Pharmaspective

The National Physicians Alliance and the American Medical Student Association Request Full Implementation of the Sunshine Act

By Monica Aurelien

On January 3, 2013, the National Physicians Alliance (NPA) and the American Medical Student Association (AMSA) sent a joint letter to Jack Lew, the White House Chief of Staff, urging him to fully implement the “Sunshine Act” provisions of the Patient Protection and Affordable Care Act. In the letter, the organizations noted that they have supported the Sunshine Act since its passage, and expressed disappointment that the Department of Health and Human Services has not yet released final regulations implementing the Sunshine Act provisions. The organizations request that the final regulations implementing the Sunshine Act be released by the end of January 2013 so that manufacturers can “quickly implement procedures to begin collecting payment information.”

 

On November 27, 2012, the Office of Management and Budget (OMB) received final regulations from the Centers for Medicare and Medicaid Services (CMS), which would implement the Sunshine Act provisions. CMS previously missed the October 1, 2011, deadline to establish regulations implementing these provisions.

 

The Sunshine Act requires drug, device, biological product, and medical supply manufacturers to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires manufacturers and group purchasing organizations (GPOs) to report all ownership or investment interests held by physicians or members of their family. Although the Sunshine Act requires manufacturers and GPOs to begin collecting data starting January 1, 2012, CMS has previously indicated that it will not require data collection by applicable manufacturers and applicable GPOs before January 1, 2013.

 

Stay tuned....

Vermont Attorney General’s Office Posts Final “Guide to Vermont’s Prescribed Products Gift Ban and Disclosure Law for 2013 Disclosures”

By Hiramella Deonarine and Danielle Burke

In an effort to help manufacturers comply with the requirements of Vermont's Prescribed Products Gift Ban and Disclosure Law (Law) and to provide additional guidance for expenditure reports due on April 1, 2014 (the 2013 calendar year), the Vermont Attorney General's Office (AG’s Office) has posted on its website the final “Guide to Vermont’s Prescribed Products Gift Ban and Disclosure Law for 2013 Disclosures” (Guide).  Additionally, the AG’s Office posted the 2013 Expenditures Disclosure Form for 2013, and the Samples Disclosure Form for 2013.

Pursuant to the Law, manufacturers of prescription drugs, biological products, and medical devices are required to disclose to the AG's Office the value, nature, purpose, and recipient of any allowable expenditure or permitted gift. Manufacturers are also required to submit samples disclosure reports that include the product, recipient, number of units, dosage, and other information for all samples provided to health care providers.

In addition to the Guide, the AG’s Office also released a memorandum entitled “Common Errors in Compliance with Vermont’s Prescribed Products Gift Ban and Disclosure Law That May Result in Enforcement Action” (Common Errors).  This memorandum lists common errors made by manufacturers in previous disclosure reports submitted to the AG’s Office.  The Common Errors memo states that the AG’s Office “expects to take enforcement action against manufacturers with unjustified, obviously and egregiously incomplete or incorrect submissions.”

To view a copy of the Guide, the forms, and the Common Errors memo, please see the links above or visit the Vermont AG’s Office’s website. 

Second Circuit: Truthful Off-label Promotion of Prescription Drugs is Protected by the First Amendment

By Laura C. Conway

On December 3, 2012, the United States Court of Appeals for the Second Circuit ruled that a pharmaceutical sales representative could not be convicted for truthful off-label promotional statements made to physicians about a drug that had been approved by the FDA for other uses.  United States v. Caronia, 09-5006-cr  (2d Cir. Dec. 3, 2012). 

 

Caronia was a sales representative who promoted Xyrem, a drug that was approved for two specific uses and carried a “black box warning.”  Caronia detailed physicians who might prescribe the product and helped establish a speakers program where the drug was discussed.   During the course of a government investigation, Cardonia was recorded promoting the drug for unapproved uses, including unapproved indications and unapproved subpopulations.  The government did not allege that the statements at issue were untruthful or misleading. 

 

Caronia was convicted in the trial court for conspiracy to introduce or deliver misbranded drugs into interstate commerce, in violation of the Food, Drug and Cosmetic Act (FDCA).  The Second Circuit vacated this conviction.  The government, according to the court, incorrectly argued that off-label promotion alone constitutes “misbranding.”  The court found that the FDCA does not expressly prohibit the promotion of drugs for off-label use, but noted that promotional statements could constitute proof of an intent to use a drug in a manner that the FDA had not approved and was inconsistent with the label, which would be actionable under the FDCA. 

 

The court concluded that the government prosecuted Caronia not for his intent to sell misbranded drugs based on his statements regarding the drug’s off-label uses, which does not implicate the First Amendment, but rather for the act alone of making statements about off-label uses for the drug, which does implicate the First Amendment.  The court held that the First Amendment protects this type of commercial speech and that the government could not overcome the heightened scrutiny applicable to such commercial speech.  The court looked to the United States Supreme Court’s recent decision, Sorrell v. IMS Health, in which the Court held that “[s]peech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment."  131 S. Ct. 2653, 2659 (2011).   

 

In reaching its decision, the Second Circuit reasoned that the statements were truthful; the FDCA does not expressly prohibit the promotion of drugs for off-label use; physicians are permitted to prescribe the drug for unapproved uses, and persons other than pharmaceutical companies and their sales representatives may advise physicians of off-label uses of drugs that the FDA had approved for other uses.  The court interpreted the misbranding provisions of the FDCA as “not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs” and concluded that “the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.” 

 

The court noted that its decision was limited to FDA-approved drugs for which off-labels uses are permitted and that the FDA is authorized to regulate prescription drug marketing.  In addition, the court made clear that off-label promotion that is false or misleading is not protected by the First Amendment. 

 

            One of the three judges on the panel dissented from the decision and issued a lengthy opinion arguing that Caronia’s conviction should have been upheld.  In this dissent, the court disagreed with the majority’s interpretation of the government’s position and contended that Caronia was prosecuted because his speech revealed an intent to sell the drug for a use that was inconsistent with the drug’s label, not for the speech itself.  As such, the court noted, the First Amendment did not apply and did not protect Caronia’s statements.  Even if the First Amendment did apply, the dissent stated, the FDCA’s misbranding provision precludes promotion of off-label uses and passes constitutional muster.  The dissent argued that the majority opinion serves as a disincentive to pharmaceutical manufacturers to go through the premarket drug approval process and undercuts the purpose of the FDCA and the FDA to ensure the safety and efficacy of drugs before they are marketed.    

 

The Caronia decision is not binding on trial courts outside of the Second Circuit and likely is not the last word on this subject.  We anticipate a request for further review by the full panel of the Second Circuit or review by the United States Supreme Court.  Until the United States Supreme Court reviews the decision, off-label promotion is subject to prosecution outside of the Second Circuit.  In addition, both in and out of the Second Circuit, off-label promotion by sales representatives remains potentially actionable because, among other things, the government could argue that it is evidence of an intent to sell a misbranded drug.

Full Text of Decision: United States v. Caronia, 09-5006-cr  (2d Cir. Dec. 3, 2012)

CMS Sends Final Regulations That Would Implement the Sunshine Act to the Office of Management and Budget

By Danielle Burke

On November 27, 2012, the Office of Management and Budget (OMB) received final regulations from the Centers for Medicare and Medicaid Services (CMS), which would implement the “Transparency Reports and Reporting of Physician Ownership or Investment Interests” section of the Patient Protection and Affordable Care Act. CMS previously missed the October 1, 2011, deadline to establish regulations implementing this section, which is commonly referred to as the “Sunshine Act.” The text of the final regulations is not currently available for viewing.  

 

CMS released proposed regulations to implement the Sunshine Act in December 2011.  The Sunshine Act requires drug, device, biological product, and medical supply manufacturers to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires manufacturers and group purchasing organizations (GPOs) to report all ownership or investment interests held by physicians or members of their family. Although the Sunshine Act statute requires manufacturers and GPOs to begin collecting data starting January 1, 2012, CMS has previously indicated that it will not require data collection by applicable manufacturers and applicable GPOs before January 1, 2013.

Update: Massachusetts Bureau of Health Care Safety and Quality Requests Approval of Final Regulations to Implement Changes to the Pharmaceutical and Medical Device Manufacturer Conduct Law

On September 19, 2012, the Massachusetts Department of Public Health (Department) posted emergency regulations to immediately implement recent changes to Massachusetts’ Pharmaceutical and Medical Device Manufacturer Conduct Law [Mass. Gen. Laws Ch. 111N] (Law). The Law requires the Department to “adopt a standard marketing code of conduct for all pharmaceutical or medical device manufacturing companies that employ a person to sell or market prescription drugs or medical devices in the commonwealth.” Recent changes to the law permits pharmaceutical and medical device manufacturers to provide “modest meals and refreshments in connection with non-CME educational presentations for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” The presentation must occur “in a venue and manner conducive to informational communication.” Additionally, pharmaceutical and medical device manufacturing companies who provide these meals must file quarterly reports detailing all non-CME educational presentations in which they provide such meals or refreshments. The emergency regulations are set to expire on December 19, 2012.

 

On November 21, 2012, the Massachusetts Bureau of Health Care Safety and Quality submitted a request to the Public Health Council to approve final regulations to implement recent changes to the Law. The final regulations permit pharmaceutical or medical device manufacturing companies to provide or pay for modest meals in the health care practitioner’s office or hospital setting in connection with informational or educational meetings or presentations. Companies may also provide or pay for modest meals outside of the health care practitioner’s office or hospital setting, provided that the meal is “for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” Please note that the regulations state that “appropriate uses” may not include the promotion of off-label uses of prescription drugs or medical devices.

 

The final regulations define “modest meals and refreshments” as “food and/or drinks provided by or paid for by a pharmaceutical or medical device manufacturing company or agent to a health care practitioner that, as judged by local standards, are similar to what a health care practitioner might purchase when dining at his or her own expense.”

 

In addition, echoing the amended law, the final regulations also require that the quarterly reports include:

 

• The location of the non-CME presentation;
• A description of any pharmaceutical products, medical devices, or other products discussed;
• The total amount spent on the presentation;
• The estimated cost per participant, including meals, refreshments, and other items of economic value provided; and
• Any other information as determined necessary by the Commissioner.

 

Further, the final regulations clarify that companies will need to register annually and submit a $2,000 annual registration fee .

 

Although the final regulations require companies to continue submitting annual disclosure reports to the Department, companies are not required to disclose information that has been disclosed to a federal agency pursuant to federal law. 

The American Medical Association Disapproves of CMS Tasking Implementation of the Sunshine Act to the Center for Program Integrity

By Ingrid A. Pelzer

In December 2011, the Centers for Medicare and Medicaid Services (CMS) issued a notice of proposed rulemaking announcing the publication of draft regulations that would implement the “Transparency Reports and Reporting of Physician Ownership or Investment Interests” section of the Patient Protection and Affordable Care Act, commonly referred to as the Sunshine Act. Under the Sunshine Act, drug, device, biological product, and medical supply manufacturers are required to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires manufacturers and group purchasing organizations (GPOs) to report all ownership or investment interests held by physicians or members of their family. Since releasing the draft regulations, CMS has accepted comments from interested parties and has engaged stakeholders regarding the implementation of the regulations. CMS has not yet released the final regulations.  

 

Recently, the American Medical Association (AMA) published an editorial voicing its disapproval of CMS’ intention to have the Center for Program Integrity, CMS’ anti-fraud unit, implement the Sunshine Act. According to the editorial, putting the Center for Program Integrity (CPI) in charge of the collection and distribution of public reports on physician-industry interactions “creates the impression that any physician who appears on the list, no matter how limited financially or legitimate the nature of the interaction, is somehow engaged in behavior that could be seen as ethically or legally suspect.” As a result, CPI’s implementation of the Sunshine Act “could have a chilling effect on beneficial interactions between doctors and researchers that help advance medicine.” The AMA proposes that CMS leave “data collection, reporting and appeals to another part of the agency and reserve CPI only for matters involving compliance with the law.”

 

The AMA previously voiced its objection to CPI’s implementation of the Sunshine Act in an October 2012 letter to CMS. In this letter, AMA’s Executive Vice President and CEO, James L. Madara, MD, noted that the purpose of the Sunshine Act “is not to supplant the role of the profession in regulating ethical conduct or to create new fraud and abuse laws.” Dr. Madara further noted that having CPI implement the Sunshine Act “could lead to a public perception that most, if not all, transparency reports are prima facie evidence of unethical or illegal behavior.” In sum, Dr. Madara urged CMS to “reconsider tasking [CPI] with implementation of the final Sunshine Act regulation because it will cause significant confusion about the purpose of the transparency reports and create a strong perception that anything contained in a transparency report presumptively raises ethical, fraud, abuse, and program integrity concerns.”

 

What are your thoughts on CMS' plan to task the CPI with enforcing the Sunshine Act?

FDA to Industry: Stay Tuned to 2013 For Further Guidance On Federal Sample Disclosure Reporting

By Frank Minichetti

Section 6004 of the Patient Protection and Affordable Care Act (Act) requires manufacturers and authorized distributors of record (ADRs) to disclose information related to drug sample requests and distributions on or before April 1, 2012, and each year thereafter. Earlier this year, the Food and Drug Administration (FDA) issued a draft guidance for industry on the reporting of drug sample distribution information. The FDA also issued the “ACA Industry Submission Specifications User Guide,” which provides the technical requirements for the proper submission of files through its Electronic Submissions Gateway (ESG). During this time, the FDA also indicated that it did not intend to object until at least October 1, 2012, if manufacturers and ADRs did not submit drug sample information as required by the Act. The FDA has stated that it would provide notice before it begins enforcing the drug sample reporting requirement. The FDA also asked that interested parties submit comments and suggestions regarding the draft guidance. 

 

Today, the FDA announced on its website that it is currently reviewing the comments it has received regarding the draft guidance and the ESG, and that it “expects to issue further guidance regarding its compliance policy, including the timing of agency enforcement decisions, in early 2013.”

 

Please see the FDA website for additional information on the federal sample disclosure requirements.

Massachusetts Department of Public Health Issues Emergency Regulations to Implement Recent Changes to the Pharmaceutical and Medical Device Manufacturer Conduct Law

On July 1, 2012, portions of Massachusetts House Bill 4200 (HB 4200) became effective. HB 4200 amended Massachusetts’ Pharmaceutical and Medical Device Manufacturer Conduct Law (Law), which requires the Department of Public Health to “adopt a standard marketing code of conduct for all pharmaceutical or medical device manufacturing companies that employ a person to sell or market prescription drugs or medical devices in the commonwealth.”

HB 4200 amended the Law to allow pharmaceutical and medical device manufacturers to provide “modest meals and refreshments in connection with non-CME educational presentations for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” The presentation must occur “in a venue and manner conducive to informational communication.” Additionally, pharmaceutical and medical device manufacturing companies who provide these meals must file quarterly reports detailing all non-CME educational presentations in which they provide such meals or refreshments.

On September 19, 2012, the Massachusetts Department of Public Health (Department) posted emergency regulations to implement the changes in HB 4200. The regulations state that a pharmaceutical or medical device manufacturing company may provide or pay for modest meals that are in the health care practitioner’s office or hospital setting in connection with informational or educational meetings or presentations. Companies may also provide or pay for modest meals outside of the health care practitioner’s office or hospital setting, provided that the meal is “for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” Please note that the regulations state that “appropriate uses” may not include the promotion of off-label uses of prescription drugs or medical devices.

The regulations define “modest meals and refreshments” as “food and/or drinks provided by or paid for by a pharmaceutical or medical device manufacturing company or agent to a health care practitioner that, as judged by local standards, are similar to what a health care practitioner might purchase when dining at his or her own expense.”

In addition, echoing the amended law, the emergency regulations also state that the quarterly reports must include:

•    The location of the non-CME presentation;
•    A description of any pharmaceutical products, medical devices, or other products discussed;
•    The total amount spent on the presentation; and
•    The estimated cost per participant, including meals, refreshments, and other items of economic value provided.

Further, the regulations explain that companies will no longer be required to submit annual disclosure reports after the 2013 submission for sales and marketing activities occurring in 2012. In addition, the annual disclosure report fee of $2,000 will not be required after July 1, 2012.

The emergency regulations are effective September 19, 2012. There will be a public hearing held on October 19, 2012, to discuss the regulations.

The Sun Will Come Out In 2013…Hopefully!

By Sheevani Patel

On Wednesday, September 12, 2012, Senator Herb Kohl, Chairman of the U.S. Senate Special Committee on Aging, convened a roundtable discussion entitled “Let the Sunshine In: Implementing the Physician Payments Sunshine Act.” The “Sunshine Act” provisions of the Patient Protection and Affordable Care Act requires drug, device, biological product, and medical supply manufacturers to report annually certain information regarding payments and other transfers of value to physicians and teaching hospitals. An additional provision requires manufacturers and group purchasing organizations (GPOs) to report all ownership or investment interests held by physicians or members of their family. Further, the Secretary of the Department of Health and Human Services is required to establish procedures for making reported information publicly available through an Internet website.

 

The roundtable discussion was moderated by Dr. Mark McClellan, Director of the Engelberg Center for Health Care Reform at the Brookings Institution, and included a wide range of stakeholders. The discussion began with opening statements from Senator Kohl and Senator Charles Grassley, co-authors of the Sunshine Act.  In their respective statements, Senators Kohl and Grassley again noted their disappointment in the Centers for Medicare and Medicaid Services’ (CMS) delay in finalizing the rule to implement the Sunshine Act. In his statement, Senator Grassley emphasized that the “American people deserve the full disclosure and transparency [the Sunshine Act] promises and industry needs certainty about the specifics of the rules so that compliance can begin.”

 

During the discussion, Niall Brennan, Director in the Policy and Data Analysis Group at CMS, was questioned regarding CMS’ timeline for implementing the Sunshine Act. Specifically, Senator Richard Blumenthal requested dates as to when data collection, reporting, and posting will occur. Director Brennan indicated that CMS “hopes” to finalize the rule “as soon as possible,” and that it “hopes” to build in an appropriate period of time for manufacturers to get ready to collect data. Director Brennan also noted that CMS “hopes” that some of the data collection will occur in 2013.

 

To view a webcast of the roundtable discussion, please visit the following link:

"Let The Sunshine In" Round Table Discussion Webcast.

 

Amnesty! Courtesy of the Vermont Attorney General's Office!

Pursuant to Vermont's Prescribed Products Gift Ban and Disclosure Law (Law), manufacturers of prescription drugs, biological products and medical devices are required to disclose annually to the Attorney General’s Office (AG's Office) the value, nature, purpose, and recipient of any allowable expenditure or permitted gift. On September 6, 2012, the AG’s Office sent a memorandum to manufacturers of medical devices and biologics offering limited amnesty to those “whose obligation to comply with the [Law] began on or after July 1, 2009 but who failed to report their activities in any of the following reporting periods: FY10 (7/1/09-6/30/10), FY11 (7/1/10-6/30/11), or 2011 (7/1/11-12/31/11).” Notably, this offer is limited to amnesty from the “financial penalties the [AG’s Office] is authorized to seek under the Law for failure to report, and does not apply to back-payment of registration fees or penalties for other violations of the law, such as gift ban violations.”

In order to take advantage of this offer of limited amnesty, manufacturers of  medical devices or biologics must email prescribedproducts@atg.state.vt.us on or before October 1, 2012, with the following information:

•    The manufacturer’s name;
•    The reporting period(s) for which the manufacturer failed to report; and
•    The name, physical address, email address and phone number of the person with whom the AG’s Office should communicate with about the unreported activity.

The AG’s Office has indicated that it “does not anticipate seeking full disclosure for unreported activity[.]” The AG’s Office does, however, “anticipate requiring disclosure – at a later date –  of some aggregate information related to the activity.” Also note that the AG’s Office may seek to execute an Assurance of Discontinues “to secure a manufacturer’s future compliance with the law notwithstanding that manufacturer’s acceptance of the offer of limited amnesty.”