Here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week. You can see all of our previous Monday Morning Recap posts here.
1.At Fortune, Ben Geier reports that a federal grand jury in San Francisco has indicted FedEx on drug trafficking charges, with prosecutors alleging that the company has “known for a decade that these illegal businesses were using their services to deliver the drugs, going so far as to set up special credit policies to protect FedEx from losing money if the illegal pharmacies were shut down.” Geier writes: “Couriers for FedEx told federal investigators some pretty scary tales of delivering for the illegal pharmacies, including making deliveries to vacant homes where groups of people would be waiting to collect the parcels.”
2. Generic digoxin was in the news the week before last, and it was in the news again this past week. At the San Francisco Business Times, Ron Leuty reports that the drug “is at the center of an investigation by the Connecticut attorney general’s office over a spike in price. The inquiry . . . is focused on two areas. Authorities will probe if the drug’s price was fixed or if the company violated state antitrust laws by dividing customers or territories for digoxin sales[.]“
3. Turning from the high price of generics to the high price of branded drugs, the Business Standard reports that the Supreme Court of India has “upheld the compulsory licence granted to Hyderabad-based Natco Pharma to manufacture an affordable generic version of Nexavar (sorafenib tosylate), a kidney cancer drug patented by German drug major Bayer AG.“
4. At Bloomberg, Richard Rubin reports on a letter sent by Treasury Secretary Jacob Lew calling on Congress to act “to stop U.S. companies from using cross-border mergers to escape the country’s tax system, the latest trend in corporate deal-making.” As Rubin explains, “[t]he mergers used to legally avoid taxes, known as inversion transactions, have become increasingly popular over the past year, particularly in the pharmaceutical industry. Companies including Minneapolis-based Medtronic Inc. (MDT) and Canonsburg, Pennsylvania-based Mylan Inc. (MYL) have announced plans to move their legal addresses outside the U.S. Pfizer Inc., based in New York, attempted to move its tax address to the U.K. by purchasing London-based AstraZeneca Plc. (AZN).”
Filed under: Drugs & Devices, Food and Drug Administration (FDA)
More and more it seems mobile smart technology is becoming a permanent fixture in our daily routine. Need to check bus times? There’s an app for that. Need to pay a bill? There’s an app for that, too. Scanner? GPS? Calendar? Check. Check. Check.
With mobile answers to so many of life’s questions, it’s no surprise that there is a rapidly expanding market for medical applications. The apps in this category range from simple (for example, a body mass index calculator) to complex (for example, a program that turns an iPhone into a sonogram). Though the advent of medical apps undoubtedly represents progress, it isn’t without flaws. Because these apps deal with health and medicine, lives are at stake.
To illustrate, a patient with cardiac disease might rely on an ECG app to monitor his heartbeat for irregularities. If this app delivers faulty information, there is a serious risk the misinformation will be relied on in making critical medical decisions. Perhaps the patient feels mild chest pains, yet his trusty app shows a normal heartbeat. Unbeknownst to him, he is suffering a heart attack, but, because of the app’s reading, decides not to go to the hospital. This type of nightmare scenario has kept compliance officers awake at night because until recently, explicit regulation of medical apps was virtually nonexistent. Without clear guidance, attracting investors becomes difficult and as a consequence, innovation is hindered.
To grease the works, the FDA recently issued Mobile Medical Applications Guidance for Industry and Food and Drug Administration Staff. The FDA’s authority to recommend medical app guidelines comes from the Food, Drug and Cosmetics Act. The FDCA tasks the FDA with regulating medical devices, giving a broad definition that covers accessories, components and software. Ultimately, whether a specific app falls within this definition depends on the objective intent of the person legally responsible for labeling it. The labeler’s intent is determined through statements, labeling claims and advertisements. If the device is intended for use in “the diagnosis…cure, mitigation, treatment, or prevention of disease” or to “affect the structure or any function of the body of man” the app is a device, subject to FDA regulation.
The new guidelines clarify that entities exclusively distributing apps are not considered ‘labelers’ for these purposes. The owners of the iTunes App Store can breathe easy. For manufacturers whose apps qualify as medical devices, the guidelines divide into two broad categories: apps subject to regulation and apps subject to “enforcement discretion”. Put simply, enforcement discretion means the FDA could regulate the app under the FDCA, but is choosing not to. Under the guidelines, apps subject to enforcement discretion are those that pose little risk of serious harm, even when used improperly. For instance, an app that encourages the user to maintain a healthy weight would be subject to enforcement discretion.
On the other side of the regulatory spectrum are apps subject to FDA regulation. These apps are divided into three subcategories. The first covers apps that are an extension of an existing regulated medical device. For example, an app that creates a remote display for a blood pressure monitor. The second covers attachments that transform a mobile platform into a regulated medical device. An example of this would be an attachment that turns a smart phone into a blood glucose strip reader. The third subcategory embraces apps providing patient specific diagnosis or treatment recommendations. An app using a patient’s information to calculate radiation dosage would fall into this category.
In the health industry, innovation is absolutely paramount. The new Guidelines lend insight and predictably to the regulatory future of medical apps, allowing continued progress. With clear language and numerous examples, they serve as an excellent starting point for attorneys counseling medical app manufacturers.
Matthew Siti earned his Juris Doctorate from Seton Hall University School of Law in May 2014. We are very pleased to welcome him to the blog today.
Photo Credit: Juhan Sonin
A day late but not a dollar short, here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week. You can see all of our previous Monday Morning Recap posts here. 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. The battle over Zoyhdro (which I blogged about here) continued this past week. After Massachusetts’ ban on prescribing and dispensing the drug was struck down, the state promulgated emergency regulations setting forth a set of conditions that physicians must meet before prescribing the drug and a set of conditions that pharmacists must meet in order to dispense it. Zohydro’s manufacturer, Zogenix, challenged these regulations, arguing that they amounted to a de facto ban and so were preempted for the same reasons that the total ban was. As Kurt Karst explains at FDA Law Blog, Zogenix won in part–the judge preliminarily enjoined the requirement that prescribers prepare a letter of medical necessity in support of each Zohydro prescription–and Massachusetts won in part–the judge denied, for now, Zogenix’ challenge to the regulations governing pharmacists. Per Karst: “So it’s not quite ‘goodbye’ to this controversy, but rather – and quite literally – ‘auf Wiedersehen’ (until we meet again).”
2. In related news, last week, Purdue Pharma announced that the Food & Drug Administration has granted Priority Review designation to a drug the company is developing that has the same active ingredient as Zohydro but which, unlike Zohydro, incorporates “abuse-deterrent properties designed to make the product more difficult to manipulate for the purpose of misuse or abuse by various routes of administration (e.g., chewing, snorting and intravenous injection).” If Purdue’s product is approved, it may spell the end for Zohydro, at least in its current formulation. In a letter to FDA in April of this year, Senators Richard Blumenthal of Connecticut and Patrick Leahy of Vermont called on the FDA to “act swiftly to remove any older, less safe versions” when “safer, abuse-deterrent opioids are approved[.]”
3. At Reuters, Ronnie Cohen reported on a study in the journal Vaccine that found, disappointingly, that “[m]ost doctors do not recommend flu shots to their pregnant patients, who are more likely to develop serious complications if they do get the flu[.]“ Cohen quotes researcher Marie Tarrant: “‘The research is clear that healthcare providers are not providing advice to pregnant women about the importance and benefits of getting vaccinated . . . In addition, they are not making influenza vaccine available to their pregnant clients. . . . By their silence, they are sending a message that influenza vaccine is actually not that important.‘”
4. Elisabeth Rosenthal had another must-read piece in the New York Times last week, this one about the rising prices of generic drugs. She writes: “Digoxin provides a telling case study. There was no drug shortage, according to the Food and Drug Administration, that might explain the increase. There was no new patent or new formulation. Digoxin is not hard to make. What had changed most were the financial rewards of selling an ancient, lifesaving drug and company strategies intended to reap the benefits.“
Filed under: Drugs & Devices, Health Insurance, Health Law, Health Reform, Litigation and Liability, Patient Protection and Affordable Care Act, Public Health, Seton Hall Law, Women's Health Issues
We are very pleased to welcome Angela Carmella, a Professor here at Seton Hall Law, to the blog today. Professor Carmella’s intellectual focus is the intersection of law and religion, specifically the First Amendment’s religion clauses, religious land use, and Catholic social thought.
By Angela Carmella
On Monday, June 30, the U.S. Supreme Court issued its path-breaking decision in Burwell v. Hobby Lobby Stores, Inc. In a 5-4 ruling, the Court held that HHS’s contraception mandate violates the rights under the Religious Freedom Restoration Act (RFRA) of closely-held, for-profit corporations that object to providing this coverage. The mandate requires employers to provide their female employees with insurance coverage for all twenty FDA-approved contraceptives without cost-sharing. Justice Alito, writing for the majority, repeatedly notes the decision’s narrow applicability to the mandate alone; Justice Ginsburg, in dissent, criticizes the decision for its “startling breadth,” fearing that for-profits will now seek exemptions from other requirements of the Affordable Care Act and from other federal laws, to the detriment of employees and customers.
Critical to the Court’s decision is the “accommodation” currently available to religious nonprofits—charities, colleges, hospitals and the like—that object to providing contraceptive coverage to their female employees (and students). In contrast to the targeted exemption given specifically to churches and their close affiliates, which leaves employees without this coverage, the accommodation requires the nonprofit’s insurer (or third party administrator for self-insured plans) to provide coverage directly and separately to employees. Thus, the accommodation attempts to respect the twin goals of religious liberty and women’s health.
Justice Alito and Justice Kennedy (who joined the majority opinion but also wrote a separate concurrence) regarded the accommodation as evidence that the government had already devised a mechanism to address the religious objections of employers while advancing its public health goals. For the Court, extending this accommodation to for-profits was an obvious and straightforward way for the government to satisfy RFRA’s requirement that it use the least restrictive means to advance its objectives.
Hobby Lobby consolidated two challenges to the mandate, one brought by the Green family, evangelical Christian owners of the Hobby Lobby arts and crafts stores and Mardel religious book stores, and the other brought by the Hahn family, Mennonite owners of cabinet manufacturer Conestoga Wood Specialties. They refuse to provide their employees with coverage for four (out of twenty) contraceptives that might interfere with implantation of a fertilized ovum, because to do so would involve them in facilitating abortions. (Some of the other businesses that have brought similar challenges oppose providing coverage for all contraceptives.)
RFRA prohibits government from “substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability” unless it “demonstrates that application of the burden to the person—(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” 42 U.S.C. Secs.2000bb-1(a), (b). RFRA applies to “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” Sec.2000cc-5(7)(A).
The opinion takes a pragmatic approach, but its driving vision is RFRA’s overarching purpose in this context: to prevent government from excluding religious people “from full participation in the economic life of the Nation” (Alito 46) and to protect the right “to establish one’s religious (or nonreligious) self-definition in the political, civic, and economic life of our larger community.” (Kennedy 2). The Court first determines that for-profit corporations are “persons” capable of “exercising religion” under RFRA. “[A]llowing Hobby Lobby, Conestoga and Mardel to assert RFRA claims protects the religious liberty of the Greens and the Hahns,” (Alito 21). Their religious liberty here consists in being able to “run their businesses as for-profit corporations in the manner required by their religious beliefs” (Alito 2, emphasis supplied).
Next, rejecting HHS’s argument that the connection between the mandate and any immoral act is too “attenuated,” the Court finds that the “mandate imposes a substantial burden on the ability of the objecting parties to conduct business in accordance with their religious beliefs.” (Alito 36, emphasis in original) Given the prospect of fines against Hobby Lobby of up to $475 million per year, the answer for the majority is clear. The Court refused to scrutinize the claimants’ arguments regarding complicity in immoral conduct, noting that “it is not for us to say that their religious beliefs are mistaken or insubstantial.” (Alito 37)
The majority opinion assumes that the mandate fulfills a compelling governmental interest, while Justice Kennedy’s concurrence makes clear that the government has demonstrated it. But both opinions focus on the accommodation as the least restrictive alternative to further the government’s compelling interest. Although government provision of contraceptives might be an alternative, the Court concludes that “we need not rely on the option of a new, government-funded program in order to conclude that the HHS regulations fail the least-restrictive means test. HHS itself has demonstrated that it has at its disposal an approach that is less restrictive than requiring employers to fund contraceptive methods that violate their religious beliefs.” (Alito 43) The Court notes that under such an accommodation, female employees of Hobby Lobby, Mardel and Conestoga would receive the contraceptive coverage to which they are entitled under the regulations.
Because the Court does not decide whether the accommodation “complies with RFRA for purposes of all religious claims,” (Alito 44) Justice Ginsburg’s dissent largely ignores the majority’s solution and focuses instead on what she views as a radical interpretation of RFRA that allows businesses to “opt out of any law (saving only tax laws) they judge incompatible” with their beliefs (Ginsburg 1) without regard to the impacts on third parties (like the female employees of objecting businesses). Her dissent emphasizes the significance of contraception to women’s health, the expenses associated with contraception, and the compelling nature of the government’s interest in an employer-based insurance system that provides it. She draws a sharp distinction between religious nonprofits, which are accommodated because they “exist to serve a community of believers,” (Ginsburg 29) and commercial entities with diverse workforces. Justice Ginsburg concludes that not only is the claim of burden on religious exercise too attenuated, but “[i]n view of what Congress sought to accomplish, i.e., comprehensive preventive care for women furnished through employer-based health plans, none of the proffered alternatives would satisfactorily serve the compelling interests to which Congress responded.” (Ginsburg 30-31)
In other pending cases many religious nonprofits are challenging the accommodation itself as insufficiently protective of their religious liberty. The Court’s praise for this mechanism as meeting the twin goals of religious liberty and women’s health in the for-profit context might be read as a sign that the nonprofits currently in litigation may be sorely disappointed. But predicting the impact of Hobby Lobby in the nonprofit context became more complicated on July 3, just four days after Hobby Lobby came down, when the Court issued an interim order in Wheaton College v. Burwell.
Wheaton College is a religious nonprofit that is unquestionably eligible for HHS’s accommodation for religiously affiliated institutions. It has challenged the accommodation itself as a violation of RFRA on the grounds that the school will be morally complicit in providing abortifacient coverage when it files the required “self-certification” form; this form, it argues, triggers the third party administrator’s obligations to provide the objectionable coverage. Without deciding the merits, the Court decided 6-3 that the college need not use the government’s form; since the government is already on notice of its objection, HHS (and its third party administrator) can proceed as though the form had been filed.
One can view this as consistent with Hobby Lobby: as in that case, the Wheaton Court finds a solution that both respects the college’s religious exercise (it does not have to sign) and meets the government’s interest (the third party provides the contraceptive coverage). But in her dissent to Wheaton, Justice Sotomayor voiced her frustration: since the Court already found that the accommodation was the least restrictive means of furthering the mandate’s goals—indeed, it “served as the premise” for the decision—the “grant of injunctive relief [in Wheaton] simply does not square with the Court’s reasoning in Hobby Lobby.” (Sotomayor 16, 13)
Although it may be impossible to predict Hobby Lobby’s specific impacts in both commercial and nonprofit contexts, two thing are certain: first, the notion that religious liberty and government interests can be reconciled to avoid harms to third parties is now on the table for further consideration; and second, the Court’s broad reading of RFRA marks a new chapter in free exercise jurisprudence.
Filed under: Drugs & Devices, Health Law, Health Reform, Litigation and Liability
Proponents of tort reform in the United States often express particular ire at class action lawsuits, which they characterize as bonanzas for lawyers that unjustly penalize businesses while providing few benefits for consumers. The enactment of legislation limiting class action lawsuits remains the tort reform movement’s primary achievement at the federal level, having succeeded while efforts to enact federal malpractice reform have consistently failed.
In France, by contrast, a key feature of the government’s recent health reform proposal is to expand the role of class actions by making them available to groups of patients harmed by medical interventions. As explained by Health Minister Marisol Touraine, who announced a package of health law reforms in a press conference in late June,
to reach maturity in the field of health democracy, it is … necessary to strengthen the power given to patients when they are victims of damages. In light of the serial damages in the health sector, a law right could be contemplated: the introduction of class actions. This would represent major progress. Compensations would certainly be determined on a case-by-case basis but our fellow citizens would no longer be alone against the power of some industries.
At first glance, the proposal to introduce health-related class actions seems difficult to reconcile with France’s historic distaste for American-style litigation. Indeed, American-style class actions were not available in any context in France until just a few months ago, when the Constitutional Court approved a new class action mechanism for financial injuries stemming from consumer and competition law violations. The proposal to extend this new law to health-related claims by allowing recovery for bodily injuries and other non-pecuniary damages may strike some observers as a departure from other recent French malpractice reform efforts, which have sought to increase the role of no-fault compensation and to promote non-adversarial mechanisms for resolving disputes.
Yet, class actions à la française are not expected to look anything like their American counterparts. For one thing, the new class action law allows only accredited consumer associations to represent plaintiffs in class action litigation, thereby precluding lawsuits brought by fee-seeking private attorneys. Moreover, because French law does not allow no-fee contingency arrangements, the associations will be required to advance the costs of the litigation. In addition, under the new class action law, plaintiffs must explicitly opt in to class action lawsuits, which may make it difficult to assemble classes of any substantial size. If the class action law is extended to health-related lawsuits, similar limitations would undoubtedly be imposed.
Even with these limitations, the introduction of health-related class actions is likely to significantly shift the power dynamic between plaintiffs and defendants. The impact would be the greatest in cases against pharmaceutical and medical device manufacturers, as product-related injuries are inherently more amenable to group litigation than claims of professional negligence. As the proposal moves through the legislative process, it will be interesting to see how industry and other stakeholders respond.