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

This post was written by Carol C. Loepere.

Today, the Federal Trade Commission (FTC) issued a press release to announce that it will suspend enforcement of the new “Red Flag Rules” until May 1, 2009, to give "creditors" and financial institutions additional time in which to develop and implement written identity-theft prevention programs. Reed Smith has worked on behalf of the American Health Care Association (AHCA) to question the applicability of the rules to health care providers, and to request a delay in the effective date of the rule. For more on the possible application of the FTC's Red Flag Rules to health care providers, see our prior post. 

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On October 22, 2008, the Government Accountability Office (GAO) issued a report entitled "Drug Safety: Better Data Management and More Inspections Are Needed to Strengthen FDA's Foreign Drug Inspection Program." Among other things, the GAO found that: FDA databases contain inaccurate information on foreign establishments subject to inspection; FDA inspects relatively few foreign establishments each year to assess the manufacturing of drugs currently marketed in the United States; and FDA’s identification of serious deficiencies has led foreign establishments to take corrective actions, but inspections to determine continued compliance are not always timely. The GAO recommends that FDA improve the data that it uses to manage its foreign inspection program, conduct more inspections of foreign establishments, and ensure more timely inspection of foreign establishments where FDA has identified serious deficiencies. HHS agreed that FDA should conduct more foreign inspections, and discussed other FDA oversight initiatives, such as database improvements.

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Tomorrow's JAMA contains an editorial entitled, "Prescription Drugs, Products Liability, and Preemption of Tort Litigation" (subscription) by Catherine D. DeAngelis; Phil B. Fontanarosa (JAMA. 2008;300(16):1939-1941 (doi:10.1001/jama.2008.513)).

Suffice it to say, the premise that tort litigation safeguards patient health is faulty. Ensuring patient access to innovative and needed medical options is essential. See Riegel v. Medtronic, Inc., 128 S. Ct. 999, 1009 (2009) (discussing the express preemption statute for medical devices and stating, "the text of the statute - suggests that the solicitude for those injured by FDA-approved devices, which the dissent finds controlling, was overcome in Congress's estimation by solicitude for those who would suffer without new medical devices if juries were allowed to apply the tort law of 50 States to all innovations.").

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Over at Drug and Device Law Beck and Herrmann muse on the possible impact of a win by Sen. Obama on drug and device law. This blog takes no sides on the election - and this may mean nothing for the future development of the law - but it is interesting to note that in the past, Sen. McCain has supported the criminalization of product liability in certain circumstances, as Victor Schwartz explains in this March 2006 testimony before the Senate Judiciary Committee.
 

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This post was written by Matthew E. Wetzel.

In early 2008, the District of Columbia City Council passed the SafeRX Amendment Act (the “Act”), introduced by Council Member David Catania.¹ The Act requires pharmaceutical “detailers,” which includes both employees and independent contractors of pharmaceutical manufacturers, to be licensed by the District of Columbia Board of Pharmacy (the “Board”) by April 1, 2009. Pursuant to the Act and regulations issued by the Board Aug. 29, 2008,² once a pharmaceutical detailer has been licensed by the Board, he or she must, among other things, (1) comply with the PhRMA Code on Interactions with Healthcare Professionals (“the PhRMA Code”), as well as additional requirements; (2) earn continuing education credits; and (3) follow stringent document retention requirements. This Client Alert summarizes the Act and the Board’s regulations, and includes a list of considerations for manufacturers whose employees and independent contractors must be licensed to work in the District of Columbia.

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This post was written by Matthew E. Wetzel.

On Oct. 11, 2008, the Wisconsin Medical Society (WMS)--an association of more than 11,000 medical doctors in the state of Wisconsin--implemented a full ban on gifts to physicians. Specifically, the WMS policy prohibits physicians from accepting gifts from any provider of products that they prescribe to their patients. This includes personal items, office supplies, food, travel and time costs, or payment for participation in online continuing medical education (CME).

According to WMS, the goal is to restore patient trust in physicians' unbiased decision-making by eliminating any actual or potential conflicts between a physician' s medical judgment and a physician's interest in continuing to receive gifts from manufacturers and wholesalers. According to WMS President Steven Bergin, MD, the new policy establishes the principle that "individual physicians should take a bright line approach to accepting items from companies that make products or drugs that the physician might end of prescribing or recommending to his or her patients." He further states that "physicians have the responsibility to make sure nothing gets in the way of [the physician-patient] relationship--or even appears to get in the way."

In addition to the gift ban, the new Wisconsin policy includes the following items:

• The direct provision of drug samples to patients should be limited. (The policy also suggests that samples should be replaced by vouchers.)
• Physicians serving on formulary committees must disclose any commercial relationship with a "health product company," and recuse themselves from the formulary process.
• CME providers cannot accept support directly from health product companies. Rather, the policy suggests that CME providers should create a medical education fund to accept unrestricted donations that would be dispersed according to the CME provider's policies. CME contributions would be required to be disclosed as public information by the CME provider on the Internet.
• Physicians are prohibited from serving on speaker bureaus for health product companies, and from "ghostwriting" (e.g., the practice whereby physicians permit their names to be listed as authors for articles actually written by manufacturers).
• Consulting arrangements must be subject to contracts that require physicians to provide specific "deliverables" in exchange for compensation.

These new rules can be found in WMS Policy ETH-004, "The Relationship of the Profession to the Health Product Industry."

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Reed Smith LLP, in conjunction with ChemRisk and the Center for Business Intelligence, is presenting a complimentary webinar, "Nanotechnology - What the Life Sciences Industry Needs to Know about Managing its Risks", October 22 at noon eastern.

The moderator for this event will be Reed Smith partner Antony B. Klapper. Speakers include:

• Barr Weiner, Associate Director for Policy in the Food and Drug Administration's Office of Combination Products and the OCP representative on the FDA's agency-wide Nanotechnology Task Force
• Leonard I. Sweet, Senior Health Scientist, ChemRisk, Inc.
• Amy K. Madl, Senior Managing Health Scientist, ChemRisk, Inc.

The program will last one hour and will provide an overview of nanotechnology and its uses in the life sciences industry; actual and theoretical risks posed to humans by the use of engineered nanomaterials; the ways that life sciences companies can evaluate those potential risks and mitigate them through risk management practices and good product stewardship; and legal risks associated with engineered nanomaterials, and exploring next steps at the FDA and other regulatory bodies.

A link to register for this free program can be found at cbinet.com.

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Regulatory and legislative developments posted on Health Industry Washington Watch include:

• Regulatory Developments.  The Agency for Healthcare Research and Quality (AHRQ) and the HHS Office for Civil Rights have announced the availability of an interim guidance document entitled “Implementing the Patient Safety and Quality Improvement Act of 2005, Including How to Become a Patient Safety Organization.'' The Centers for Medicare & Medicaid Services (CMS) has published a notice soliciting comments on the Medicare Part D/Medicare Advantage Calendar Year (CY) 2010 Bid Pricing Tool and the CY 2010 Plan Benefit Package software and formulary submission.
• Other CMS Developments.  CMS has released details on the scoring methodology it uses to identify those nursing homes that become candidates for the “Special Focus Facility” initiative by virtue of their more serious history of severe and persistent quality of care problems. The agency also is soliciting comments regarding an interim study of options for revising geographic location adjustments under the Medicare physician fee schedule. In addition, CMS has posted Medicare Part D prescription drug plan and Medicare Advantage health plan information for 2009 online.
• Legislative Developments.  President Bush recently signed into law a number of health bills, including legislation to restrict internet pharmacy sales, increase funding for health centers, and expand disease research, among others.
• Odds & Ends.  The Food and Drug Administration (FDA) has released a draft guidance document on “Potency Tests for Cellular and Gene Therapy Products.” The Government Accountability Office (GAO) has issued reports examining the FDA’s advisory committee processes and reviewing how nonprofit hospitals meet community benefit requirements. The AHRQ's Technology Assessment Program will be posting draft reports on its website, including an upcoming report on "Potential Conflict of Interest in the Production of Drug Compendia." In addition, CMS is encouraging hospitals and other health care providers to review a new publication, “Community Pan-Flu Preparedness: A Checklist of Key Legal Issues for Healthcare Providers."
• Upcoming Events.  CMS is hosting a Special Open Door Forum for physicians on the Medicare Medical Home Demonstration project. The agency also is holding a Prescription Drug Event Symposium at CMS headquarters in Baltimore for researchers and other interested parties. In addition, CMS will host a series of national provider calls regarding issues associated with the adoption of the ICD-10 coding system.

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The Washington Legal Foundation has published "Causation in Court: Working Principles for Toxic Tort Cases" by Reed Smith partner Antony Klapper. This interesting paper describes six working
principles that get at aspects of causation that sometimes confuse judges and juries when litigation involves allegations that a substance is toxic and has caused disease.

The principles the article explains in more depth are:

1. Causation in science is not synonymous with causation in law, but the gap has closed.
2. Proof of general causation requires, at a minimum, reliable epidemiology and a statistically significant estimated relative risk of more than 2.0.
3. Proving causation does not end with the general causation inquiry. Proof of specific causation is absolutely essential before any causal conclusions can be drawn.
4. Risk assessment is the best tool available to answer questions of causation.
5. Although risk assessment is the best tool available, regulatory rules for implementing risk assessments should not be used, and too often are abused.
6. Where there are multiple exposure sources for the same toxin, a more principled, objectively reliable methodology should be used to answer questions of causation. Concepts such as “substantial contributing” cause should be jettisoned.

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This post was written by Kevin M. Madagan.

FDA has repeatedly stated over the past year that more enforcement activity in the promotional arena is likely. It appears that time has arrived. Half of FDA’s Division for Drug Marketing, Advertising, and Communications’ (“DDMAC”) citations for misleading advertisements in 2008 were sent in September and October. The citations address typical misbranding issues such as failing to adequately disclose risks, overstating efficacy, broadening indications, and asserting unsubstantiated superiority claims. Whether these citations are the result of DDMAC’s increased budget and new hires, or a continued interest by Congress and the Department of Justice over drug industry promotional issues, one thing appears clear: a new era of increased scrutiny is likely here. 

A particularly interesting position that DDMAC has taken in a few of the September and October letters concerns descriptions of disorders and the consequences of failing to obtain treatment. For example, in five letters targeting drugs indicated to treat attention deficit hyperactivity disorder (“ADHD”), DDMAC cites marketing materials that list the difficulties and consequences of untreated ADHD (e.g., poor social-emotional development and job success, inability to complete schooling, illegal behaviors, contraction of sexually transmitted diseases, motor vehicle accidents, and physical injury). In each letter, DDMAC takes the position that listing such difficulties and consequences in association with an ADHD drug constitutes an implied claim that the drug will have a positive impact on these issues. If deemed an implied claim, DDMAC requires studies with endpoints that support each claim. 

This is similar to DDMAC’s position on quality-of-life (“QOL”) claims, with health-related QOL claims requiring substantial supporting evidence in the form of adequate and well-controlled studies designed to specifically assess these outcomes. 

While the need to have adequate studies to support claims is nothing new, drug manufacturers should remain cognizant of everything listed in marketing materials, including statements concerning the difficulties and consequences of untreated disorders, diseases, or conditions. Drug manufacturers wishing to include such statements must ensure that all implied claims arising from these general statements are supported by substantial evidence (i.e., adequate and well-controlled studies with endpoints targeting each implied claim/impact). Stated otherwise, drug manufacturers must design specific study endpoints to support a disease state description, or must carefully tailor disease state descriptions to pre-existing specific study endpoints.

The Oct. 13, 2008, Pink Sheet provides further detail about DDMAC’s increased activity. DDMAC’s 2008 warning letters can be accessed at fda.gov.

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The Recorder (via Law.Com) has an article today discussing the Fifth Circuit's en banc decision In re Volkswagen of America Inc. and its ramifications for patent litigation.

The case involves the often-discussed (some would say notorious) Eastern District of Texas. The Rio Grande Valley and Gulf Coast of Texas are repeat offenders on the American Tort Reform Association's "Judicial Hellholes" list. Both patent and product liability cases historically have made their way because of the plaintiff-friendly nature of this jurisdiction, and judges in the Eastern District often rejected venue challenges under the reasoning that if a product was available in the jurisdiction, that was enough for venue—even if no other connection linked the case to the Eastern District of Texas.

In Volkswagen, however, an en banc panel of the Fifth Circuit issued a writ of mandamus ordering a product liability matter transferred from the Marshall Division of the Eastern District of Texas to the Dallas Division of the Northern District of Texas, where the underlying accident took place.

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In Parker v. Stryker Corp., 2008 WL 4457864 (D. Colo. Oct. 1, 2008), the District of Colorado addressed Riegel v. Medtronic, Inc., 128 S. Ct. 999 (2008), and the applicability of the express preemption clause of the Medical Device Amendments in a case where the manufacturer sought a discovery stay pending resolution of its motion to dismiss product liability claims regarding its PMA device, a hip implant. Although the motion to dismiss has not yet been resolved, the court exercised its discretion to decline the stay to allow discovery into plaintiffs' claims which supposedly parallel federal requirements. The case is not reported, and its lack of detail means it has limited value (if any) to future courts. So does Parker's failure to address authorities that shape and define what this so-called "parallel requirements" exception really takes. Medtronic, Inc. v. Lohr, 518 U.S. 470, 495 (1996) (state duty must be "identical" to the corresponding existing federal requirements for a plaintiff to survive preemption); see also McMullen v. Medtronic, Inc., 421 F.3d 482, 489 (7th Cir. 2005) (even a permitted act that is turned into a state requirement will not constitute a "parallel" requirement).

Preemption issues reach many products in the life sciences industry, and for preemption geeks, one category of over-the-counter (OTC) drugs is frequently featured in preemption jurisprudence: head lice treatments. Mills v. Warner-Lambert Co., --- F.Supp.2d ----, 2008 WL 4488308 (E.D.Tex. Sept. 30, 2008) is the latest. In Mills, the Eastern District of Texas interpreted and applied the express preemption provision for nonprescription drugs, Section 379r of the Federal Food, Drug and Cosmetic Act. Plaintiffs asserted that the lice treatment medications manufactured and sold by the defendants were ineffective, and asserted claims of breach of implied warranty of merchantability and violation of the Texas Deceptive Trade Practices Act. Defendants argued that Section 379r preempted these claims because they constituted a requirement on the marketing and sale of the products that differed from that provided under the FDCA. The district court agreed, holding that (1) while the medication was not approved through the NDA process but through the "monograph system for over-the-counter drugs," the FDA's oversight and review over the medication constituted a federal requirement within the meaning of Section 379r; (2) the plaintiffs' lawsuit would create a state requirement related to the medications, which followed that same holding in Riegel; (3) this state requirement would be different from, and in addition to, the federal requirement that allowed these manufacturers to sell the lice medication labeled as they were; and (4) the savings clause of Section 379r(e), which saved product liability claims from preemption, would not operate the same as for claims that were based on a contractual ground.

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Over at druganddevicelaw.blogspot.com, Jim Beck and Mark Hermann have a comprehensive summary of the current draft version of ALI's Principles of the Law of Aggregate Litigation, which ALI intends to influence the future of class action litigation in the United States. Despite improvements over the prior draft, Beck and Hermann caution that it "still suffers from the same two fundamental problems that have been there all along: (1) it would do away with predominance as a practical restriction on the types of claims that can be certified as class actions, and (2) it would allow routine certification of what it calls 'common issues' – pieces of litigation or of a cause of action – without regard to the litigation or cause of action as a whole."

Another ALI member who is familiar with the project, Reed Smith's Jim Martin, explains that some in the ALI Members’ Consultative Group seemingly fail to appreciate the real-world hardships that classes create for the targeted companies, and labor under the misapprehension that common adjudication should be preferred above all else under the euphemism of judicial efficiency. With more attention focused on the problems with these draft Principles, it is hoped that the project may yet change course.

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The Reed Smith Health Industry Washington Watch blog has been updated to discuss a variety of regulatory and legislative developments of interest to the life sciences and health industry, including the following:

• Legislative Developments: President Bush signed into law mental health parity legislation and funding for HHS and other federal agency programs through March 6, 2009. Congress also has cleared online pharmacy and organ transplant bills that now await the President's signature.
• CMS Developments: A new CMS initiative to combat Medicare DMEPOS and home health fraud and abuse; CMS guidance on Medicare payment of certain routine costs associated with clinical trials; CMS release of “Medically Unlikely Edits” used by Medicare contractors to prevent payment for excessive services; and waiver of certain hospital quality reporting requirements in hurricane areas.
• Regulatory Developments: Revised FY 2008 Medicare hospital inpatient PPS rates; solicitation of members for the DMEPOS competitive bidding advisory committee; a final rule on Medicaid self-directed personal assistance services; a final rule revising the Medicaid definition of "multiple source drug"; and FDA reporting requirements for authorized generics.
• OIG and GAO Developments: The OIG has released its FY 2009 Work Plan, supplemental compliance program guidance for nursing facilities, and reports on nursing home deficiencies. The GAO has issued reports on trends in Medicare imaging services and hospital-associated infections.
• Upcoming Events: CMS is hosting a conference on DMEPOS supplier accreditation and provider calls on adoption of the ICD-10 coding system.

For details on these and other health industry developments, please visit healthindustrywashingtonwatch.com.

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This post was written by Matthew R. Sheldon and Alexander "Sandy" Y. Thomas.

On September 19, 2008, President Bush signed into law the long-awaited Federal Rule of Evidence Rule 502; “Attorney-Client Privilege and Work Product; Limitations on Waiver” (“Rule 502”). Rule 502 addresses waiver of the attorney-client privilege and work product doctrine in the context of disclosures to a federal agency or during a federal proceeding.

Among other benefits, Rule 502 adds some needed clarity to the question of what constitutes a waiver if privileged or work product material is inadvertently disclosed to an opponent in litigation. It also addresses the scope of a waiver and the impact such a waiver may have in other federal and state court proceedings.

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This article discusses the U.S. Supreme Court’s decision in Exxon Shipping Co. v. Baker, 128 S. Ct. 2605 (2008). In Exxon, the Supreme Court established a 1:1 ratio between punitive and compensatory damages under federal maritime law, and implications for applying the 1:1 ratio to limit punitive damages in state court actions. Originally published in the International Association of Defense Counsel's Drug, Device and Biotech Committee Newsletter for September 2008. Reprinted with permission of IADC.

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SCOTOSblog has its usual comprehensive coverage of the first Supreme Court case of this term, Altria Group v. Good, which involves questions of express and implied preemption in the context of tobacco.

As Lyle Denniston explains, "More than four decades ago, the Federal Trade Commission – the federal government’s main regulator of business conduct – told the major companies making and selling cigarettes that it would not challenge factual statements they made about the tar and nicotine content of cigarettes, if the claims were based on tests done using what is called the “Cambridge Filter Method.”

* * *

Three individuals who live in Maine – Stephanie Good, Lori A. Spellman and Allain L. Thibodeau – filed a class-action lawsuit, based on state law . . . . The low yields of the test method, according to the lawsuit, were offset by the actual smoking habits of users: they “compensated” by taking deeper puffs, holding the smoke in their lungs longer, or smoking more cigarettes. The lawsuit did not seek compensatory damages, but rather a return of the money smokers had paid for “light” cigarettes, along with a claim for punitive damages and recovery of their attorneys’ fees.
Philip Morris sought dismissal of the case, contending that state law claims had been displaced by the federal cigarette labeling and advertising law or FTC actions. The company made two claims of “preemption” of such state law claims: it said they were expressly pushed aside by the federal law controlling cigarette marketing, and were impliedly preempted by the FTC’s four-decades-long effort to implement a uniform policy on disclosing the health risks of smoking. A U.S. District Court dismissed the lawsuit on preemption grounds, but the First U.S. Circuit Court of Appeals in Boston reinstated it."

Links to the full analysis and briefs are on the case's SCOTUSwiki page, and links to the argument should be up very soon.

UPDATE: The transcript is now available.

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