Canaries in a Coal Mine: Patient Complaints (Finally) Lead to Withdrawal of Generic Wellbutrin XL

Recently, the Food and Drug Administration announced that the manufacturer Impax Laboratories has asked the agency to withdraw its approval of a generic version of the antidepressant Wellbutrin XL 300 mg that is manufactured by Impax and marketed by Teva Pharmaceuticals.  A bioequivalence study sponsored by the FDA compared the Impax/Teva 300 mg generic to Wellbutrin XL 300 mg and found that the generic tablets failed to release the medication’s active ingredient into the blood “at the same rate and to the same extent” as the name brand.  While the results of the study only recently became available, the FDA acknowledges that it has been aware of concerns about the Impax/Teva 300 mg generic for over five years.

The Impax/Teva 300 mg generic was approved in 2006 on the basis of a study establishing that Impax’s 150 mg generic was bioequivalent to Wellbutrin XL 150 mg.  The FDA did not require that a bioequivalence study of the 300 mg generic be done, because the 300 mg dose of the drug poses a risk of seizures.  Soon after the Impax/Teva 300 mg generic was approved, the FDA began to receive “reports describing either adverse events or lack of an effect.”  As ABC News reports here, Joe Graedon of the consumer advocacy group the People’s Pharmacy was hearing the same things, and, in 2007, he asked Consumer Lab –according to its website, “the leading provider of independent test results and information to help consumers and healthcare professionals identify the best quality health and nutrition products”–to compare the Impax/Teva generic to its name brand counterpart.

Consumer Lab published an analysis demonstrating that “[i]n the first two hours of a dissolution test, we found [the generic] released 34 percent of the drug, while Wellbutrin released 8 percent” and that “[a]t four hours, the [Impax/]Teva product released nearly half of its ingredients, while original Wellbutrin released 25 percent.”  Consumer Lab’s president explained to ABC that the patent on the extended release technology used in Wellbutrin XL was still in effect when the Impax/Teva generic was approved.  As a result, the generic contained the same medication as the original but used a different (or perhaps no) extended release technology.

The FDA was made aware of Consumer Lab’s results, but declined to act on them.  The agency believed that differences in rate of release were unlikely to be clinically significant because “[t]he antidepressant effect of this drug does not appear for several weeks after initiation of treatment, and the effect is, in large part, related to long-acting metabolites.”  The FDA concluded that “[t]he recurrent nature of [major depressive disorder] offers a scientifically reasonable explanation for the reports of lack of efficacy following a switch to a generic product.”

As the FDA explains in a Questions and Answers document posted to its website, despite its conclusion that the Impax/Teva generic was clinically equivalent to the name brand, in November 2007 the agency “asked Impax/Teva to conduct a study directly on its 300 mg extended-release product to compare its bioequivalence to Wellbutrin XL 300 mg … [in]patients who had reported lack of efficacy after switching from Wellbutrin XL 300 mg to [the Impax/Teva product].”  That study was terminated in late 2011 because “Impax/Teva was unable to recruit a significant number of affected patients to generate the necessary data.”  It was not until 2010 that the FDA decided to sponsor its own bioequivalence study.  That study, of 24 healthy adult volunteers, was not completed until August of this year, because the agency had to “get funding for the study, design[] the study, obtain[] approval from the Institutional Review Board for Protection of Human Subjects, recruit[] and enroll[] healthy volunteers, conduct[] the study, develop[] an analytical method of analyzing the data, and complete[] its analysis of the study data.”

As a result of its experience with the Impax/Teva 300 mg generic, the FDA reports that it “is revising its guidance to industry for how to conduct premarket bioequivalence studies in generic [Wellbutrin] products.”  It will no longer be possible for a company to extrapolate the results of bioequivalence studies done on 150 mg tablets to 300 mg tablets.

One wonders whether there might be other lessons to be learned from the Impax/Teva 300 mg generic experience.  For one, I wonder if the FDA could have–and, if so, if it should have–acted more quickly.  The agency does seem to have taken patients’ complaints about the Impax/Teva tablets seriously.  At the same time, it took six years to withdraw a generic drug that patients complained about immediately upon its approval.   Delays of this sort have the potential to undermine trust in generics generally.

Another potential lesson to be learned from the Impax/Teva 300 mg generic experience is specific to antidepressants.  As Michelle Hottinger and Bryan A. Liang note in their article Deficiencies of the FDA in Evaluating Generic Formulations: Addressing Narrow Therapeutic Index Drugs, which is forthcoming in the American Journal of Law and Medicine, much about antidepressants’ mechanism of action is still not understood, which “may leave some uncertainty as to [their] pharmacokinetics.”  Even where an antidepressant meets the FDA’s bioequivalence standards, Hottinger and Liang write, “therapeutic equivalence is not guaranteed.”  Given this, the FDA might be well-advised to pay heightened attention to adverse event reports about generic antidepressants.

Industry Funding of CME Down, According to ACCME

When we think about health care reform, we need to remember that we have been attempting reforms through many avenues of myriad parts of our health system.  The IRS revised Form 990 and schedule H in anticipation of the ACA; critics of conflicts of interest have been working on multiple fronts simultaneously.  One of the challenges about all of these changes is how we measure whether they have made any positive difference.

The Accreditation Council for Continuing Medical Education (ACCME), which is the accrediting entity for Continuing Medical Education (CME), just released its annual report, which was much less interesting than I had hoped, as it is mostly a financial statement for the year’s CME activities.  Nonetheless, it shows that industry grants to CME have declined from 50 to 30 percent of total CME income, which is attributed to the tremendous scrutiny CME has received over the years.  Importantly, industry has not lost interest in medical conferences, as ad revenue from exhibits rose 7.2 percent to $296 million.  You can read a summary of the report on Pharmalot or read the whole report.

While interesting, it’s hard to make out exactly what to conclude from this news about CME funding.  First, it could be a response to the economy, but that’s belied by the increase in exhibit funding.  And besides, pharma has historically been of the “you have to spend money to make money” mind.  So, perhaps industry is indeed responding to the criticism about funding CME.  Not mentioned is the possibility that CME sponsors have been turning away industry money, but that too is a possibility.

Some were concerned that if this happened, health professionals would be unable or unwilling to pay for their own CEUs.  The total income for 2011 CME appears to be in line with prior years (especially given a methodology change adopted in 2011).  While the number of physicians participating in CME was down slightly, that decline is consistent with a multi-year downward trend; the number of non-physician participants in CME is slightly up.  Finally, as noted by Pharmalot, “other income, which includes registration fees paid by participants, rose 4.4 percent [in 2011] to nearly $1.2 billion.”  While more than one year of experience will give a better picture, it seems fair to conclude so far that physicians are indeed willing to underwrite their own CME.

Most important to remember, however, is that the funding issue was merely a surrogate for the question of whether CME is biased either substantively or in subject matter coverage.  I don’t think we really knew the answer yesterday, any more than the ACCME report enlightens us about what the answer is today.  An annual report about CME in which I and others would really be interested would look at whether the subject matter of conferences has changed — are things being covered that weren’t before.  Is comparative cost-effectiveness being addressed in presentations that address alternative treatments?  Are real responses to racial health disparities being discussed?  Is education being delivered to audiences comprised of interdisciplinary healthcare teams rather than the homogenous audiences found at many academy and similar meetings?  Is CME delivery itself being studied to determine what learning methodologies are most effective?  In short, if we can conclude that industry is listening to its critics by redirecting its funding, can we also infer that changes are occurring in response to other critiques of CME, such as those posed by the IOM report entitled “Redesigning Continuing Education in the Health Professions” and Seton Hall Law’s Whitepaper entitled “Drug and Device Promotion: Charting a Course for Reform?”

Presumably, it is a good thing to have less industry funding of CME — although we only see the change in the United States, not elsewhere . But it doesn’t get to the heart of the matter, which is the need for significant reform of CME generally.  That’s the report I want to read.

Graduate Certificate Program in Pharmaceutical & Medical Device Law & Compliance to Start Again, October 7, 2012

Seton Hall Law School’s Center for Health & Pharmaceutical Law & Policy starts classes again on October 7th for the Graduate Certificate in Pharmaceutical & Medical Device Law & Compliance. The priority application date is September 24, 2012.

The Graduate Certificate in Pharmaceutical & Medical Device Law & Compliance is a non-degree program designed for individuals who seek in-depth knowledge about legal, regulatory, and ethical issues related to the pharmaceutical and medical device industries. Taught exclusively online, it offers students nationwide a targeted immersion in key substantive issues along with the practical skills necessary to research and communicate effectively about the law.

The intensive program is geared to busy professionals who want to cover a significant amount of material in a relatively short period of time. The program is open to students who have earned a baccalaureate degree from an accredited college or university. It is specifically designed to meet the needs of mid- to senior-level professionals in the health care industry, but highly motivated students from other backgrounds are also welcome to apply. It is not necessary to have prior academic or work experience in health care in order to do well in the program.

Additional information and registration is available here.

Why study pharmaceutical and medical device law at Seton Hall School of Law?

Seton Hall Law School has specialized in health law for more than a decade, and its health law program is consistently ranked among the top ten in the nation by U.S. News & World Report.  The Law School’s health law faculty specialize in a wide range of health law topics, including healthcare organizations, nonprofit governance, healthcare financing, healthcare fraud and abuse, food and drug law, research with human subjects, genetics and the law, public health law, and bioethics.  In addition to training future lawyers, Seton Hall Law offers a Master’s of Science in Jurisprudence degree for individuals working in the health care industry, as well as an innovative compliance certification program for pharmaceutical and medical device professionals.  Seton Hall Law is also a center for scholarship and public policy development related to health care, particularly through its Center for Health & Pharmaceutical Law & Policy, whose mission is to foster informed dialogue among policymakers, consumer advocates, the medical profession, and industry.

Of Drug and Device and a Lack of Personal Jurisdiction

As much as I write about medical malpractice, it seems only fair that I devote a post and direct our fair readers to the other side of the bar: The Drug and Device blog put out by a number of Dechert, LLP attorneys involved in pharmaceutical and medical device product liability litigation– from the defense side– And  Writing in Their Individual Capacities (yes, I read the disclaimer– which is itself a piece of art).

I don’t know that our non-law-based readers would find the site of much interest, but for those of you who do have a legal background– it’s really quite good– and rather funny (though it doesn’t hurt if you have a taste for the acerbic). And I’m not just saying this because today’s post I so enjoyed turned out to have a hat tip to former classmate and worthy opponent Lincoln Wilson at the bottom of it. The blog is good. And if you’re a lawyer– or a law professor– today’s post should be disquieting for you.

The post, entitled “Another Homework Failure By Plaintiffs,” is about a suit against Endo Pharmaceuticals  re: Darvocet and how the plaintiffs cause of action burst into flames when it saw the light of a federal judge– for lack of personal jurisdiction. The article points out (pointedly) that the court notes that although the burden of showing jurisdiction is “relatively slight,” plaintiff’s offered no facts. None. Plaintiffs asserted that Endo, which purchased three entities (which still now exist) that had formerly produced the drug in question, “may have assumed responsibility for the acts…” and claimed the court needed to find personal jurisdiction based on the facts. The court:

But what “facts”? The portion of the complaint relied upon by the plaintiffs merely implies that the Endo Defendants “may have” somehow assumed the liabilities of their subsidiaries; the only factual assertion [plaintiff's allegation] contains is that the plaintiffs do not have the information they need to establish personal jurisdiction.  Thus, even if the plaintiffs were permitted to stand on their pleadings, they would fall woefully short of the necessary prima facie showing.

I think that’s going to leave a mark.

I said above that if you were a law professor or a lawyer you would find the Drug and Device post disquieting. But maybe I was hasty with regard to other lawyers. Although there is great value in a learned bar, the value of an unprepared opponent is, I suppose, inestimable. At least in the short run.

Having said that, if you have a few minutes, check out the Drug and Device blog article– and the slip opinion of the case they’ve conveniently provided. It’s worth it. From a stand point of pedagogy, it may not be as useful as the numerous Texas appeals filed late resulting in execution, but it could certainly function as a cautionary tale.

Kate Greenwood on American Law Journal TV Regarding Off-Label Promotion

In Case you missed it: Research Fellow & Lecturer in Law, Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy, Kate Greenwood, on American Law Journal TV regarding Pharmaceutical Off-Label Marketing and Free Speech. A regular blogger here at HRW, Kate Greenwood appeared along with attorneys Hope Freiwald of Dechert, LLP and Brian J. McCormick, Jr., of Sheller, P.C.

Must-Read Articles on Drug Shortages

In February, Health Affairs featured Duff Wilson’s article on “Deepening Drug Shortages.”  As Wilson notes, “the number of reported drug shortages in the United States nearly tripled between 2005 and 2010, increasing from 61 to178 and emerging as a systemic problem in the US health care system.”  Sharona Hoffman has recently written on the topic:

How could such shortages plague premier hospitals in the twenty-first century in the wealthiest country in the world? How could even patients with comprehensive health insurance and abundant financial resources be denied adequate care because the medications they require are simply not available in the marketplace?

The Article posits that public health policies and standards must serve multiple roles. They should deter both carelessness that leads to product contamination and strategic decisions to discontinue or suspend manufacturing when such decisions will cause shortages. At the same time, governmental rules should encourage production of vulnerable drugs. Accordingly, the Article proposes a blend of legislative, regulatory, and private-sector interventions that should realign manufacturers’ incentives and significantly diminish the drug shortage phenomenon.

Hoffman’s article is well worth reading in full, and I hope it guides policymakers.  As I noted last year, a plutonomy will not reliably generate even the products that its most powerful consumers may occasionally need.

(Slow) Progress Towards Uncovering Sex-Linked Differences in Drug and Device Safety and Efficacy

In 2000, the General Accounting Office (since re-named the Government Accountability Office) reported that more women than ever were being included in clinical trials funded by the National Institutes of Health.  In fact, the GAO noted, over 50% of the participants in the trials that NIH funded in fiscal year 1997 were women.  At the same time, the NIH had made much less progress implementing the requirement that certain clinical trials it funds be designed to reveal sex-linked differences in a treatment’s safety and efficacy.  In 2012, sex-linked differences in responses to treatments are still not being studied in research funded by the government or by the private sector.  In a summary released last month of an Institute of Medicine workshop on the problem, Theresa Wizemann reports that “[e]ven when women are included in clinical trials, the results are often not analyzed by sex” despite “growing acknowledgement that men and women have substantial and widespread biologic differences.”

As its title — “Sex-Specific Reporting of Scientific Research” — suggests, a focus of the IOM Workshop was whether medical journals could drive reform in this area by requiring that authors report sex-specific data.  Wizemann writes that because “[r]esearchers are eager to have their papers published in high-profile journals[,]” “editorial policies implemented by those journals can be effective in modifying behavior.”  But several participants in the IOM Workshop noted that studying population subgroups poses “methodologic and analytic” challenges.  In many cases, Wizemann reports, “achieving statistical significance for subgroup analyses would require unattainable or unjustifiable numbers of participants.”  Workshop participant Gregory Curfman, who is the Executive Editor of the New England Journal of Medicine, “cautioned against editorial policies that require trials to be designed to reach valid statistical conclusions for males and females separately[,]” because “[s]uch editorial policies would create a ‘steep mountain to climb for investigators and for funding agencies[.]‘”

The participants in the Workshop seemed to be largely in agreement that journals could not, acting alone, re-shape “research culture to embrace consideration of sex differences as part of sound study design.”  There are steps that journals could (and should, I think) take short of dictating study design, though, including requiring study authors to tabulate and make available raw sex-specific data to facilitate future studies that draw on data from multiple trials.

Government agencies and other funders have a role to play too.  The NIH should more stringently enforce the statutory requirement that certain later-stage trials it funds be designed to evaluate sex-linked differences, and the FDA should take similar action with regard to trials funded by drug and device companies.

A study published last year by Sanket Dhruva, Lisa Bero, and Rita Redberg in the journal Circulation highlighted how little progress the FDA made on the device side over the last decade.  In 1994, the FDA issued a directive requiring that every time it makes a decision on an application for approval to market a new device, it issue a Summary of Safety and Effectiveness Data (SSED) that includes, among other things, a “gender bias” statement addressing the following two questions: (1) Did the proportion of men and women in the clinical trial reflect the distribution of the disease? and (2) Were there any sex-linked differences in safety or effectiveness?  Dhruva and colleagues reviewed all of the of the SSEDs for all of the cardiovascular premarket approval applications submitted and approved between 2000 to 2007 and found (1) that women were underrepresented in the underlying clinical trials and (2) that less than half (41%) of the SSEDs included the required “gender bias comment or analysis.”  Nearly a third (28%) did not even report the percentages of men and women enrolled in the studies supporting the application.  And, there was no improvement over time; “[t]here was no change in the presence of gender bias comments or analyses over the 8-year period” studied.

The FDA has been working for several years to address the problem and in December of 2011 it released a draft guidance in which it “strongly recommends” that device companies work closely with the agency to “investigate and report differences in study outcomes of treatment by sex.”

The Guidance provides clear direction for companies regarding (1) increasing the percentage of enrollees in device trials who are women, (2) designing studies to allow for the “consideration of sex and associated covariates” such as body size, (3) analyzing study data for sex-linked differences, and (4) “reporting sex-specific information in summaries and labeling for approved devices.”  Whether these strong recommendations translate into strong and consistent agency action remains to be seen, but the Guidance is an excellent start.  As Carolyn Clancy, the Director of the Agency for Healthcare Research and Quality, who participated in the IOM Workshop, emphasized, “[b]etter data on women would be better data for everyone,” allowing for more specific clinical practice guidelines and better-tailored care of individual patients.

New Evidence on Smoking Marijuana and Lung Function; Update on New Jersey’s Nascent Medical Marijuana Program

This week’s JAMA includes an article reporting on new evidence that smoking marijuana does not negatively affect lung function. Smoking tobacco has long been known to harm the lungs and to increase the risk of developing chronic obstructive pulmonary disease and lung cancer, both leading causes of death. The risks posed by smoking marijuana, on the other hand, have largely been assumed, based on the fact that “[m]arijuana smoke contains many of the same constituents as tobacco smoke[.]”

The authors of the JAMA article analyzed data from a 20-year longitudinal study of 5,115 people in 4 American cities who “comprise a broad cross-section of typical tobacco and marijuana use patterns” and found that “[w]ith up to 7 joint-years of lifetime exposure (e.g., 1 joint [a day] for 7 years or 1 joint [a week] for 49 years)” there was no evidence of an adverse effect on the lungs. Very heavy marijuana use in excess of 7 joint-years of lifetime exposure could prove harmful, but there were not enough heavy users in the study to demonstrate this.

High-quality epidemiological evidence like this latest JAMA study will be key to filling in the gaps in our knowledge about marijuana’s safety profile. While double-blinded randomized controlled trials are considered the gold standard for evaluating the safety and efficacy of drugs, they are not always an option, particularly where the goal is to gather data over many years. Marijuana’s classification as a Schedule 1 controlled substance adds to the difficulty of mounting clinical trials. Given this, it is (or will be) a very good thing that New Jersey’s still-nascent medical marijuana program will include a registry of de-identified patient treatment and outcomes data that will allow researchers to learn more about the drug’s safety and efficacy.

The statute authorizing New Jersey’s medical marijuana program was passed two full years ago, in January 2010, but the road to implantation has been a long and rocky one. (My previous posts on the subject are here, here, here, and here.) While the Christie Administration is now on board, local towns have proved resistant to efforts to site alternative treatment centers that would grow and/or dispense marijuana there. In the Associated Press earlier this week, Geoff Mulvihill writes that “[s]o far, only one [of the six groups authorized by the state to operate alternative treatment centers] has announced that it has secured local approvals. … Three others have been shut out of their chosen locations by local government bodies, despite assurances that security at the dispensaries would be tight and that pot would be given only to patients who are truly sick.”

The state may be fighting back. Nina Rizzo reports in the Asbury Park Press that Assemblyman Declan O’Scanlon has announced “that he will introduce legislation next week that would prohibit counties and municipalities from interfering with the development of medical marijuana cultivation and distribution centers by extending their protections under the Right to Farm Act.”

Such a heavy-handed approach may be necessary in the short term, to ensure that all six authorized alternative treatment centers can get off the ground. If the New Jersey Compassionate Use Medical Marijuana Act and its regulations work as they are intended to, however, public confidence in the program should grow.

Physician Payment Sunshine Act Proposed Regulations Out

CMS has published proposed rules for its implementation of the Physician Payment Sunshine Act (SUNSHINE ACT or Act), which was enacted by Congress as part of the 2010 Patient Protection and Affordable Care Act.  In short, the SUNSHINE ACT requires life science companies to report annually to CMS their conferral of anything of value, whether it be payment for services or a dinner, in connection with a particular product of the paying company.  By requiring CMS to post the information on its website, the Act seeks to ensure that interested patients become aware of physicians’ conflicts of interest that could affect their prescription of a branded drug or choice of a specific medical device.

The SUNSHINE ACT represents another example of the transparency movement, which has had varying degrees of success in either changing the behavior of the parties subject to disclosure, and/or enabling consumers to make better decisions based upon their access to the disclosed information.  It is likely that the SUNSHINE ACT will impact physicians and manufacturers’ behavior more than it will enlighten consumers about conflicts of interest.  Some physicians will simply conclude that accepting certain gifts or benefits from pharmaceutical or medical device companies isn’t worth having their names on the CMS website.  Some companies have already discovered that they haven’t necessarily reaped the value of the costs of gifting many physicians, or that the cost of recording certain activities simply isn’t worth the return on investment.  Unquestionably, certain transactions will continue to be valuable to both physician and company, and will continue.

It is unlikely that most patients will access the information either before or after a physician visit, or know what to do with the information even if they discover that their physician has an equity interest in the knee she plans to use in next week’s surgery – does such a close relationship with the knee manufacturer signal that the physician is great, or that something nefarious is going on?  The information is likely to be used by consumer watchdog groups, as well as hospital formulary committees and medical school deans interested in knowing the sources and amounts of outside income being earned by faculty.  Divorce attorneys are likely to find the information useful if their client’s soon-to-be ex-spouse hasn’t reported significant pharma consulting fees as income.

CMS rulemaking is behind schedule, thereby delaying the SUNSHINE ACT’s implementation.  It is likely, however, that the ultimate rules will still require that 2012 data be submitted, even if not by the deadline originally contemplated by Congress.

The statute requires manufacturers of drugs, devices, biological or medical supplies covered by Medicare, Medicaid or the Children’s Health Insurance Program (CHIP) (“applicable manufacturers”) to report annually to HHS payments or transfers of value to physicians and teaching hospitals (“covered recipients”).  Failure to comply will result in Civil Monetary Penalties.  HHS, in turn, must publish this information on a public web site which is searchable, downloadable and able to be aggregated.  Compliance with the SUNSHINE ACT’s reporting requirements does not exempt applicable manufacturers from application of fraud, waste and abuse laws.

Applicable Manufacturer

The proposed rule merges the SUNSHINE ACT definition of “manufacturer of a covered drug, device, biological, or medical supply”[1] with the statutory section clarifying that the entity covered by the SUNSHINE ACT must be “operating in the United States, or in a territory, possession, or commonwealth of the United States”[2] to define applicable manufacturer as one

(1)    Engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply for sale or distribution in the United States, or in a territory, possession, or commonwealth of the United States; or

(2)    Under common ownership with an entity in paragraph (1) of this definition, which provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biological, or medical supply for the sale or distribution in the United States, or in a territory, possession, or commonwealth of the United States.

The operative activity that invokes statutory coverage, then, is sale of a product in the United States, as opposed to where the product is produced, or where the entity is located or incorporated. Pursuant to the rationale that risks inhere in conflicts of interest irrespective of where the manufacturer is located if the product is sold in the United States, any entity under common ownership with the manufacturer that is involved in the production, distribution or sale of at least one covered product in the United States must report all payments and conferral of value upon covered recipients. Further, as proposed, the product sponsor (i.e., the entity that obtained FDA approval) is subject to the reporting requirement, even if the sponsor is not involved in the manufacture of the covered product.  CMS is considering alternative interpretations of the common ownership concept.

Covered Drug, Device, Biological, or Medical Supply (“covered product”)

The SUNSHINE ACT focuses upon those products for which Medicare, Medicaid and CHIP pay.  This is relatively straightforward in many contexts, but CMS seeks to ensure that it captures situations where such products are part of a composite rate payment, such as the inpatient or outpatient hospital reimbursement, or the end-stage renal disease prospective payment system.  As such, CMS proposes to define “covered drug, device, biological, or medical supply” as:

Any drug, device, biological, or medical supply for which payment is available under Title XVIII of the Act or under a State plan under title XIX or XXI (or a waiver of such plan), either separately, as part of a fee schedule payment, or as part of a composite payment rate (for example, the hospital inpatient prospective payment system or the hospital outpatient prospective payment system).  With respect to a drug or biological, this definition is limited to those drug and biological products that, by law, require a prescription to be dispensed.  With respect to a device or medical supply, this definition is limited to those devices (including medical supplies) that, by law, require premarket approval by or premarket notification to the Food and Drug Administration.

CMS seeks comments on its plan to exclude from the scope of regulation those manufacturers who produce and sell only over the counter (OTC) products.  More specifically, this exemption would not extend to a manufacturer who sells even one prescription product who is otherwise subject to the reporting requirements of the SUNSHINE ACT.  Similarly, CMS seeks to interpret the SUNSHINE ACT to cover only those medical devices that require premarket approval, on the theory that this is the segment of the market most likely to have extensive provider relationships.  If a device manufacturer produces a single product that requires pre-market approval, it would have to report all payments and conferrals of value to covered recipients.

Covered Recipients

The SUNSHINE ACT defines “covered recipients” as (1) a physician, other than a physician who is an employee of an applicable manufacturer; or (2) a teaching hospital.   The term physician includes both doctors of medicine and osteopathy as well as podiatrists, optometrists and licensed chiropractors. CMS interprets the statute to include within its scope those who act on behalf of covered recipients.  Teaching hospital is not defined by the statute; CMS seeks comments on its proposal to identify such entities by virtue of their receipt of Medicare graduate medical education funds. CMS will publish this list annually on its website for manufacturers’ reference.

CMS plans to utilize the National Plan & Provider Enumeration System, which it maintains on its website, to collect the data regarding covered recipients required by the SUNSHINE ACT: covered recipient’s name and business address, and, for physicians, the National Provider Identifier and specialty.

Payments or Other Transfers of Value

The report must also include the date, form (i.e., cash, stock, ownership interest), nature (i.e., education, research, consulting fees, food) and amount of payment, and the market name of the product associated with the payment.  CMS continues to consider how to handle payments made to a single covered recipient related to multiple products.  CMS seeks to generate data in a form most easily understood by consumers.

The statutory definition requires such conferrals to be reported irrespective of whether they were requested by the physician or hospital and includes those made by third parties as long as the applicable manufacturer knows the identity of the covered recipient. CMS proposes that payments made through a group practice be reported under the specific recipient physician’s name.  If a physician requests the conferral to be directed to another physician or entity, the manufacturer should report the conferral under the requesting physician’s name as well as the name of the actual recipient.

Charitable contributions by an applicable manufacturer to, at the request of, or on behalf of a covered recipient are reportable.

The SUNSHINE ACT excludes from its reporting requirement the following payments:

• Transfers of value less than $10, unless the aggregated amount exceeds $100 in a calendar year
• Product samples not intended to be sold that are intended for patient use
• Educational materials that directly benefit patients or are intended for patient use
• The loan of a covered device for a period not to exceed 90 days, to permit evaluation
• Items or services provided under a contractual warranty
• A transfer of value or payment to a covered recipient when that person is receiving the conferral in his/her capacity as a patient
• Discounts, including rebates
• In-kind items used for the provision of charity care
• A dividend or profit distribution from ownership or investment interest in a publicly traded security or mutual fund
• Self-insurance payments to covered employees by an applicable manufacturer
• Non-medical services
• Transfers of value made by third parties where the applicable manufacturer is unaware of the identity of the covered individual

CMS will be moving rapidly to respond to comments and finalize these rules, which will likely involve changes from the discussion here.  State laws that pre-date the Act are pre-empted to the extent that they require reporting of the same information, which leaves them the discretion to retain those reporting requirements that are not redundant.  States seeking to impose as much of a burden on manufacturers as possible are likely to retain their individualized reporting requirements, others may find the costs not worth the benefits now that the feds have finally stepped in.

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[1] Section 1128G(e)(9).

[2] Subsection (e)(2) further clarifies that the entity covered by the SUNSHINE ACT must be “operating in the United States, or in a territory, possession, or commonwealth of the United States.”

Venture Capitalists Complain of ‘Regulatory Challenges,’ FDA Responds

Writing in this month’s Fortune, Dan Primack is the latest to raise the alarm about indications that venture capital funding of life sciences startups is on the decline.  The decline in funding is cause for concern because venture capital-funded startups are, in the words of Tracy Lefteroff of PricewaterhouseCoopers, “where all the drugs are coming from[.]“  “[L]arge pharma[,]” Lefteroff explains, has “been extremely ineffective at developing pipeline drugs internally.”

While there are still “plenty of venture dollars … going into the [life sciences] sector,” Primack reports, they are going to mature companies.  Startups, on the other hand, “are having a much tougher go of it, with 17% fewer raising venture capital during the first three quarters of 2011 than during the same period in 2010.”  According to Primack, “a number of veteran VC firms are formally ending their pursuit of pharma startups.”

What explains the increasing reluctance to invest in the life sciences sector?  The venture capitalists blame “regulatory challenges,” primarily “the hostile FDA.”   Primack quotes Kate Mitchell, co-founder and Managing Director of Scale Venture Partners, a venture capital firm which recently announced that it will make no new healthcare investments, as follows: “It just takes a lot longer now to get approval than it used to, or to even know what the [Food & Drug Administration] is thinking.  One of our companies, Prestwick Pharmaceuticals, supposedly was put on a ‘fast track,’ but it still took another three years before receiving FDA approval.  It’s incredibly frustrating and means we need to invest more to keep the companies running.”

The Medical Innovation and Competitiveness (MedIC) Coalition, a group of “life science investors, innovators and entrepreneurs,” has been lobbying hard for the FDA to approve more drugs and devices more quickly, that is, without the careful review of efficacy and safety that it currently undertakes.  Specifically, they have prioritized “[r]ebalancing benefit-risk assessments in the drug and device approval processes to appropriately reflect the value of new therapies to patients in need” and “[e]xpanding the accelerated approval pathway into a progressive approval system for drugs, diagnostics and medical devices.”  MedIC also believes that the FDA’s conflict of interest policy threatens to “hinder[] patient access to new treatments.”  It argues for increased “utilization of non-government outside experts to facilitate and strengthen the FDA review and approval process,” presumably experts who would be barred from serving by the FDA’s current conflicts policy.

Not all of MedIC’s priorities are so extreme.  They have also called for more timely, consistent, and transparent decision-making at FDA, while acknowledging that to achieve these ends the agency must be “well resourced and endowed with state-of-the-art scientific tools, clinical input, processes and procedures.”  With this, even the most ardent consumer advocate can agree, and the FDA has recently acted to improve its decision-making in ways that do not risk sacrificing health and safety.  This is a promising development.  The results of a recent survey of venture capitalists suggests that increasing the predictability and speed of the FDA’s decision-making would have a higher impact on their willingness to invest in the life sciences sector than would “rebalancing” the agency’s weighing of safety and efficacy.

Distribution Controls: A Potentially Powerful Weapon Against Inappropriate or Dangerous Off-Label Use

When supplies of sodium thiopental dried up earlier this year, states turned to other drugs to carry out executions by lethal injection.  The anti-seizure drug pentobarbital, marketed as Nembutal, is one such drug.  An estimated two-thirds of the thirty-four states with the death penalty have switched or considered switching to Nembutal; states that have made the switch include Georgia, Ohio, Oklahoma, South Carolina, and Texas.  As of earlier this month, Nembutal had been used in eighteen executions this year.

Like sodium thiopental, Nembutal is an off-patent drug that serves a relatively small market.  The sole company licensed to manufacture Nembutal in the United States, the Danish firm Lundbeck Inc., has been the target of a public relations and investment campaign by human rights activists calling for the end to the use of the drug in executions.  Lundbeck has never sold Nembutal directly to prisons, however, and initially the company said that there was nothing it could do to control the drug’s re-sale.  As a spokesperson explained:

We can’t withdraw the product because it is used for treating severe epilepsy and sometimes it’s the only treatment option.  All we can do is write to the prisons urging them to stop misusing using our product which was designed to help sick people.  It’s a really unfortunate situation.

Earlier this month, Lundbeck announced that it had determined that there were steps it could take beyond letter writing.  The company considered ceasing production of the drug altogether–it represents less than one percent of the company’s sales and is, in the company’s words, “economically insignificant”–but decided against doing so in light of survey evidence that the fifty million doses of the drug it sells in the United States each year are important for treating epilepsy that is severe and refractory (that is, unresponsive to other drugs).

Lundbeck decided instead to distribute Nembutal through Cardinal Health’s Specialty Pharmaceutical Services on a “drop-ship” basis, directly to hospitals.  Less than ten percent of drugs are distributed directly to end-user customers in this way, typically “cancer treatments that are expensive, difficult to make, or not in high demand.”  Lundbeck will review each Nembutal order and deny those from “from prisons in states currently active in carrying out death penalty sentences.”  Every purchaser will be required to represent in writing “that the purchase of [Nembutal] is for its own use and that it will not redistribute any purchased product without the express written authorization of Lundbeck.”  Lundbeck’s CEO has warned that the company will take unspecified “legal action” against any purchaser who violates these terms.

Lundbeck’s decision to use a drop-ship program and purchaser agreements to take responsibility for the off-label uses to which its product is put once it leaves the company’s control raises the question whether other companies could or should be asked to do the same.  In some cases, issues of scale will foreclose such an approach.  In other cases, a company and/or regulators may have concerns about inappropriate or dangerous off-label use but not be able to link it to an easily identified class of would-be purchasers like “prisons in states currently active in carrying out death penalty sentences.”  (Note that even in Lundbeck’s case the agreements are overbroad to the extent that they deny access to Nembutal to prisoners in death penalty states who need the drug to treat severe, refractory epilepsy.)  In still other cases, however, taking control of distribution will be a feasible, and powerful, compliance tool.  The Risk Evaluation and Mitigation Strategy (REMS) for Lazanda (fentanyl) Nasal Spray, recently posted to the Food and Drug Administration website, which provides that would-be distributors enroll in the REMS program and agree to limit their distribution to specially-certified pharmacies which are also enrolled in the program, is just one example.

FDA Recalls and Selective Analysis

Researchers at the National Research Center for Women & Families and the Cleveland Clinic published a controversial report in the Archives of Internal Medicine in February.   The research team, led by Diana Zuckerman, analyzed high-risk medical device recalls from 2005 to 2009.  The report concludes that “reform of the [510(k)] regulatory process is needed to ensure the safety of medical devices.”

510(k) Process: Cause for Concern?

Zuckerman’s team determined that of the 113 recalls from 2005 through 2009, eighty (71%) medical devices — or the vast majority of those recalled — passed through the 510(k) process.  Twenty-one (19%) medical devices had passed through the more rigorous premarket approval process and eight (7%) were exempted from review.

Consumer advocates and the study authors argue that the disproportionate number of medical devices recalled after being reviewed under the 510(k) process demonstrates the need to reform the review process.   But do these statistics demonstrate a flaw in the 510(k) process?

Advanced Medical Technology Association (AdvaMed), an industry lobbying group says no.  It calls the study flawed.  Why?  The vast majority of devices (~90%) are cleared through the 510(k) process.   Therefore, it would be expected that more recalls are for 510(k) cleared devices.  A 2010 AdvaMed report, analyzed the recall rates for the PMA approval and 510(k) clearance processes.  The report demonstrated that the overall recall rate was very low for both — less than 1% and that PMA approved devices were more likely to be recalled.

In fact, during the Zuckerman study period, 19,000 devices were cleared through the 510(k) process, making the overall recall rate for 510(k) cleared devices approximately 0.4%.

When NPR asked Zuckerman to compare her study with the AdvaMed study, she agreed that most devices had not been recalled. “But I’m taking the public health perspective. How many people have been harmed by these products? We know that 112.6 million devices have been recalled in the last five years. That’s a lot of products. We know thousands of people have died. And those are deaths that did not have to happen.”

But what about all the lives saved?  Mark Adelman, MD, of the NYU Langone Medical Center in New York City, counters, “While some lives have been lost by expedited approval, many lives have been saved by getting better devices to market quickly. How many lives have been saved by the 510(k) fast track?”  Public health advocates, like Zuckerman, would offer a more complete analysis if they took account of both the risks and the benefits in their evaluation of the FDA approval processes.

Misclassification and Proper Review Path?

What if the processes are adequate, but some devices get thrown in the wrong review bucket?  Physicians Rita Redberg and Sanket Dhruva of USC San Francisco wrote in the invited commentary that “Zuckerman and colleagues demonstrate the dangers to patient safety posed by these innumerable device misclassifications.”  The Zuckerman report focused on “high-risk” recalls, or “those that could cause serious health problems or death.”

The report states that “[o]f the recalled devices cleared for market through the 510(k) process, 12% were marketed for risky or life sustaining Class III indications, which are required by law to undergo a full PMA regulatory review.”  In an email to MedPage Today, study author Steven Nissen, MD, of the Cleveland Clinic, elaborated:

There should be NO recalls for ‘serious injuries or death’ amongst 510(k) approved devices. The FDA is supposed to require a PMA for Class III devices, those used to sustain life or preserve health. If a PMA is required for devices used to support or sustain life, why were so many of the devices recalled for ‘serious injury or death’ originally approved using 510(k)?

Unfortunately, Nissen conflates risk of injury with the life-sustaining capacity of the device.  Although the failure of a Class III device will more likely result in serious injury or death, medical devices in all three Classes may cause serious injury or death if improperly designed or manufactured.  But maybe there is something to this.

Strengthening 510(k) process

What about the steps the FDA has already taken to improve the process?  In late 2009, the FDA began a review of its 510(k) process.  Last August, 55 recommendations were issued by two working groups.  In January, the FDA announced the adoption of 25 changes to the 410(k) process to take place this year.

According to Dr. Jerry Avorn, a professor of medicine at Harvard Medical School in Boston, “The current FDA leadership has been trying to improve the carefulness of device review, and that is very good for patients. But those attempts have been met by self-serving complaints from the device industry that better review and surveillance will somehow stifle innovation, which is not the case.”  Avorn suggests that both industry innovation and consumer safety can be achieved.

Meanwhile, the Institute of Medicine is working on a comprehensive report, commissioned by the FDA, on what’s wrong with medical device regulation. That’s due later this year.

Left to Our Own Devices?

Lucia Burgos sued Satiety, Inc. after an experimental stomach stapling device perforated her esophagus.  Her first complaint was dismissed on preemption grounds, but she was given permission to “replead her claims as state-law parallel claims.”  So called “state-law parallel claims” are state law tort claims where the duty that the defendant manufacturer is alleged to have violated stems from the Food Drug & Cosmetic Act or its implementing regulations.  Such claims are not preempted because they do not impose additional duties on defendants, beyond those imposed by Congress and the Food & Drug Administration.

Ms. Burgos amended her complaint to state two new claims, including a state law negligence cause of action founded on Satiety’s alleged failure to manufacture the device in conformance with the requirements of its investigational device exemption (IDE).  Ms. Burgos believes that it was the device (as opposed to human error) that caused her injury because of an incident report filed by her treatment team, but, because the documentation supporting the FDA’s grant of an IDE is confidential, her complaint does not specify how the device deviated from the IDE.  On April 5, 2011, Judge John Gleeson of the Eastern District of New York held that Ms. Burgos had stated a claim for negligence and that, despite the lack of specifics, her suit could proceed “to a brief and strictly-cabined period of discovery in order to determine the terms of Satiety’s IDE, and to explore whether or not the specific device used in her procedure was manufactured in accordance with the IDE.”

The Burgos case is of interest to civil procedure buffs because of what the BNA Medical Research Law & Policy Report characterized as Judge Gleeson’s “liberal approach” to the pleading of parallel claims, but it is important to the rest of us, too, because of what it tells us about the state of the products liability backstop to FDA’s oversight of medical devices.  In the words of Ms. Burgos’ attorney, there is only a “narrow window” for parallel claims.

The limited recourse that those injured by medical devices have in court makes the FDA’s pre-market clearance and approval processes and its post-market surveillance and recall oversight efforts that much more important.  Testimony given earlier this month by Marcia Crosse, Health Care Director at the Government Accountability Office, before the Senate’s Special Committee on Aging suggests that there is cause for concern.  As Ms. Crosse explained, in January 2009 the GAO issued a report in which it “found that a significant number of high-risk devices-including device types that FDA has identified as implantable; life sustaining; or posing a significant risk to the health, safety, or welfare of a patient-were cleared for the U.S. market through FDA’s less stringent 510(k) review process.”  Section 510(k) of the FD&C Act allows for streamlined review and clearance of devices that are shown to be substantially equivalent to devices already on the market.  Data from clinical trials is typically not required to make this showing.

The FDA agreed with the GAO’s 2009 recommendations.  If the devices at issue did not actually belong in the highest-risk class, Class III, they should be re-classified.  On the other hand, if they did belong in Class III, they should be subject to the more stringent premarket approval process, which typically requires clinical data in support of an agency determination that a device is safe and effective for its intended use.  In her testimony, Ms. Crosse noted that, to date, the FDA has issued a final rule reclassifying one device — a blood test for herpes — from Class III to Class II.  Rules regarding the classification of another five devices are pending.  “There are still 26 types of high-risk devices, including, for example, automated external defibrillators and implantable hip joints, that can enter the market via 510(k).”  Moreover, since January 2009, “FDA cleared at least 67 individual submissions that fall within 12 of these class III device types through the 510(k) process.”

While the GAO has not completed its review of the FDA’s post-market activities, Ms. Crosse testified that their “preliminary findings suggest that shortcomings in FDA’s oversight of the medical device recall process may limit the agency’s ability to ensure that the highest-risk recalls are being implemented in an effective and timely manner. These shortcomings span the entire range of the agency’s oversight activities-from the lack of a broad-based program to systematically assess trends in recalls, to inconsistencies in the way FDA ensures the effective completion of individual recalls.”

Why Reduce Health Care Costs?

One rare point of elite consensus is that the US needs to reduce health care costs. Frightening graphs expose America as a spendthrift outlier. Before he decamped to Citigroup, the President’s OMB director warned about how important it was to “bend the cost curve.” The President’s opponents are even more passionate about austerity.

Journalists and academics support that political consensus. Andrew Sullivan calls health spending a “giant suck from the rest of the working economy.” Gregg Bloche estimates that “the 30% of health care spending that’s wasted on worthless care” is “about the price of the $700 billion mortgage bailout, squandered every year.” He calls rising health spending an “existential challenge,” menacing other “national priorities.” Perhaps inspired by Children of the Corn, George Mason economist Robin Hanson compares modern medicine to a voracious brat:

King Solomon famously threatened to cut a disputed baby in half, to expose the fake mother who would permit such a thing. The debate over medicine today is like that baby, but with disputants who won’t fall for Solomon’s trick. The left says markets won’t ensure everyone gets enough of the precious medical baby. The right says governments produce a much inferior baby. I say: cut the baby in half, dollar-wise, and throw half away! Our “precious” medical baby is in fact a vast monster filling our great temple, whose feeding starves our people and future. Half a monster is plenty.

But when you scratch the surface of these sentiments, you have to wonder: is the overall level of health care spending really the most important threat facing the country? Is it one of the most important threats? There are many ways to raise revenue to pay for rising health costs. Aspects of the Affordable Care Act, like ACOs and pilot projects, are designed to help root out unnecessary care.

I am happy to join the crusade against waste. But why focus on total health spending as particularly egregious or worrisome? Let’s explore some of the usual rationales.

Terrible Tax Expenditures and Suspect Subsidies?

Employment-based insurance gets favorable tax treatment, and much Medicare and Medicaid spending is drawn from general revenues. So, the story goes, medicine’s big spenders don’t have enough “skin in the game.” Once health and wealth are traded off at the personal level (as the Harvard Business School’s Clayton Christensen advocates), people will be much less likely to demand so much care. Government can attend to other national priorities, or individuals will enjoy higher incomes and will be free to spend more.

I respect these arguments to a point, but I worry they partake of the “nirvana fallacy.” If I could be certain that leviathan would repurpose all those wasted health care dollars on infrastructure, or green energy, or smart defense, or healthier agriculture, I’d be ready to end tax-advantaged health insurance in an instant. But I find it hard to imagine Washington going in any of these directions presently.

Giving tax dollars back to taxpayers also sounds great, until one processes exactly how unequal our income distribution is. In 2004, “the top 0.1% — that’s one-tenth of one percent — had more combined pre-tax income than the poorest 120 million people.” To the extent health-related taxes are cut, very wealthy households may see millions per year in income gains; the median household might enjoy thousands of dollars per year. Sure, middle income families will find important uses for those funds (other than bidding up the price of housing and education). But at what price? What if the insurance systems start collapsing without subsidies, and more physicians (who are already expressing a desire to work less) start seeking out pure cash practices? A few interactions with the the very wealthy may be far more lucrative than dozens of ordinary appointments.

Consider the math: billing a $20,000 retainer from each of 50 millionaires annually may be a lot more attractive to physicians than trying to wrangle up 500 patients paying $2000 each—or, worse, getting the money from their insurers. There are about 10 million millionaires in the US; that’s a lot of buying power. One $10,000 score by a cosmetic dentist from such a client could be worth 400 visits from Medicaid patients seeking diagnostic procedures. Providers are voting with their feet, and a Medicaid card is already on its way to becoming a “useless piece of plastic” for many patients. Given those trends, simply reducing health care “purchasing power” generally risks some very troubling outcomes for the very people the health care cost cutters claim to protect. No one should welcome a health care plutonomy, where the richest 5% consume 35% of services, regardless of how sick they are.

Is Anyone Underpaid in Health Care?

Health commentators rightly draw attention to big insurer CEO paydays. Top layers of management at hospitals and pharma firms are also getting scrutiny. Wonks are up in arms about specialist pay. Read more

Antibiotic Resistance on the Rise, Thanks to Capital Misallocation on a Grand Scale

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