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 Gina M. Cavalier and Brad M. Rostolsky.

Today the Department of Health and Human Services (HHS) issued a Notice of Proposed Rulemaking implementing provisions of the HITECH Act related to accounting for disclosures of protected health information (PHI). Pursuant to the HITECH Act and its more general authority under HIPAA, HHS proposed to divide the Privacy Rule provisions related to an accounting into two separate individual rights: (1) an accounting and, (2) an access report.

With respect to an accounting, HHS proposes that individuals have a right to an accounting of disclosures of PHI in a designated record set made by a covered entity or a business associate: (i) for impermissible purposes, (ii) for public health activities, (iii) for judicial and administrative proceedings, (iv) for law enforcement purposes, (v) to avert a serious threat to health or safety, (vi) for military and veterans activities, and (vii) for workers compensation. The proposed compliance date for this provision is 180 days after the effective date of the final rule.

With respect to the access report, HHS proposes to provide individuals with the right to receive a report detailing who has accessed their electronic PHI in a designated record set maintained by a covered entity or its business associates. HHS proposes that covered entities and business associates provide individuals with a right to an access report beginning January 1, 2013, for electronic designated record set systems acquired after January 1, 2009, and beginning January 1, 2014 for electronic designated record set systems acquired as of January 1, 2009.

The proposed rule is posted here.

Comments are due in 60 days - August 1, 2011.

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This post was written by Elizabeth B. Carder-Thompson and Katie C. Pawlitz.

States are increasingly imposing marketing restrictions on device manufacturers through laws that previously focused more specifically on pharmaceutical manufacturers. These laws affect compliance activities and relationships with providers, and create new reporting obligations. The impact is significant in that these state laws directly influence how companies conduct business and interact with customers, but implementation is complicated by the variations that exist between states.

Most significantly, under the federal Patient Protection and Affordable Care Act (“ACA”), beginning March 31, 2013, and annually thereafter, device manufacturers must report payments to physicians and teaching hospitals during the preceding calendar year. This means manufacturers must be prepared to track payments in a comprehensive manner as of January 1, 2012. The Centers for Medicare & Medicaid Services (“CMS”) is now in the early stages of developing specific provisions to implement the new ACA provisions, with publication of proposed regulations to occur not later than October 1, 2011.

This Client Alert provides a brief overview of the existing state marketing laws that apply to device manufacturers, including recent changes to those laws, as well as federal reporting requirements under the ACA. Although the laws discussed may apply broadly to other entities, we refer in our Client Alert specifically to medical device manufacturers. To read the full Alert, click here.

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This post was written by Ruth N. Holzman, Angelo Ciavarella, Joseph W. Metro and Vicky G. Gormanly.

On Friday, May 27, 2011, the Internal Revenue Service ("IRS") issued Notice 2011-46 (the "New Notice"), which extended to June 10, 2011 the deadline to submit error reports in accordance with the dispute resolution process established with respect to the preliminary fee calculation of the 2011 fee imposed on certain manufacturers and importers of branded prescription drugs.

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This post was written by Gina M. Cavalier, Vicky G. Gormanly and Brad M. Rostolsky.

Pursuant to the HITECH Act, covered entities and business associates must account for disclosures of PHI for treatment, payment and health care operations if the disclosures are through an electronic health record. This represents a significant change to the requirements under the current HIPAA Privacy Rule. The Department of Health and Human Services (HHS) will shortly publish a notice of proposed rulemaking to modify the Privacy Rule’s standard for accounting of disclosures of protected health information. An advance copy of the proposed rule is available here.

HHS proposes to expand the accounting requirements of the Privacy Rule to provide individuals with the right to receive an access report detailing who has accessed their electronic PHI in a designated record set. Accordingly, HHS proposes to revise an individual’s right to an accounting under the Privacy Rule by separately setting forth an individual’s right to (a) an accounting of disclosures and (2) an access report. HHS has also proposed other changes designed to improve the workability and effectiveness of the existing accounting of disclosures requirements.

Comments are due 60 days after the proposed rule is published in the Federal Register.

More to come...

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The National Law Journal's article “Torts once again on the front burner in the House” discusses the March 24, 2011 U.S. House Judiciary subcommittee hearing on tort reform. The hearing, entitled, "Can We Sue Our Way to Prosperity?: Litigation's Effect on America's Global Competitiveness," once again opens the debate regarding the US tort system. Topics included a bill that would cap non-economic damages in cases of medical malpractice, and a hearing on the yet-to-be-introduced Lawsuit Abuse Reduction Act, a proposal to implement mandatory sanctions of attorneys who violate civil procedure's Rule 11 against filing frivolous claims.

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This post was written by Joseph W. Metro and Vicky G. Gormanly.

On May 19, 2011, the Health Resources and Services Administration (“HRSA”) released a proposed rule concerning the exclusion of orphan drugs for certain covered entities under the 340B Program. The 340B Program, enacted pursuant to the Veterans Health Care Act of 1992 (“VHCA”), limits the prices that participating manufacturers may charge for outpatient drugs purchased by certain “covered entities” that act as “safety net” providers of services to low-income individuals.

Health care reform included significant changes for the 340B program, including expanding the types of covered entities eligible to participate in the Program. New classes of covered entities include certain freestanding cancer hospitals, rural referral centers, sole community hospitals, critical access hospitals, and children’s hospitals. However, under the amendments, 340B prices are not available for “orphan drugs” purchased by freestanding cancer hospitals, rural referral centers, sole community hospitals and critical access hospitals. This limitation applies to protect financial incentives for manufacturers to bring to market such drugs.

Under the proposed rule, however, such covered entities may in fact purchase orphan drugs at the 340B price so long as the drug is not transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the orphan drug was designated. In other words, covered entities can purchase the drugs for approved non-orphan uses, as well as potentially unapproved, off-label uses. This proposal potentially “guts” the ineligibility provisions of the statute, as the rule provides no guidance as to how manufacturers can determine what indications (or non-indicated off-label uses) their orphan drugs are used for, and emphasizes that manufacturers may not condition the offer of 340B pricing upon an entity’s assurance that the drug will be used for its orphan indication.

The proposed rule is also somewhat unusual in its specificity, in that HRSA has not previously issue a rule that more generally governs the 340B program. Thus, manufacturers may wish to consider whether it is appropriate to comment on some of the general defined terms (e.g., “covered entity,” “covered outpatient drug”) contained in the proposed rule.

The proposed rule may be viewed here.  Comments are due July 19, 2011.
 

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This post was written by Gina M. Cavalier, Vicky G. Gormanly and Brad M. Rostolsky.

On May 16, 2011, the Office of Inspector General (“OIG”) published a report with the results from its nationwide review of the Centers for Medicare and Medicaid Services (“CMS’”) oversight of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). In its review, the OIG sought to determine the sufficiency of CMS’ oversight and enforcement actions pertaining to hospitals’ implementation of the HIPAA Security Rule. Pursuant to the Security Rule, covered entities, such as hospitals, must implement technical, physical, and administrative safeguards for the protection of electronic protected health information (“ePHI”). According to the OIG, CMS’ oversight and enforcement actions were “not sufficient,” leaving limited assurance of the security of hospitals’ ePHI.

The report details the results from the OIG’s audits of seven hospitals. The audits disclosed “numerous internal control weaknesses.” Specifically, the OIG identified 151 vulnerabilities in the systems and controls intended to protect ePHI. Of these vulnerabilities, 124 were categorized as “high impact.” These vulnerabilities placed the confidentiality, integrity, and availability of ePHI at risk. The consequences of the high impact vulnerabilities is that it (1) may result in the highly costly loss of major tangible assets or resources; (2) may significantly violate, harm, or impede an organization’s mission, reputation, or interest; or (3) may result in human death or serious injury. 

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This post was written by Ruth N. Holzman, Angelo Ciavarella and Joseph W. Metro.

On May 2, 2011, the Internal Revenue Service (the "IRS") issued Revenue Procedure 2011-24 (the "Revenue Procedure"), which establishes a dispute resolution process for the preliminary fee calculation for the 2011 fee imposed on certain manufacturers and importers of branded prescription drugs pursuant to the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the "ACA"). As further explained below, in order to participate in the dispute resolution process, a "covered entity" must submit a written error report to the IRS that is postmarked no later than June 1, 2011.

This Tax Alert provides background on the annual fee and a summary of the dispute resolution process established by the Revenue Procedure.

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