart explained that the Justice Department has since 2009 viewed such settlements as unlawful and that the drug companies should convince the court they're valid. Justice Kennedy, however, said that the government’s test was the “same for a very strong patent as a very weak patent,” which the Justice said, “doesn’t make a lot of sense.”

MedPage noted that Justice Sonia Sotomayor questioned why it would be the responsibility of the drug companies to prove the settlement was lawful rather than the government to prove that to a court. “It would seem to me that you have to bear the burden -- the burden of proving that the payment for services or the value given was too high,” Sotomayor told Stewart. “I don’t know why it has to shift to the other side,” the article notes.

Justice Antonin Scalia asserted that the Court shouldn’t “overturn understood antitrust laws just to patch up a mistake that Hatch-Waxman made.” Similarly, Kamp pointed out that Justice Anthony Kennedy, often seen as the swing vote, “suggested that if Congress made a drafting mistake enabling these settlements in the Hatch-Waxman statute upon which the decision rests, it’s up to Congress, not the courts, to change the law.” We previously noted that in March, Senators Charles Grassley (R-IA) and Amy Klobuchar (D-MN) introduced Senate bill 214 (S.214), A Bill to prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market—also known as the Preserve Access to Affordable Generics Act.

In addition, Senators Al Franken (D-MN) David Vitter (R-LA), Dick Durbin (D-IL), Jeanne Shaheen (D-NH), and Bernie Sanders (I-VT) introduced S. 504, the “Fair and Immediate Release of Generic Drugs Act,” in mid-March, reported Patent Docs. The bill is aimed at banning settlement agreements of ANDA litigation between innovator drug companies and generic drug manufacturers. According to blog post author Kevin E. Noonan, “the bill contains provisions that preclude the 180-day exclusivity period granted to the first ANDA filer from any party that has entered into a ‘disqualifying agreement.’”

“Another provision limits agreements on deferring commercial marketing, which are defined as being between a first ANDA filer and NDA holder (or owner of an Orange Book listed patent that was the subject of a Paragraph IV certification) and wherein the first filer agrees “not to seek an approval of its application that is made effective on the earliest possible date” or “not to begin the commercial marketing of its drug on the earliest possible date after receiving an approval of its application” or both” he writes.

The bill also contains a notice provision to the FDA that requires that the “text” of any agreement “that has been reduced to writing” (or a “written detailed description” of any agreement not reduced to writing) be submitted to the Secretary of HHS "not more than 10 business days after execution of the agreement.”

In response to industry’s arguments, Kamp noted that the FTC argued vigorously that the “pay for delay” drug patent settlements create extraordinary profits for the private companies, which harm consumers much more than in any other antitrust settlement situation. While the decision may be too close to call, Kamp pointed out that “populist policy and politics favors drug cost savings, especially in the face of escalating healthcare costs and the need to control the growing deficit. While the law seems to favor pharma, especially with the more conservative justices, the politics of less expensive drugs may be tougher, especially as the case moves to Congress.” For example, the American Medical Association, AARP, and a group of states attorney general have come out in favor of banning these agreements.

However, Generic Pharmaceutical Association (GPhA) CEO Ralph Neas said that every patent settlement has brought a generic drug to market before the relevant patent ended, and that about two-thirds of the generic that were launched in 2010 and 2011 became available earlier than they would have otherwise due to a settlement, reported by Forbes. Justice Kennedy suggested that brand-name drug companies should “not be allowed to pay generic-drug manufacturers more than those companies could expect to get by winning patent litigation,” notes the Washington Post. In addition, Justice Elena Kagan sympathized with consumers, and noted that these agreements are merely “splitting monopoly profits, and the person who's going to be injured are all the consumers out there,” Justice Kagan said.

The Medicare Drug Savings Act 2013

2013-05-15T05:03:00-04:00

In mid-April, Senator Jay Rockefeller and 18 Senate Democrats introduced legislation to protect seniors and reduce the deficit by $141.2 billion according to the Congressional Budget Office (CBO) by “making sure pharmaceutical companies pay their share,” reported FiercePharma. Similar proposals were also included in the President’s most recent budget proposal and the President's Commission on Fiscal Responsibility and Reform.

Other Senate co-sponsors include Bill Nelson (D-FL), Amy Klobuchar (D-MN), Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Barbara Boxer (D-CA), Sherrod Brown (D-OH), Dick Durbin (D-IL), Al Franken (D-MN), Angus King (I-ME), Patrick Leahy (D-VT), Jeff Merkley (D-OR), Jack Reed (D-RI), Bernie Sanders (I-VT), Brian Schatz (D-HI), Jeanne Shaheen (D-NH), Debbie Stabenow (D-MI), Tom Udall (D-NM), and Sheldon Whitehouse (D-RI).

According to the sponsors, the Medicare Drug Savings Act would eliminate a special deal for brand-name drug manufacturers that allows them to charge Medicare higher prices for prescription drugs for some seniors and people with disabilities. The bill would require drug companies to provide rebates to the federal government on drugs used by dual eligibles – people eligible for both Medicare and Medicaid, who are predominantly low-income seniors and people with disabilities – just as was done for dual eligibles on Medicaid before Medicare Part D was created in 2006. Rebates would also be available to other enrollees in the low-income-subsidy plan in the Medicare Part D Prescription Drug Program.

With the exception of Medicare Part D, all large purchasers of prescription drugs negotiate better prices, including Medicaid and private insurers. This bill simply restores negotiated prices for low-income Medicare beneficiaries.

This bill would correct excessive payments to drug companies, while also saving taxpayers and the federal government from footing the unnecessary cost. Over the past ten years, the 11 largest drug companies alone took in $711.4 billion in profits, including a 62 percent increase from 2003 to 2012.

Ranking Members Henry A. Waxman, Sander M. Levin, George Miller, Jim McDermott, and Robert E. Andrews introduced the companion bill in the House.

“This bill would make sure drug companies no longer receive this unnecessary and excessive payment. It would responsibly help to reduce the deficit – without impacting Medicare beneficiaries – by making sure drug companies don't get more than they're due,” Senator Rockefeller said in a statement. AARP and the National Committee to Preserve Social Security and Medicare support the legislation.

Before the Medicare prescription drug program was created in 2006, brand-name drug manufacturers paid rebates for dually eligible beneficiaries on Medicare and Medicaid. All dual eligibles' prescription drugs were discounted by rebates negotiated by the federal government and some received additional discounts negotiated by state Medicaid plans. But since Medicare Part D was created, drug companies no longer had to provide these rebates and they have been unfairly making more money off of prescription drugs for dual eligibles at the taxpayers' expense. The bill retains incentives for drug manufacturer innovation and would not impose price controls.

However, Matthew Bennett, senior vice president of the Pharmaceutical Research and Manufacturers of America (PhRMA), said in a statement that the legislation “would bring higher premiums and copays, more restricted access to medicines for seniors and Americans with disabilities, and diminished research on the next generation of medicines,” reported by Kaiser Health News. “Unlike familiar consumer rebates that return savings to shoppers, this policy would undermine a successful and popular program to send ‘rebates’ to the Federal Treasury, not seniors,” Bennett said.

340B Drug Discount Program

In related news, FierceHealthFinance reported that the American Hospital Association (AHA) has asked the Health Resources and Services Administration (HRSA) to delay by at least six months the imposition of a new rule for the 340B drug discount program that would bar institutions from purchasing drugs for outpatients through a group purchasing organization The delay “would give hospitals enough time to modify their inventory management practices to meet the new GPO policies and avoid expulsion from the 340B program,” the article noted.

AHA claimed the lack of public hearings on the matter left hospitals unprepared to adjust to the rule change, which was enacted on April 7. The required changes include tweaks to overhauled inventory management systems, establishing new accounts with drug wholesalers and staff training, according to a letter sent April 3 by AHA Executive Vice President Rick Pollack to the HRSA.

“The rule change and AHA request come amid suspicions by U.S. Senator Charles Grassley, an Iowa Republican, that hospitals have been profiting from the drug discount program. It is intended to provide low-cost pharmaceuticals to uninsured patients or those who lack the financial means to obtain them on their own.”

“Instead, some hospitals have been using their 340B discounts to purchase drugs at steep discounts, then selling them to insured patients at hefty markups, FierceHealthcare previously reported. Duke University Hospital, for instance, profited to the tune of $69.7 million on drugs it purchased through the 340B program in 2012. Duke purchased the drugs for $65.8 million, then sold them to patients for $135.5 million.”

NEJM Article: Massachusetts Payment to Physicians Sites Old Statistics to Support Anti Industry Bias

2013-05-14T05:22:00-04:00

Over the last several years, we have covered the Massachusetts Pharmaceutical and Medical Device Manufacturer Code of Conduct (PCOC), enacted in 2009. Subsequently, the Massachusetts legislature rolled back some of the reporting requirements last fall. And we recently noted that Massachusetts saw a 3% drop in payments to physicians in 2011.

Consequently, several researchers—led by Aaron S. Kesselheim, M.D., J.D., M.P.H.—recently published a viewpoints article in the New England Journal of Medicine (NEJM) analyzing the distribution of industry payments to Massachusetts physicians. The authors maintain that “relationships between pharmaceutical manufacturers and health care professionals remain controversial.” For example, “meals and continuing medical education (CME) programs have been criticized for being promotional and have been linked to non–evidence-based prescribing practices.”

This assertion is clearly outdated, incorrect, and biased. First, the Accreditation Council for Continuing Medical Education (ACCME) has strict Standards for Commercial Support (SCS) that prohibit any CME programs from being promotional in any way, and explicity prohibit the involvement of any commercial supporter at any point in a CME program. Moreover, the ACCME conducts regular compliance audits of CME providers and CME programs to ensure compliance with such standards and physicians are able to submit complaints of any inappropriate promotion or potential violations.

Furthermore, the ACCME has the highest level of standards for accreditation that strongly require and demand the use of evidence-based materials and scientific literature in creating and presenting an accredited CME program, independent from any commercial support. Clearly the authors are not familiar with either standards.

Moreover, the authors ignore significant and overwhelming literature which shows that commercial support of CME does not influence or create any bias in such educational programs. See Cleveland Clinic; Medscape, and UCSF. In fact, we have cited numerous surveys showing that physicians overwhelmingly value commercial support of CME. For example, a recent survey showed that 98% of respondents said CME/CE activities provided them with information that has helped them improve patient care. In addition, almost 60% believe the information that they gathered from accredited CME has helped them reduce the cost of the care they provide.

Another survey showed that 89% of physicians valued industry providing research grants to doctors, hospitals, and medical schools. Of those responding to the survey, 76% of participants said they attended an industry sponsored education program and about 9 in 10 attendees say information provided at educational programs is up-to-date and timely, useful, and reliable. More than half of attendees said they often gain knowledge or skills helpful in their practice.

The author’s suggestion that CME is not evidence based is also problematic. We have written numerous times that CME, including commercially supported programs, have improved patient outcomes in areas such as multiple sclerosis, hypertension, COPD, ICU patients, improved taking of family history by physician assistants, Sepsis, healthcare-associated infections, reduction in CT scans, and several other areas.

To bolster the appearance of a “problem” with physician-industry relationships, the authors use evidence of relationships from 2004, almost a decade ago, to estimate that “83% of physicians received gifts from industry.” Such data is not only 10 years old, but also predates the PhRMA and AdvaMed Codes, changes in the AMA’s ethical policies, rules and standards, and much of the federal guidance and regulations from FDA and HHS-OIG.

They attempt to use newer data from 2009, which showed “71% of physicians received gifts” but it is unclear exactly how they could have received such “gifts” when federal law (anti-kickback statute), the AMA, and industry trade groups ban them. Likely, the research did not capture detailed data such as meals, reprints etc., and instead classified all payments as “gifts.” They also cite to “social science” research which suggests that “gifts” of any value may influence prescribing decisions, however, such research never used patient measure outcomes. Moreover, no research to our knowledge has ever shown negative patient outcomes from doctors who collaborate with industry.

To the contrary, research has shown that practitioners who restrict access to sales reps are slower to adjust to negative news about a drug on the market.

Methods

Nevertheless, the authors used data from the Massachusetts database to calculate industry payments to physicians, make comparisons, and evaluate trends from July 2009 through December 2011 (the most current data available). The Massachusetts database lists the name, address, and professional license number of each physician, the manufacturer, and the amount and purpose of the payment. The purpose is categorized by the reporting company as one of the following eight types, with names and descriptors set by the state:

compensation for bona fide services (including consulting and participation in speaker’s bureaus);
food;
grants and educational gifts;
CME programs, third-party conferences, or meetings;
education and training;
marketing studies (payments in conjunction with research “other than genuine research”);
charitable donations (excluding free samples); or
“other.”

The researchers recognized that the federal Sunshine Act has similar descriptors for the “nature of payment” category, but that the ones currently used in Massachusetts are of limited value, since the dominant category of “compensation for bona fide services” encompasses “legitimate scientific as well as more controversial marketing relationships.”

The researchers also matched each physician to a medical specialty using a publicly available data set managed by the state medical licensing board from February 2013 (historical data were not available) and compared the distributions received by various specialties.

Findings

The 30 months’ worth of data included 32,227 reported payments to 11,734 Massachusetts physicians, for a total of $76.7 million. Of those payments, $17.1 million occurred in the last 6 months of 2009, $30.3 million in 2010, and $29.3 million in 2011. In 2010, a total of 6530 physicians appeared in the database, as compared with 5921 in 2011. The average total payment per physician over the course of a year increased slightly, from $4,637 in 2010 to $4,944 in 2011.

The most common form of payment was food. During the 30 months, there were 14,251 payments for a total of $2.4 million (median, $100; interquartile range [IQR], $69–$164). The number of food payments shrank from 5253 in 2010 (for a total of $858,031) to 4131 in 2011 ($811,292).

Compensation for bona fide services was the payment type with the highest value. The 8432 payments in this category accounted for $67.3 million, or 88% of total expenditures (median, $2,750; IQR, $1,000–$6,560). Such payments were made 3072 times in 2010, and the number remained stable in 2011 (2990).

According to physicians’ specialty distributions, the researchers found that 25% of currently licensed Massachusetts physicians (8439 of 33,446) received at least one payment between July 2009 and December 2011.

Primary care was among the specialties least likely to receive payments: non-specialist internists (19%),
Pediatricians (12%), and family practitioners (21%)
Urologists (61%),
Gastroenterologists (57%),
Rheumatologists (51%), and
Cardiologists (46%)

The highest average per-physician amounts paid over the full 30-month period were received by orthopedic surgeons ($18,446) and physicians in various specialties within internal medicine, including endocrinology ($17,407), infectious diseases ($15,922), and pulmonology ($13,027).

The distribution of types of financial relationships also varied among specialties. For example, compensation for bona fide services accounted for more than 90% of the payments for orthopedic surgeons, psychiatrists, and most internal medicine specialists, whereas general internists received larger shares of their payments in the form of food (8%) and grants or educational gifts (5%), and obstetricians received 11% of their total amounts as education or training.

The analysis revealed decreases in overall payments and numbers of physicians appearing in the database between 2010 and 2011, with a slight increase in the average payment amount — when fewer physicians received payments from drug and device companies, the remaining financial relationships became a bit more lucrative.

One explanation may be that relatively high proportions of physicians in Massachusetts are affiliated with academic medical centers and health systems that now have policies preventing physicians from accepting certain types of gifts of any value; institutions that have taken such actions include:

Boston University School of Medicine–Boston Medical Center (2007),
the University of Massachusetts (2008),
Partners HealthCare (2009),
Tufts University School of Medicine (2010), and
Harvard Medical School (2010).

While payments for meals decreased due to the original July 2009 law, the repeal in the fall of 2012 will likely cause an increase in such meals, although there is no explicit definition of what “modest” industry-sponsored “meals and refreshments” are.

Ultimately, journal articles such as this are evidence of what the future holds once CMS begins to publish payments under the Sunshine Act. Articles such as this emphasize the critical need for having a “healthy dialogue” about physician-industry relationships to ensure that patients and the public understand their importance.