Amidst Increasing Security Concerns, Medicare to Drop Social Security Numbers from Cards

This post was written by Jennifer Pike.

In an effort to combat growing concerns of identity left, President Obama signed into law last week a bill that will require the removal of Social Security Numbers (SSNs) from all Medicare beneficiary cards. The change, which follows years of warnings to Medicare officials, will be implemented over the next eight years. Medicare has four years to begin issuing cards with new identifiers, and four years after that to reissue cards to current beneficiaries.

The removal of SSNs from the cards is not only expected to decrease the risks associated with identity theft for Medicare beneficiaries, but also Medicare’s risk of exposure associated with breaches of protected health and personal information under the Health Insurance Portability and Accountability Act (HIPAA) and state privacy laws. The impermissible disclosure of SSNs by a health plan, such as Medicare, health care providers and health care clearinghouses (together “covered entities”) are generally considered breaches under the HIPAA Breach Notification Rule and similar state notification laws. Such laws require substantial, and often expensive, action, including notifications to affected individuals, the Office for Civil Rights, state Attorneys General, and consumer protection agencies. Moreover, some states require covered entities to provide complimentary identity theft protection to individuals whose SSNs are breached. Breaches of protected health and personal information may also result in significant monetary penalties.

Additional information on the new Medicare card requirements is available here.

FDA Releases Draft Guidance on Acceptance of Medical Device Clinical Data from Studies Conducted Abroad

This post was written by Vicki Morris and Jennifer Pike.

On April 21, 2015, the Food and Drug Administration (FDA) issued a notice announcing the availability of a draft guidance document clarifying the Agency’s acceptance of medical device clinical data from studies conducted outside of the United States (“OUS”). The guidance arises from the 2012 Food and Drug Administration Safety and Innovation Act § 1123, amending Food, Drug & Cosmetic Act § 569B, which codified FDA’s longstanding practice of accepting scientifically-valid clinical data obtained from foreign clinical studies in support of premarket submissions for devices. Thus, the guidance is not intended as a new policy announcement, but rather as a description of FDA’s existing approach to this topic.

The draft guidance highlights special considerations that apply when using foreign clinical data, including applicability to populations within the US, and provides recommendations to assist sponsors in ensuring their data are adequate under applicable FDA standards. Specifically, FDA focuses on considerations sponsors of device submissions should take into account when initiating, or relying on previously collected data from a foreign clinical study to support an Investigation Device Exemption (IDE), Premarket Notification (510k), De Novo Petition, Humanitarian Device Exemption (HDE), or Premarket Approval Application (PMA). To illustrate these considerations, FDA includes in the draft guidance several hypothetical examples depicting when data will be acceptable.

As noted in the draft guidance, the number of IDE applications and submissions for marketing authorization supported by OUS clinical trials has increased in recent years and will likely continue to increase in the future. This increasing globalization of clinical trials presents challenges to both US and foreign regulators. Among the challenges are resource constraints that impact the number of foreign clinical site inspections and unnecessary duplication of clinical studies and administrative burdens. As such, in publishing the draft guidance, FDA believes that promoting greater clarity concerning the Agency’s use of foreign study data will minimize the possibility for additional or duplicative U.S. studies, further efforts to harmonize global clinical trial standards, and promote public health and innovation.

Comments on the draft guidance are due to FDA by July 20, 2015 and can be submitted here.

MACRA Signed into Law by President; Reforms Medicare Payment Policy for Physician Services

On April 16, 2015, President Barack Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The bill permanently transforms the structure of Medicare physician reimbursement and enacts several changes to Medicare payment, program integrity and policy provisions that will affect both health care providers and pharmaceutical/medical device manufacturers. The most notable change, according to a Reed Smith client alert written by Deb McCurdy, Elizabeth Carder-Thompson, Dan Cody, Gail Daubert, Tom Greeson, Paul Pitts, Trey Andrews, Katie Hurley and Rahul Narula, is the repeal of the Sustainable Growth Rate formula, ending an era in which Medicare physician fee schedule rates were subject to regular cuts and temporary adjustments by Congress. Under MACRA, physician payment updates will now pertain to quality, value and participation in alternative payment models.

Other changes under MACRA include a two-year extension of the Children’s Health Insurance Program (CHIP), a reduction of market basket updates for post-acute care providers, a revision of inpatient hospital payment rate updates, a restructuring of reductions under the Medicaid disproportionate share hospital program, an implementation of additional income-related adjustments for Medicare Part B and Part D premiums, and a ban on first-dollar Medigap coverage policies.

To read the full alert, click here.

FDA, CMS Form Interagency Task Force on LDT Quality Requirements

This post was written by Debra McCurdy.

FDA and CMS have announced that they are establishing an interagency task force to reinforce their collaboration regarding the oversight of laboratory-developed tests (LDTs) -- tests intended for clinical use and designed, manufactured, and used within a single lab. According to an FDA blog post, the goals of the FDA/CMS task force include:

  • identifying areas of similarity between the FDA quality system regulation and requirements under the Clinical Laboratory Improvement Amendments (CLIA);
  • working together to clarify responsibilities for laboratories that fall under the purview of both agencies; and
  • leveraging joint resources to avoid duplication and maximize efficiencies.

CMS Discusses Medicare Implications of FDA Approval of First Biosimilar Product

This post was written by Deb McCurdy.

CMS has issued an educational article on “Food and Drug Administration Approval of First Biosimilar Product,” and the implications for Medicare coverage. CMS states that its policies “will ensure Medicare beneficiaries will have access to this new product, as it does for other drugs that receive FDA approval.” The document includes the following Q&A:

Question: How will a health care professional that administers this product get reimbursed under Medicare Part B?
Answer: Medicare Part B payment for newly approved drugs and biologicals is available once the product is approved by the FDA. CMS will incorporate biosimilars that are approved under the abbreviated biological approval pathway into the Average Sales Price (ASP) payment methodology, and issue additional guidance as necessary. Initially, once the manufacturer’s wholesale acquisition cost (WAC) is available, Medicare will pay 106 percent of the WAC for the product until ASP information is available. Once ASP information is available for this biosimilar product, Medicare payment will equal the ASP for the biosimilar product plus six percent of the ASP for the reference product.

Question: How soon will CMS be releasing coding information related to Part B reimbursement?
Answer: CMS anticipates including the approved biosimilar in the next quarterly Healthcare Common Procedure Coding System (HCPCS) tape release in the coming weeks, appearing in the claims processing system on July 1, 2015, effective retroactively to the FDA approval date.

Question: Will CMS be assigning unique codes to each biosimilar released?
Answer: CMS will create a separate code to distinguish the biosimilar from the reference biological. CMS is considering policy options for coding of additional biosimilars, and will release further guidance in the future.

Question: Will use of a distinguishing identifier to biological products make it harder to achieve Medicare reimbursement?
Answer: Distinguishing identifiers will have no bearing on coding and payment.

Question: How will CMS address providing access to biosimilars through Medicare Part D?
Answer: Although coverage for filgrastim will generally be provided through Part B, it could also be covered under Part D in certain circumstances (for example, nursing homes or Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID)). CMS will be releasing guidance to plans confirming that biosimilars approved by the FDA will be subject to existing rules for prescription drugs under Part D.

To read the full article, click here.

Toward Class Actions for Health-Related Claims in France

This post was written by Daniel Kadar.

Class actions – which are progressively becoming part of the legal landscape in France as “actions de groupe” – will probably soon be extended to personal injury claims against health products manufacturers, suppliers or service providers using health products.

On March 17, 2015, a new bill proposal was issued, advocating the creation of a class action procedure for the health sector.

Plenary discussions at the French National Assembly will commence March 31, 2015, and will more precisely address the issue of compensation for personal injury in the framework of the proposed class action.

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Erroneous Country of Origin Determinations May Result in Significant FCA Penalties for Medical Device Companies

Country of origin labeling issues can be exceedingly complex, as we have noted before. Several manufacturers have recently paid multi-million dollar settlements for alleged misstatements about their products’ country of origin, under the Trade Agreements Act (TAA) and False Claims Act (FCA). As described by Reed Smith attorneys Larry Sher, Larry Block and Jeffrey Orenstein in “Medical Device Companies Face Severe FCA Penalties for TAA Violations,” the TAA requires that entities selling certain products to the U.S. government be responsible for identifying the products’ country of origin and ensuring that it is either the United States or one of the designated countries with which the United States has special trade agreements. Falsely certifying products as being TAA-compliant can result in sizeable civil and criminal penalties for entities under the FCA, and can attract attention both from purported whistleblowers and the Department of Justice.

To read the client alert, click here.

State Attorneys General Address Data Privacy and Security Issues

There have been several recent data protection actions by state attorneys general across the United States, which is the subject of “Update on State Attorneys General: Connecticut Creates a Permanent Privacy Department; NAAG Covers Big Data, Cybersecurity, and Cloud Computing; and States Amend Breach Laws,” a post on Reed Smith’s Global Regulatory Enforcement Law Blog written by attorneys Divonne Smoyer and Christine Czuprynski. These actions include:

  • Connecticut Attorney General George Jepsen announced on March 11, 2015 that the privacy task force he appointed in 2011 will become a permanent Privacy and Data Security Department, which will handle investigations and litigation relating to data privacy and security.
  • The National Association of Attorneys General (NAAG) Southern Region Meeting, which concluded on March 13, 2015, featured presentations on big data, cybersecurity, cloud computing and data breaches (including the proposal for a national data breach notification law). In addition, a NAAG presidential initiative summit will be held in mid-April in Biloxi, MS, with agenda topics to include intellectual property theft, cloud computing and digital currency.
  • Following in the footsteps of attorneys general in New York and Oregon, Washington Attorney General Bob Ferguson has proposed several amendments to his state’s current data breach notification law that would expand the scope of requirements in an effort to increase consumer protection.

State attorneys general are focusing a significant amount of attention on issues relating to data privacy and security, and continued action on this front is to be expected.

To read the full post, click here.

French Sunshine Act's Scope Expands with Recent French Supreme Administrative Court Decision

Reed Smith’s Global Regulatory Enforcement Law Blog features a post on a recent decision by the French Supreme Administrative Court (Conseil d’Etat) that expands the scope of the French Sunshine Act. “French Supreme Administrative Court Decision Significantly Broadens the Scope of the French Sunshine Act,” written by Reed Smith attorneys Daniel Kadar and Caroline Gouraud, highlights two major changes to the current French Sunshine Act provisions: (1) health care companies will now be required to disclose the contractual remuneration paid to health care providers, and (2) manufacturers and marketers of non-corrective contact lenses, cosmetics and tattoo products will now be held to the same transparency standards as manufacturers and marketers of pharmaceuticals and medical devices. As to the former change, the French Ministry of Health must now decide whether or not the remuneration disclosure requirement should be retroactively applied – potentially back to January 1, 2012, the date of the first reporting requirements.

To read the full post, click here.

The SEC and the Pharmaceutical Industry - Recent Commentary by the SEC's Enforcement Director Identifies Areas of SEC Focus Applicable to the Industry

This post was written by Lisa Blackburn.

Recently, the United States Securities and Exchange Commission’s (“SEC”) Enforcement Director, Andrew Ceresney (“Ceresney”), spoke to pharmaceutical compliance personnel at the CBI’s Annual Pharmaceutical Compliance Congress and discussed three current areas of SEC focus most relevant to the pharmaceutical industry: the Foreign Corrupt Practices Act (“FCPA”), corporate disclosures relating to interactions with the Food and Drug Administration (“FDA”), and financial internal controls.

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FDA Hosting Workshop on April 1 to Discuss Clinical Outcome Assessments

As mentioned on our Health Industry Washington Watch blog, the FDA will host a public workshop on April 1, 2015 to provide updates on the use of clinical outcome assessments (COAs), as well as to address plans for future development and use of COAs in drug development programs. The workshop, entitled “Clinical Outcomes Assessment Development and Implementation: Opportunities and Challenges,” will also cover the inclusion of patient-centered outcome measures, COA usage standards and collaborative processes for the development and dissemination of COAs. Participants may attend in person or via webcast. If you are interested in attending, please register no later than March 27, 2015.

In-House Lawyers in France Remain without Legal Privilege

“Projet de loi Macron,” a bill recently introduced by French Minister for Economic Affairs Emmanuel Macron, proposed the recognition of legal privilege for in-house lawyers in France – a considerable change in France’s procedural rules as legal privilege for in-house counsels does not currently exist. However, this recognition was rejected by the Special Commission of the French National Assembly before the bill was passed by the lower chamber. As noted by Reed Smith partner Daniel Kadar in “From ‘Akzo’ to ‘Loi Macron’: There is still no Legal Privilege for In-House Lawyers in France,” this is consistent with the Grand Chamber of the European Court of Justice’s 2010 ruling in Akzo.

To read the client alert, click here.

Court of Federal Claims Decision on Contracts Regulations Reversed on Appeal

Earlier this week, the Court of Appeals for the Federal Circuit reversed and remanded the Court of Federal Claims’ August 2014 decision in CGI Federal Inc. v. The United States, in which the Court of Federal Claims ruled that the Centers for Medicare and Medicaid Services (CMS) could include contract clauses that deviated from federal government commercial contracting rules. As discussed by Reed Smith attorneys Lorraine Campos, Leslie Monahan and Nkechi Kanu in “FAR Part 12 Applies to CMS Orders on Federal Supply Schedule Contract,” a post on the Global Regulatory Enforcement Law Blog, the appellate court expressed its disagreement by ruling that Federal Acquisition Regulation (FAR) Part 12 – which concerns the acquisition of commercial items – applies to Federal Supply Schedule (FSS) contracts, and that FAR Part 12’s disallowance of terms inconsistent with customary commercial practices applies to requests for quotes issued by CMS that are pursuant to an underlying FSS contract. FAR Part 12, the appellate court stated, applies to orders made pursuant to existing FSS contracts by its terms.

To read the full post, click here.

FDA Draft Guidance Addresses Electronic Informed Consent in Clinical Investigations

This post was written by Deb McCurdy.

Today the Food and Drug Administration (FDA) published a notice announcing the availability of a draft guidance document entitled “Use of Electronic Informed Consent in Clinical Investigations: Questions and Answers.” The draft guidance provides recommendations for clinical investigators, sponsors, and institutional review boards (IRBs) on the use of electronic media and processes to obtain informed consent for FDA-regulated clinical investigations of medical products, including human drug and biological products, medical devices, and combinations thereof. The guidance provides recommendations on procedures that may be followed when using an electronic informed consent (eIC) to help:

  1. ensure protection of the rights, safety, and welfare of human subjects
  2. ensure the subject's comprehension of the information presented during the eIC process
  3. ensure that appropriate documentation of consent is obtained when electronic media and processes are used to obtain informed consent
  4. ensure the quality and integrity of eIC data included in FDA application submissions or made available to FDA during inspections

FDA is requesting comments on the draft guidance; to be assured of consideration during development of the final version, submit comments by May 8, 2015. Note that while the document is issued by FDA and is drafted as guidance that would apply to FDA-regulated clinical investigations, the HHS Office for Human Research Protections (OHRP) is considering whether to adopt the positions and recommendations proposed in this guidance for research regulated under the HHS protection of human subjects regulations, 45 CFR part 46, and to issue a joint OHRP and FDA guidance document on this topic when the final guidance document is developed.

Recent Regulatory Actions on Advertisement Disclosures

Reed Smith attorneys Kevin Madagan and Keri Bruce were recently quoted in the January 21st edition of Compliance Week in an article titled “FTC, FDA Take Closer Look at Disclosures,” which discusses recent actions by the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) concerning advertisement disclosures. The FTC launched Operation Full Disclosure in fall 2014, involving the distribution of warning letters to more than 60 companies across “a wide range of industries” for allegedly failing to properly disclose information in their advertisements. In the article, Kevin and Keri note that the letters are a reminder to all companies, even those that did not receive letters, to review their disclosures.

The FDA also recently announced that its “fair balance” doctrine may be amended to only require companies to recite or print a product’s most prominent and common side effects during television commercials. While such changes would undoubtedly be welcomed by pharmaceutical manufacturers, it could actually result in the FDA paying more attention to drug disclosures to ensure their continued effectiveness. Kevin also comments that there is precedent of the FDA following the FTC’s lead in such matters, and the crackdown on advertisement disclosures could end up involving both agencies.

To read the article, click here.