A “Torrent of Studies” on Direct-to-Consumer Advertising: Is FDA Shoring Up Its Defenses?

Cross-Posted at Bill of Health

At Regulatory Focus earlier this week, Alexander Gaffney wrote about what he characterized as “a torrent of studies” that FDA is conducting or has proposed conducting on prescription drug promotion, and, in particular, on direct-to-consumer advertisements.  The studies include, among others, a survey study aimed at sussing out “the influence of DTC advertising in the examination room and on the relationships between healthcare professionals and patients”, a study exploring similarities and differences in the responses of adolescents and their parents to web-based prescription drug advertising, and a study that will use eye tracking technology to collect data on the effect of distracting audio and visuals on participants’ attention to risk information.

Gaffney speculates that “the proposed studies could indicate coming changes in FDA’s regulatory approach toward advertising[.]“  Another possibility is that the studies are part of an effort by FDA to build up the evidence base supporting its current regulatory approach.  In a Tweet commenting on Gaffney’s article, Patricia Zettler–a  Fellow at Stanford Law School’s Center for Law and the Biosciences who was formerly an Associate Chief Counsel for Drugs at FDA’s Office of Chief Counsel–asks whether the data generated by the studies could help insulate FDA from First Amendment challenges.

Commercial speech is only protected under the First Amendment if it is not false or–perhaps more relevant in the context of direct-to-consumer advertising–misleading.  In Christopher Robertson’s recent essay in the Boston University Law Review, he argues that when the truth about a claim is known, as it likely the case with an on-label direct-to-consumer advertisement, it is sensible to put the burden on the government to    “prov[e] that the true speech is misleading…given the epistemic value of truth and our aversion to paternalism, especially as a motivation for speech regulation.”

As I discussed previously here, courts called upon to decide whether an advertisement or form of advertising is true, false, or misleading are permitted “to look to the facts to determine ‘the actual effect speech will have.’”  In Florida Bar v. Went for It, for example, the Supreme Court relied on the government’s “106-page summary of its 2-year study of lawyer advertising and solicitation to the District Court,” as well as an “anecdotal record . . . noteworthy for its breadth and detail” in upholding a thirty-day moratorium on direct-mail solicitation of accident victims and their families by personal injury lawyers.  In Bronco Wine Company v. Jolly, a California appeals court  held that a legislative finding that the descriptor “Napa” was inherently misleading was adequately supported by “the regulatory history of brand names of geographic significance,” hearing testimony, and a survey.  By contrast, in Edenfield v. Fane, the Supreme Court invalidated a ban on in-person solicitation by accountants on the grounds that the Board of Accountancy failed to ”validate [its] suppositions[.]“

Commercial speech doctrine does not precisely specify the level of deception, or the form or degree of proof, necessary to justify speech-restrictive regulations like those that limit direct-to-consumer prescription drug advertising. The government might have to show that such advertising is more often deceptive than not.  Or, as in Lanham Act false advertising cases, it might have to show that a substantial percentage (typically fifteen to twenty percent) of a company’s customers is misled by it.  Or, a significant risk of deception might be sufficient.  Notwithstanding this uncertainty, FDA is wise to prepare to defend (and even fend off) future First Amendment challenges to the laws and regulations governing direct-to consumer prescription drug advertising by building up the evidence base underlying them.

Monday Morning Recap: The Week in Drug and Device Law and Policy

Welcome back from what I hope was a restorative break in the routine!  What follows is a weekly feature here at Health Reform Watch.  Each Monday morning, we provide a recap of the drug and device law and policy developments over the previous week that caught our eye and made us think.  Credit for the format goes to Seton Hall Law alum Jordan T. Cohen, who used it to great effect in his series of Reform Rodeo posts.

1. Last week, the warning letter that the FDA sent to 23andMe on November 22, 2013 ordering the company to stop marketing its 23andMe Saliva Collection Kit and Personal Genome Service was heavily debated.  Here’s a link to a radio show on the FDA’s action featuring Nita Farahany, Hank Greely, and others.

2. At Scientific American, Dina Fine Maron reports that “[a] new process, in which the FDA approves cancer drugs on the basis of which malfunctioning growth pathways they target rather than on [the part of the body where a malignancy begins], has been quietly batted about on the sidelines of conferences or over drinks among oncologists for the past couple years. Although the FDA has not formally proposed any such change, the agency’s cancer czar, Richard Pazdur, floated the idea at a public conference on cancer care earlier this month in Washington, D.C., suggesting the idea may be gaining official traction.”

3. In an editorial in JAMA, epidemiologist Jennifer Robinson makes the case for statins for primary prevention.  She writes: “Critics give several reasons to avoid statin therapy, including concerns about adverse effects, lack of a total mortality benefit, cost, and a philosophical aversion to drug therapy. However, the passage of time has allowed sufficient evidence to accumulate to refute each of these concerns.”

4. Health Affairs issued a new Health Policy Brief on specialty pharmaceuticals.  The authors note that the debate over co-pay coupons, which I blogged about here, is especially heated with regard to these more expensive drugs.

5. Finally, in an editorial in the American Journal of Obstetrics and Gynecology, Anthony Vintzileos and Cande Ananth provide an alternate explanation for data demonstrating a link between oxytocin, used to induce or augment labor, and autism. The authors conclude that “the most recent evidence (birth years 1995-1998) indicates that when the appropriate diagnostic criteria for autistic disorders are applied, there was no increase in autism from baseline or any association between induced or augmented childbirth and autism.”  The search for a cause continues.

Halbig v. Sebelius: A Case to Watch Challenging Subsidies in the Federal Exchanges

One of the important aspects of the Patient Protection and Affordable Care Act (“PPACA”) is the creation of new health insurance exchanges where individuals can buy regulated healthcare insurance. To encourage states to establish such exchanges and individuals to buy healthcare from these exchanges, Congress chose to offer subsidies in the form of refundable tax credits to help a state’s low and moderate-income residents be able to buy healthcare. Section 1401 of the PPACA states that individuals who purchase healthcare insurance through an exchange established by a state will qualify for the subsidies.

The wording “through an exchange established by the State” is the precise issue in a case to watch, Halbig v. Sebelius. The case, filed in the federal district court in the District of Columbia, involves four taxpayers and three employers (one, Innovare Health Advocates, a Tea Party-backed organization) who are challenging the authority of the IRS to issue subsidies to health-insurance companies and impose penalties on individual taxpayers and employers in the 36 states that have not established a health insurance exchange under PPACA.

Plaintiffs argue that these subsidies and penalties violate the clear and unambiguous language of the Act, which anticipates premium assistance only in states with state-operated exchanges. (Pruitt v. Sebelius also challenges the IRS’ authority and will be in front of the Eastern District of Oklahoma in the near future). Plaintiffs have a strong argument as the exact language of the statute states “through an exchange established by the State.” Should this case proceed to the Supreme Court, the Court will engage in statutory construction to deliver a ruling on this issue. The first step of statutory construction is a plain language analysis in which the Court will assume the legislative purpose is expressed by the ordinary meanings of the words used. See Sec. Indus. Ass’n v. Bd. of Governors. And where the plain language is clear and unambiguous, the Court will usually not inquire further to ascertain meaning. See Qi-Zhuo v. Meissner. Only if the Court finds ambiguity within the statute will it then look to legislative intent to interpret the statute. Here, it seems that the language clearly states that subsidies will only be afforded to those 14 states that have established an exchange, so it will be interesting to see further ruling on the issue.

To the contrary, proponents of the PPACA argue that Plaintiffs’ argument is inappropriate based on other sections of the PPACA, the legislative history, and the overall structure of the Act. First, supporters argue that the availability of tax credits through federally operated exchanges is recognized in other sections of the Act such as 1311, 1321, 1401 (36B of Internal Revenue Code), and 1413. Second, proponents argue that the legislative history suggests that Congress intended for the subsidies to be available in every state. In making such claim, they rely heavily on the Senate Finance Committee Report of 2009, which stated that tax credits would be provided to reduce the cost of purchasing insurance, but with no mention of any limitation based on the nature of the exchange. They also point to the fact that the Congressional Budget Office provided Congress in 2009 with an analysis of the impact of the PPACA on premiums, with the assumption that tax credits would be available in all states. Lastly, they claim that the overall purpose of the PPACA is to bring millions of individuals into insurance markets by providing tax credits, and to rule that tax credits will be inapplicable in over half the country would defeat the purpose of the statute. The proponents’ arguments rest heavily on legislative intent, which as stated above, will only be addressed if ambiguity is found within the statute.

Plaintiffs sought a preliminary inunction to block subsidies immediately for those who buy health insurance through the federally operated exchanges, however, U.S. District Judge Paul Friedman refused to grant the injunction. Nonetheless, Judge Friedman allowed the case to proceed and stated that it would be handled on an expedited basis, giving consumers a clear answer under the law before the March 2014 deadline to buy insurance.

Why, you ask, are the Plaintiffs challenging the IRS subsidies to all exchanges, whether federally or state established? In their complaint, Plaintiffs claim that the subsidies “financially injure and restrict the economic choices of certain individuals.” There is an exemption from the individual mandate for low- and moderate-income individuals for whom healthcare insurance is “unaffordable,” however with the subsidies, such individuals are no longer exempt, and are thereby forced to purchase healthcare under the individual mandate. Following from this, employers are charged a penalty if they do not adhere to the “employer mandate,” which is triggered by their employees receiving a federal subsidy.

Although there is little attention paid to this case right now, more should tune in to see the final result. One of the most important aspects of the PPACA will be inapplicable to over half the country if the Court chooses to rule in favor of the Plaintiffs. One way or another, this will be a case to watch.

The Co-Pay Coupon Controversy: Time for Detente?

Cross-Posted at Bill of Health

At the end of last month, the Secretary of Health and Human Services Kathleen Sebelius made headlines when, in a letter addressed to Representative Jim McDermott (D-WA), she announced that “[qualified health plans], other programs related to the Federally-facilitated Marketplace, and other programs under Title I of the Affordable Care Act” were not “federal health care programs under section 1128B of the Social Security Act”.  One implication of the Secretary’s interpretation is that the “anti-kickback act”, which is found in Section 1128B, does not apply to qualified health plans.  And that, in turn, means, among other things, that individuals insured under those plans, unlike individuals on Medicare or Medicaid, will be able to use drug company coupons to defray the cost of their prescription drugs.

Prescription drug coupons have been a source of controversy, favored by branded manufacturers and patients, and opposed by generic manufacturers, health insurers, third party payers, and pharmaceutical benefit managers.  Joseph Ross and Aaron Kesselheim studied a large number of coupons advertised on the website www.internetdrugcoupons.com and found that ”62% (231 of 374) were for brand-name medications for which lower-cost therapeutic alternatives were available.”  Ross and Kesselheim argue that the coupons are costly at the population level, but also for individual patients.  This is because the coupons are nearly always time-delimited and the short-term savings do not typically outweigh the long-term cost of taking a branded drug.  On the other hand,  in an article in last week’s JAMA, Leah Zullig and colleagues pointed out that reducing co-payments has been proven to improve medication adherence, a problem which there ”is an increasing business case for addressing[.]“

The coupon controversy has carried over into the courts.  On March 7, 2012, seven lawsuits were filed in district courts by third party payers against a number of drugmakers, alleging that prescription drug coupons violate antitrust, commercial bribery, and racketeering laws.  (This post at FDA Law Blog includes links to the seven complaints, and this one provides an update on the status of the litigation as of late June 2013.)

On June 3, 2013, Judge Paul Oetken of the Southern District of New York dismissed one of the seven suits, brought against Bristol-Myers Squibb and Otsuka, finding that the challenged coupons were not fraudulent because the program is “‘open and notorious,’ information about its terms and conditions is readily available on a number of public websites, and Plaintiffs do not allege that anyone is deceived about the effect of these programs.”  The court dismissed one of the plaintiffs’ claims–that the defendants committed fraud “by reporting benchmark prices to reporting agencies while failing to account for the routine waiver of co-pays”–without prejudice to refile, which the plaintiffs did.  A review of the seven dockets this morning, November 26, 2013, reveals that there are motions to dismiss pending in all that were not voluntarily dismissed by the plaintiffs.

The likely outcome of the ongoing litigation is that if an insurer wants to end the use of coupons, it will have to include a provision in its insurance contracts barring their use.  Note, though, that Ross and Kesselheim found that fully 38% of the coupons offered were for prescription drugs for which there was no therapeutic alternative.  The public policy arguments against using coupons are significantly weaker with regard to such drugs.

A better approach to cutting costs, I think, is to focus on doctors, not patients.    Rather than take away patients’ coupons–which can be perilous, as JC Penney can tell you–insurers and third party payers should make it easier for doctors to make cost-effective prescribing decisions and harder for them to prescribe brand-name drugs that have generic substitutes or alternatives.  As Judge Oetken held, “neither precedent nor logic” supports assigning to patients a duty to “pressure physicians to choose generics.”  Physicians should be choosing generics, where appropriate, in the first instance.  Focusing on helping them do so would be fairer and more productive than continuing the fight against coupons.

Monday Morning Recap: The Week in Drug and Device Law and Policy

What follows is a weekly feature here at Health Reform Watch.  Each Monday morning, we provide a recap of the drug and device law and policy developments over the previous week that caught our eye and made us think.  Credit for the format goes to Seton Hall Law alum Jordan T. Cohen, who used it to great effect in his series of Reform Rodeo posts.

1. At Regulatory Focus, Alexander Gaffney reports on efforts by members of Congress to exempt user fees like those that support the Food and Drug Administration’s drug and device approval processes from sequestration.  While appropriated funding that is subject to sequestration can be used to pay down the national debt, user fee funding may not be spent and so is sitting in an account unable to be used.

2. Gaffney also reports on a “flurry” of untitled letters alleging violations of advertising rules and regulations sent by the FDA’s Office of Prescription Drug Promotion in recent weeks, including one sent to the manufacturer of the recently-approved morning sickness drug Diclegis “the day the drug was approved, possibly marking a new speed record for the time between product approval and the first alleged marketing violation.”

3. In JAMA, Leah Zullig and colleagues survey the literature on improving medication adherence.  They conclude as follows: “To date, improving medication adherence has proven elusive—yet recent advances in understanding of how to help patients sustain adherence are helping to identify the major ingredients needed for success. The challenges now involve how to create and sustain large-scale programs that ensure patient adherence on a national scale.”

4. Also this past week, Duke Law’s Center for Innovation Policy hosted a conference on  “New Approaches and Incentives in Drug Development” which brought together “leading figures from the private sector, government, and academia” to ask whether “alternative economic incentives, such as targeted public funding or exclusivity terms based on research risk or disease, [should] be considered[.]“  A recorded broadcast of the conference will be posted to the conference website next month.

5. Finally, Nicole Huberfeld has just posted what looks like a fascinating essay in which she presents empirical evidence that despite the “bleak picture” painted by the media, in fact “the Medicaid expansion is progressing apace.”  Huberfeld also contends that her data show “dynamic negotiations occurring within states and between the federal and state governments, which indicates that the vision of state sovereignty projected by the Court in NFIB v. Sebelius was incorrect and unnecessary.”

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