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 Elizabeth O’Brien and Joseph W. Metro.

On March 5, 2010, the Office of Pharmacy Affairs published a Final Notice allowing covered entities to use multiple contract pharmacies in order to supplement “in-house” pharmacy services or to increase patient access to 340B drugs. This Final Notice replaces “Notice Regarding Section 602 of the Veterans Health Care Act of 1992; Contract Pharmacy Services (61 Fed. Reg. 43,549) and all other previous 340B Program guidance regarding non-network contract pharmacy services.

Under the Public Health Service Act’s Section 340B drug pricing program, manufacturers who sell covered outpatient drugs to specific federal grantees, federally-qualified health center look-alikes and qualified disproportionate share hospitals (“covered entities”) must agree to charge less than the statutorily-prescribed maximum price for those drugs, which results in significant savings on drugs for the covered entities. Previously, the Health Resources and Services Administration ("HRSA") Office of Pharmacy Affairs had specified procedures under which discounts could be made available to covered entities engaging a single contract pharmacy, and had conducted an Alternative Methods Demonstration Project program in which HRSA approved a limited number of covered entities using multiple contract pharmacies.

Effective April 5, 2010, the Final Notice permits all covered entities to use multiple contract pharmacies. The guidelines in the Final Notice give covered entities and contract pharmacies a great deal of freedom in structuring their contract pharmacy services agreements, so long as they implement and maintain mechanisms to ensure compliance with 340B Program rules, especially against diversion of drugs. To learn more about the Final Notice, including compliance guidelines, potential alternatives to the single location/single pharmacy model and suggested contract provisions, read the full alert. 

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As reported by our sister site, Health Industry Washington Watch, on Wednesday the House Energy and Commerce Health Subcommittee will hold a hearing entitled, "Drug Safety: An Update from the FDA." At the hearing, the FDA will detail its current challenges and successes in the area of drug safety. Joshua M. Sharfstein, M.D., FDA Principal Deputy Commissioner, is slated to testify.

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This post was written by Rachel Cutler Shim, John D. Martini, Dennis R. Bonessa, William H. Nichols and Laurie S. DuChateau.

On January 29, 2010, the U.S. Departments of Labor, Health and Human Services and the Treasury jointly issued interim final regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA"). The MHPAEA, as implemented by the interim final regulations, greatly expands the parity standards of its predecessor, the Mental Health Parity Act of 1996 ("MHPA 1996").

The MHPAEA, as implemented by the interim final regulations, expands on the requirements of the MHPA 1996 and introduces new rules that prohibit group health plans from creating disparities between medical/surgical benefits and mental health benefits, as well as substance-use disorder benefits. To learn more about how MHPAEA impacts group health plans, read our full alert.

For more information, please contact one of the authors: Rachel Cutler Shim, John D. Martini, Dennis R. Bonessa, William H. Nichols and Laurie S. DuChateau.

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This post was written by Robert H. Jackson.

The Federal Communications Commission (“FCC”) has proposed changes to its Telephone Consumer Protection Act (“TCPA”) rules that would conform to the Federal Trade Commission’s Telemarketing Sales Rule (“TSR”). The primary change in the regulations would affect the sending of prerecorded messages (a/k/a “robocalls”) by barring them even to existing customers without first obtaining prior written consent. At first blush, this seems routine, but because of differences in the FCC’s and FTC’s statutory jurisdiction, there are complicated implementation issues that could trap unsuspecting companies. Other key issues for the health care industry is whether the FCC should create an exemption for prerecorded messages that are subject to Health Insurance Portability and Accountability Act (“HIPAA”) and, if so, how such exemption should be implemented. For more information about these changes, please read our client alert written by Robert Jackson.

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This post was written by Steven P. Murphy.

Responding to efforts by a number of industry groups, on December 28, 2009, the U.S. Consumer Product Safety Commission ("CPSC") posted a Federal Register notice announcing its continuation of the stay of enforcement of the third-party laboratory testing and certification required under section 14 of the Consumer Product Safety Improvement Act of 2008 ("CPSIA"). The stay was continued until February 10, 2011. The continued stay involves a discrete group of products, including children's toys and child care products with banned phthalates, toys subject to ASTM's F-963 standards, baby walkers, electrically operated toys, youth all-terrain vehicles, carpets and rugs, vinyl plastic film, and children's sleepwear. Most importantly, the stay was continued for the third-party testing and certificate of the lead content limit that applies to all children's products.

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Ralph Tyler has been appointed the new FDA General Counsel. The announcement was made today by FDA Commissioner, Dr. Margaret A. Hamburg. Mr. Tyler will join the Office of the Chief Counsel in Rockville, MD on January 19, 2010. Stepping down will be Acting Chief Counsel Michael Landa, who will return to the Center for Food Safety and Nutrition (CFSAN) as Deputy Director for Regulatory Affairs.

Mr. Tyler is currently the Insurance Commissioner of the State of Maryland. Previously he served as Chief Legal Counsel to Maryland Governor Martin O’Malley. Prior to that, Mr. Tyler served as the Deputy Attorney General, the Chief of Litigation, and Assistant Attorney General in the Maryland Attorney General’s office between 1982 and 1996. Mr. Tyler also spent several years as a partner at Hogan & Hartson, LLP. He holds a B.A. from the University of Illinois, a J.D. from Case Western Reserve University, and a LL.M. from Harvard University. 

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This post was authored by Karl A. Thallner, Jr., Amie E. Schaadt and Jacqueline B. Penrod.

On December 12, 2009, the Pennsylvania Department of Health published final regulations governing home care agencies and registries operating in the Commonwealth. The regulations, which became effective on December 12, 2009, require home care agencies and registries to obtain a license to operate. They also address the qualifications and competence of home care workers. Read our full alert to learn more about Pennsylvania's new licensing and consumer protection regulations as well as the new requirements for hiring home care personnel.

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As noted by our colleagues at Legal Bytes, on December 1, 2009, the revised "Guides Concerning the Use of Endorsements and Testimonials in Advertising" released by the Federal Trade Commission ("FTC") came into effect. Washington, D.C. partner John P. Feldman, an authority in advertising regulations and compliance, recently outlined some considerations every advertiser should take into account in his memo, "FTC Endorsement Guides (Revised) - Some Thoughts As They Become Effective." To read John's full analysis, click here.

Legal Bytes has been following new developments regarding the FTC's Guidelines since November 2008. In case you missed any earlier updates, you can refer back to them here: FTC Testimonial and Endorsement Guides Stimulate Industry Comment (March 2009); a presentation given at the University of Limerick on the subject entitled "Trust Me, I'm a Satisfied Customer: Testimonials & Endorsements in the United States," which you can download (If You Didn't Make It to Ireland ...); Ghostwriters: Medical Research or Paid Endorsers (and are they mutually exclusive?) and Rights of Publicity - Wake Up and Smell the Coffee! (both in August 2009); and FTC Releases Updated Endorsement & Testimonial Guidelines and Reed Smith Analysis of the New FTC Endorsement and Testimonial Guidelines (both in October 2009).

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This post was written by Areta Kupchyk, Kevin Madagan, and Paul Sheives.

Following a decade-long hiatus, the Food and Drug Administration (“FDA”) appears ready to finally address industry Internet communications. FDA’s Center for Drug Evaluation and Research (“CDER”) in collaboration with other divisions within FDA, held a two-day hearing on November 12^th and 13^th to help the Agency determine how the statutory provisions, regulations, and policies governing advertising and promotional labeling should be applied to product-related information on the Internet and emerging technologies.

Much has changed since 1996, the last time FDA held a public hearing on this topic. The Internet is now widely used as a medium for companies to disseminate information about their products, and the Internet's ability to facilitate communication and collaboration has substantially evolved over the last few years primarily as a result of a second (Web 2.0) and now third (Web 3.0) generation of Internet development and website design. The inherent flexibility and intelligence of Web 2.0 and 3.0 is great for society, but also fraught with risk for an FDA-regulated industry that must carefully control its interactions with consumers and health care practitioners. Indeed, the industry has largely avoided using Web 2.0 out of fear that any social media use may result in FDA enforcement action. 

Given the above, it is not surprising that FDA’s hearing was a welcome relief to many. Even though the hearing technically was only an information gathering exercise for FDA, it was an important opportunity for industry leaders and stakeholders to contribute to FDA’s emerging Internet policy. This Client Alert provides a brief summary of the major themes and recommendations from the presenters at the hearing.

In addition, please see a related commentary on the blog Adlaw by Request (“FDA Seeks To Understand Social Media”). Adlaw by Request is a blog designed to provide regular news on advertising law developments in the United States and elsewhere, with practical commentary and analysis from Reed Smith’s Advertising, Technology and Media (ATM) practice.

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This post was written by Dana Blanton.

On November 12 and 13, 2009, the FDA hosted public hearings to vet the potential need for regulation of prescription pharmaceutical and medical device marketing on social media outlets such as YouTube, Wikipedia, Facebook, and Twitter. The FDA specifically sought input on these five questions: (1) For what online communications are manufacturers, packers or distributors accountable? (2) How can manufacturers, packers, or distributors fulfill regulatory requirements in their Internet and social media promotion, particularly when using tools that are associated with space limitations and tools that allow for real-time communications? (3) What parameters should apply to the posting of corrective information on Web sites controlled by third parties? (4) When is the use of links appropriate? and (5) Questions specific to Internet adverse event reporting.

The hearings attracted both internet and ethical drug and device industry giants, as well as nonprofit organizations seeking to gain a better understanding of what will certainly be a new frontier for advertising these regulated products. The FDA's existing regulations for print and television advertising are widely considered unsuitable for social media outlets, some of which allow for no more than 140 characters per post--far too few to include FDA-mandated safety information--and most of which allow for uncensored layperson commentary sometimes indistinguishable from manufacturer content. As a result, pharma and medical device representatives reported, drug and device companies have been reluctant to venture into the social media advertising field. Meanwhile, media and marketing firms offered pre-packaged advertising solutions and industry critics suggested that the FDA and pharmaceutical and device companies should bear the burden of correcting misinformation on third party websites and blogs. The FDA will consider the commentary and determine whether guidelines should be promulgated.

Information on the hearing, including background, further information regarding the five issues presented, a link to transcripts of the FDA's 1996 hearing on internet advertising and other information may be found in the Federal Register Notice for the hearing and transcripts of the November 12 and 13, 2009 hearings will be available by approximately December 13, 2009.

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On October 30, 2009 the Federal Trade Commission (FTC) issued a News Release announcing that it is granting industries under the FTC's jurisdiction an additional 7 months (i.e., until June 1, 2010) to develop and implement their identity theft prevention programs as required under the FTC's Identify Theft Red Flags Rule. According to the FTC News Release, this additional extension has been provided at the request of members of Congress. In making this announcement, the FTC attempts to refocus the attention of creditors and financial institutions to the FTC's dedicated Red Flags Rule website, which contains various compliance guidance documents designed to assist affected industries with the development of Identity Theft Protection Programs. 

Also on October 30, 2009, the U.S. District Court for the District of Columbia ruled that the FTC may not apply the Red Flags Rule to attorneys. The FTC's New Release acknowledges this ruling, and further cautions that the FTC's additional postponement of Red Flags Rule enforcement remains distinct from whatever timeline may be associated with the aforementioned court proceeding and any possible appeals.

The announcement of the additional extension is available at www.ftc.gov, and our prior posts on the Red Flags Rule are available here.

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On Friday, October 30, 2009, the U.S. Department of Health and Human Services ("HHS") published an interim final rule and request for comments that implements certain HIPAA enforcement changes made pursuant to the HITECH Act. Consistent with the provisions of the HITECH Act, the new rule amends the HIPAA enforcement regulations applicable to violations of each of HIPAA's Administrative Simplification Rules (i.e., Privacy Rule, Security Rule, Transactions and Code Sets Rules, Standard Unique Identifier for Employers (EIN Rule), and the Standard Unique identifier for Health Care Providers (NPI Rule)) by instituting the below categories of violations and tiered penalty scheme to HIPAA violations that occur on or after February 18, 2009. 

• Unknown violations (i.e., if a person did not know and by exercising reasonable due diligence would not have known that a violation occurred): The penalty shall be at least $100 for each violation not to exceed $25,000 for all such identical violations during a calendar year, but may be no more than $50,000 for each violation not to exceed $1.5 million for all such violations of an identical requirement or prohibition during a calendar year.
• Violations due to reasonable cause and not to willful neglect: The penalty shall be at least $1,000 for each violation not to exceed $100,000 for all such identical violations during a calendar year, but may be no more than $50,000 for each violation not to exceed $1.5 million for all such violations of an identical requirement or prohibition during a calendar year.
• Violations due to willful neglect (and the violations have been corrected): The penalty shall be at least $10,000 for each violation not to exceed $250,000 for all such identical violations during a calendar year, but may be no more than $50,000 for each violation not to exceed $1.5 million for all such violations of an identical requirement or prohibition during a calendar year.
• Violations due to willful neglect (and the violations have not been corrected): The penalty shall be at least $50,000 for each violation not to exceed $1.5 million for all such violations of an identical requirement or prohibition during a calendar year.

Furthermore, the interim final rule generally amends a covered entity's ability to employ an affirmative defense against an action seeking civil monetary penalties if (i) the covered entity did not have knowledge or constructive knowledge of the violation, and (ii) the violation was not due to reasonable cause and not willful neglect. HHS is also given the authority to waive a civil monetary penalty for violations due to reasonable cause and not willful neglect if the covered entity corrects the violation within 30 days of having knowledge that the violation occurred. 

Comments on this interim final rule will be considered if received by December 29, 2009.

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This post was written by Irene M. Recio and Lorraine M. Campos.

E-Verify is a free internet-based program operated by the U.S. Department of Homeland Security, U.S. Citizenship and Immigration Services ("CIS") to allow employers to verify the employment eligibility of new hires. Until recently this had been a voluntary program. However, a new regulation went into effect on September 8th, which now requires that all Federal contracts awarded and solicitations issued after that date must include a clause mandating use of E-Verify for all employees hired during the contract period, and those employees who will perform work under the given contract. Employers are not required to use E-Verify with employees who perform support work on the contract, such as indirect or overhead functions. Institutions of higher education, state and local governments, and governments of federally recognized Native American tribes need only verify employees assigned to a covered federal contract (and not all newly hired employees, as is the case for all other Federal contractors).

This new requirement is of specific interest to health care providers and pharmaceutical and medical device manufacturers who have a Federal government contract containing the E-Verify clause, which requires the usage E-Verify with employees working on the Federal contract. Those providers will be required to use E-Verify with all new employees and with any employees assigned to work on the Federal contract. An important exception exists for health care providers only having an agreement with Medicare to provide patient services. In those situations the usage of E-Verify is not required. A provider will only be required to use E-Verify with employees assigned to a Federal contract when there is a separate contract with a Federal agency to provide specific health care items (i.e. pharmaceuticals or devices) or specific services delivered through a Government-sponsored health plan. In addition, Medicare administrative contractors and fiscal intermediaries will also be required to use the E-Verify System.

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Health care companies interested in doing business in Cuba may want to learn more about recent regulatory changes to U.S. economic sanctions promulgated by the U.S. government. Due to the difficult political situation on the island, doing business in Cuba remains challenging; however, U.S. sanctions have traditionally allowed for food, medicine, and other forms of humanitarian travel. The new regulations, in part, allow U.S. persons to travel to the island for "transactions that are directly incident to the commercial marketing, sales negotiation, accompanied delivery, or servicing in Cuba" of medicine and medical devices. Finally, U.S. companies interested in engaging the Cuba market should also assess the U.S. domestic political considerations that may come with Cuba sales.

To read the full Client Alert, written by Reed Smith attorneys Leigh T. Hansson and Jason I. Poblete, please click here.

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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 Frederick H. Branding, R.Ph., JD, Areta L. Kupchyk and Kevin M. Madagan.

After just passing her eighth week as FDA Commissioner, Dr. Margaret Hamburg announced on August 6, 2009, six new enforcement procedures to a group of industry representatives, attorneys, consumers, and others attending a speech sponsored by the Food and Drug Law Institute in Washington, D.C.

“The FDA must be vigilant, the FDA must be strategic, the FDA must be quick, and the FDA must be visible,” according to Commissioner Hamburg. She stated that vigilance means regular inspections and follow-up to ensure problems are resolved; identifying and resolving problems early; a “greater emphasis on significant risk and violations”; rapidly responding to egregious violations or violations that jeopardize public health; and using “meaningful penalties to send a strong message” to discourage future offenses. The Commissioner also said that the agency must be visible and publicize its enforcement actions (and the rationale for those actions) widely and effectively. Commissioner Hamburg described six new policy changes to meet these goals.

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This post was written by Carol C. Loepere, Erik T. Atkisson and Catherine A. Hurley.

The Medicare secondary payer (“MSP”) law requires Medicare to be the “secondary” payer of health benefits for Medicare beneficiaries where another entity is the “primary” payer of health benefits. Determining whether another entity is “primary” and when Medicare is “secondary” has often been difficult due to the wide range of circumstances in which another party may be responsible for a Medicare beneficiary’s health expenses, the number of potential parties involved, and the somewhat confusing terminology in the law itself. As a result, Congress enacted new rules to enhance the enforcement of the MSP law. Any entity that might pay settlements to Medicare-eligible plaintiffs that would cover any health expenses, or might otherwise compensate Medicare beneficiaries for health expenses as part of group health insurance, workers’ compensation, or any other arrangement or plan, needs to become familiar with these new rules. Specifically, Congress now requires such entities to (1) register as a responsible reporting entity (“RRE”), and (2) electronically report information to the Centers for Medicare & Medicaid Services (“CMS”).CMS will use this information to track and recover health expenses it incurred on behalf of Medicare beneficiaries but that another entity, as a primary payer under the existing MSP requirements, may be responsible for paying.  To read the full alert, click here.

Update:  For more information about this topic from an insurance industry perspective, please check out the Reed Smith Policyholder Perspective blog.

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On July 29, 2009 the Federal Trade Commission (FTC) issued a News Release announcing that it is granting industries under the FTC's jurisdiction an additional 3 months to develop and implement their identity theft prevention programs as required under the FTC's Identify Theft Red Flags Rule. Additionally, the FTC staff will "redouble" its education efforts and ease compliance by providing additional resources and guidance to clarify whether businesses are covered by the Rule and what they must do to comply.   By extending the enforcement date of the Rule until November 1, 2009, the FTC intends to give creditors and financial institutions more time to review the forthcoming guidance and to develop and implement written Identity Theft Prevention Programs. The announcement of the extension is also available at www.ftc.gov, and our prior posts on the Red Flags Rule are available here.

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This post was written by Frederick H. Branding, R.Ph., JD and Kevin M. Madagan.

Numerous signals by the Food and Drug Administration (“FDA”) in recent weeks, including statements made by Dr. Margaret A. Hamburg, the recently appointed FDA Commissioner, show that the agency intends to toughen enforcement in several areas. These signals should be taken seriously. An “awakened” FDA will be funded with additional monies promised for FDA’s budget and with funding proposed through legislation such as The Drug and Device Accountability Act of 2009 (S. 882). As a result, firms that manufacture, import, and distribute FDA-regulated products can anticipate being visited more often, and probably more critically, than in the past. This, in turn, will force a company to handle additional Inspectional Observations (FDA 483s), Warning Letters, and reinforcement actions.

This article discusses two areas in which FDA has begun to focus – supply chains and imports, in particular supply chain management and safety, and increased foreign and domestic import inspections. Included in the discussion are suggestions companies may wish to consider in preparing for increased regulatory scrutiny.

To read the full alert, click here.

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On July 1, 2009, the Centers for Medicare & Medicaid Services (“CMS”) proposed to relax its controversial position concerning physician supervision of hospital outpatient services. The hospital industry had recently been vocal in its objection to CMS’s position, and the latest proposal signifies a potential important win for hospitals. If adopted, hospitals will be able to meet Medicare supervision requirements for outpatient services, without incurring some of the high costs necessary to ensure physician presence while those services are furnished. 

The July 1 proposal is contained in CMS’s hospital outpatient prospective payment system (“HOPPS”) rule for 2010. The controversy arose a year earlier in CMS’s HOPPS rule for 2009. In the 2009 HOPPS rule, CMS “clarified” that direct supervision by a physician is required for outpatient hospital therapeutic services furnished “incident to” a physician’s services – not only in an off-campus hospital-based location, but also in the main hospital building or an on-campus department. This means that a physician must be present in each provider-based department when these services are furnished. While styled as a clarification, most hospitals saw CMS’s position in the 2009 HOPPS rule as a significant change from prior CMS guidance. Specifically, in the original HOPPS regulations from 2000, while CMS required that services furnished at a location designated as a department of a provider under the Medicare “provider-based” rules must be furnished under the direct supervision of a physician, CMS also stated that it “assumed” that the direct supervision requirement would be met when the services are furnished on a hospital’s campus. 

In the latest proposal, CMS articulated three new proposed policies for physician supervision for hospital outpatient services that would go into effect Jan. 1, 2010. 

• First, nonphysician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, and certified nurse-midwives) would be permitted to directly supervise all hospital outpatient therapeutic services that they may perform themselves in accordance with state law, and scope of practice, hospital-granted privileges, and other Medicare requirements. 
• Second, for outpatient services furnished in the hospital or in an on-campus outpatient department of the hospital, the “direct supervision” requirement would be met if the physician or nonphysician practitioner is present on the same campus, in the hospital or on-campus provider-based department, and is immediately available to furnish assistance and direction throughout the performance of the procedure.
• Third, for hospital outpatient diagnostic services, the physician supervision requirements attributable to each particular test under the Medicare physician fee schedule would have to be satisfied, whether the test is performed directly or under arrangements. While the same definition of “direct supervision” applicable to therapeutic services would also apply to diagnostic tests, nonphysician practitioners would not be permitted to supervise diagnostic tests.

These changes would allow hospitals significantly more flexibility in meeting the supervision requirements, and would represent a relaxation not only from CMS’s policy articulated in the 2009 HOPPS rule, but in some respects also from CMS’s policy prior to 2009. In particular, for example, nonphysician practitioners will be able to supervise therapeutic services furnished in off-campus provider-based departments.

An advance copy of the proposed 2010 HOPPS rule, which is scheduled to be published in the Federal Register July 20, 2009, is available here. Hospitals desiring to comment on the proposal must do so by Aug. 31, 2009. The final HOPPS rule is likely to be released in December 2009. Hospitals should monitor regulatory developments in this area in order to be able to adjust physician and nonphysician staffing and scheduling of services accordingly.

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The REACH Regulations established a new system for the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) in the European Union when implemented on June 1, 2007. With phased implementation over an 11-year period, REACH covers chemicals, and substance mixtures, and articles that contain substances that are manufactured or imported into the EU in certain minimum quantities.

Statistics on the pre-registration phase give a clear indication that REACH's reach has been longer than expected: The European Chemical Agency (ECHA) anticipated that approximately 30,000 chemical substances would be pre-registered, but in the end closer to 150,000 substances were pre-registered.

Nick Elliott's article, "The Next Steps," published in a recent edition of Hazardous Cargo Bulletin, discusses this new EU chemical regime, what companies need to do next, and some of the pitfalls to be avoided. The first registration deadline, applicable to high-volume and high-risk chemical substances, is only 18 months away – November 30, 2010. As Elliott explains, potential registrants have no time to waste in order to ensure compliance with the REACH registration obligations. REACH potentially impacts not only the EU chemical industry but also any entity, such as those operating in the life sciences industry, that manufactures in or imports substances/products into the EU.

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The article on "Prescription Drug and Medical Device Promotion – New FDA Draft Guidance on Presenting Risk Information" by Reed Smith lawyers Areta Kupchyk, Frederick Branding, Jennifer Goldstein and Kevin Madagan (previously discussed in this post) has now been published in AHLA's Health Lawyers Weekly (log in required).

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This post was written by Matthew Wetzel.

On June 9, 2009, Vermont’s governor signed S. 48, a new law that revises the state’s current pharmaceutical marketing disclosure requirements. The new statute expands the application of Vermont’s current requirement that pharmaceutical manufacturers annually disclose certain expenditures made in connection to interactions with Vermont health care professionals. Under the new law, the disclosure requirement now also applies to medical device companies. Further, the new law adds a ban on certain items and expenditures that was not included in the previous version. Notably, this gift ban goes into effect July 1, 2009.

For more information, please read Reed Smith's full alert summarizing the revised Vermont law, including key dates for compliance.

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The Reed Smith Health Industry Washington Watch blog has been updated to discuss a variety of health policy developments, including the following:

• FDA Transparency Task Force
• Toll-Free Numbers for Adverse Events Reporting
• Generic Drugs

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Congress has been busy and there is no sign it intends to slow down just because it is summer.

In two weeks, the House Energy and Commerce Health Subcommittee will hold a hearing entitled, "Medical Devices: Are Current Regulations Doing Enough for Patients." The hearing will be on June 18th at 9:30 a.m. in 2322 Rayburn House Office Building and access to the webcast and witness list should be available from this page once available. Information about this subcommittee's May 12th hearing about medical device preemption is in this prior post.

Earlier this week, the House Judiciary Committee held a hearing on a bill to curtail the discretion of federal judges in issuing litigation protective orders under Federal Rule of Civil Procedure 26(c ) and limiting the use of confideniality provisions in litigation settlement agreements subject to court approval or filed with the court. Proponents of this bill, the "Sunshine in Litigation Act of 2009", H.R. 1508, suggest that it is needed to help keep defendants in civil litigation from "hiding" health and safety hazards.

As the Supreme Court recognized in Seattle Times Co. v. Rhinehart, 467 U.S. 20, 33 (1984), discovery materials are not public components of a civil trial. Until information produced in discovery is filed with the court or introduced into evidence for determination of a merits issue (such as on a motion for summary judgment or at trial), protective orders routinely protect the confidential and proprietary information of parties to civil litigation.

Testimony by the Hon. Mark R. Kravitz of the District of Connecticut, on behalf of the Conference’s Committee on Rules of Practice and Procedure and its Advisory Committee on Civil Rules, opposed the bill on the ground that it effectively amends the Federal Rules of Civil Procedure outside the rulemaking process, contrary to the Rules Enabling Act (28 U.S.C. §§ 2071-2077). He testified that the bill is not needed (emphasis added):

In 1994, the Rules Committees asked the Federal Judicial Center (FJC) to do an empirical study on whether discovery protective orders were operating to keep information about public safety or health hazards from the public. The FJC completed the study in April 1996. . . . The FJC study showed that discovery protective orders were requested in only about 6% of the approximately 220,000 civil cases filed in federal courts in that time period. Most of the requests are made by motion. Courts carefully review these motions and deny or modify them in a substantial proportion. Less than one-quarter of the requests are made by party stipulations and the courts usually accept them. In most civil cases in which discovery protective orders were entered, the empirical study showed that the orders did not impact public safety or health. . . . The empirical data showed no evidence that protective orders create any significant problem of concealing information about public hazards.
* * * *
Even when a protective order is entered, it usually does not result in the sealing of all, or even many, documents or information submitted to the court. Case law shows that courts are rightly protective of the public’s right to gain access to information and documents submitted to the courts.
* * * *
Requiring courts to review discovery information to make public health and safety determinations in every request for a protective order, no matter how irrelevant to public health or safety, will burden judges, further delay pretrial discovery and inevitably increase the cost of civil litigation in federal courts.

We've attached a copy of the Federal Judicial Center's Report.  Additional testimony on the bill is available here.

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This post was written by Areta Kupchyk, Frederick Branding, Jennifer Goldstein and Kevin Madagan.

On May 27, 2009, the Food and Drug Administration (“FDA”) announced the availability of a draft guidance titled “Presenting Risk Information in Prescription Drug and Medical Device Promotion” (“Draft Guidance”). The Draft Guidance sets forth the standards FDA intends to consider when evaluating promotional pieces to determine whether they effectively communicate risk information in a non-misleading manner. Under the Food, Drug & Cosmetic Act (“FDCA”) and FDA’s implementing regulations, promotional materials making claims about a product are deemed misleading if they fail to disclose certain information about the product’s risks. FDA is accepting comments on the draft through Aug. 25, 2009. Reed Smith’s full alert provides a brief outline of the Draft Guidance and identifies issues for possible comment to FDA.

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The FDA has issued final guidance regarding formal meetings between FDA and sponsors or applicants relating to the development and review of drug or biological drug products by the Center for Drug Evaluation and Research and the Center for Biologics Evaluation and Research (note that the guidance does not apply to abbreviated new drug applications). Specifically, the guidance discusses the principles of good meeting management practices and describes standardized procedures for requesting, preparing, scheduling, conducting, and documenting formal meetings. The document supersedes the guidance entitled “Formal Meetings With Sponsors and Applicants for PDUFA Products” published in February 2000.

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On May 27, 2009, the Food and Drug Administration (FDA) published a notice soliciting comments on a draft guidance document entitled “Presenting Risk Information in Prescription Drug and Medical Device Promotion.” The draft guidance proposes to use a “reasonable consumer” standard, similar to the Federal Trade Commission's standard, for assessing whether advertisements are misleading, a standard FDA already applies to labels on food and dietary supplements. In the draft guidance, FDA discusses the factors the agency would consider when evaluating prescription drug and restricted device promotional materials directed at healthcare professionals and consumers. The factors include: consistent and appropriate use of language, use of signals, framing of risk information, and the hierarchy of risk information. FDA also states that the agency will review content for both quantity of risk information, as well as materiality and comprehensiveness. Finally, FDA provides extensive factors it considers when evaluating the format of promotional materials. Comments should be submitted by August 25, 2009; for information on submitting comments, click here.

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This post was written by Scot T. Hasselman, Andrew C. Bernasconi and Nathan Fennessy.

On May 20, 2009, the President signed into law the Fraud Enforcement and Recovery Act of 2009 (“FERA”), which will implement significant changes to the federal False Claims Act (“FCA”). The amendments to the FCA will significantly expand the scope of FCA liability, provide for new investigative tools, and make it easier for qui tam relators to bring and maintain FCA suits on behalf of the government.

The House and Senate both passed the bill with overwhelming majorities before the President signed FERA into law. While the new law is primarily targeted at potential fraud involving recipients of economic stimulus funds in the financial services industry, it also includes some very significant changes to the liability provisions of the federal False Claims Act affecting members of the health care industry.  To read Reed Smith's full alert, please click here.

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The White House Press Office just released a Memorandum for the Heads of Executive Departments and Agencies re Preemption.  Regarding actions by the executive branch intended to preempt state law, it directs:

1. Heads of departments and agencies should not include in regulatory preambles statements that the department or agency intends to preempt State law through the regulation except where preemption provisions are also included in the codified regulation.

2. Heads of departments and agencies should not include preemption provisions in codified regulations except where such provisions would be justified under legal principles governing preemption, including the principles outlined in Executive Order 13132.

3. Heads of departments and agencies should review regulations issued within the past 10 years that contain statements in regulatory preambles or codified provisions intended by the department or agency to preempt State law, in order to decide whether such statements or provisions are justified under applicable legal principles governing preemption. Where the head of a department or agency determines that a regulatory statement of preemption or codified regulatory provision cannot be so justified, the head of that department or agency should initiate appropriate action, which may include amendment of the relevant regulation.

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This post was written by Judith L. Harris and Amy S. Mushahwar.

As previously reported, the Federal Communications Commission ("FCC") proposes to allot spectrum and adopt service and technical rules for new implanted medical devices that would expand the use of functional electric stimulation to restore sensation, mobility and function to paralyzed limbs and organs. As an update to this report, yesterday the FCC published the Notice of Proposed Rulemaking ("Notice") regarding implanted neuromuscular simulators in the Federal Register and released the comments dates. Comments are due August 11, 2009 and replies are due on September 10, 2009.

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On May 8, 2009, HHS published an advance notice of proposed rulemaking seeking comments on whether the HHS should amend its regulations on the responsibility of applicants for promoting objectivity in research for which Public Health Service (PHS) funding is sought. Specifically, HHS is considering whether to revise current regulations to provide a more rigorous approach to investigator disclosure, management of conflicts, and federal oversight. The notice invites comments on a range of related issues, including: the scope of the regulation and disclosure of interests; the definition of a “significant financial interest”; identification and management of conflicts; how to assure institutional compliance; reporting on conflicts of interest; and standards regarding institutional conflict of interest. Comments will be accepted until July 7, 2009.

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This post was written by Scot T. Hasselman, Andrew C. Bernasconi, and Nathan R. Fennessy.

On April 28, both the U.S. Senate and the U.S. House of Representatives took steps that would provide sweeping changes to the federal False Claims Act ("FCA"). The bills would significantly expand the scope of FCA liability while at the same time make it easier for qui tam relators to bring and maintain FCA suits on behalf of the government.

In short, the bills are answers to a DOJ and relator’s counsel "wish list" that would eliminate 20 years of hard-fought defense jurisprudence. In addition, the House bill, for example, would eliminate the public disclosure jurisdictional bar and defense, which could allow a sworn federal agent to utilize information obtained in the course of official investigations to file FCA lawsuits as a relator, and to receive a portion of any financial recovery. The House bill would also eliminate any basic pleading standards by relators and allow relators’s attorneys to file fishing expeditions without any substantive basis of allegation. 

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

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This post was written by Carol Loepere.

On April 30, 2009 the Federal Trade Commission (FTC) issued a News Release announcing that it is granting industries under the FTC's jurisdiction an additional 3 months to develop and implement their identity theft prevention programs as required under the FTC's so-called Identify Theft Red Flag Rule. The FTC also stated that that some entities, particularly those that are small, non-traditional creditors, would benefit from the availability of a template Red Flags program in developing their programs. The Commission staff intends to publish such a template for low-risk entities shortly. The FTC said that the extension, coupled with the release of the template, should be sufficient to enable low-risk entities to prepare their programs without undue burden. The announcement of the extension is also available at www.ftc.gov.

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On Tuesday, Senate Finance Committee Chairman Max Baucus and Ranking Member Chuck Grassley released a lengthy policy paper discussing for options for reducing health care costs and improving quality in the health care delivery system. The proposals are far-reaching, ranging from bundling of hospital and post-acute care, establishing appropriateness criteria for imaging services, and requiring drug/device manufacturers to report payments to physicians/physician investments. With regard to specialty hospitals, the “whole hospital” and rural exceptions to the general ban on self-referral would be eliminated, but a new exception would be created for hospitals that have physician ownership and a Medicare provider agreement in effect on July 1, 2009 and which meet certain criteria. The release is available at finance.senate.gov.

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On April 29, 2009, the Obama Administration released a report on HHS progress over the first 100 days of the Obama Administration. The report addresses implementation of the American Recovery and Reinvestment Act of 2009, efforts to promote health reform, regulatory review initiatives, and release of the President's proposed budget, among other things.  

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To promote transparency, HHS has established a new searchable database of communications with registered lobbyists on ARRA issues. HHS is reporting verbal and written communications within three business days of their occurrence.  

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This post was written by Antony B. Klapper and Jesse J. Ash.

On April, 8, 2009, the National Institute for Occupational Safety and Health ("NIOSH") and the Centers for Disease Control and Prevention ("CDC") submitted a notice for public comment in the Federal Register, requesting information to evaluate potential health risks associated with the use of carbon nanotubes ("CNTs"). 74 Fed. Reg. 15985-15986 (Apr. 8, 2009). NIOSH and CDC request by May 15, 2009, all information related to studies, workplace exposure data and information on control measures where companies manufacture CNTs in products. The agencies plan to use this information to formalize recommendations for the safe handling of products that contain CNTs.

Recent scientific reports have drawn parallels between CNTs and asbestos. CNTs are long, thin particles similar to the needle-like shape of some asbestos fibers. In fact, these reports suggest that CNTs can cause adverse effects on the lung function of mice. These reports, in part, likely form the rationale for NIOSH's and CDC's focus on CNTs. Suggesting a connection between CNTs and the human health questions associated with asbestos is a sure way to gain the public's and the government's attention, even though the reports do not answer the critical question of whether CNT exposure can cause adverse consequences in humans, and are limited in a variety of ways. Regardless, this Notice from NIOSH and CDC demonstrates that the government is now highly concerned about the effects of CNTs on human health, and that it is focused on the future regulation of its use.

Companies that manufacture, integrate or sell nanomaterials, including, in particular, CNTs, need to be mindful of the actions taken as a result of this Notice. Companies should evaluate whether to communicate their views and/or findings to NIOSH and CDC by May 9, either through associations or directly. Whatever information NIOSH collects, and any guidance it may promulgate, could become the floor that companies may need to adhere to or risk future liability.

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This post was written by Carolyn D. Duronio and Kristen M. Gurdin.

On February 12, 2009, the Internal Revenue Service (the “Service”) released its long–awaited Hospital Compliance Project Final Report (the “Report”). The Service commenced the Hospital Compliance Project in 2006 by sending out comprehensive questionnaires to 544 tax-exempt hospitals. The questionnaires focused primarily on hospitals’ current practices with respect to community benefits and executive compensation. The Report details the data the Service compiled from the 487 respondent hospitals and the 20 hospitals selected for examination from that group. The Report did not provide any conclusions on whether the federal tax rules regarding community benefits and executive compensation should be changed. IRS officials’ and lawmakers’ initial interpretation of the Report and its findings, however, suggests that exempt hospitals should expect significant scrutiny of the community benefit and compensation information that they provide on the revised IRS Form 990 and that stricter requirements may be forthcoming.

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

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This post was written by Joseph W. Metro and Lorraine Mullings Campos.

On March 17, 2009, the Department of Defense (DoD) issued a final rule to implement a provision of the 2008 National Defense Authorization Act (NDAA). In the final rule, the DoD takes the position that the NDAA requires pharmaceutical manufacturers to provide discounted drug prices based on the Veterans Health Care Act’s (VHCA’s) Federal Ceiling Price (FCP), for covered drugs sold by retail pharmacies to TRICARE beneficiaries on or after Jan. 28, 2008 (the date of enactment of the NDAA). DoD further establishes a process whereby manufacturers’ satisfaction of this obligation will be a condition to a product’s continued Tier 2 status on the TRICARE uniform formulary. Finally, however, DoD indicates that it will consider, pursuant to its authority under the Federal Debt Collection Act, proposals to settle outstanding "refund" claims for periods prior to the effective date of the rule.

Further discussion and commentary by the authors is included after the jump. For additional background information, please see Reed Smith’s full alert.

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This post was written by Judith L. Harris and Amy S. Mushahwar.

The Federal Communications Commission (“FCC”) recently released an Order allocating 2 MHz of new spectrum for advanced wireless implanted devices, which may enable the certification of new devices by the FCC’s Office of Engineering and Technology.

The FCC also seeks comment on a proposal to allocate up to 20 MHz of spectrum for implanted neuromuscular micro stimulators. This additional allotment for electronic stimulation technologies could be used to develop devices for the medical treatment for millions of people living with brain and spinal cord injuries and neuromuscular disorders.

Parties interested in registering new devices under the FCC’s Order or in commenting on the additional spectrum allotment for electronic stimulation technologies are encouraged to contact Judith L. Harris or Amy S. Mushahwar.

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

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This post was written by Matthew E. Wetzel. 

On March 11, 2009, the Massachusetts Department of Public Health (the “Department”) released final regulations that impose restrictions on pharmaceutical and medical device manufacturers’ sales and marketing activities. The final regulations—which implement section 14 of the Massachusetts Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care (the “Act”)— also require companies to file annual disclosures of all fees, payments and economic benefits paid to health care professionals that total $50 or more.

Massachusetts now joins seven other jurisdictions that have issued similar requirements. Currently, California and Nevada both require manufacturers to adhere to restrictions on marketing activities, and the District of Columbia, Maine, Minnesota, Vermont and West Virginia all mandate periodic disclosures of payments and other economic benefits to health care professionals. Massachusetts, however, has the broadest regulations in two regards. First, Massachusetts is the only state to include both a marketing code of conduct that is specifically enumerated in detail in the regulations as well as annual financial disclosure obligations. Other jurisdictions require adherence to a marketing code or disclosure, but not both. Second, Massachusetts is the first state to require financial disclosure from medical device companies. Financial disclosure requirements in other states currently only apply to pharmaceutical companies.

For additional details regarding the final Massachusetts marketing restrictions and disclosure requirements, including a list of key dates for compliance and a chart detailing marketing restrictions, please see Reed Smith's full alert (.PDF), "Massachusetts Releases Final Restrictions on Drug and Device Marketing Activities, Annual Financial Disclosure Requirement."

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This post was written by Karl A. Thallner, Jr., Carol C. Loepere, Debra A. McCurdy, Brad M. Rostolsky, Jacqueline B. Penrod, and Amie E. Schaadt.

On February 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act (the “ARRA”). The sweeping $790 billion economic stimulus package includes a number of health care policy provisions. Reed Smith's Health Care Memorandum summarizes the major health policy provisions of the Act.

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This post was written by Brad M. Rostolsky, Gina M. Cavalier, Debra L. Hutchings, Kerry A. Kearney, and Mark S. Melodia.

On Feb. 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act (the “ARRA”).1 This memorandum outlines significant changes and additions to the landscape of federal privacy and security law set forth in Subtitle D of the ARRA. In general, the privacy and security portions of the ARRA become effective 12 months after the enactment of the ARRA, which is approximately February 2010. It is also important to note that the ARRA directs the Secretary of the U.S. Department of Health & Human Services (“HHS”) to amend the HIPAA Privacy and Security Rules to implement the legislative changes. As such, the effective dates associated with the rulemaking process will vary.

Click here to read the full alert.

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This post was written by Jason M. Healy.

Centers for Medicare & Medicaid Services ("CMS") states that on February 4, 2009 the parties involved in the protest of the award of the Recovery Audit Contractor ("RAC") contracts settled the protests filed with the GAO.

The settlement means that the stop work order has been lifted and CMS will now continue with the implementation of the RAC program.

Under the program, the four RACs will contract with subcontractors to supplement their efforts. PRG-Schultz, Inc. will serve as a subcontractor to HDI, DCS and CGI in regions A, B and D. Viant Payment Systems, Inc. will serve as a subcontractor to Connolly Consulting in region C. Each subcontractor has negotiated different responsibilities in each region, including some claim review.

According to the CMS Notice, the RAC in each jurisdiction is as follows:

Region A: Diversified Collection Services (DCS)
Region B: CGI
Region C: Connolly Consulting, Inc.
Region D: HealthDataInsights, Inc.

All correspondence, websites and call centers will be in the name of the RACs listed above. 

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This post was written by Paule Droualt-Gardrat, Juliette Peterka and Julie Gottenberg.

On December 10, 2008, the European Commission published a series of political measures and legislative proposals, the so-called “Pharmaceutical Package.” This series included the “Communication on a renewed vision for the pharmaceutical sector,” which reflected on ways to improve market access and develop initiatives to boost European Union (“EU”) pharmaceutical research. Through the Pharmaceutical Package, the European Commission aims to make pricing and reimbursement more transparent, increase the development of pharmaceutical research within the EU, improve the safety of medicines worldwide, and reinforce cooperation with international partners.

The European Commission has published three separate sets of proposals amending Directive 2001/83/EC on the Community Code of medicinal products and Regulation 726/2004 on medicinal products obtained through centralized procedures:

1.  A proposal amending Directive 2001/83 as “regards information to the general public on medicinal products subject to medical prescription” (Information to patient);
2.  A proposal amending Directive 2001/83 and a proposal amending Regulation 726/2004 as “regards pharmacovigilance” (The EU pharmacovigilance system); and,
3.  A proposal amending Directive 2001/83 as “regards the prevention of the entry into the legal supply chain of medicinal products which are falsified in relation to their identity, history or source” (Counterfeit Medicines).

Read Reed Smith's full alert outlining proposed amendments to Directive 2001/83/EC and Regulation 726/2004.

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This post was written by Jason M. Healy.

By now, most Medicare providers have heard about the Medicare Recovery Audit Contractor (RAC) demonstration and that it is currently being rolled out nationwide as a permanent program. On November 4, 2008, however, CMS imposed an automatic stay on the RAC program after two unsuccessful bidders for RAC contracts filed protests with the Government Accountability Office (GAO). GAO has 100 days to issue its decision, which means that all RAC program work is on hold until early February 2009.

Because the three-year demonstration program that ended in March of last year was limited to six states (New York, Florida, California, Massachusetts, South Carolina, and Arizona), it may not be obvious to all providers and suppliers that RACs pose a threat when the RAC program resumes. To understand that threat and how best to address it, it is important to understand where RACs will operate; what RAC auditors are designed to do and how they audit; where your claims fit within a RAC’s set of priorities; and your rights as a Medicare provider or supplier to challenge RAC overpayment determinations through appeal.

Read Reed Smith’s full alert, "What Every Medicare Provider and Supplier Should Know About RAC Audits and Appeals."

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This post was written by Areta L. Kupchyk, James M. Wood and Kevin M. Madagan.

FDA's Good Reprint Practice (GRP) Guidance went into effect in January 2009. The GRP Guidance establishes criteria that FDA will now use to determine whether the distribution of medical or scientific reprints and reference texts about off-label uses of a drug or device would constitute impermissible promotional activity under the Food, Drug and Cosmetic Act.

Read Reed Smith’s full commentary analyzing the GRP Guidance, which includes a Good Reprint Practice Checklist.

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This post was written by Diane Green-Kelly and Karl A. Thallner.

In a time of economic crisis, when hospitals, like most other businesses, are struggling to operate within a constrained budget, Memorial Hermann Healthcare System (“Memorial Hermann”) agreed Jan. 26, 2009 to pay $700,000 to settle claims of the Texas Attorney General alleging that Memorial Hermann orchestrated an agreement among health plans not to do business with a new competitor, Town and County Hospital (“Town and Country”).  According to the complaint, Memorial Hermann, which owns and operates acute care hospitals furnishing inpatient care, is the largest hospital system in the Houston area.  Town and County, a physician-owned hospital, opened in November 2005.  Before opening, Town and County approached insurers to enter into contracts to be included in those insurers’ hospital networks.  Memorial Hermann allegedly took steps to discourage insurers from entering into contracts with Town and Country, including sending notification of an intent to terminate its contract with one insurer as to all Memorial Hermann facilities, and subsequently renegotiating a contract with the insurer for substantially higher rates. 

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The FDA published a notice on January 13, 2009 announcing a final guidance document entitled “Good Reprint Practices for the Distribution of Medical Journal Articles and Medical or Scientific Reference Publications on Unapproved New Uses of Approved Drugs and Approved or Cleared Medical Devices.” The guidance, which finalizes a February 20, 2008 draft policy, is intended to provide manufacturers with the agency's views on permissible distribution by a company's sales representatives of medical journal articles and scientific or medical reference publications that discuss unapproved new uses for FDA-approved drugs or biologics or FDA-approved or cleared medical devices to healthcare professionals. As with the 2008 draft guidance, the final version notes the need to balance the law’s prohibition on distributing or promoting “unapproved uses of approved drugs and approved or cleared medical devices” with the “important public policy” of providing information that “may even constitute a medically recognized standard of care.” The FDA concludes that the touchstone for lawful dissemination of literature about unapproved uses is that the publications “are truthful and non-misleading.” To meet this standard, the FDA final guidance lists “principles of Good Reprint Practices” that include criteria for determining the type of publication and the manner in which the publication can be distributed. Although the final guidance closely tracks the draft guidance, it has some important clarifications, including revisions to the Good Reprint Practices and a specific reference encouraging manufacturers to seek approvals and clearance for new indications and intended uses for medical products.   A Reed Smith analysis of the final guidance is available here.

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The FDA published a notice January 15, 2009 announcing the launch of a voluntary Secure Supply Chain pilot program to help promote the safety of imported drugs and active pharmaceutical ingredients (APIs). According to the FDA, the program would enable the FDA to focus its resources on imported drugs that fall outside the program and that pose a risk of being adulterated, misbranded, or unapproved, while increasing the likelihood of expedited entry for specific finished drug products and APIs into the U.S. that meet the pilot’s criteria. The FDA plans to select 100 applicants to participate in the program, and each applicant may designate up to five drugs for selection in the pilot program. To qualify, applicants will need to meet the pilot's criteria, including a requirement that they maintain control over the drugs from the time of manufacture through entry into the U.S.  The FDA will accept comments on the program through March 16, 2009.

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On January 13, 2009, the FDA published a notice seeking comments on issues related to the enrollment of certain populations in clinical drug trials. This request is related to FDA's implementation of the Food and Drug Administration Amendments Act of 2007 (FDAAA) section 901, which requires the FDA to report to Congress on best practice approaches to increasing participation of elderly populations, children, racially and ethnically diverse communities, and medically-underserved populations in clinical drug trials. FDA requests comments from medical product manufacturers, IRBs, patient groups, researchers, and other interested parties on possible approaches to increasing participation of these groups in clinical drug trials. Comments will be accepted until February 27, 2009.

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On January 13, 2009, the FDA announced on behalf of the Interagency Working Group on Import Safety the availability of draft guidance on “Good Importer Practices.”  The draft guidance document provides general recommendations to importers on possible practices and procedures they may follow to increase the likelihood the products they import (including drugs) comply with applicable U.S. safety and security requirements. Comments will be accepted through April 13, 2009. 

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On January 16, 2009, the FDA published a final rule requiring an abbreviated new drug application (ANDA) applicant to submit data from all bioequivalence (BE) studies the applicant conducts on a drug product formulation submitted for approval. In the past, ANDA applicants have submitted BE studies demonstrating that a generic product meets bioequivalence criteria in order for FDA to approve the ANDA, but have not typically submitted additional BE studies conducted on the same drug product formulation, such as studies that do not show that the product meets these criteria. The FDA now believes that additional BE study data may be important in determining whether the proposed formulation is bioequivalent to the reference listed drug, and will increase FDA’s understanding of how changes in components, composition, and methods of manufacture may affect product formulation performance. The rule is effective July 15, 2009.

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The FDA has released a draft document entitled “Guidance for Industry: Current Good Tissue Practice (CGTP) and Additional Requirements for Manufacturers of Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps).” The draft document provides establishments that manufacture HCT/Ps with recommendations for complying with CGTP requirements. This guidance also addresses whether the establishment registration and HCT/P listing requirements under 21 CFR part 1271, subparts A and B apply in certain instances. The FDA will accept comments on the guidance through April 16, 2009. 

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The FDA has released draft guidance on “Standards for Securing the Drug Supply Chain – Standardized Numerical Identification for Prescription Drug Packages,” which recommends standards industry should use for the identification of individual packages containing prescription drugs under the FDAAA. The standards are designed to facilitate adoption of a uniform electronic track and trace system for prescription drugs to further improve their safety and security. The FDA is soliciting comments on certain aspects of the guidance, as detailed in a January 16, 2009 notice. Comments will be accepted until April 16, 2009.

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The FDA has released final guidance on “Certifications To Accompany Drug, Biological Product, and Device Applications/Submissions: Compliance with Section 402(j) of The Public Health Service Act, Added By Title VIII of The Food and Drug Administration Amendments Act of 2007.” The guidance describes the FDA’s current thinking regarding the types of applications and submissions that sponsors, industry, researchers, and investigators submit to FDA and accompanying certifications under the FDAAA related to the submission of required information to the clinical trials data bank, www.ClinicalTrials.gov.

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On January 16, 2009, the FDA published a notice announcing “Draft Guidance for Industry on Submission of Laboratory Packages by Accredited Laboratories,” which is intended to enhance the quality and reliability of test results submitted by importers to demonstrate that their products meet the FDA's requirements. The guidance advises importers how to use accredited laboratories and makes recommendations about the quality and type of test data that these laboratories should produce to support test results submitted to the FDA. According to an FDA press release, the guidance also is intended to reduce the likelihood that an importer will submit only favorable test results to the FDA. Comments on the draft will be accepted through April 16, 2009. 

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This post was written by Lorraine Mullings Campos and Steven D. Tibbets.

On December 12, 2008 the Federal Acquisition Regulation (“FAR”) Council’s Final Rule – which applies to all federal government contracts in amounts greater than $5 million and more than 120 days in duration, including small business and commercial item contracts -- went into effect, requiring all federal contractors to disclose wrongdoing to the federal government, including certain violations of federal law, and violations of the False Claims Act. Specifically, contractors must “timely” disclose, in writing and to the Inspector General and the contracting officer (in that order), whenever, in connection with the award, performance, or closeout of a contract, the contractor has “credible evidence” that a principal, employee, agent, or subcontractor has committed a violation of federal criminal law involving fraud, conflict of interest, bribery or gratuity violations under Title 18 of the U.S. Code, or a violation of the False Claims Act.

In addition, the rule requires contractors to establish a “business ethics awareness and compliance program,” as well as an “internal control system” with certain attributes. In addition, significant overpayments by the government must be disclosed to the contracting officer. Failure to disclose violations of federal criminal law or violations of the False Claims Act may lead to criminal sanctions, civil penalties, suspension, or debarment.

Click here to view an an alert highlighting this and other major issues likely to impact government contracts businesses in the coming months and years.

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This post was written by John P. Feldman and Anthony E. DiResta.

One of the most frequent strategies employed by advertisers is to let the consumer hear about the advertised product or service from a third party, someone other than the advertiser itself. At its root, an endorsement or testimonial when used in advertising is the advertiser’s way of saying, “Don’t just take my word for how wonderful my product or service is, listen to this unbiased person whose opinion you should rely upon to make a purchasing decision.” The Federal Trade Commission (FTC or Commission) originally published Guides Concerning the Use of Endorsement and Testimonials in Advertising (The Guides) in 1972. The Guides have not been updated since 1980. In January, 2007, the FTC sought comments on proposed modifications and updates to the Guides. In particular, the Commission sought comments on whether so-called “disclaimers of typicality,” statements like “Results not typical” or “Your results may vary,” should continue to be a valid way to communicate that a testimonial does not represent experiences consumers will generally achieve with the advertised product or service.

Click here to view the alert.

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This post was written by Lorraine M. Campos, Gregory S. Jacobs and Brett D. Gerson.

On November 12, 2008, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council issued an amendment to the Federal Acquisition Regulation (“FAR”) to establish: (1) mandatory disclosure requirements for certain violations of federal criminal law and the False Claims Act; (2) requirements for contractors to establish and maintain specific internal controls to detect, prevent, and disclose improper conduct in connection with the award or performance of any government contract or subcontract; and (3) new causes for suspension and debarment. See 73 Fed. Reg. 219, 67,064 (Nov. 12, 2008). The final rule went into effect December 12, 2008, and applies to all federal government contracts in amounts greater than $5 million and more than 120 days in duration, including small business and commercial item contracts. Certain exceptions are discussed in the attached.

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The GAO has issued a report entitled "Medical Devices: FDA Should Take Steps to Ensure That High-Risk Device Types Are Approved through the Most Stringent Premarket Review Process." The report was issued in response to a provision of the FDA Amendments Act of 2007 mandating that GAO study the 510(k) process. The GAO found that in fiscal years 2003 through 2007, as part of its premarket review to determine whether devices should be permitted to be marketed in the United States, FDA:

• reviewed 13,199 submissions for class I and II devices via the 510(k) process, clearing 11,935 (90 percent) of these submissions;
• reviewed 342 submissions for class III devices through the 510(k) process, clearing 228 (67 percent) of these submissions; and
• reviewed 217 original and 784 supplemental PMA submissions for class III devices and approved 78 percent and 85 percent, respectively, of these submissions.

Although Congress envisioned that class III devices would be approved through the more stringent PMA process, and the Safe Medical Devices Act of 1990 required that FDA either reclassify or establish a schedule for requiring PMAs for class III device types, the GAO concluded that this process remains incomplete. GAO found that in fiscal years 2003 through 2007 FDA cleared submissions for 24 types of class III devices through the 510(k) process. As of October 2008, four of these device types had been reclassified to class II, but 20 device types could still be cleared through the 510(k) process. FDA officials said that the agency is committed to issuing regulations either reclassifying or requiring PMAs for the class III devices currently allowed to receive clearance for marketing via the 510(k) process, but did not provide a time frame for doing so.

GAO recommends that FDA expeditiously take steps to issue regulations for class III device types currently allowed to enter the market via the 510(k) process by requiring PMAs or reclassifying them to a lower class. HHS agreed with GAO’s recommendation.

Click here to view the report.

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This post was written by Areta L. Kupchyk, James M. Wood and Kevin Madagan.

On January 13, 2009, eleven months after the Food and Drug Administration (FDA) issued a draft guidance document, and 2 1/2 years after the sunset of the statute intended to permit the dissemination of medical literature about unapproved uses of drugs and medical devices, the FDA issued a final guideline for such dissemination. Often referred to as “the distribution of off-label use journal articles,” FDA’s final guidance is aptly named “Guidance For Industry: Good Reprint Practices for the Distribution of Medical Journal Articles and Medical Scientific Reference Publications on Unapproved New Uses of Approved Drugs and Approved or Cleared Medical Devices.”

As with the 2008 draft guidance, the final version begins by succinctly discussing the historical attempts to regulate the distribution of literature about unapproved uses, including noting the need to balance the law’s prohibition on distributing or promoting “unapproved uses of approved drugs and approved or cleared medical devices” with the “important public policy” of providing information that “may even constitute a medically recognized standard of care.” FDA concludes that the touchstone for lawful dissemination of literature about unapproved uses is that the publications “are truthful and non-misleading.”

To meet this standard, the FDA final guidance lists “principles of Good Reprint Practices” that include criteria for determining the type of publication, and the manner in which the publication can be distributed. Although the final guidance closely tracks the draft guidance, it has some important clarifications.

Click here to read the full alert, which highlights these clarifications and provides an overview of the final guidance.

UPDATE: Much obliged to Drug and Device Law for the link and thoughtful discussion, and more also is at the FDA Law Blog.

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The Food and Drug Administration Amendments Act of 2007 (FDAAA) expanded the public reporting requirements for “applicable clinical trials” involving certain drugs, biologicals, and devices. In December 2008, the Food and Drug Administration (FDA) issued a draft guidance document proposing, among other things, definitions that would affect who would be required to register certain clinical trials under the FDAAA. In some cases, FDA's proposal would require manufacturers who make grants to investigators to be the responsible party required to register. In addition, FDA elaborates on the circumstances under which clinical investigations designed to demonstrate bioequivalency would be subject to reporting. Additional background information is available at the clinicaltrials.gov web site. Reed Smith is reviewing the draft guidance. Please contact Areta Kupchyk at akupchyk@reedsmith.com for more information.

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The FDA has released final guidance on “Substantiation for Dietary Supplement Claims Made Under Section 403(r)(6) of the Federal Food, Drug, and Cosmetic Act,” which discusses the amount, type, and quality of evidence that FDA recommends a dietary supplement manufacturer have to substantiate a nutritional deficiency, structure/function, or general well-being claim. FDA has adopted the FTC standard for substantiation and, among other things, will expect statistically significant clinical studies to support structure/function claims. For more information, contact Areta Kupchyk at akupchyk@reedsmith.com.

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The FDA has issued final guidance on “Labeling OTC Human Drug Products—Questions and Answers.” This document is intended to assist manufacturers, packers, and distributors of over-the-counter (OTC) drug products in complying with the agency’s regulation on standardized content and format requirements for the labeling of OTC drug products, including the use of toll-free numbers and compliance with adverse event reporting requirements.

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The FDA has released draft guidance entitled “Assay Migration Studies for In Vitro Diagnostic Devices,” which is designed to present a least burdensome regulatory approach to gaining FDA approval of Class III or certain licensed in vitro diagnostic devices in cases when a previously-approved assay is migrating to a new system for which the assay has not been previously approved or licensed. FDA will accept comments on the draft guidance until April 6, 2009. 

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The FDA is inviting pharmaceutical companies to participate in the FDA’s Regulatory Project Management Site Tours and Regulatory Interaction Program, through which FDA personnel observe operations of pharmaceutical manufacturing and/or packaging facilities, pathology/toxicology laboratories, and regulatory affairs operations. The goals of the program are to provide FDA regulatory project managers with first-hand exposure to industry’s drug development processes, and to offer a venue for sharing information about project management procedures (but not drug-specific information) with industry representatives.  Interested companies may submit proposed agendas to FDA by March 6, 2009. 

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FDA is soliciting comments on the paperwork burden associated with its plan to require drug establishment registration and drug listing submissions in electronic format. Comments will be accepted until February 9, 2009. 

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This post was written by Leigh T. Hansson and Jason P. Matechak.

On Jan. 5, 2008, the U.S. Department of Commerce Bureau of Industry and Security ("BIS") issued a Request for Public Comments on the effects of U.S. Export Controls on sales of U.S.-origin commercial products and components. Specifically, BIS is seeking public comments on whether U.S. Export Controls influence manufacturers' decisions on whether to use U.S.-origin products and, if export controls do in fact influence sourcing decisions, what the effect is on the U.S. economy as a whole. This is an opportunity for manufacturers and exporters of commercial products to inform the U.S. government as to the economic effects of U.S. Export Controls, and perhaps to have some input into possible reforms of U.S. Export Control law and regulations in the future. Comments are due Feb. 19, 2009.

Attorneys in Reed Smith’s Global Regulatory Enforcement Group are actively monitoring this Request for Comment and are seeking information from life sciences clients facing export controls. Please contact Leigh T. Hansson or Jason P. Matechak if you would like to participate.

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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 Matthew E. Wetzel.

On Dec. 10, 2008, the Massachusetts Department of Public Health released proposed regulations that would impose aggressive restrictions on pharmaceutical and medical device manufacturers’ sales and marketing activities that exceed similar restrictions in other jurisdictions. The proposed regulations—intended to implement section 14 of the Massachusetts Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care—would also require companies to file annual disclosures of all fees, payments and economic benefits paid to health care professionals that total $50 or more. If the Department finalizes these regulations as proposed, Massachusetts will join the ranks of seven other jurisdictions that have issued similar requirements.

Click here to read the full Client Alert.

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Reed Smith partner Karl Thallner just published "Health Care Reform During the Obama Presidency: The Impact on Hospitals" in BNA's Health Care Policy. Karl discusses several aspects of the Obama plan, including access to coverage, individual mandates, delivery and payment, and transparency. As the article notes, "[t]o the extent that health care reform reduces the uninsured population, hospitals could benefit through a reduction in uncompensated care and bad debts. In addition, hospitals may see increases in patient volumes with the reduction in the uninsured."

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This article, written by Reed Smith attorneys Paule Drouault-Gardrat and Juliette Peterka, was first published in Insights, the conference bleue newsletter.  Reprinted with permission.

Article 21 of the Regulation No. 1924/2006 on nutrition and health claims made on foods of 20 December 2006 provides data protection for applicants who wish to register a nutritional or health claim not included in the Community list. The Community list of authorized health or nutrition claims will be established on the basis of proposals made by Member States with the assent of the Commission before 31 January 2010.

The difficulty is that if a manufacturer wants to use a claim which is not listed, it will have to proceed to a scientific evaluation of the claim. This raises two types of issues. Firstly, this is quite expensive. Consequently, this will cause small and middle sized companies to increase their costs every time they consider using a new claim. The second issue relates to the protection of the company’s private data. The Commission thus decides to provide data protection to new applicants, under Article 21 of the Regulation No. 1924/2006.

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This post was written by Louis A. Naugle and Mark A. Mustian.

On Aug. 12, 2008, EPA began a process toward possible regulation of the disposal of unused pharmaceuticals into sanitary sewer systems, by publishing notice of its intent to submit an Information Collection Request in order to better understand and document the current handling and disposal practices of unused pharmaceuticals. See, 73 FR 46903. Just last week, EPA announced a separate but related proposed rulemaking, in which EPA is proposing changes to the handling and disposal of unused pharmaceuticals that are currently classified and handled as hazardous waste (the “Unused Pharmaceuticals Rulemaking”). In this proposed Unused Pharmaceuticals Rulemaking, EPA plans to add pharmaceutical wastes that are RCRA hazardous waste to the list of materials that are classified as universal wastes. See, 73 FR 73519. This proposed change will potentially reduce costs for facilities that currently dispose of their unused pharmaceuticals as RCRA hazardous waste. The impact of EPA’s overall efforts to regulate the large and unknown volume of pharmaceutical waste not currently handled as hazardous waste is unclear.

For facilities that generate pharmaceutical waste that is currently handled and disposed of as hazardous waste, this Unused Pharmaceuticals Rulemaking could have significant advantages. The changes will likely result in reduced costs and requirements for storage, labeling, shipment off site, employee training, responses to releases, and notification. The changes would allow for (1) an increased accumulation threshold; (2) an increased on-site accumulation limit; (3) an increased storage time limit; and (4) no manifest requirement.

While this Unused Pharmaceuticals Rulemaking has no immediate adverse regulatory and economic impact, it should be considered in light of EPA’s ongoing efforts to reduce the impact of disposal of unused pharmaceuticals. EPA estimates that more than 600,000 individual facilities in the United States may be generators of hazardous pharmaceutical wastes. This number includes 40,000 retail pharmacies, more than 7,000 hospitals, and more than 300,000 physicians and dental offices. However, only 94 hospitals and 19 pharmacies report themselves to be Large Quantity Generators (“LQGs”) of hazardous waste. While EPA believes that the vast majority of pharmaceutical waste generators are Small Quantity Generators (“SMQs”) or Conditionally Exempt Small Quantity Generators (“CESQGs”), they admit that their information about pharmaceutical waste management is limited. Based upon their communications with pharmaceutical waste generators, EPA believes that numerous health care facilities are unaware of how the hazardous waste regulations apply to pharmaceutical wastes, and that much of the waste is being disposed of either in medical waste incinerators, or discharged into the municipal sanitary sewer.

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This post was written by Edward S. Miller, Gérard Sicsic and John Wilkinson.

In January 2008 the EC Commission spectacularly launched an investigation into the pharma sector by carrying out dawn raids on Europe’s major pharma groups. This was the first time a sector enquiry had been commenced by unannounced inspections.

The Commission has now published its 400 page preliminary report on its investigation which was launched at a press conference given by EU Competition Commissioner Neelie Kroes in Brussels on 28th November 2008.

The Commission’s preliminary view, on which it will now consult, is that competition in the European pharma industry is not working as well as it should. The Commission cites three practices of the large pharma groups which the Commission believes restrict competition and artificially keep the price of drugs high.

The practices which concern the Commission are: registering lots of patents – apparently 1300 in one case – for the same drug (patent clusters) in order to make it more difficult for other companies to produce competing (generic) versions of the same drug; a policy of initiating litigation to keep the generic companies out of the market or delay their entry; settling this litigation by agreements which typically keep the generic competitor out of the market for a time, give the generic competitor a licence of the patent holder’s drug or the right to sell it, so removing the possibility of a new generic drug entering the market, and/or include a so called “reverse payment” to the generic company.

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This Client Alert, written by Debra L. Hutchings, Paul J. Bond and Carol C. Loepere, updates information received from the Federal Trade Commission (“FTC”) concerning application of its Address Discrepancy and Red Flag rules aimed at combating identity theft as they apply to health care providers and suppliers. As reported previously these rules, collectively known as the Red Flag Regulations, 16 C.F.R. § 681.1 et seq. (“Red Flag Regulations”), apply to users of consumer reports and “creditors,” which may include many participants in the health care industry.

Past posts on this subject describe the FTC's decision to delay enforcement of a portion of the regulations and our initial discussion of the implications of the FTC's Red Flag Regulations for health care providers.

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This post was written by Stephen P. Murphy, Antony B. Klapper, Mark A. Brand, and Barry J. Thompson.

Among other things, the Consumer Product Safety Improvement Act of 2008 ("CPSIA"), signed August 14, 2008, will impose new transparency and public disclosure requirements on every importer, retailer and distributor of consumer products, and give the Consumer Product Safety Commission ("CPSC") increased power to enforce existing laws, as detailed in this summary of the bill's major provisions.

The life sciences industry is taking note and taking action to comply. But the new law is not without its drawbacks. One appeared to be that the disclosure requirements designed to document the source and supply chain for consumer goods threatened closely-guarded confidential business information, such as the names of foreign manufacturers and suppliers.

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Areta Kupchyk opines about possible picks for the FDA Commissioner in today's Law360 article, "Obama's FDA Commissioner Pick Could Be Outsider."

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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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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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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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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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Articles in This Issue:

• Provider Networks and Joint Ventures: Avoiding Antitrust Scrutiny Through Clinical Integration
• Stark II, Phase III Final Rule
• In the Spotlight:  Fraud and Abuse
• Health Law 101:  Fraud and Abuse
• Recent Reed Smith Publications

Click here to read the Spring 2008 issue of Health Law Monitor.

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At EU level, there are essentially two routes to obtaining an authorization from the EMEA to place a product on the market more quickly than through the usual marketing authorization route. The first is an application for a conditional authorization that is available where clinical trials have not been fully completed. This is not a full marketing authorization, but, as its name suggests, has conditions attached. The intention is that once the conditions are fulfilled, the authorization can become a full and unconditional marketing authorization. The other route is through an application to the EMEA for an accelerated or exceptional authorization. For this application, full data is available and a full marketing authorization is obtained, but the decision-making process occurs more quickly. In addition to these EU routes, some individual member states have their own legislation allowing products, subject to controls, to be marketed without a full marketing authorization in specified circumstances. This national legislation is the subject of a harmonizing guideline issued by the EME¹, although significant differences still remain in how the member states operate these compassionate-use programmes.

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This post was written by Catherine A. Durkin and Areta L. Kupchyk.

On May 22, 2008, the Food and Drug Administration (“FDA”) announced plans for what it is calling the “Sentinel System”—a new, national electronic health information surveillance system to track the performance and safety of medical products once they are on the market. See FDA, “The Sentinel Initiative: National Strategy for Monitoring Medical Product Safety” (May 2008). In addition to a whitepaper on the Sentinel Initiative, FDA has published a “Questions and Answers” document, a fact sheet, and information for the consumer that are all available at fda.gov. 

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On March 14, 2008, the U.S. Food and Drug Administration (“FDA”) received approval from the U.S. State Department to place eight full-time, permanent FDA employees at U.S. diplomatic posts in the People’s Republic of China, pending authorization from the Chinese government. The FDA will also be hiring five local Chinese nationals to work with the new FDA staff at the U.S. Embassy in Beijing and the U.S. Consulates General in Shanghai and Guangzhou. The FDA expects to be fully staffed in China within 18 months.

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This post was written by Debra McCurdy, Carol Loepere, and Elizabeth Carder-Thompson.

I. INTRODUCTION

On January 8, 2008, CMS announced the second phase of Medicare competitive bidding for durable medical equipment (“DME”), prosthetics, orthotics, and supplies (“DMEPOS”). In this second round, competitive bidding will be implemented in 70 areas, including the nation’s largest cities. The complete list of areas can be found at Appendix 1. With very limited exception, only suppliers who are successful bidders in these regions and who meet program standards (including accreditation) will be eligible to furnish eight categories of DMEPOS to Medicare beneficiaries beginning next year. Successful bidders will be paid based on the median of the winning suppliers’ bids for each of the selected items in the region, rather than the Medicare fee schedule or supplier bid amount.

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