Lawsuit Against Guidant for Making False Statements (Again)

As we reported a little while back, the Department of Justice obtained what FDA Commissioner Hamburg declared “the largest criminal penalty ever imposed on a device manufacturer for violating the Food, Drug and Cosmetic Act” against Boston Scientific subsidiary, Guidant LLC.

Following this record breaking performance, the Department of Justice filed suit against Guidant LLC on January 27, 2011.  Yes, that is correct — Guidant is once again subject to a federal claim resulting from false statements made regarding three models of its implantable cardioverter defibrillators that were recalled for short-circuiting failures.  This time, however, it is alleged that “Guidant knowingly caused the submission of false or fraudulent claims for implants of faulty… devices to the Medicare program” in violation of the False Claims Act.

John R. Marti, First Assistant U.S. Attorney for the District of Minnesota was quoted in the Department of Justice press release stating:

When companies like Guidant request and receive federal dollars for products they know to be defective, the United States is committed to aggressively seeking the recovery of those payments. That is especially true when the defective products endanger human lives. In today’s environment, it is essential that Medicare and other public health care programs be made whole to ensure their continued vitality for future generations.

Well that makes sense.  But why bring the False Claims Act claim separately from the claims for violations of the Food, Drug and Cosmetic Act (”FDCA”)?  The most obvious reason is as follows: the Department of Justice did not bring the False Claims Act claim against Guidant.  The United States joined a lawsuit filed by qui tam relator James Allen, a patient who allegedly received a defective device.

The complaint alleges that approximately 2,000 false claims were submitted to the Medicare program.  It also includes ten examples of individual false claims ranging from $20,201.14 to $ 46,130.20.  With treble damages and civil penalties of not less than $5,500 and up to $11,000 for each violation, the recovery could range anywhere from $132 million to $298 million.  The record-breaking $296 million in fines and forfeitures for violations of the FDCA standing alone looked formidable; coupled with this latest volley, it is staggering– a potential total minimum of $428 million, maximum  of just shy of $600 million.

According to Fox News, Boston Scientific “is disappointed that the federal government, after reaching a criminal resolution with Guidant LLC, has chosen to seek additional money in a civil lawsuit.  However, the company believes that the ultimate resolution of this matter should not have a significant financial impact.”

Res Ipsa Loquitur

Do I Need 9 Lives Just to Get a Cat Scan?

Tonight’s post will be relatively brief, as I wish only to call attention to another post and a particularly disturbing number contained therein. The post was published over at The Health Care Blog by Robert Wachter, MD, a leading figure in the modern patient safety movement. It is entitled “A Game-Changing Statistic: 1 in 250.” It is. Or at least it should be. You should take a minute or two to read it– it’s provoking, and not in a good way.

The 1 in 250 refers to the odds of getting cancer from a single CT scan.

Wachter writes:

Last month, my colleague Rebecca Smith-Bindman, professor of radiology, epidemiology, and ob/gyn at UCSF and one of the nation’s experts in the risks of radiographs, gave Medical Grand Rounds at UCSF. Her talk was brimming with amazing statistics, but this is the one that took my breath away:

A 20-year old woman who gets an abdominal-pelvic CT scan (i.e., just about any young woman coming to the ED with belly pain) has a 1 in 250 chance of getting cancer from that single scan.

Did that fully register? One CAT scan, which until recently most of us ordered with no more restraint than we exhibit when asking the Starbucks barista for a tall latte, will cause cancer in one out of every 250 patients. Two-hundred fifty: that’s the number of students in my college Bio 101 class. Wow.

Wachter adds fuel to that disturbing fire and reports that his above mentioned colleague found both increased radiation dosage (66% greater than that which is the usually quoted dose) and wide variation in dosage among different scanners in 4 Bay area hospitals.

If the variation and increased dosage isn’t scary enough, perhaps this nugget from Wachter regarding the usual dose is:

• A multiphase abdominal/pelvic CT scan has the same radiation wallop as 500 transcontinental flights, 450 chest radiographs, and 74 mammograms.

The effects? Well, there’s the 1 in 250 number, but Wachter is kind enough to give us an aggregate estimate:

• The best estimates are that radiation from CT scans causes 29,000 excess cancers each year in the U.S., mostly in women.
• Researchers estimate that 15,000 people will die from the direct effects of the 72 million CT scans performed in 2007 alone.

And if that weren’t enough, it seems the death and danger are accompanied by widespread ignorance–

• A 2004 study found that less than 50 percent of radiologists, and 9 percent of ER docs, were aware that CT scans could increase the subsequent risk of cancer.

Unfortunately, quite a few CT scans are done each year. And the number has risen dramatically over the last few decades–a more cynical man (or perhaps just a man who has read Atul Gawande and Adam Smith) might think the increase in usage might bear some relationship to the high cost of purchase for a CT scan machine-Buy it and they will come. Wachter tells us that

• One in five Americans will receive a CT scan in any given year; some experts suggest that at least one-third of those scans are unnecessary.

Even if only one-fifth were unnecessary, with a 1 in 250 chance of getting cancer from a single scan, the odds are ugly– and at least in some cases, amount to a dire risk without any merit whatsoever. In other cases, we risk greatly for minimal gain–and, perhaps, most disturbingly, that risk is often called for by doctors and radiologists who are sans knowledge of the risk. Yes,  a 1 in 250 chance of getting cancer from a single scan–when you perform 72 million of them per year–should be a game changer.

A “Sputnik Moment”? Hopes for Renewed Drug Development With A Little Help From Our NIH Friends

In his State of the Union Address, President Obama tried to spark the “creativity and imagination” of the American people when he proclaimed

[t]his is our generation’s Sputnik moment.  Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race.  And in a few weeks, I will be sending a budget to Congress that helps us meet that goal.  We’ll invest in biomedical research, information technology, and especially clean energy technology… an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.

Now I don’t know what came first — the chicken or the egg — but President Obama’s speech about investing in biomedical research and technological innovation follows National Institutes of Health (NIH) Director Francis Collins’ proposal to create a National Center for Advancing Translational Sciences (NCATS) to encourage drug discoveries and facilitate translational research in compounds overlooked by or abandoned by pharmaceutical manufacturers.  So does Dr. Collins’ proposal qualify as a “Sputnik moment”?

You might not have realized it, given those never-ending TV and magazine advertisements for prescription products (whose side effects sometimes sound worse than their benefits, but that’s another blog post), but pharmaceutical manufacturers have reduced their investment in researching and developing drugs.  According to the New York Times, pharmaceutical manufacturers spend over $1 billion developing a drug, with some “typically spend[ing] twice as much on marketing as on research” though that’s “a business model that is increasingly suspect.”  (For a brief overview of the research and development process, click here.)  The Pharmaceutical Research and Manufacturers of America (PhRMA) estimates that its members spent $45.8 billion in 2009 in research alone.

Even so, the number of drugs approved by the Food and Drug Administration (FDA) has dropped over the last 15 years and that’s not due to a lack of scientific information or higher FDA standards.  In November 2010, Forbes health blogger Matthew Herper reported on  the annual meeting of the American Society of Human Genetics at which Dr. Collins

implored his colleagues in genetics to work to develop new treatments for rare diseases. His point was that the NIH and the Food and Drug Administration are increasingly able to handle preclinical and early clinical drug development, and that with these first steps taken medicines are more likely to be brought to market by large pharmaceutical companies.

Mr. Herper also noted that a few organizations, such as the Cystic Fibrosis Foundation and the Multiple Myeloma Research Foundation, have taken a similar route in pushing along research  until a pharmaceutical manufacturer picks up the slack.  Then a month later, Arthur H. Rubenstein, dean of the University of Pennsylvania School of Medicine and chair of the NIH Translational Medicine and Therapeutics Working Group, told the Wall Street Journal Health Blog, “[b]asic science has exploded but it has not translated into benefit for the public.  The question was what to do about it.”

In stepped NIH to ease, in the words of the WSJ Health Blog, the “mounting frustration that a wealth of new information about the molecular basis of diseases hasn’t produced more new therapies.”  On December 7, 2010, NIH’s Scientific Management Review Board (SMRB) voted 12-1 in favor of adding NCATS to NIH.  Dr. Collins notified Health and Human Services Secretary Kathleen Sebelius of the decision.  Then on January 14, 2011, Secretary Sebelius sent a letter to Congress.  However, the decision to add NCATS  meant dismantling one of the 27 NIH centers and institutes, per the requirements of a 2006 law (”27″ is the “magic number”).  The lone SMRB dissenter, Jeremy Berg, director of the National Institute of General Medical Sciences, said he was “concerned that the implications for the rest of NIH hadn’t been adequately discussed.”

And therein lies some of the controversy.  NIH envisions NCATS as a link between basic discovery research and therapeutics care by:

• providing a visible, central locus for access to resources, tools, and expertise related to translational medicine;
• streamlining and improving the process of therapeutics development;
• serving as a catalyst, resource, and convener for collaborative interactions by supporting novel and innovative partnerships between multiple key stakeholders, including academia, government, industry, venture capitalists, and non-profit organizations;
• expanding the pre-competitive space by, among other things, enabling and providing incentives for greater sharing of scientific information and publication of negative results;
• supporting and strengthening translational medicine and therapeutics research, including providing access to services and resources for high-throughput screening, assay development, medicinal chemistry, and preclinical modeling;
• training translational research investigators; and
• enhancing communication among all stakeholders.

PhRMA Senior Vice President David E. Wheadon supports NCATS because

[c]ollaboration — including industry, NIH and academia — is one element driving innovation in drug development, particularly early stage — and ‘bold and ambitious’ proposals, such as Dr. Collins’, will be key to how we collectively progress in discovering novel compounds for addressing patients’ unmet medical needs….

The fact remains that biopharmaceutical research companies today and in the future will play a pivotal role: Our companies create the vast majority of new medicines from start to finish and, for the remainder, in close collaboration with academia and NIH, fulfill the critical final phase that transforms promising molecules into actual medicines for patients.

The WSJ Health Blog notes that NCATS isn’t NIH’s first foray into developing drugs.  In 2009, NIH created the Therapeutics for Rare and Neglected Diseases (TRND) program for basic research on rare diseases.  This early stage of drug development, WSJ Health Blog notes, is “expensive, time-consuming… prone to failure” and often not worth the effort for pharmaceutical manufacturers since the related market is small.

However, this time NIH must restructure several programs to accommodate NCATS, including the Molecular Libraries screening program, TRND, and the National Center for Research Resource’s (NCRR) Clinical and Translational Science Awards.  NCATS would house all three programs, along with the in-the-works Cures Acceleration Network (a drug-development program created by the Patient Protected and Affordable Care Act).

Staff members and researchers connected with the NIH community aren’t too thrilled over the restructuring, particularly with respect to NCRR.  If you visit Feedback NIH, the online forum for public commentary on NIH initiatives, you can read through the 1,100+ lengthy NCATS-related comments.  You’ll also see the “Separating Fact & Fiction” post by Dr. Francis Collins, which begins:

[b]y now, many of you have read the recent New York Times article or related news coverage, about NIH’s plan to establish the National Center for Advancing Translational Sciences (NCATS).

While we are pleased that the news media have recognized NIH’s efforts as a significant development for translational research, the Times article contains some misleading statements that we would like to clarify. Those statements suggest that a much larger shakeup of NIH is underway than is actually contemplated.

So, to set the record straight, we want to share with you what we know at this point in time…

(internal links removed).  The “we” includes Members of the Institute and Center Directors NCATS Working Group.  The post attempts to clear up concerns about budget cuts (House Republicans have already promised to cut the discretionary spending that supports NIH), the security of existing programs, and the misconception that NCATS will be a drug company.

Despite the negative responses, Dr. Collins remains optimistic.  In an interview with ScienceInsider, he emphasized that

the NIH director is called upon to look for scientific opportunities that aren’t being met and to figure out how to make them happen, and that sometimes requires moving things forward at a rapid pace, and that affects a lot of people.

And of course change is always distressing, especially if people aren’t quite sure where it’s going. So I understand the anxiety that currently exists.

But let’s wait a year and see when this has all taken shape how people feel at that point. Will they say at that point that projects or programs at NCRR got dealt a bad deal? I bet they won’t. Will they say they’re excited about the translational science opportunities that are taking shape in the form of this new center? I bet they will.

Perhaps if purse strings weren’t so tight and the healthcare reform debate was settled — or if NIH wasn’t limited to 27 centers and institutes — the creation of NCATS might not upset so many people.  Yet has Dr. Collins displayed a little of that “Sputnik moment” spirit by accelerating the development of drugs for diseases and other areas overlooked by pharmaceutical manufacturers?  Sure.  Just don’t expect him to take us to the moon.

Spinal Fusion Controversy Underscores Extent of Conflicts of Interest

The Wall Street Journal recently published a report that outlines the extensive financial benefits that surgeons are receiving for spinal fusion surgeries. The “bounty” — a term used by the WSJ — comes from Medicare reimbursement as well as royalties for the intellectual property contributed by the surgeons to the spinal fusion procedures. Presumably the surgeons also receive money from speaking and training fees.

In short, spinal fusion is a surgical procedure whereby two or more vertebrae are fused together. The fusion is accomplished by creating a bridge between the vertebrae that is usually constructed out of bone taken from other parts of the body. The bone is inserted between the vertebrae, and is secured by rods, screws, and plates. This reduces the movement of each vertebrae that is connected to the bridge, thereby relieving stress on the injured vertebrae, disks, and nerves. Spinal fusion may be a necessary treatment in the face of trauma or debilitating diseases affecting the spine, such as scoliosis. However, the application of spinal fusion to treat certain types of back pain has been questioned.

In light of the dearth of comparative effectiveness research regarding nearly all surgical procedures, why then is spinal fusion so controversial? There appear to be two factors: the high price of the surgery, and  the strong ties between the surgeons performing the spinal fusions and the medical device manufacturers that produce the hardware used in the procedure.

In particular, the royalty payments are staggering. In the first three quarters of 2010, the WSJ reports that each of five spinal surgeons at Norton Hospital in Louisville Kentucky received more than $1.3 million from Medtronic — the leading manufacturer of spinal fusion devices. Norton Hospital — and its surgeons — are certainly not alone in profiting from the procedures.

Though the device manufacturers like Medtronic pay out large sums to physicians that develop, utilize, and promote spinal fusion treatments, the manufacturers clearly come out ahead after taking into account the price they charge hospitals for the spinal fusion devices. Not surprisingly, this money often comes from Medicare reimbursement.  According to the WSJ’s analysis of Medicare claims, spinal fusion went from costing Medicare $343 million in 1997 to $2.24 billion in 2008.  And as the Journal points out, the screws used in spinal fusion implants can cost between $1,000 to $2,000 a piece for reimbursement but actually turn out to cost less than $100 to make. Spinal surgeon Charles Rosen is quoted as stating that “You can easily put in $30,000 worth of hardware in a person during a fusion surgery.” A Los Angeles Times report in 2010 found that complex spinal fusion surgeries can end up costing $80,888 in hospital charges as compared to $23,724 for spinal decompression surgery — the latter referring to a group of procedures that can relieve painful pressure on the spine, but without the extensive implantation required by spinal fusion.

Nevertheless, it is true that there there are many expensive surgical procedures wherein the value to the patient justifies the high price. But it is more than the wise allocation of resources that is at issue. In the Journal of the American Medical Association’s April 2010 issue, Dr. Eugene Carragee M.D., professor of spinal disease and orthopaedic surgery at Stanford University School of Medicine summarized the clinical difficulties facing complex spinal fusion surgery, especially in older individuals:

…the complex reconstruction of spinal deformity in older patients remains a difficult and dangerous enterprise. Complication rates have declined but remain concerning (30%-40%) and the reoperation rates, in a population for whom there is a high risk of both medical and anesthetic complications with additional surgery, remains at 10% to 20% in the most optimistic reports. Moreover, despite these major interventions, this approach is still not effective in 30% to 40% of patients.

When asked about the need for spinal fusion surgeries, Dr. Steven Glassman — one of the Norton Hospital surgeons that has received millions to implant spinal fusion devices — stated that he and his colleagues were “leaders among spine surgeons nationally in comparative effectiveness research.” This is a troubling statement, precisely because of the significant royalty agreements between Dr. Glassman and Medtronic that are described in the WSJ report. Dr. Glassman is therefore incentivized — at least economically speaking — to interpret research findings in such a way that maximizes the contexts in which spinal fusion surgery can be recommended.

To combat these conflict of interest claims, Medtronic claims that it refrains from paying out royalties to the collaborating surgeons on the devices they personally use in their patients. This would appear to reduce the incentive for Dr. Glassman to personally churn out spinal fusion operations in the hope that he will get royalties for those instances where he implants hardware in which he holds a royalty agreement with Medtronic. This certainly helps to combat violations of the Federal Anti-Kickback Statute, which prohibits Medtronic from inducing surgeons to purchase their devices. But this policy does little to curb the general conflicts of interest of the general spinal surgery community when determining whether to recommend complex spinal fusion surgery. Even if a contributing surgeon does not receive royalty payments for the specific surgeries where his manual contributions are utilized, they still have an incentive to keep Medtronic “happy” by increasing demand for the spinal fusion hardware. And certainly one can envision a scenario in which a surgeon so situated might suggest such a surgery but then refer the procedure itself to a colleague, thereby allowing the royalty payments to flow unencumbered by the guise of propriety.  What does appear certain is that demand for complex spinal fusion operations has increased. Citing a study by Deyo and colleagues in the same JAMA issue, Dr. Carragee points out that:

…the rate of spinal stenosis surgery in the Medicare population has remained more or less stable, but the rate of complex surgery for this disease has increased from negligible levels in 2002 to nearly 15% of all spinal stenosis surgeries in 2007. These more complex surgeries are also reported to be independently associated with increased perioperative mortality, major complications, rehospitalization, and cost.

The findings do not provide explanations for the increase in complex surgery that has occurred during the past 6 years. Ideally, because the complex surgical techniques are used to treat complex deformities, the data should show that patients undergoing these procedures usually have these complex deformities. The diagnoses reported, however, do not support this “ideal” explanation; 50% of these new complex fusion operations were performed in patients with spinal stenosis alone and no deformity. Spinal stenosis with scoliosis by coding, accounted for only 6% of the complex fusions performed.

In other words, there has been an increase in the rate of a complex surgical procedures prone to severe complications, but with no concomitant increase in the rate of the severe conditions that would ostensibly warrant such surgery. Regardless, this demand pays dividends in the royalty agreements that the surgeons receive when the U.S. spinal surgery community implant the hardware that the contributing surgeons developed– and dividends to the manufacturer.

Currently, there appears to be little, if any, countervailing force that militates against the doctors recommending this complex and expensive procedure. By conducting the complex fusion operation, the surgeon and the hospital both make money through the handsome reimbursement from Medicare and private insurance, while Medtronic is handsomely paid by selling more devices. Those hurt, financially speaking, are the taxpayers in terms of Medicare, and those insureds in private plans whose premiums have risen because of the increased costs of this procedure. Private insurance plans are unable to combat this, as any limit on spinal fusion surgery will be framed as corporate greed coming at the expense of treatment. This is precisely what has occurred after Blue Cross and Blue Shield of North Carolina announced that it would place tighter restrictions on spinal fusion surgery. In response to the restrictions, Dr. John Wilson, a neurosurgeon at Wake Forest University Baptist Medical Center and president of the North Carolina Neurological Society stated that “If this intrusion into the physician-patient relationship goes unchallenged, other insurers will follow suit…It will be a progression of ever-more restrictive policies that will handcuff us as we try to treat patients.” Dr. Wilson was one of nine physicians to write a letter to Blue Cross urging the insurer to alter the new rules. Interestingly, the letter repeatedly supports its position by citing the studies of Dr. Daniel Resnick, a spine surgeon who is listed by the Congress of Neurological Surgeons as receiving grant money from Medtronic.

Mefloquine at GTMO Interview by Leonard Lopate on NPR’s WNYC

A little while back, we wrote about a report, Drug Abuse: An Exploration of the Government Use of Mefloquine at Guantánamo, issued by Seton Hall Law’s Center for Policy & Research. Renowned for its series of Guantánamo Reports, the Center’s most recent report documents the medically inappropriate use of a dangerous pharmacological treatment on detainees.

According to the report, the U.S. military routinely administered mefloquine, a controversial malaria treatment, at five times the standard prophylactic dose. Mefloquine, even at the standard dose, is known to cause adverse side effects such as paranoia, hallucinations, aggression, psychotic behavior, memory impairment, convulsions, suicidal ideation and possibly suicide.

Today, Professor Mark P. Denbeaux, Director of the Seton Hall Law Center for Policy and Research, was interviewed about the report on NPR’s New York City station, WNYC, by Leonard Lopate. You can listen to the interview here

Continuing [Surgical] Education Poses Compliance Challenges

While the drug and device industries are frequently lumped together, there are differences that can pose challenges for compliance professionals and regulators.  I was reminded of this while watching an interesting video interview of Damon Marquis, the Director of Education & Member Services for The Society of Thoracic Surgeons, conducted by Murray Kopelow, the Chief Executive of the Accreditation Council for Continuing Medical Education, in which Mr. Marquis discusses the steps his organization takes to protect the continuing medical education (CME) they provide from undue industry influence.

On the drug side, it is relatively easy for specialty societies and other providers to accept industry support for CME while maintaining at least the appearance of independence and objectivity.  Once the check is cut, there is no need for the funding company to have any further involvement with the funded program, which typically follows a lecture format.

Things are quite different on the device side.  As Mr. Marquis explains, a core part of The Society of Thoracic Surgeons’ mission is to provide “education on procedures using … devices.”  The CME offered at the Society’s annual meeting includes 12 “wet labs.”  (While Mr. Marquis does not define wet lab, a browse of the web suggests that the surgeons are given the opportunity to practice procedures or techniques on animal or human organs.)  Each wet lab is taught by two experienced surgeons with, ideally, expertise in different devices; the Society’s goal is “to incorporate all the products or as many of the products as we possibly can that are available for that procedure.”

Overall, the 12 wet labs use products from over 40 device companies, all provided at no cost to the Society.  And industry involvement extends beyond this in-kind support.  Before the meeting, the companies are asked to weigh in on what devices and materials are needed for each procedure to be demonstrated.  At the meeting, “industry will come in and set up their devices and their materials.  We don’t know how to set that up.  They do.  They have the technical skills.”  One company representative is permitted to remain in the lab area once the set up is complete to observe; Mr. Marquis does not explain why.  More than one representative may remain if they are needed to run a device or devices.  (The representatives are not permitted to do any teaching; they wear a different colored gown from the participating surgeons to aid enforcement of this rule.)

At the conclusion of the interview, Mr. Marquis discussed the Society’s efforts to comply with the ACCME’s commercial support reporting requirements.  The Society relies on its industry sponsors to provide prices for the devices used, but “most of the companies have not added into there the staff time that they literally donate for setting the product up on site.”  Mr. Marquis posits that, from industry’s perspective, the time donated is de minimis, because “they bring people off of the exhibit hall floor … so they think well they’re going to be there already.”  This scenario — sales reps moving from the exhibit hall floor, where their job is to sell their device, to the wet lab, where they are asked to use their technical expertise in support of the surgeons’ educational experience, and then back to selling again — is just one of many examples of compliance challenges unique to the device side.

Human Farming & the Limits of Medical Research

A Museum of Modern Art exhibit by Michael Burton once proposed that human beings themselves would be the soil for a “future farm:”

Future Farm predicts that the emerging pharmaceutical research in harvesting adult stem cells from fat tissues and its convergence with future nanotechnologies, will bring with it scenarios that reconsider the body as income. We live in a world where industries exist to offer financial rewards for those willing to sell a kidney or produce hair to beautify others. Industries have grown to facilitate transplant tourism as a result of the success of contemporary surgery. And scientific and technological advances continue to bring new possibilities for the practice of farming the body.

This may seem like an overly dramatic or even science-fictionalized description of desperation due to poverty and larger economic trends. But the global economic race to the bottom has now so influenced medical research that Burton’s dark vision is coming closer to realization.

A recent article by Bartlett & Steele and a book by Carl Elliott describe the rise of “contract research organizations” that organize the initial phases of drug trials. Bartlett and Steele choose a provocative metaphor to describe the trend:

To have an effective regulatory system you need a clear chain of command—you need to know who is responsible to whom, all the way up and down the line. There is no effective chain of command in modern American drug testing. Around the time that drugmakers began shifting clinical trials abroad, in the 1990s, they also began to contract out all phases of development and testing, putting them in the hands of for-profit companies.

It used to be that clinical trials were done mostly by academic researchers in universities and teaching hospitals, a system that, however imperfect, generally entailed certain minimum standards. The free market has changed all that. Today it is mainly independent contractors who recruit potential patients both in the U.S. and—increasingly—overseas. They devise the rules for the clinical trials, conduct the trials themselves, prepare reports on the results, ghostwrite technical articles for medical journals, and create promotional campaigns. The people doing the work on the front lines are not independent scientists. They are wage-earning technicians who are paid to gather a certain number of human beings; sometimes sequester and feed them; administer certain chemical inputs; and collect samples of urine and blood at regular intervals. The work looks like agribusiness, not research.

Because of the deference shown to drug companies by the F.D.A.—and also by Congress, which has failed to impose any meaningful regulation—there is no mandatory public record of the results of drug trials conducted in foreign countries. Nor is there any mandatory public oversight of ongoing trials.

Therefore, it is up to journalists like Bartlett & Steele to uncover problems. And they are legion:

The Argentinean province of Santiago del Estero, with a population of nearly a million, is one of the country’s poorest. In 2008 seven babies participating in drug testing in the province suffered what the U.S. clinical-trials community refers to as “an adverse event”: they died. . . . In New Delhi, 49 babies died at the All India Institute of Medical Sciences while taking part in clinical trials over a 30-month period. . . . In 2007, residents of a homeless shelter in Grudziadz, Poland, received as little as $2 to take part in a flu-vaccine experiment. The subjects thought they were getting a regular flu shot. They were not. At least 20 of them died.

Bartlett and Steele also discuss problems in research in the US. Exploitation probably should not be a surprise in a country where unpaid prison labor appears to be a strategy to boost productivity. US companies are also driving the “initial stages of distributed human computing that can be directed at mental tasks the way that surplus remote server rackspace or Web hosting can be purchased to accommodate sudden spikes in Internet traffic.” (Such “human intelligence tasks” can be purchased for as little as a penny each on Amazon’s Mechanical Turk.) But the slow infiltration of less developed countries’ standards into US drug testing should be a concern for the FDA.

The system also appears to give drug companies a wide latitude to manipulate results, leading to the rise of “rescue countries” that are particularly prone to produce positive results:

One big factor in the shift of clinical trials to foreign countries is a loophole in F.D.A. regulations: if studies in the United States suggest that a drug has no benefit, trials from abroad can often be used in their stead to secure F.D.A. approval. There’s even a term for countries that have shown themselves to be especially amenable when drug companies need positive data fast: they’re called “rescue countries.” Rescue countries came to the aid of Ketek, the first of a new generation of widely heralded antibiotics to treat respiratory-tract infections. . . In 2004—on April Fools’ Day, as it happens—the F.D.A. certified Ketek as safe and effective. The F.D.A.’s decision was based heavily on the results of studies in Hungary, Morocco, Tunisia, and Turkey. The approval came less than one month after a researcher in the United States was sentenced to 57 months in prison for falsifying her own Ketek data.

Massive global inequalities render populations around the world vulnerable to exploitative testing conditions.

Carl Elliott’s book White Coat, Black Hat covers similar terrain, as well as the conflicts of interest and other issues we’ve addressed at Seton Hall’s health law center. His review of recent books on medical research described a “mild torture economy.” His piece “Guinea Pigging” suggests that “rescue counties” in the US may complement the “rescue countries” of Bartlett and Steele:

This unit was in a university hospital, not a corporate lab, and the staff had a casual attitude toward regulations and procedures. “The Animal House of research units” is what [one research subject] calls it. . . . Although study guidelines called for stringent dietary restrictions, the subjects got so hungry that one of them picked the lock on the food closet. “We got giant boxes of cookies and ran into the lounge and put them in the couch,” Rockwell says. “This one guy was putting them in the ceiling tiles.” Rockwell has little confidence in the data that the study produced. “The most integral part of the study was the diet restriction,” he says, “and we were just gorging ourselves at 2 A.M. on Cheez Doodles.”

Elliott’s litany of poorly controlled or ramshackle studies gives us one more item to add to Dr. John Ioannidis’s many reasons for doubting medical research:

Ioannidis [has] laid out a detailed mathematical proof that, assuming modest levels of researcher bias, typically imperfect research techniques, and the well-known tendency to focus on exciting rather than highly plausible theories, researchers will come up with wrong findings most of the time. Simply put, if you’re attracted to ideas that have a good chance of being wrong, and if you’re motivated to prove them right, and if you have a little wiggle room in how you assemble the evidence, you’ll probably succeed in proving wrong theories right. . . .

When a five-year study of 10,000 people finds that those who take more vitamin X are less likely to get cancer Y, you’d think you have pretty good reason to take more vitamin X . . . But these studies often sharply conflict with one another. Studies have gone back and forth on the cancer-preventing powers of vitamins A, D, and E; on the heart-health benefits of eating fat and carbs; and even on the question of whether being overweight is more likely to extend or shorten your life. How should we choose among these dueling, high-profile nutritional findings? Ioannidis suggests a simple approach: ignore them all.

For starters, he explains, the odds are that in any large database of many nutritional and health factors, there will be a few apparent connections that are in fact merely flukes, not real health effects—it’s a bit like combing through long, random strings of letters and claiming there’s an important message in any words that happen to turn up. But even if a study managed to highlight a genuine health connection to some nutrient, you’re unlikely to benefit much from taking more of it, because we consume thousands of nutrients that act together as a sort of network, and changing intake of just one of them is bound to cause ripples throughout the network that are far too complex for these studies to detect, and that may be as likely to harm you as help you. . . .[S]tudies rarely go on long enough to track the decades-long course of disease and ultimately death. Instead, they track easily measurable health “markers” such as cholesterol levels, blood pressure, and blood-sugar levels, and meta-experts have shown that changes in these markers often don’t correlate as well with long-term health as we have been led to believe. . . .

And these problems are aside from ubiquitous measurement errors (for example, people habitually misreport their diets in studies), routine misanalysis (researchers rely on complex software capable of juggling results in ways they don’t always understand), and the less common, but serious, problem of outright fraud (which has been revealed, in confidential surveys, to be much more widespread than scientists like to acknowledge). . . .If a study somehow avoids every one of these problems and finds a real connection to long-term changes in health, you’re still not guaranteed to benefit, because studies report average results that typically represent a vast range of individual outcomes. Should you be among the lucky minority that stands to benefit, don’t expect a noticeable improvement in your health, because studies usually detect only modest effects that merely tend to whittle your chances of succumbing to a particular disease from small to somewhat smaller. “The odds that anything useful will survive from any of these studies are poor,” says Ioannidis—dismissing in a breath a good chunk of the research into which we sink about $100 billion a year in the United States alone.

To summarize: Ioannidis casts some doubt on even the best of studies, and Elliott, Bartlett, and Steele show that bad studies may be far more common than we suspect. It’s a troubling set of observations for all concerned. We should at the very least insist on much more systematic monitoring of global drug trials.

Seton Hall Law Report Shows U.S. Military Routinely Administered Controversial Drugs to Detainees in Guantanamo Bay

Findings suggest detainees were unnecessarily dosed with a medication known to induce hallucinations, paranoia and psychosis

Seton Hall University School of Law’s Center for Policy and Research has issued a report, Drug Abuse: An Exploration of the Government Use of Mefloquine at Guantánamo, documenting the medically inappropriate use of a dangerous pharmacological treatment on Guantánamo Bay detainees.

According to the report, the U.S. military routinely administered mefloquine, a controversial malaria treatment, at five times the standard prophylactic dose. Mefloquine, even at the standard dose, is known to cause adverse side effects such as paranoia, hallucinations, aggression, psychotic behavior, memory impairment, convulsions, suicidal ideation and possibly suicide.

The prophylactic dose of mefloquine is 250 mg. On arrival at Guantánamo, as a matter of standard operating procedure, detainees received 1250 mg of mefloquine. The larger dose of mefloquine was administered without taking a patient history of any kind.

Dr. G. Richard Olds, tropical disease specialist and founding Dean of the Medical School of the University of California at Riverside, commented on the long-lasting effects of the drug: “Mefloquine is fat soluble, and as a result, it does build up in the body and has a very long half-life. This is important since a massive dose of this drug is not easily corrected and the ’side effects’ of the medication could last for weeks or months.”

The Centers for Disease Control and Prevention reports, and the U.S. military concedes, that malaria is not a threat in Guantánamo. For that reason, U.S. military personnel and contractors are not prescribed any prophylactic anti-malarial medication.

“Mefloquine was administered to detainees contrary to medical protocol or purpose,” commented Professor Mark P. Denbeaux, Director of the Seton Hall Law Center for Policy and Research. “The record reveals no medical justification for mefloquine in this manner or at these doses. On this record there appears to be only three possible reasons for drugging these men: gross malpractice, human experimentation or ‘enhanced interrogation.’ At best it represents monumental incompetence. At worst, it’s torture.”

Dean Olds concluded, “In my professional opinion there is no medical justification for giving a massive dose of mefloquine to an asymptomatic individual. I also do not see the medical benefit of treating a person in Cuba with a prophylactic dose of mefloquine.”

Professor Stephen Soldz, Director of the Center for Research, Evaluation, and Program Development, Boston Graduate School of Psychoanalysis and President of Psychologists for Social Responsibility, added, “For years there has been an almost complete lack of transparency regarding medical practices and procedures at Guantánamo. The military has failed to provide credible explanations for its procedures. Detainees and their attorneys have been denied access to their own medical records, an egregious ethical violation. All health providers should join the call for Guantánamo to respect fundamental rules regulating medical ethics everywhere.”

The report, Drug Abuse: An Exploration of the Government Use of Mefloquine at Guantánamo, may be found here.

TruthOut.org published an article independent of the Seton Hall Law report. Read it here.

Seton Hall University School of Law, New Jersey’s only private law school, and a leading law school in the New York metropolitan area, is dedicated to preparing students for the practice of law through excellence in scholarship and teaching, with a strong focus on clinical education. The Center for Policy and Research enables students to gain practical experience while engaging in research and analysis that promotes respect for the rights of individuals worldwide. The students examine primary sources pertaining to national security law and practices of the U.S. government, as well as the reliability of forensic evidence for criminal investigations and prosecution. Seton Hall Law is located in Newark, NJ and offers both day and evening degree programs. For more information, visit http://law.shu.edu.

Office of the Inspector General Releases 2011 Work Plan

On October 1, the Office of the Inspector General (”OIG”) of the U.S. Dept. of Health & Human Services (”HHS”) released its Work Plan for Fiscal Year 2011 (”Work Plan”).  Each year, the OIG briefly outlines activities that OIG “plans to initiate or continue with respect to the programs and operations” of HHS.  Various offices within OIG conduct audit, evaluation, investigation, enforcement, and compliance activities.

Continuing Work Within OIG

Many of the topics outlined in the Work Plan were included in last year’s plan.  Although the repeated inclusion of these areas of focus makes compliance easier for facilities, audits should still be conducted in the following areas:

• Provider-based status
• Observation services (as part of an outpatient visit)
• Part A hospital capital payment
• Critical access hospitals
• Medicare disproportionate share payments
• Duplicate graduate medical education payments
• Hospital readmissions
• Hospital admissions with conditions coded present-on-admission
• Inpatient rehabilitation facility transmission of patient assessment instruments
• Medicare excessive payments

New Issues to be Targeted

“What we’re really looking at are four or five really brand new issues,” said Stephen Miller, JD, chief compliance and privacy officer for Trenton, NJ-based Capital Health System, Inc. for HealthLeadersMedia.com.

• Brachytherapy reimbursement
• Replacement of devices received at no cost or reduced cost
  • According to Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc., in Marblehead, MA, “Since the medical devices replacement issue can be a difficult billing procedure to comply with, facilities should certainly do an in-depth process audit in this area.”
• Safety and quality of intensity-modulated radiation therapy (IMRT) and image-guided radiation therapy (IGRT)
  • Indicates a responsiveness on the part of OIG to headlines regarding quality concerns.  In March, the Nuclear Regulatory Commission fined Philadelphia Veterans Affairs Medical Center $227,500, its second largest fine ever against a medical institution, after “unprecedented number” of radiation errors in treating prostate cancer patients.
• Hospitals’ application of the “three-day rule” and “one-day rule” under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010
  • Many hospitals have had difficulty in billing under the new rules, which redefined what services are related to the admission, and therefore not eligible for Medicare payment within the defined window.  According to Mackaman, “IPPS facilities should be vigilant about reviewing the current three-day rule, and the non-IPPS hospitals should review the addition of the one-day rule.”  CMS guidance on this topic can be found here.

OIG Review of FDA Administration

As HealthReformWatch previously reported, nine Food & Drug Administration (”FDA”) scientists from the Center for Devices and Radiological Health (”CDRH”) sent a letter to President Obama stating, in relevant part, that:

the scientific review process for medical devices at the FDA has been corrupted and distorted by current FDA managers, thereby placing the American people at risk. Managers with incompatible, discordant and irrelevant scientific and clinical expertise in devices…have ignored serious safety and effectiveness concerns of FDA experts. Managers have ordered, intimidated and coerced FDA experts to modify scientific evaluations, conclusions and recommendations in violation of the laws, rules and regulations, and to accept clinical and technical data that is not scientifically valid.

These scientists also wrote to Congress in 2008, accusing the top FDA officials of “serious misconduct” in ignoring scientist concerns and “approving for sale unsafe or ineffective medical devices,” according to the N.Y. Times.

According to Washington G-2 Reports, OIG also stated on September 29 that “it would re-examine the concerns of those FDA reviewers, and broaden the scope of its inquiry.”

This coming year, OIG intends to investigate CDRH “policies and procedures for resolving scientific disputes about approval of devices.”  The Work Plan states that OIG will:

review a sample of administrative files for disputed device decisions and assess the extent to which regulations, policies, and procedures were followed during the dispute resolution process. We will also assess whether CDRH managers and staff are aware of and trained on policies and procedures for resolving scientific disputes.

Additionally, OIG will continue to review FDA oversight of investigational new drug applications, the process for device approval, and oversight of postmarketing surveillance studies of medical devices.

FDA and CMS Propose Parallel Review of Medical Products

On September 17, the Centers for Medicare and Medicaid Services (CMS) and Food and Drug Administration (FDA) announced their consideration of a parallel review “process for overlapping evaluations of premarket, FDA-regulated medical products,” and their intention to create a pilot program for parallel review of medical devices.

According to the request for comments published in the Federal Register, the new process would be initiated when “the product sponsor and both agencies agree to such parallel review.”  This collaboration is among the first fruits of a June memorandum of understanding between both departments of Health and Human Services (HHS),which is intended to “promote initiatives related to the review and use of FDA-regulated drugs, biologics, medical devices, and foods, including dietary supplements.”

Among the goals set out by the agreement, the FDA and CMS sought to “[b]uild infrastructure and processes that meet the common needs for evaluating the safety, efficacy, utilization, coverage, payment, and clinical benefit of drugs, biologics and medical devices.”  The proposed parallel review process would do just that.

The proposed process is intended to reduce the time delay between “FDA marketing approval or clearance decisions and CMS national coverage determinations.”  Currently, medical products are first reviewed by the FDA for safety and effectiveness; then, CMS begins the process of making its coverage determination and payment rate, which can take up to a year.  Although CMS is only one of many third-party payors, many others follow CMS’ lead in making their own coverage decisions.  A reduction in the approval-to-payment time by CMS will positively impact the rate at which all coverage decisions are made.

The parallel process will potentially benefit patients and sponsors.  A parallel process that reduces the “approval-to-payment” time will produce savings for sponsors and lead to timely patient access to new products.   Furthermore, by reducing the time to return on investment, the parallel process may be an incentive for increased investment in innovation.

Hurdles to a Parallel Process

There are significant differences between FDA and CMS review that must be overcome.  The FDA generally reviews safety and effectiveness through various application processes (premarket approval, premarket notification, etc.).  CMS, on the other hand, must make multiple decisions regarding a medical product under the “reasonable and necessary” standard, including: “what items and services it can and should pay for; how it should accomplish the payment; and how much to pay.”

Because the FDA and CMS apply different standards in their review processes, a clinical study that demonstrates the FDA requirements of safety and effectiveness may neglect to address CMS’ “questions concerning the impact of the technology on Medicare beneficiary health outcomes.”  Ideally, the parallel process will guide sponsors to design clinical studies that simultaneously address both FDA and CMS questions.

Moving from a serial to parallel process must be carefully staged in order to preserve agency resources.  There is the potential for CMS waste if coverage decisions are begun (or even worse, completed) for products that are subsequently denied approval or clearance by the FDA.

The Call for Comments

The FDA has asked the public to comment on seventeen different issues, including:

• How parallel review should be implemented and when in the FDA review process it should start
• Whether anyone other than the product sponsor should be able to initiate a request for parallel review
• Which classes of products would benefit most from parallel review
• Whether there exist regulatory, legal or scientific barriers to review, and how they may be overcome.
• The criteria for granting a parallel review request

The FDA and CMS will publish their decisions regarding the proposed parallel review process after December 16, when the comment period closes.

“The alternate approach to medical marijuana distribution,” an op-ed by Kate Greenwood featured in The Record

[Ed. Note: This op-ed piece was featured in The Record's Sunday Editorial Page and on North Jersey.com. It was written by Center for Health & Pharmaceutical Law & Policy Research Fellow and regular Health Reform Watch blogger, Kate Greenwood]

WE FEEL there is no question about it: The careful, legal distribution of medicinal marijuana to those in need is a good thing. The New Jersey Legislature agreed and passed legislation permitting distribution last January. Then-Gov. Jon Corzine signed the measure before leaving office.

But Governor Christie has requested a delay in its implementation, and a proposal to modify the system of distribution is cause for concern.

More than a year ago, Seton Hall Law’s Center for Health and Pharmaceutical Law and Policy distributed a position paper to New Jersey lawmakers urging passage of the marijuana measure, called the “New Jersey Compassionate Use Medical Marijuana Act.” The center did so citing the inclusion of “multiple measures designed to reduce the risk of abuse or diversion” and noting that “the medical literature supports the conclusion that smoked marijuana can provide relief to patients suffering from debilitating medical conditions for whom conventional treatments have failed.”

Implementation delayed

The act was to have taken effect this month, but, in response to a request from Christie, the Legislature pushed back the effective date to October.

As passed, the act provides that medical marijuana be grown and distributed by six not-for-profit “alternative treatment centers.”

But now, the New Jersey Council of Teaching Hospitals has proposed that the act be amended — before it is even implemented to provide that medical marijuana instead be grown by Rutgers University and distributed by the state’s teaching hospitals.

While hospitals are, as the Council of Teaching Hospitals points out, experienced dispensers of medicine, the act should not be rewritten to require them to dispense medical marijuana.

The passage of the act affects the rights and responsibilities of patients and providers of medical marijuana under New Jersey law; it does not change the fact that distribution and use of marijuana are illegal under federal law.

Although Attorney General Eric Holder has pledged not to prosecute patients and providers who comply with applicable state laws, and hospitals could thus dispense medical marijuana without fear of criminal prosecution, they would still be violating federal law.

Condition of participation

This is a problem because compliance with federal law is a condition of participation in the Medicaid and Medicare programs. Hospitals depend heavily on Medicaid and Medicare funding; the Compassionate Use Act’s alternative treatment centers would not.

Read More

Possible Repeal of Massachusetts Ban: A Gift to Prescribers, Patients or Industry?

Next month marks the second anniversary of the enactment of the Massachusetts Pharmaceutical and Medical Device Manufacturer Code of Conduct, a law requiring pharmaceutical and medical device manufacturing companies to designate a compliance officer and implement a compliance program reflecting the commonwealth’s regulations on meals, CME sponsorship, use of non-patient identified prescriber data, gifts and other payments, etc.  The law, which went into effect on July 1, 2009, builds upon the Pharmaceutical Research and Manufacturers of America’s revised Code  on Interactions with Healthcare Professionals (”PhRMA Code“) and the Advanced Medical Technology Association’s revised Code of Ethics on Interactions with Healthcare Professionals (”AdvaMed Code“), two voluntary codes intended to eliminate any influence — perceived or otherwise — of the industry over healthcare professionals with respect to gifts, entertainment, recreation, educational programs, professional meetings, scholarships, and the like.

The Massachusetts law is more restrictive, however, than its PhRMA and AdvaMed counterparts.  It prohibits companies from sponsoring continuing medical education programs that do not meet Accreditation Council for Continuing Medical Education guidelines.  The PhRMA and AdvaMed Codes do not.  It prohibits any company employee from providing meals outside of a hospital or office setting.  The PhRMA Code only restricts sales representatives and their immediate supervisors to a hospital or office setting.  The AdvaMed Code does not impose any restrictions on the location of meals.

Furthermore, starting on July 1, 2010, the law requires companies to annually certify their compliance with commonwealth regulations and, among other things, to disclose any gifts or payments valued over $50 and given to anyone who can prescribe, purchase, or dispense drugs or devices.  Effectively, it’s a ban on all gifts to prescribers (and in so doing goes a step further than the PhRMA and AdvaMed Codes which make an exception for educational gifts).  Companies must also submit $2,000, payable to the commonwealth’s Department of Public Health, with each annual disclosure report.  Violations can result in penalties up to $5,000 per occurrence.  The first round of disclosures were due 16 days ago and covered activities for the July 1, 2009 to December 31, 2009 period.  Next year companies will be expected to report on their activities for the January 1, 2010 to December 31, 2010 period.  Or will they?

The Massachusetts House recently passed an economic development bill that repeals the disclosure requirement/gift ban (the bill also establishes a sales tax holiday and consolidates commonwealth economic agencies).  The Senate version of the bill does not include the repeal.  It’s a wait-and-see as to how the two chambers will work out the final bill through their conference committee.

Opponents of the gift ban claim it has adversely affected pharmaceutical clinical research as well as the restaurant and convention industries.  Almost two years ago, PhRMA Senior Vice President Ken Johnson expressed his disappointment over the law, saying:

[it is] very likely damaging for medical partnerships, clinical research and patients in Massachusetts….

Public disclosure of a pharmaceutical company’s arrangements with principal investigators of its clinical trials also could reveal sensitive, proprietary business information to a company’s competitors.  This could erode the independent decision-making of companies trying to bring science from research facilities to patient care setting….

The disclosure requirements subjects all of the physicians, academic institutions and hospitals involved in such trials to publicity in a form that may be difficult to understand and likely will generate unwanted and unnecessary public scrutiny.  This could make Massachusetts an unattractive place for academic scientists to live and work — and for pharmaceutical research companies to do business.  Such a policy clearly is not in the best interest of public health — and it flies in the face of the ongoing efforts to further cultivate the life sciences industry within Massachusetts.

Indeed, the Wall Street Journal and Boston Herald report that some medical groups either have threatened to take their annual meetings elsewhere or have actually done so in protest of the law.

Supporters of the law say otherwise.  Health Care For All, a Massachusetts-based advocacy organization, views banning gifts as a step in the right direction.  According to the organization:

[t]he pharmaceutical industry gives gifts to promote their drugs and make a higher profit.  Under the guise of promoting welfare for all, the industry maximizes their own revenue….

Experts living within the guidelines of the gift ban find that it is not interfering with their work or professional relationships according to Dr. David Coleman, Boston University School of Medicine.

‘The Massachusetts Gift Ban legislation is an important step in the process of reducing both biases in therapeutic decision-making and healthcare costs.  The Ban has not adversely impacted the important relationships of our physician-faculty with the pharmaceutical and device industries….’

Health Care For All also maintains there is no connection between the decrease in restaurant revenues and the law as:

[t]he Massachusetts Prescription Reform Coalition has researched the decrease in restaurant profits, and found sales are down across the country — including in states without a gift ban.   According to the trade paper, Restaurants & Institutions, sales at the nation’s top 100 independent restaurants were down 10% in 2009….

Massachusetts Senators, who recognize the value of the gift ban legislation, also see that these lost profits mirror similar recession-caused losses in the restaurant industry across the country.

Georgia Maheras, Private Market Policy Manager at the Massachusetts Prescription Reform Coalition, considers the current House bill to be a “significant step backward” in the fight to curb medical costs.

Massachusetts is not alone in attempting to reform pharmaceutical and medical device marketing practices.  Neighboring Vermont has a similar, and in fact more stringent, law which even allows the Attorney General’s office to track free samples given to physicians (though a reporter for the Times Argus, a Vermont newspaper, worries how a repeal in Massachusetts might have a ripple effect).  California, the District of Columbia, Maine, Minnesota, Nevada, and West Virginia also have some form of a marketing code.  The federal government’s Patient Protection & Affordable Care Act includes the Physician Payment Sunshine Provision (”Provision”) requiring disclosure of payments made to physicians and teaching hospitals by manufacturers of products covered under Medicaid, Medicare, and SCHIP (click here to read a summary).

So who has it right?  It would seem as though PhRMA and AdvaMed opened the door for state and federal government to codify modified versions of these industry codes.  From a compliance perspective, it must be quite inefficient — and headache inducing — to wade through state marketing disclosure laws that lack uniformity.  Starting January 1, 2012, the Provision will preempt state disclosure laws except for where the state requires additional information.  Maybe this will help, maybe it will add to the headache, or maybe this particular episode will no longer matter.   For now, though, from a patient perspective, a repeal of the Massachusetts disclosure requirement/gift ban, or that of any other state, would feel more like a gift to the industry and prescribers than a service to the “best interest of public health.”

The Center for Health & Pharmacy Law & Policy here at Seton Hall Law has issued two white papers addressing these issues: Conflicts of Interest in Clinical Trial Recruitment & Enrollment: A Call for Increased Oversight,” in which the Center proposes legal and policy changes to address conflicts of interest in the relationships between industry and doctors that can create unwarranted risks to trial participants and to the scientific integrity of research; and Drug and Device Promotion: Charting a Course for Policy Reform,” in which the Center proposes legal and policy changes to address conflicts of interest in the relationship of medicine and industry– including the recommendation “that industry funding for continuing medical education should be phased out, and replaced by an educational process driven by physicians.”

The Center has also recommended “the adoption of federal legislation to ban the use of gifts, meals, and other perks to promote drugs and devices. The states have taken the lead to date–Massachusetts, California, Minnesota, and the District of Columbia have passed laws to limit or ban gifts and meals that are now routine in marketing practices. Concluding that industry self-regulation is not sufficient, the Center calls for national legislation to create uniform practices by industry and physicians. As urged by Professor Boozang, ‘the benefits of drugs and devices should drive promotion and physicians’ decision to prescribe, not a marketing model that depends on gifts and meals.’”

Obviously, the adoption of additional federal standards in this regard will lessen the ability of industry to pit one state against another and make compliance easier. The Physician Payment Sunshine Provision is a step in that direction, the Massachusetts development bill is a step back.

Prescription Drug Abuse Up– Dramatically

I wrote the other day that I was “generally suspicious of the pharmaceutical zeitgeist. And terribly so as it concerns myself.” The following, I suppose, is that zeitgeist’s underbelly. Reuters reports:

U.S. officials reported a 400 percent increase over 10 years in the proportion of Americans treated for prescription painkiller abuse and said on Thursday the problem cut across age groups, geography and income.

The dramatic jump was higher than treatment admission rates for methamphetamine abuse, which doubled, and marijuana, which increased by almost half, according to figures from the Substance Abuse and Mental Health Services Administration.

They said 9.8 percent of hospital admissions for substance abuse in 2008 involved painkillers, up from 2.2 percent in 1998. The percentage of people admitted to treatment for alcohol dropped by 5 percent and for cocaine dropped by 16 percent over the same period.

The report, which is brief and chock full of interesting charts and graphs, can be found here.

Are GPO’s Suppressing Safer Devices?

S. Prakash Sethi has called group purchasing organizations (GPO’s) an “undisclosed scandal in the U.S. health care industry.” Mariah Blake’s article in the Washington Monthly on GPO’s is a sobering “must-read” for those concerned about the future of health care in the US. She writes about the entrepreneur Thomas Shaw, who’s invented a syringe that drastically reduces the risk of bloodstream infections for patients and healthcare workers. (According to Barry Lynn, who’s also written on the issue, “each year about 6,000 medical workers come down with HIV or infectious hepatitis from such accidents, and dozens end up dead.”) Shaw’s brilliant innovation “added only a few pennies to the cost of production,” but it’s rarely used today. Blake traces the non-diffusion of this innovation to a complex set of deregulatory decisions relating to GPO’s.

GPO’s are supposed to use purchasing clout on behalf of buyers (like hospitals) to drive down prices from sellers. But it appears that these intermediaries, like large Wall Street firms, are often more interested in fees and payments from the sell-side than they are in helping the buy-side. As one analyst testified before the DOJ and FTC, “the compensation of most GPO management is almost always based on . . . fee income [from suppliers] rather than on the real savings to hospital members.”

Shaw’s bad luck was to enter the market shortly after a massive GPO, Premier, struck a multiyear deal with supplier Becton Dickinson. As Blake notes, “Premier signed a $1.8 billion, seven-and-a-half-year deal with Becton Dickinson [whereby its 1700 member hospitals] had to buy 90 percent of their syringes and blood collection tubes from” Becton Dickinson, which also “landed similar deals with all but one major GPO.” Lynn says that “many hospital buying agents won’t even dare to talk to Shaw for fear of upsetting their more powerful suppliers.”

How did the GPO-Supplier nexus grow so strong? Blake does a terrific job explaining developments that transmogrified many cost-cutting intermediaries into self-serving middlemen:

To keep costs in check, in the 1970s many medical facilities began banding together to form group purchasing organizations, or GPOs. The underlying idea was simple: because suppliers generally give price breaks to customers who buy large quantities, hospitals could get better deals on, say, gauze or gloves, if a group of them came together and bargained for ten cases, rather than each hospital buying a case on its own. . . . By decade’s end, virtually every hospital in America belonged to a GPO.

Then, in 1986 Congress passed a bill exempting GPOs from the anti-kickback provisions embedded in Medicare law. This meant that instead of collecting membership dues, GPOs could collect “fees”—in other industries they might be called kickbacks or bribes—from suppliers in the form of a share of sales revenue. (For example, in exchange for signing a contract with a given gauze maker, a GPO might get a percentage of whatever the company made selling gauze to members.) The idea was to help struggling hospitals by shifting the burden of funding GPOs’ operations to vendors. To prevent abuse, “fees” of more than 3 percent of sales were supposed to be reported to member hospitals and (upon request) the secretary of [HHS].

[This shift] turned the incentives for GPOs upside down. Instead of being tied to the dues paid by members, GPOs’ revenues were now tied to the profits of the suppliers they were supposed to be pressing for lower prices. This created an incentive to cater to the sellers rather than to the buyers. . . . Before long, large suppliers began using “fees”—sometimes very generous ones—along with tiered pricing to secure deals that locked GPO members into buying their products. . . .

This situation only grew thornier in 1996, when the Justice Department and the Federal Trade Commission overhauled antitrust rules and granted the organizations protection from antitrust actions, except under “extraordinary circumstances.” . . . Within a few years, five GPOs controlled purchasing for 90 percent of the nation’s hospitals, which only amplified the clout of big suppliers.

There are a few lessons here. Within the confines of competition law, the message should be clear: Einer Elhauge was right to state in 2003 that “Serious antitrust concerns remain about exclusionary agreements that charge higher prices to GPOs or hospitals that won’t commit to limiting purchases from rivals of dominant manufacturers to a small (often 5-10%) percentage of their purchases.” The broader lesson is that intermediaries in many fields are often tempted to put their own profits ahead of the entities they’re ostensibly serving. In the endless battle for compensation between providers, hospitals, and insurers, there are many profitable opportunities to shift alliances. Meanwhile, entrepreneurs like Thomas Shaw, patients, and thousands of medical workers are enduring unsafe conditions that could easily be remedied.

Pharmaceutical Outsourcing: Trading Quality for Lower Costs?

With the waning economy, outsourcing has never been a more popular route for businesses to take.  Why pay more when you can get a similar product or service for less overseas?  Traditionally, outsourcing has been limited to low-end, back-office type of work. However, in the recent years, more companies have been outsourcing complex services such as medical diagnostics.

So it should be no surprise that India, a country with an abundance of cost effective labor, has emerged as a hot spot for pharmaceutical companies to outsource their drug manufacturing.  The NY Times reports,

India’s drug industry — on track to grow about 13 percent this year, to just over $24 billion — was once notorious for making cheap knockoffs of Western medicines and selling them in developing countries. But India, seasoned in the basics of medicine making, is now starting to take on a more mainstream role in the global drug industry, as a result of recent strengthening of patent law here and cost pressures on name-brand drug makers in the West.

Not limited to just manufacturing, India is projected to further expand into more sophisticated aspects of drug making such as pharmaceutical research and development. Due to its cheap labor, Indian drug companies are able to “discover new drugs at a tenth of the cost” incurred in the United States, according to Ajay G. Piramal, the chairman of Piramal Healthcare.

This pharmaceutical boom in India has been relatively recent.  Initially, pharmaceutical companies were hesitant to outsource their internal operations.  Sujay Shetty, an associate director with PricewaterhouseCooper in Mumbai, described pharma as  “an incredibly arrogant industry” and predicted that “everything in the value chain will move to different parts of the world that are cheaper.”

But, what risks are these pharmaceuticals companies taking?  Outsourcing, in general, can be riddled with quality problems and pharmaceutical outsourcing to India has been no exception.  According to the NY Times,

Recent growth, though, has been shadowed by quality problems. The F.D.A. cited Ranbaxy [India's largest pharmaceutical manufacturer] for manufacturing violations several times in recent years, and in February ordered a review of the company’s global manufacturing operations.

In May, Sanofi-Aventis recalled vaccines made by Shantha Biotechnics that were distributed to the World Health Organization after users complained about white sediment in the vials. In June, after floating matter was found in some plastic IV bags, Pfizer recalled injectible drugs made by Claris Lifesciences and sold in the United States.

Maybe pharmaceutical companies were justified in being cautious, even to the point of arrogance, in deciding whether to outsource in the past.  Drug manufacturing is a complex process that needs proper review practices to prevent errors.

Fortunately, the Food and Drug Administration (FDA) has taken note of India’s growing influence in the drug industry and has been cracking down to prevent substandard and contaminated drugs from entering the United States.  In the past two years, the FDA has opened two new offices in India, one in Delhi and the other in Mumbai.  And just last month, as reported by The Wall Street Journal, the FDA stated that “it will propose stronger regulation for pharmaceutical companies that outsource manufacturing, putting more responsibility on the companies to ensure the purity and safety of the products…”

Whether or not the FDA’s crackdown improves the quality of the outsourced drugs remains to be seen.  But, with lower costs and regulation avoidance said to be the primary motivation behind pharmaceutical outsourcing, it’s uncertain whether the quality problems mentioned by the NY Times will be the last.

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