Massachusetts’ Ban on “Prescribing and Dispensing” Zohydro: The Arguments For and Against Preemption

Cross-Posted at Bill of Health

As Kurt Karst reported at FDA Law Blog, here, drug maker Zogenix has filed a Motion for Temporary Restraining Order and Preliminary Injunction challenging Massachusetts’ decision to “prohibit the prescribing and dispensing” of the company’s extended-release hydrocodone capsule, Zohydro ER. At a hearing on Tuesday, Judge Rya Zobel told the parties that she is likely to decide in the company’s favor. While Zogenix argues that Massachusetts’ action is unconstitutional for a number of reasons, including that it violates the dormant Commerce Clause and the Contracts Clause, Karst predicts that Judge Zobel will grant Zogenix’ motion on preemption grounds.

Zogenix argues in its Memorandum that “[t]he emergency declaration issued by Governor Patrick, and related order by the Commissioner of the Department of Public Health (DPH), purported to ban Zohydro™ ER based on safety concerns that squarely conflict with – and are therefore preempted by – FDA’s determination that Zohydro ER® is safe and effective and may be marketed and sold in the United States.”  Zogenix notes that the reason Massachusetts gave for banning Zohydro—that the drug lacks abuse-deterrence features—was expressly considered by the Food and Drug Administration during the course of the approval process.  FDA concluded that Zohydro’s benefits, in particular the fact that it contains no acetaminophen, outweighed the risks posed by its lack of such features.

Zogenix acknowledges that the Supreme Court’s decision in Wyeth v. Levine stands for the proposition that when the FDA approves the contents of a drug’s label, the agency merely establishes “a ‘floor’ upon which state tort requirements may build.” But, the company argues, “this is not a labeling case; it is a case about the safety and efficacy vel non of a drug already found to be safe and effective.”  If Massachusetts’ ban is upheld, Zogenix concludes, “Congress’s objectives to promote the public health through FDA drug approvals could be directly contravened by a potential flood of state policy disagreements.”

While Massachusetts has not yet filed papers in opposition to Zogenix motion, there are a number of strong counter arguments it could make.  First, while Zogenix emphasizes that the FDA “expressly” considered Zohydro’s lack of abuse-deterrence features, this is not an express preemption case. The federal Food, Drug, and Cosmetic Act does not expressly preempt the Massachusetts ban. Similarly, Zogenix uses the word “conflict” in its Memorandum, but this is not a case in which it would be impossible for the company to comply with both federal and state law. As the United States noted in an amicus brief submitted in the Supreme Court’s most recent FDA preemption case, Mutual Pharmaceutical v. Bartlett,

the FDCA makes FDA approval a prerequisite for, inter alia, “introduc[ing] or deliver[ing] for introduction into interstate commerce” any “new drug.” … That text does not expressly require that an approved drug be made available in any particular State or that the manufacturer be guaranteed the ability to make it so.

Finally, Zogenix argues that it was Congress’ intent that the FDA promote the public health by approving drugs for sale.  One could as easily argue that it was Congress’ intent that the FDA do so without supplanting states’ authority to regulate the practice of medicine and against a backstop of states’ longstanding power to act as necessary to avert a public health emergency. The ban on prescribing and dispensing Zohydro was just one of a number of actions Massachusetts is taking as part of Governor Deval Patrick’s declaration that the “growing opioid addiction epidemic” in the state constitutes a public health emergency.

While Massachusetts can make a strong case against preemption, its case would be even stronger were Zohydro not a newly-approved drug.  In its amicus brief in Bartlett, the United States argues that a state law tort claim founded on an allegation that a drug had a “design defect” would not be preempted if it were based on “significant new evidence” that was not before the FDA when it approved the drug at issue. Even if Judge Zobel strikes down Massachusetts’ ban on Zohydro, then, there may be room for states to act with regard to other drugs under other circumstances.

Monday Morning Recap: The Week (3.31.14-4.6.14) in Drug & Device Law & Policy

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

1. This week the New York Times published the seventh part  of Elisabeth Rosenthal’s gripping series Paying Till It Hurts, this one on the increasingly-costly drugs and devices relied on by Type I diabetics.

2. At The Atlantic, Clara Ritger summarizes “[a] new report from the Centers for Disease Control and Prevention find[ing] that states don’t offer many of the Health and Human Services Department’s recommended [tobacco cessation] treatments, and the services they do cover come with co-pays, limits on the duration of use, and other barriers to access for Medicaid patients.” Ritger explains that “[a]lthough more states increased the number of [tobacco cessation] treatments covered between 2008 and 2014, more states also added barriers to accessing those treatments. That trend can be attributed, in part, to the Affordable Care Act’s requirement that state Medicaid programs cover all FDA-approved tobacco cessation medications by January 2014. Not all states used to offer that benefit, so as some added it, they also added it with restrictions.”

3. The Philadelphia Inquirer ran a story about a campaign by Hooman Noorchashm, a cardiothoracic surgeon, and his wife, Amy Reed, an anesthesiologist, to end the use of electric tissue-cutting morcellators in gynecologic surgery. ”Power morcellation, introduced in 1993, enables tissue removal through tiny abdominal incisions, but in rare cases it can also spread a hidden uterine cancer called leiomyosarcoma. Reed, a mother of six, has become the poster woman for that awful scenario. During a minimally invasive hysterectomy in October at Brigham and Women’s Hospital in Boston, the morcellator hurled uterine tumor fragments that were implanted in her abdominal cavity. She now has stage-four leiomyosarcoma, and the hospital acknowledges the procedure likely worsened her prognosis.”

4. Sachin Jain, Michael Rosenblatt, and Jon Duke published a piece in JAMA about a partnership between the Indiana University School of Medicine’s Regenstrief Institute and Merck to conduct research on electronic clinical data from the Indiana Network for Patient Care (INPC), a health information exchange. The authors write: “Neither industry nor academia can navigate this terrain alone—nor should they. Working together, governments, health plans, academic delivery systems, electronic medical record vendors, and private sector companies have the potential to analyze data to improve care and enhance the sophistication of this research.” That said, “[r]igorous controls on how the data are used and by whom, careful and considered alignment of interests, and focused investments in long-term capability-building are important starting points for this new and expanding frontier of collaboration.”

5. Finally, at the FCPA Professor Mike Koehler discusses the Foreign Corrupt Practices Act in light of the Supreme Court’s recent campaign finance decision, McCutcheon v. FEC.  He writes: “In the end, the double standard between the meaning of corruption as it relates to ‘foreign officials’ vs. U.S. ‘officials’ matters as it undermines the legitimacy and moral authority on which the U.S. government acts.”

Monday Morning Recap: The Week (3.24.14-3.30.14) in Drug & Device Law & Policy

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

1. This week the Supreme Court held oral argument in two companion cases, Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius, challenging the Affordable Care Act’s mandate that insurance plans include coverage for contraceptive drugs and devices. SCOTUSblog provided two recaps of the oral argument, here and here, and rounded-up commentary all week long, here, here, and here.  The Conglomerate hosted a symposium on the cases, which can be accessed here, and Margaux Hall discussed it in a post at Bill of Health and Slate, here.  Hall’s post calls attention to the fact that these cases have arisen because of the “virtually unfettered freedom” employers have to set employees’ health coverage, a theme John Jacobi addressed here at Health Reform Watch.

2. The controversy over the painkiller Zohydro, which we previously referenced here, heated up last week when Governor Deval Patrick of Massachusetts declared a public health emergency and banned the drug’s sale, “until determined that adequate measures are in place to safeguard against the potential for diversion, overdose and misuse.”

3. On March 21st, the Food and Drug Administration issued a proposed rule making changes to the ways that medical devices are classified.  Last week, Allyson Mullen provided a helpful summary at FDA Law Blog, here, and Elizabeth Bierman, Phoebe Mounts, and Michele Buenafe of Morgan Lewis discussed the proposal here.

4. The Employee Benefit Research Institute (EBRI) reported the results of a study it conducted on the effect of a high-deductible health plan with a health savings account on the generic drug dispensing rate (GDR).  GDR, which equals the number of generic prescriptions filled divided by the total number of prescriptions filled, is “a metric routinely used by pharmacy benefit managers (PBMs) to assess plan design effectiveness.”  The EBRI’s study found that while the plan increased the GDR, it only did so because it depressed overall medication utilization.  The study’s authors, Paul Fronstin and Christopher Roebuck, write that “plan designs that raise patient cost-sharing for prescription drugs would seem to be counter-productive, particularly in light of the results presented in this analysis. Instead, value-based insurance designs (VBID) that reduce or eliminate prescription-drug copays in order to bolster adherence may be a more effective and efficient strategy[.]“

5. Finally, on Monday of last week, the New York Times published a fascinating interview with Ricardo E. Dolmetsch, a biochemist who ”has pioneered a major shift in autism research, largely putting aside behavioral questions to focus on cell biology and biochemistry.” Dolmetsch did most of his work at Stanford University but has recently ”taken a leave to join Novartis, where his mission is to organize an international team to develop autism therapies.”  He explains: ““Pharmaceutical companies have financial and organizational resources permitting you to do things you might not be able to do as an academic. I really want to find a drug.”

Consent to Arbitration is Not a Health Care Decision: South Carolina Supreme Court Invalidates Nursing Home Arbitration Agreement Executed by Health Care Surrogate

Nursing homes commonly include arbitration agreements in their admissions materials. These agreements require residents to bring any disputes against the facility to a professional arbitrator, as opposed to a court. Many advocates maintain that arbitration disadvantages nursing home residents, particularly in malpractice cases, and that their use in the admissions process takes advantage of a vulnerable population. Nonetheless, efforts to challenge such agreements have failed in light of the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, which held that the federal Arbitration Act (FAA) preempts state laws that “prohibit[] outright the arbitration of a particular type of claim.” Following Concepcion, the Supreme Court unanimously overturned a decision by the West Virginia Supreme Court that had found that nursing home arbitration agreements are inherently unconscionable, concluding that “a categorical rule prohibiting arbitration of a particular type of claim … is contrary to the terms and coverage of the FAA.”

Yet, as demonstrated by the South Carolina Supreme Court’s recent decision in Coleman v. Mariner Health Care, Inc., there is still one situation in which nursing home arbitration agreements are open to challenge: when the agreements are signed by a third party appointed to make health care decisions for the patient by operation of law.

Coleman involved a wrongful death suit brought by the surviving sister of a nursing home resident who had been admitted to the facility after already having lost decision-making capacity. The resident’s sister – the plaintiff in the wrongful death lawsuit – signed the admissions forms based on the authority granted to her under South Carolina’s Adult Health Care Consent Act. One of the forms the sister signed was an arbitration agreement.

Denying the nursing home’s motion to compel arbitration, the court concluded that the arbitration agreement was not valid because it exceeded the scope of the sister’s authority under the Adult Health Care Consent Act. According to the Court, the statute specifically limited surrogates’ authority to making health care decisions and associated financial arrangements. Because an agreement to arbitrate was not a health care or related financial decision, it exceeded the scope of the sister’s authority.

The dissent argued that the majority’s decision conflicted with Concepcion because it had the effect of treating a specific type of arbitration agreement – i.e., one entered into by a surrogate decision-maker – as inherently unenforceable. In response, the majority asserted that it was simply recognizing the legislature’s intent to limit the scope of surrogates’ decision-making authority to narrowly defined areas. It other words, the rationale for the majority’s decision was not that arbitration agreements entered into by surrogates are unenforceable because they are specifically disfavored; instead, it was that surrogates may not enter into any agreements that do not directly deal with “health care decisions” or the associated financial costs.

Of course, the majority’s narrow interpretation of the Adult Health Care Consent Act is not the only possible way to read the statute. If the surrogate has the authority to consent to an individual’s admission to a facility, it does not seem like much of a stretch to conclude that this authority implicitly includes all decisions reasonably related to the admission – including those related to how any subsequent disputes with the facility will be resolved. It is true that, in this case, the arbitration agreement was a “separate” document that “concerned neither health care nor payment,” but it could just as easily have been included as a term in the underlying contract for admission. It seems hyper-technical to say that the surrogate’s authority to consent to arbitration depends on whether the agreement is contained in the admissions agreement itself as opposed to a stand-alone document.

Yet, even if the court could have interpreted the scope of the surrogate’s authority more broadly, its decision remains consistent with Concepcion because it does not amount to “a categorical rule prohibiting arbitration of a particular type of claim.” Instead, the court was simply applying the general legal rule that arbitration agreements, like any agreements, must be entered into by an individual with the legal capacity to contract. At least in South Carolina, this means that nursing homes can no longer rely on arbitration agreements for residents who are admitted based on surrogate consent.

Seton Hall Law Awarded Robert Wood Johnson Foundation Grant to Assess ACA Implementation in New Jersey

Yesterday, Seton Hall Law announced that Professor (and Health Reform Watch blogger) John Jacobi has begun work on a two-year Robert Wood Johnson Foundation-funded project that “will use individual advocacy and broad-based information gathering and analysis to call attention to areas in which New Jersey health insurers fall short of the ACA standards and to develop recommendations to bring the plans and services into compliance.”  An excerpt from the press release follows:

“The Sentinel Project is designed to create a ‘feedback loop’ between healthcare providers and patients, on the one hand, and insurance plans, government regulators, and the public, on the other,” stated Professor John V. Jacobi, Dorothea Dix Chair of Health Law & Policy and faculty director of the Seton Hall Law Center for Health & Pharmaceutical Law & Policy, who serves as the Project leader.

…

To date, much of the media focus surrounding the ACA has been on issues and challenges related to enrolling people in health insurance plans. “The ACA’s benefits are achieved not upon enrollment, but upon the connection of enrolled consumers with necessary health benefits,” Professor Jacobi said. He concluded, “It would be a Pyrrhic victory to enroll millions of consumers and fail to connect them to quality care.”

The full press release is here.  New Jersey consumers who believe that they may have been denied coverage by their individual or small group plan can contact the Sentinel Project by email at sentinelproject@appleseednetwork.org, or by leaving a message at 973-991-1190.

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