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 Areta Kupchyk and Kevin Madagan.

On May 11, 2010, the U.S. Food and Drug Administration (FDA) launched a new initiative – the “Bad Ad Program” – designed to educate health care practitioners about their role in ensuring that prescription drug advertising and promotion is truthful, and not misleading. With the launch of this program, FDA, through the Division of Drug Marketing, Advertising, and Communications (DDMAC), a division within FDA’s Center for Drug Evaluation and Research, is now actively seeking to “collaborate with health care professionals” to increase the effectiveness of the agency’s marketing and advertising surveillance program. DDMAC is responsible for assuring prescription drug information is truthful, balanced, and accurately communicated, and guarding against false and misleading advertising and promotion through comprehensive surveillance, enforcement, and educational programs.

FDA introduced the Bad Ad Program through a dedicated website, an educational brochure for practitioners (Truthful Prescription Drug Advertising and Promotion: The Prescriber’s Role), and a letter from FDA Commissioner, Dr. Margaret Hamburg, introducing practitioners to the program.

“I am asking you to help FDA in our efforts to stop misleading prescription drug promotion,” states the Commissioner in her letter. “The Bad Ad Program can only succeed with your collaboration. Your help in this effort will be most beneficial to FDA in helping to ensure that prescription drug promotional information is accurately communicated to the medical community.” 

The Bad Ad Program website encourages health care practitioners to “play an important role” for FDA by “recognizing and reporting” misleading advertising and promotion. FDA wants practitioners to be “aware of the many advertisements and promotions that [they] see every day,” and help FDA stop violations by “reporting activities and messages” that may be false or misleading. 

The Bad Ad Program will be rolled out in three phases. In Phase 1, DDMAC will engage health care practitioners at specifically-selected medical conventions in 2010 and partner with specific medical societies to distribute educational materials. At these conferences, DDMAC reviewers will be speaking with practitioners regarding how to recognize misleading prescription drug promotion and how to report any potential violations to FDA. Phases 2 and 3 will expand the FDA’s collaborative efforts and update the educational materials developed for Phase 1. 

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This post was written by Christopher C. Foster.

The Ninth Circuit recently confronted an issue of first impression: whether a plaintiff could maintain an action under the false advertising prong of the Lanham Act, where a determination of the alleged falsity would require the court to impinge on the exclusive purview of the Food and Drug Administration (FDA) in deciding whether there has been a violation of the Food, Drug, and Cosmetic Act (FDCA). Although limited to the particular circumstances presented, the opinion reaffirmed the exclusive authority of the FDA to enforce the provisions of the FDCA, and indicates that a plaintiff may not maintain a lawsuit premised on the allegation of a violation of the FDCA, where the FDA itself has not acted. 

PhotoMedex v. Irwin

In PhotoMedex v. Irwin, No. 07-56672, 2010 U.S. App. LEXIS 7640 (9th Cir. Apr. 14, 2010), the Ninth Circuit held that the FDCA, which prohibits private enforcement of its provisions, bars a medical device manufacturer’s claim under the Lanham Act. PhotoMedex involved a Lanham Act claim based upon the allegation that plaintiff PhotoMedex, Inc’s (“PhotoMedex”) competitor made false and misleading statements regarding FDA approval of a medical device marketed by the competitor. The Ninth Circuit concluded that PhotoMedex could not maintain its Lanham Act claim, because resolution of the question of whether the defendant made false statements required litigation of an underlying FDCA violation, a determination reserved to the FDA. 

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This post was written by Ruth N. Holzman, Arnie Grant, Paul J. Jaskot, Michael Sanders, Donald C. Reinke, Nanette W. Mantell and Richard Scudellari.

Small biotech companies will need to move quickly in order to take advantage of a new tax credit, known as the “qualifying therapeutic discovery project credit,” enacted as part of the Patient Protection and Affordable Care Act of 2010. The new credit, contained in section 48D of the Internal Revenue Code, is equal to 50 percent of eligible costs incurred by small biotech companies in developing new therapies to prevent, diagnose and treat acute and chronic diseases. Some taxpayers may be eligible to elect to receive a cash grant in lieu of the Credit (Cash Grant). The Credit/Cash Grant program is limited to $1 billion and is only available for taxable years beginning in 2009 and 2010.

The Secretary of the Treasury has until May 22, 2010 to establish a program to consider and award certifications to qualifying therapeutic discovery project sponsors. Because it will be a competitive application process, eligible biotech companies will need to move quickly and submit their applications promptly once the Treasury Department issues guidance on the program. Since the Credit/Cash Grant program includes eligible costs incurred in 2009, biotech companies should review their 2009 costs now so that they have the data to complete their applications as soon as program details are released.

To learn more about the qualifying therapeutic discovery project credit, read our full alert.

For more information, please contact one of the authors: Ruth N. Holzman, Arnie Grant, Paul J. Jaskot, Michael Sanders, Donald C. Reinke, Nanette W. Mantell and Richard Scudellari.

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This post was written by Michael J. Wynne.

Last week, in Provena Covenant Medical Center v. Department of Revenue, the Illinois Supreme Court issued a decision in which it denied a property tax exemption for a Catholic hospital. The Court denied the exemption, in part, because the amount of charity care provided by the hospital was insufficient. However, the chilling national repercussions some portend for the Provena Covenant decision, with its inquiry into how much charity is enough to justify a property tax exemption, may ultimately be dwarfed by the repercussions of the new federal health care legislation. By 2014, under the new federal legislation, the extended coverage offered under Medicaid and the insurance exchanges will displace much of the charitable patient care that hospitals have traditionally dispensed. As hospital charitable patient care ebbs, so too may ebb the state and local grants of exemption for hospital properties.

To learn more about property tax implications of the Provena Covenant decision and the new federal health care legislation, read our full alert.

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Privacy and data security are hot topics for everyone doing business in today's rapidly developing climate, and no less for those in life science and health-related industries. With new federal statutes, new regulations from HHS and FTC, and new state laws covering private health information, now is a good time for businesses to take stock of the applicable laws and take steps to ensure that their use, transfer, and storage of private data are secure and compliant. In this article, Reed Smith's Paul Bond gives his "Ten Data Security Questions Faced by Every Company," a one-stop survey of how every business should approach these issues.

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On September 17, 2009, the White House released a “Patient Safety and Medical Liability Reform Demonstration” Fact Sheet, which outlines a new $25 million Department of Health and Human Services initiative designed to help states and health care systems identify new models for managing medical liability claims. The three-pronged initiative will support competitive grants to states and health systems with a focus on the development, implementation and evaluation of alternatives to improve health care quality and patient safety while reducing medical liability.

The Funding Opportunity Announcement will be available within 30 days. The Agency for Healthcare Research and Quality will review applications and make award decisions in early 2010.

The evaluation of the initiative will be released publicly within 18 months of the end of the initiative. The evaluation will focus on short-term improvements in both patient safety and medical liability systems with an allowance for long-term assessment of improvements as well.

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A recent study suggests that exposure to nanoparticles may have caused the death of two female workers and the illnesses of five others in China. Life science health industry companies that manufacture, integrate, sell or buy products that contain nanomaterials may want to monitor reaction to this report, which may garner attention from media outlets, scientists, regulators and the plaintiffs' bar. For a full discussion of these issues, review the full Client Alert written by Reed Smith attorneys Antony Klapper, Jesse Ash and David Wagner.

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The American Health Lawyers Association released a white paper on August 10, 2009, which analyzes the problems and benefits of the Stark Law and challenges amidst pending health care reform. In light of these significant policy discussions, many are wondering whether Congress will take action. Reed Smith's Karl Thallner was quoted in BNA's Health Law Reporter article discussing difficulties of the Stark law and the proposed improvements suggested by AHLA Committee. The article, "AHLA Stark Reform Proposals Welcome, Have Little Chance of Success, Attorneys Say" is reproduced with permission from BNA's Health Law Reporter, 18 HLR 1105 (Aug. 20, 2009). Copyright 2009 by The Bureau of National Affairs,Inc. (800-372-1033).

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This post was written by Sharon J. Mann, Hugh Scogin, Gordon B. Schatz and Amanda Yang.

At the 2nd Session of the 11th National People’s Congress (NPC) convened on March 5, 2009, China’ Premier Wen Jiabao confirmed the major contents of the healthcare reform in the 2009 Government Work Report. On January 21, 2009, the State Council approved the Opinions on Advancing Healthcare Reform and the Implementation Plan on Advancing Healthcare Reform 2009-2011 in principle. The opinions and the plan are expected to be published after the NPC session, with the Government Work Report representing the first government document that confirms work focuses in the coming healthcare reform program.

According to the Work Report, the Chinese government will spend US$124 billion (850 billion RMB) on healthcare reform between 2009 and 2011, including 331.8 billion RMB from the central government. The funds will be used in five primary areas 1) medical insurance, 2) essential medications, 3) basic healthcare service systems, 4) equal access to basic public health services, and 5) reform of public hospitals.

For additional information, please see Reed Smith’s full alert.

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Although the life sciences industry continues to await the Supreme Court's decision in the Wyeth v. Levine preemption case, the court already is half-way through this term.

The Washington Legal Foundation (WLF) will be holding its annual Midterm Supreme Court Media Briefing event on Wednesday, February 11 at 9:00 a.m. EST:

Those in D.C. can attend in person at 2009 Massachusetts Avenue, NW, and everyone else can watch the webcast online at www.wlf.org. WLF requests that RSVPs be sent to glammi@wlf.org.

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This post was written by Elizabeth Carder-Thompson, Gina M. Cavalier, Matthew E. Wetzel.

On December 18, 2008, the Advanced Medical Technology Association (“AdvaMed”), the national trade association of medical technology manufacturers, issued a revised Code of Ethics on Interactions with Health Care Professionals (the “AdvaMed Code” or “Code”). The revised AdvaMed Code, which becomes effective July 1, 2009, contains several changes that will significantly impact the medical device industry. These include:

• The addition of guidelines for the payment of royalties to health care professionals;
• The inclusion of a new section on the provision of evaluation and demonstration products to customers at no charge;
• More comprehensive guidelines for furnishing reimbursement and health economics information to health care professionals;
• A prohibition on the provision of entertainment and recreation;
• A prohibition on the provision of non-educational branded promotional items such as pens, notepads, mugs and similar items; and
• Increased restrictions on the provision of restaurant meals or meals at other off-site venues.

The Client Alert discusses the principal changes to the AdvaMed Code, highlights several compliance considerations that medical device companies should consider when implementing the revised Code and includes a chart detailing the original and revised AdvaMed Codes and highlighting the new provisions that will become effective in July 2009.

Reed Smith was honored to serve as outside counsel to AdvaMed in connection with drafting both the current and the revised Code and would be pleased to answer any questions or provide additional information.

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This post was written by Jamie Schreiber.

On Dec. 10, 2008, the Pharmaceutical Research and Manufacturers of America (“PhRMA”) released revised guidelines on direct-to-consumer (“DTC”) advertising that offer further direction to pharmaceutical research and biotechnology companies on providing accurate, accessible and useful information to consumers. The revised “PhRMA Guiding Principles on Direct to Consumer Advertisements about Prescription Medicines” includes new guiding principles that address the use of actors or celebrities in DTC ads, recommending that ads should: identify when actors are playing the roles of health care professionals, acknowledge any compensation paid to actual health care professionals, and accurately reflect the opinions or experiences of celebrity endorsers. In addition, a new PhRMA principle states that print ads should include FDA’s MedWatch number, and TV ads should include a company’s toll-free number or refer patients to a print ad. There is also guidance on the content and placement of DTC ads with adult-oriented content; the presentation of risks and safety information in DTC ads; and strengthened language asking companies to include in their DTC ads information about help for the uninsured and underinsured.

The revised guidelines will take effect March 2, 2009. Company CEOs and Compliance Officers will certify each year that they have processes in place to comply with the guidelines, and PhRMA will post a list on its website of all companies that make such certifications.

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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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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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