Life Sciences Legal Update : Life Sciences Lawyers & Attorneys : Reed Smith Law Firm : Healthcare, Food and Drug Law, Biotechnology, Privacy, Product Liability

The California Court of Appeal reversed a lower court's holding for a generic pharmaceutical manufacturer and distributor, and held that implied preemption principles did not preempt the state law claims challenging the labeling for a generic drug. In McKenney v. Purepac Pharms. Co., --- Cal. Rptr. --- , 2008 WL 4355425 (Cal. App. Sept. 25, 2008), the lower court granted the manufacturer's demurrer without leave to amend, holding that because the defendant was a manufacturer of the generic drug, metroclopramide, it could not deviate from the original FDA approved warnings for the product. The reviewing court rejected this specific holding by stating that the FDA allows generic manufacturers to change its labeling with new safety information given the existence of supporting evidence. (57 Fed. Reg. 17950, 17961). The court also examined the Carlin v. Superior Court, 13 Cal. 4th 1104 (1996) decision that imposed liability for labels that failed to warn of risk that were known or reasonably known by the manufacturer. The court in Carlin noted the company's argument that the FDA evinced no intent to impliedly preempt state law claims, and nothing indicated that this intent had changed now. While the manufacturer showed more recent changes indicative of the FDA's intent, the court stated that this was particular case did not demonstrate the type of conflict preemption upheld in other cases, such as instances where the FDA precluded the manufacturer from including certain warnings for the drugs.

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New posts are up on Life Sciences Legal Update regarding a Senate committee hearing on DTC ads for medical devices, the DOJ's revised its Principles of Federal Prosecution of Business Organizations, the business climate for pharmaceutical manufacturers, House Energy and Commerce Committee action on more than 7 health policy bills, and the overlooked implications of the FTC's Red Flag Regulations for the life sciences and health care industry. These posts, and more, are in keeping with the site's inter-disciplinary scope which is grounded in the recognition that legal issues are intertwined with business concerns, and rarely confine themselves to narrowly proscribed practice areas.

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The United States Senate Special Committee on Aging heard testimony Sept. 17, 2008, to consider recommendations on whether increased regulation of direct-to-consumer (“DTC”) advertising is needed for restricted medical devices regulated by FDA, such as heart stents, replacement hips, and other implanted medical devices. (The Federal Trade Commission regulates advertising for non-restricted medical devices.) 

Describing its inquiry as “Marketing or Medicine: Are Direct-to Consumer Medical Device Ads Playing Doctor?” the hearing was another in the committee’s on-going, 15-month series of oversight hearings on medical device and pharmaceutical marketing practices. Committee Chairman Sen. Herb Kohl (D-Wis.) observed in his opening remarks that the pharmaceutical industry has spent “billions of dollars advertising their products directly to consumers” since the mid-1990s, while the medical device industry is “just beginning to get into the game.” (According to AdvaMed’s President and CEO, Stephen J. Ubl, pharmaceutical companies spent $2.46 billion on DTC ads in 2005 while medical device companies spent $116 million.) 

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We previously wrote about how the Department of Justice (DOJ) revised its Principles of Federal Prosecution of Business Organizations, which govern how federal prosecutors investigate, charge, and prosecute corporate crimes, including health care fraud. Reed Smith's Matthew R. Sheldon, Alexander “Sandy” Y. Thomas, and Richard D. Kelley have written more on the subject.

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A post on in-pharmatechnologist.com summarizes a report by Moody's forecasting that pharmaceutical companies in the United States and Europe will face difficult times over the course of the next 12-18 months.

Some of the causes identifed by Moody's include:

• patent expirations and challenges to existing patents;
• difficult regulatory climate;
• downward pricing pressures; and
• unexpected problems related to product safety.

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On September 17, 2008, the House Energy and Commerce Committee unanimously approved more than 7 health policy bills addressing such issues as FDA drug and device approvals, internet pharmacy regulation, health care workforce issues, insurance coverage, and medical treatment, including:

• H.R. 1014, the "Heart Disease Education, Analysis Research, and Treatment (HEART) for Women Act"; would require new drug, biologics, and device applications submitted to FDA to include specific data on the drug's safety and effectiveness by gender, age and race. This information would be posted on the internet. The bill as amended also would authorize research and public health activities to reduce cardiovascular disease in women.
• H.R. 6353, the “Ryan Haight Online Pharmacy Consumer Protection Act of 2008,” would prohibit the sale of controlled substances over the Internet without a valid prescription and subject on-line pharmacies to a series of new restrictions.
• H.R. 758, the “Breast Cancer Patient Protection Act,” would require health insurers to cover minimum lengths of stay and secondary consultations for patients undergoing procedures to treat and diagnose breast cancer.
• H.R. 2994, the “National Pain Care Policy Act of 2007,” would direct the Department of Health and Human Services to establish a national pain care education outreach and awareness campaign.
• H.R. 5265 the “Paul D. Wellstone Muscular Dystrophy Community Assistance, Research, and Education Amendments of 2008,” would promote research into the causes and treatments of various forms of Muscular Dystrophy.
• H.R. 2583, the “Physician Workforce and Graduate Medical Education Enhancement Act of 2007,” would authorize a loan repayment program for hospitals to start a residency training program.
• H.R. 6908, the “HIPAA Recreational Injury Technical Correction Act,” would require timely disclosure of limitations and restrictions on coverage under group health plans.

The legislation now moves to the full House for further consideration.

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This post was written by Debra L. Hutchings, Paul J. Bond, and Carol C. Loepere.

In November 2007, the Federal Trade Commission (“FTC”) issued sweeping regulations aimed at deterring, detecting and preventing identity theft. Under these rules, known as the Red Flag Regulations, 16 C.F.R. § 681.1 et seq. and Final Rule (“Red Flag Regulations”), financial institutions and creditors of covered accounts must establish a program to detect, prevent and mitigate identity theft. While somewhat unclear and perhaps counterintuitive, the breadth of the Red Flag Regulations and the FTC’s current interpretation indicates that these rules apply to many participants in the health care industry. The rules become effective November 1, 2008.

The Red Flag Regulations have three parts, two of which pertain to the health care industry. The first part applies to anyone who uses “consumer reports” for employment, insurance or credit purposes. The second part places obligations on “creditors and financial institutions” to detect, prevent and mitigate identity theft in relation to accounts covered under the Red Flag Regulations. This Client Alert addresses each part in turn.

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The Institute for the Advancement of the American Legal System (“IAALS”) and the American College of Trial Lawyers Task Force on Discovery conclude in their Interim Report (“Report”) that the civil justice system, while not broken, is in serious need of repair. Significantly, however, they do conclude that the discovery system is, indeed, broken because it costs far too much and has become an end in itself.

The Report is based upon responses from 1,494 Fellows of the American College of Trial Lawyers to a survey developed by the College’s Task Force on Discovery and the IAALS. Of the 3,812 Fellows surveyed, 42 percent responded, a response rate the Report characterizes as “unusually large.” On average, survey respondents have been practicing law for 38 years, with 31 percent representing defendants exclusively, 24 percent representing plaintiffs exclusively, and 44 percent representing both, but primarily defendants.

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The Department of Justice (DOJ) has revised its Principles of Federal Prosecution of Business Organizations, which govern how federal prosecutors investigate, charge, and prosecute corporate crimes, including health care fraud. A number of the revisions address the area of cooperation credit, including providing that credit for cooperation will not depend on a corporation’s waiver of attorney-client privilege or work product protection, but rather on the disclosure of relevant facts. The guidelines also instruct prosecutors not to consider a corporation’s advancement of attorneys’ fees to employees when evaluating cooperativeness, and specify that the mere participation in a joint defense agreement will not render a corporation ineligible for cooperation credit. Moreover, prosecutors may not consider whether a corporation has sanctioned or retained culpable employees in evaluating whether to assign cooperation credit to the corporation.

Reed Smith's Health Industry Washington Watch blog has new posts about these guidelines as well as new FDA initiatives; Medicare DMEPOS accreditation requirements; the Medicare Part B drug CAP program; Congressional hearings and markups; OIG and GAO reports; upcoming health care industry events; and other policy developments.

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In-house lawyers in many industries--including life sciences and health care--repeatedly confront hard questions about the attorney-client privilege. As Reed Smith lawyers Matthew Sheldon and Sandy Thomas explain in the PrivilEdge Newsletter, a number of recent developments warrant attention. These include "The Attorney-Client Privilege Protection Act of 2007"--pending legislation that would curb demands for waiver of the privilege during corporate investigations and a recent case addressing attorney-client privilege issues such as the "joint client" exception, protection for tax advice and internal audits, and corporate ratification of a lower-level employee's disclosure of privileged information. Their article also discusses proposed Rule of Evidence 502 (S. 2450) regarding inadvertent disclosure of privileged information. As of Monday, that bill is awaiting the President's signature.

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