FCC Sheds New Light on TCPA’s Exemption for Healthcare-Related Calls

As we have previously reported, the Federal Communications Commission (“FCC”) issued a Declaratory Ruling and Order (“Order”) on July 10, 2015, clarifying several sections of the Telephone Consumer Protection Act (“TCPA”) and its implementing regulations.  One important clarification addressed a petition filed by the American Association of Healthcare Administrative Management (“AAHAM”) in October 2014 regarding “free, pro-consumer… healthcare-related messages” and under what circumstances such messages are exempt from the TCPA’s requirement for prior express consent.  This petition sought clarification on exemptions that are currently found in the TCPA for calls subject to the Health Information Portability and Accountability Act (HIPAA).

The HIPAA exemption in the TCPA regulations currently extends to advertising and marketing calls to cell phone and residential landline phone numbers.  The exemption provides that calls that deliver a healthcare message made by or on behalf of a “covered entity” or its “business associate,” as those terms are defined in HIPAA, do not require the prior express written consent of the called party.  What has been confusing is whether non-telemarketing calls (i.e., informational or transactional calls) that deliver healthcare messages require any type of consent at all.  The FCC’s response to the AAHAM petition helps to answer that question.

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340B Drug Pricing Program Omnibus Guidance Notice Published by Health Services Resources Administration

On August 28, 2015, the Health Services Resources Administration (“HRSA”) published its 340B Drug Pricing Program Omnibus Guidance Notice in the Federal Register. Although many aspects of the Notice reiterate previous HRSA guidance, several elements will generate significant debate among program stakeholders regarding the scope of the 340B program.  In addition, the Notice presages a more robust – if still somewhat ill-defined – oversight and enforcement environment for both covered entities and manufacturers participating in the program.

For more details on this Notice, the significant policy issues that it raises, and the potential areas that 340B program stakeholders may wish to comment on through October 27, 2015, read the Client Alert written by Joe Metro, Julia Krebs- Markrich, Salvatore Rotella, Jacquelyn Godin, and Zachary Portin.

The Legal 500 United States Names Reed Smith ‘Data Protection and Privacy: 2015 Firm of the Year’

Reed Smith’s Information Technology Privacy & Data Security Group has been doing phenomenal work for years, linking experienced cybersecurity and privacy professionals with veteran intellectual property litigators, information governance advisors, technology contracting specialists and others with a similar data-oriented perspective.  And now it has been recognized by The Legal 500 United States as its ‘Data Protection and Privacy: 2015 Firm of the Year.’

Click here for the group’s blog on data protection and privacy issues, and  here to read the press release.  You can also revisit some of the life sciences and health care data privacy issues and developments we have covered here.

Proceed with Caution: Attorney-Client Privilege and Communications with Third-Party Consultants

In our modern economy, businesses regularly use all manner of third-party consultants for many different reasons, including cost, efficiency, and expertise.  Less regularly, communications between businesses and consultants are the subject of discovery motion practice in litigation.  Two recent decisions out of the Southern District of New York demonstrate why businesses that use third-party consultants should proceed with caution to preserve claims of attorney-client privilege, and prevent the disclosure of what would otherwise be privileged communications.

In a normal business setting, the attorney-client privilege is not implicated when third-party consultants are involved in typical business functions, such as meetings, revising draft documents, and setting corporate policy.  However, the privilege can be, and often is, at issue when privileged communications are shared with these consultants.

The root of the problem lies with a basic tenet of the attorney-client privilege:  communications between attorney and client are confidential, but once that communication is shared with a third party, the privilege is waived.  In some cases, however, courts have found an exception to this normal waiver rule, depending upon the role of the third party and the nature of the communication.  See PR That’s Protected, Corporate Counsel (Oct. 2014) (available here).

In both of the decisions examined below, the courts were focused on the critical question underlying this analysis: was the purpose of the third-party consultant’s participation to improve the comprehension of the communications between attorney and client?  In both decisions, the answer was no—and because the third party was not essential to the facilitation of legal services, the privilege was held to be waived.

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HHS and OIG Issue Advisory Opinion Announcing Administrative Sanctions Will Not Be Imposed for Individuals Undergoing Late Insurance Approvals

The Department of Health and Human Services (HHS) and Office of Inspector General (OIG) issued Advisory Opinion 15-11 stating that the OIG will not impose sanctions on individuals for a program that provides free drugs to patients experiencing late insurance approvals. The OIG concluded that, although the arrangement has the potential to generate improper payment under the federal health care program anti-kickback statute, the OIG would not seek administrative sanctions against the manufacturers because the “Program” presents a low risk of fraud and abuse. The OIG also concluded that the arrangement would not violate the beneficiary inducement civil monetary penalty (CMP), which prohibits the offer of payment to a Medicaid or Medicare beneficiary that the offeror knows or should know is likely to influence the beneficiary to use a particular “provider, practitioner, or supplier” for federally reimbursed items or services.

For more information on this Program and the potential implications for drug manufacturers, read the Client Alert  written by Joseph Metro and Jacquelyn Godin.

First Opinion Issued on ACA “60-Day Overpayment Rule” in a FCA Case

In a case dating back several years, the first judicial opinion interpreting the Affordable Care Act’s “60-Day Overpayment Rule” in a False Claims Act case was recently issued by the Southern District of New York. In Kane v. Healthfirst, Inc., et al., the court found in favor of the DOJ, denying the defendant hospitals’ motion to dismiss, finding that the hospital had failed to timely repay overpayments. Although providers are still awaiting CMS’ Final Rule (the proposed rule was covered on our Health Industry Washington Watch blog back in 2012 here), after this recent decision, questions remain regarding how its holding will apply to providers who diligently investigate potential overpayments but fail to meet the 60-day reporting and repayment timeframe.

For more details on this decision and the potential impact to providers, read the Client Alert written by Carol Loepere, Scot Hasselman and Nancy Bonifant.

What Comes Next In Amarin Pharm v. FDA?

The Southern District of New York’s preliminary injunction in Amarin Pharm, Inc. v. FDA—prohibiting the FDA from taking action against Amarin over truthful, non-misleading “off-label” statements about its prescription drug Vascepa—understandably has been big news, analyzed here  and  elsewhere.

Some are asking whether the FDA will pursue appellate review of the decision.  An indication about that may come soon, as the District Court issued an order yesterday that directs the parties to meet and confer, and then file a joint letter by August 28, 2015 advising about “the future course of and next steps in the case.”

In the meantime, the District Court’s Opinion and Order  is now available on Westlaw and Lexis as well:  Amarin Pharma, Inc. v. FDA, No. 15 Civ. 35888, 2015 WL 4720039, 2015 U.S. Dist. LEXIS 103944 (SDNY Aug. 7, 2015).

Amarin Obtains Preliminary Injunction Against FDA Regarding Off-Label and First Amendment Issues

In our prior posts about Amarin Pharma, Inc. v. FDA, we wondered what the Southern District of New York would make of Amarin’s request for an order prohibiting the FDA from taking enforcement actions against it over speech regarding “off-label” uses of its prescription drug, Vascepa.  Although Vascepa is regulated as a drug, equivalent products (also consisting of EPA and DHA omega-3 fatty acids) are sold as nutritional supplements.  More particularly, we wondered what District Judge Paul A. Engelmayer would make of one central paradox in the FDA’s position:  that the same statement—that “supportive but not conclusive research shows that EPA and DHA may reduce the risk of coronary heart disease”—supposedly is at once both false and misleading (as to omega-3 fatty acids as a drug), and not false and misleading (as to omega-3 fatty acids as a nutritional supplement).

The District Court has now issued its order and granted Amarin the injunction it requested, in what surely will be considered a landmark ruling regarding the First Amendment and truthful, non-misleading off-label promotion, alongside the Second Circuit’s United States v. Caronia, 703 F.3d 149 (2d Cir. 2012).

The Amarin Pharma opinion is lengthy and thoughtful.  In the background section, the court first recognized that off-label uses of approved medical products are not regulated by the FDA and widespread—even essential in areas like oncology and pediatrics—although “the FDA has long taken the position that a drug manufacturer who markets or promotes an approved drug for unapproved uses violates the FDA.”  Slip Op. at 9.

The court also reviewed the parties’ filings, including the FDA’s letter response (discussed and linked to here), and its opposition to the motion for preliminary injunction (discussed and linked to here).  Although the FDA’s filings seemed aimed at mooting the case before the District Court could reach the First Amendment issues, and although these filings did narrow the parties’ differences, the District Court recognized that a key disagreement still remained—“whether certain statements Amarin propose[d] to make are, in fact, truthful and non-misleading so as to be constitutionally protected.”  Slip Op. at 38.  If the statements were constitutionally protected, yet still might result in an FDA enforcement action for misbranding [id. at 44]— Amarin properly had standing to pursue its claim [id. at 42].

With regard to the Second Circuit’s Caronia decision, Amarin Pharma rejected the FDA’s reading of that case as a limited, fact-bound decision.  Instead, it recognized that Caronia’s holding represented “a definitive one of statutory construction” regarding the constitutionally permissible reach of the FDCA’s misbranding statute, as well as a clear rejection of the FDA’s authority to use the FDCA to prohibit truthful off-label promotion.  Id. at 48-49.  As Judge Engelmayer put it:

Where the speech at issue consists of truthful and non-misleading speech promoting the off-label use of an FDA-approved drug, such speech, under Caronia, cannot be the act upon which an action for misbranding is based.

Id. at 49 (emphasis in original).  Moreover, the court was not willing to limit its holding or its reading of Caronia to certain types of truthful and non-misleading manufacturer statements, rejecting FDA’s request that it distinguish between “statements made proactively to a doctor as opposed to those responding to a doctor’s query,” or “statements made to a doctor by a sales or marketing employee, as opposed to those by a scientist or a physician.”  Id. at 50.

In reviewing the specific promotional speech that Amarin sought to protect through its lawsuit, the court found none of it to be false or misleading, including:

  • Article reprints that Amarin wished to distribute (which the FDA did not contend were false or misleading)
  • A summary of a clinical study (the Anchor study, which the FDA also did not contend was false or misleading)
  • Certain proposed disclosures relating to off-label use of Vascepa
  • The statement that the FDA already permits for omega-3 fatty acids marketed as nutritional supplements

Id. at 53-65.

After reviewing Caronia’s holding, and the particulars of Amarin’s proposed speech to, the District Court ordered that:

(1) Amarin may engage in truthful and non-misleading speech promoting the off-label use of Vascepa, i.e., to treat patients with persistently high triglycerides, and under Caronia, such speech may not form the basis of a prosecution for misbranding; and (2) Based on the information presently known, the combination of statements and disclosures that Amarin proposes to make to doctors relating to the use of Vascepa to treat persons with persistently high triglycerides, as such communications have been modified herein, is truthful and non-misleading.

Although the FDA is for now enjoined from taking action against Amarin over truthful, non-misleading statements about Vascepa, the order does not conclude the case, and it remains to be seen what the court—and the FDA—decide to do next.  In the meantime, for more blog posts and analysis about the decision, check out our colleagues over at the Drug and Device Law Blog as well.

 

 

CMS Releases Proposed Stark Law Regulations

As previously discussed on our Health Industry Washington Watch blog, the Centers for Medicare & Medicaid Services (CMS) has proposed regulations “to reduce burden and to facilitate compliance” under the physician self-referral law known as the Stark Law. However, even with changes, the regulations will remain highly complex, with major implications for health care providers that misstep. Providers are encouraged to remain vigilant to ensure Stark Law compliance. CMS is soliciting comments on the proposed rule until 5 p.m. September 8, 2015.

For more information on the implications of CMS’ proposed changes to the Stark Law and the implications they may have for health care providers, read the full Client Alert written by Karl Thallner, Julia Krebs-Markrich, Tom Greeson and Elizabeth Carder-Thompson.

House Easily Passes 21st Century Cures Legislation, Includes Significant FDA Reforms

On July 10, 2015, the U.S. House of Representatives passed with an overwhelming majority (344-77), the 21st Century Cures bill (H.R. 6), a high-profile bipartisan bill intended to speed up and improve the process for approving innovative drugs and medical devices, and to address other issues, including those regarding clinical trial design, research funding, and interoperability of health technology (i.e., a health care system’s ability to connect with other systems).

If enacted into law in its current form, the bill will establish a Cures Innovation Fund to support biomedical research, providing $8.75 billion for the National Institutes of Health (NIH) and $550 million for the federal Food and Drug Administration (FDA).  It also will reauthorize funding for the NIH through fiscal year 2018.

The legislation includes a variety of offsets to pay for new costs, including provisions related to Medicare drug and durable medical equipment payment policy, Medicare imaging reimbursement, and civil monetary penalties in cases of Department of Health and Human Services (HHS) grant or contract fraud, among others (see our related posts on Health Industry Washington Watch).

Before coming to the House floor, the 352-page bill was subject to several drafts, spending more than a year in development at the Energy and Commerce Committee, where it unanimously passed last month 51-0 after series of hearings and roundtable discussions by lawmakers.

The bill as approved consists of four titles (Title I “Discovery”; Title II “Development”; Title III “Delivery”; Title IV “Medicaid, Medicare, and Other Reforms”).  Of particular interest to drug developers, health care IT professionals, and those involved in clinical trials, are the following sections of Title II “Development”:

  • Subtitle A, Patient-Focused Drug Development – Would require FDA to implement a “structured risk-benefit assessment framework” that incorporates “patient experience data” in the new drug development process.  Patient experience data means data collected by “patients, parents, caregivers, patient advocacy organizations, disease research foundations, medical researchers, research sponsors,” or other parties determined appropriate by FDA, that is intended to facilitate or enhance FDA’s risk-benefit assessments, “including information about the impact of a disease or a therapy on patients’ lives.”  Including patient experience data is intended to integrate patient experience with the development of potential treatments.
  • Subtitle B, Qualification and Use of Drug Development Tools – Would require FDA to establish a process for the qualification of “drug development tools” that can help “translate scientific discoveries into clinical applications.”  For the purpose of streamlining clinical trials, Subtitle B also would allow trial sponsors to request that the Secretary of HHS agree to an “accelerated approval development plan,” which must include agreement on surrogate endpoints, study design, and the magnitude of the effect of the drug on the surrogate endpoint that would be sufficient to demonstrate the safety and efficacy of the product.
  • Subtitle D, Modern Trial Design and Evidence Development – Would require FDA to investigate and issue final guidance to assist sponsors in incorporating adaptive trial design and Bayesian methods into proposed clinical protocols and new drug and biologic applications.  This subtitle also would require FDA to establish a program to evaluate the potential use of evidence from clinical experience to help support the approval of a new indication for a drug.
  • Subtitle G, Antibiotic Drug Development – Would create a process under which FDA and a sponsor could expedite the development and availability of treatments for serious or life-threatening bacterial or fungal infections in patients with unmet needs.
  •  Subtitle I, Orphan Product Extensions Now; Incentives for Certain Products for Limited Populations – Would extend the exclusivity period for six months for an approved drug already on the market when FDA approves a new indication for the drug for a rare disease or condition.  This subtitle also would reauthorize the priority review voucher incentive program for rare pediatric diseases.
  • Subtitle L, Priority Review for Breakthrough Devices – Would require FDA to establish a program to provide priority review for medical devices: (1) “representing breakthrough technologies”; (2) without any other approved alternatives; (3) offering significant advantages over existing approved or cleared alternatives; or (4) “the availability of which are in the best interest of patients.”
  •  Subtitle N, Sensible Oversight for Technology Which Advances Regulatory Efficiency – Would restrict FDA’s ability to regulate software that currently falls within the definition of a medical device under the Food, Drug, and Cosmetic Act.  Under this provision, FDA could regulate only “health software” that: (1) is “intended for use to analyze information to provide patient-specific recommended options to consider in the prevention, diagnosis, treatment, cure, or mitigation of a particular disease or condition”; or (2) FDA “determines poses a significant risk to patient safety.”  All other “health software” would be exempt from FDA regulation.
  •  Subtitle O, Streamlining Clinical Trials – Would require the HHS Secretary to harmonize differences between HHS Human Subject Regulations and the FDA Human Subject Regulations.  This subtitle also would permit the use of non-local institutional review boards for review of investigational device exemptions and human device exemptions.  In addition, it would waive the informed consent requirement for individuals participating in device and drug trials that pose no more than minimal risk to the participants.

H.R. 6 is now on its way to the Senate, which has held a number of hearings related to issues in the 21st Century Cures, but has yet to advance any legislation.  Stay tuned.

Summer Associate Yetundi Oni also contributed to this blog post.

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