Sterilization Matters

When patients undergo surgical or other medical procedures, they hope to receive optimal care provided by experienced physicians. They are rarely concerned about proper sterilization of surgical instruments and other medical equipment as it is likely assumed that the health care facility has applied this standard precaution. Unfortunately, however, not every medical center is adequately sterilizing its equipment, yet this is a crucial element of successful medical care.

According to a report by The Center for Public Integrity, a patient who underwent a routine rotator cuff repair surgery at a Texas hospital in 2009 was readmitted weeks later due to an infection from the deadly bacteria known as P. aeruginosa.[1] An investigation conducted by the Centers for Disease Control and Prevention (CDC) and the hospital revealed that the arthroscopic shaver utilized for the surgery contained the deadly bacteria even after the sterilization process. [2] A more recent incident occurred in March of this year where a routine inspection at an oral surgeon’s office in Tulsa, Oklahoma exposed sterilization issues, including cross-contamination problems.[3] The Department of Health stated, “more than 60 former patients [of the oral surgeon] tested positive for hepatitis and HIV.”[4]

Medical device manufacturers originally sold “single-use” devices because of the demand for disposable equipment.[5] In the late 1970s, hospitals began reusing medical devices intended for or labeled as “single-use” as a cost control measure.[6] The FDA explains that “single-use” devices are to be used once or on one patient during a single procedure whereas reusable medical devices are those that can be reused to treat several patients.[7]

Contaminated reusable medical devises can lead to infections but a method known as “reprocessing” involves meticulous sterilization intended to prevent infections.[8] Reprocessing generally includes the following steps: 1) preliminary decontamination and cleaning in the area of use such as the operating room to inhibit drying of blood and other contaminants on the devises; 2) transfer of the devise to the reprocessing area where careful cleaning occurs and 3) final disinfection or sterilization to allow the devise to be reused.[9] The FDA further explains that problems arise for reprocessing when sterilization instructions by the manufacturer are “unclear, incomplete, difficult to obtain from the manufacturer, or impractical for the clinical environment.” [10] Manufacturer designs that render proper cleaning difficult in addition to scantily paid sterilization technicians are other sources of concern.[11]

There are some diseases that preclude the reuse of medical devices, specifically Creutzfeldt-Jakob Disease (CJD).[12] CJD is a neurodegenerative disorder that causes rapidly advancing dementia, deteriorating memory, drastic changes in behavior, and coordination and visual issues.[13] It is 100% fatal; patients with CJD usually die within one year of disease symptom onset.[14] CJD results when normal brain proteins are transformed into abnormal and infectious forms known as prions.[15] Infected pituitary hormones, dura mater transplants, cornea grafts, and neurosurgical instruments are some examples of materials that can transmit the disease to patients.[16] Most disinfectant and sterilization procedures do not eliminate the infected prions.[17] Importantly, although fatality normally occurs within one year of symptom onset, the disease has an incubation period of up to 50 years, it is not readily detectable until symptoms occur, and is seemingly capable of transmission to others during the incubation period.[18]

The World Health Organization (WHO) released infection control guidelines for health facilities handling patients with CJD.[19] Essentially, any reusable surgical instruments that come into contact with “high infectivity areas” including the brain, spinal cord, and eye should be disposed of and incinerated.[20] But the difficulty, of course, is knowing who is infected with this infectious fatal disease with the disturbingly long incubation period.                                                                                                              Ensuring that hospitals follow proper sterilization is integral, but technician certification is also an important aspect of the overall sterilization scheme.[21] As the director of sterilization at a healthcare facility in New York so accurately stated, “The people who do your nails, they have to take an infection control course before they can apply for a license …Yet the people who deal with lifesaving equipment, they are required to have zero education.”[22] Currently, New Jersey is the only state that makes certification mandatory for sterilization technicians.[23]

As the provision of health care becomes more transparent, patients not only have the ability to choose where to obtain services based on price and reputation of a facility, but they are also, presumably, able to learn about various quality measures. By filtering a search based on location or hospital name, the Centers for Medicare & Medicaid Services’ (CMS) Hospital Compare Website enables patients to view quality measures such as readmission, complication, and mortality rates.[24] There, patients are able to examine the facility’s rates in comparison to the national average.[25] Therefore, improper sterilization leading to increased infection rates will likely be exposed to the public, however attenuated, which could cause patients to seek care elsewhere—at least in time, among consumers able to bring choice to the equation (non-emergency, non-insurance dictated) and who have the ability to comprehend the data. But seemingly, more direct measures can be taken to ensure patient safety.

Recommended Reading: New Legal Scholarship from Ryan Abbott and Jennifer Herbst on Pharmacovigilance Topics

In his article Big Data and Pharmacovigilance: Using Health Information Exchanges to Revolutionize Drug Safety, which is forthcoming in the Iowa Law Review, Ryan Abbott argues that third parties, including academics, insurance companies, and rival drug companies, should be incentivized via an “administrative bounty proceeding” to analyze the large and rich datasets that will be generated by health information exchanges.  Should a third party’s original statistical analysis reveal safety or efficacy concerns about a drug, Abbott suggests, it could submit the results to the Food and Drug Administration and be paid a taxpayer-funded bounty, the amount of which would be based on the value of the new information to the government in terms of health care dollars saved.  If a drug’s manufacturer knew or should have known about the concerns brought to light by the third party, Abbott proposes that the manufacturer fund the bounty, the amount of which would be based on the drug’s sales; depending on its degree of culpability, a manufacturer could even be liable to both the third party and the government for damages.

Abbott believes that the bounty system he proposes would level the pharmacovigilance playing field in a way that would redound to the benefit of consumers.  In his words: “The public deserves an advocate as equally committed to challenging the safety and efficacy of approved drugs as product sponsors are to maintaining these drugs on the market.”  Writing about Abbott’s proposal at the Bill of Health blog, Dov Fox distills it down to the following provocative question: Are we “better off evaluating medicines under an inquisitorial system or an adversarial system”?

I also recommend Jennifer Herbst’s article How Medicare Part D, Medicaid, Electronic Prescribing and ICD-10 Could Improve Public Health (but Only if CMS Lets Them), which is forthcoming in Health Matrix: Journal of Law-Medicine.  While the title might seem daunting, the article itself brings clarity to a murky, highly-technical area of the law with enormous significance for public policy.  As Herbst explains, although both Medicare Part D and Medicaid limit reimbursement to drugs prescribed for “medically accepted indications,” this limitation is not enforced, at least not at the time of payment.  And, while the government’s attempts to enforce it retroactively have led to headline-making settlements with pharmaceutical companies, they have not resulted in a significant dent in the rate of unscientifically-supported prescribing.

Herbst recommends that the government take advantage of the inroads made by electronic prescribing and require that patient diagnosis codes be made a condition of payment for outpatient prescription drugs.  Linking drugs to diagnoses in this way would allow pharmacists to do a more thorough safety review of the prescriptions they fill and it would give the government a powerful pharmacovigilance tool.  Of course, it would also allow the government to decline to provide reimbursement for drugs prescribed for indications that are not “medically accepted.”  Herbst argues that this would be a mistake because it could lead to widespread miscoding – there’s a disconnect between what the government deems medically accepted and what providers consider sound medical practice – which would undermine the value of the data being collected.  I wonder, however, whether it would be politically feasible for the Centers for Medicare & Medicaid Services “to continue its current policy of paying for all outpatient prescriptions not subject to prior authorization (contrary to the letter of the Medicare Part D and Medicaid statutes)” in the face of the data Herbst’s proposal would generate.

Online Health Law Graduate Certificate Programs

Adventures in Health Care Cost Cutting

Expect to keep hearing more talk about health care cost cutting, despite charts like this. It’s an idee fixe of the Wall Street/Washington corridor, and will only be implemented more vigorously over time.  So perhaps we should take stock of a few cost cutting initiatives. Medicare Part D, it seems, is coming way under its projected budget.  But maybe that’s because of ”a sharp fall in the number of breakthrough drugs,” a sign that innovation in pharma is stalling.  Cost cutting triumph, or logical outgrowth of a system that fails to reward actual contributions to health?

There’s also been a lot of pressure on skilled nursing facilities to hold the line on costs.  What are we getting in return? Here’s a summary from OIG:

Skilled nursing facilities (SNF) are required to develop a care plan for each beneficiary and provide services in accordance with the care plan, as well as to plan for each beneficiary’s discharge. . . For 37 percent of stays, SNFs did not develop care plans that met requirements or did not provide services in accordance with care plans. For 31 percent of stays, SNFs did not meet discharge planning requirements. . . . [R]eviewers found examples of poor quality care related to wound care, medication management, and therapy. These findings raise concerns about what Medicare is paying for. They also demonstrate that SNF oversight needs to be strengthened to ensure that SNFs perform appropriate care planning and discharge planning.

I’m sure the health care cost cutters will use this evidence to demand the SNFs be paid even less–rather than, say, investing real funding in proper training and pay in this vital service sector.  At some point, though, costs get cut so much that Medicaid will become little more than a meaningless plastic card, and “SNF” will stand for “Scarce Nursing Forever.”

This post first appeared on HealthLawProf Blog.

FDA Warning Letters to Cosmetic Companies Leading to Consumer Fraud Litigation

This past September, the Food and Drug Administration (FDA) issued a Warning Letter against L’Oreal, the world’s largest cosmetics company.  The FDA cited claims gathered online from a subsidiary of L’Oreal, Lancôme, about its expensive Genifique, Absolue, and Renergie anti-aging creams and serums. Claims such as “[U]nique R.A.R.E. oligopeptide helps to re-bundle collagen” and “[B]oosts the activity of genes and stimulates the production of youth proteins” were deemed “intended to affect the structure or any function of the body,” thus rendering the claims to be drug-like under section 201(g)(1)(c) of the FDCA. Lancôme could either submit their cosmetics to the rigorous New Drug Approval process, in which safety and efficacy would be tested, or discontinue making such claims.  Lancôme chose the latter.

Although the FDA possesses the authority to regulate cosmetics companies, traditionally the agency has not enforced provisions of the FDCA against big name cosmetics corporations.  However, Lancôme has not been the only major cosmetics company to recently receive a Warning Letter for making drug-like claims. In October of 2012, the FDA sent a Warning Letter to Avon citing claims from their Anew product line.  The drug-like claims included, “The at-home answer to wrinkle filling injections.  Start rebuilding collagen in just 48 hours;” “[W]rinkles are a result of micro-injuries to the skin, so AVON studied how skin heals… ANEW’s Activinol Technology helps reactivate skin’s repair process to recreate fresh skin & help dramatically reverse visible wrinkles;” and, “In just 3 days, see tighter, firmer, more lifted skin.” As with Lancôme’s products, the FDA concluded that these products “are not generally recognized among qualified experts as safe and effective for the above referenced uses.”

The  ultimate impact of an FDA Warning Letter in terms of litigation remains unclear, but the legal industry has taken notice.  Attorneys at Venable LLP point out in their analysis of the FDA’s Warning Letter to Lancôme, “[F]ederal action has been shown to encourage consumer class action lawsuits.” Attorneys at Shook Hardy & Bacon LLP note, “Plaintiffs will allege that consumers were defrauded into purchasing the product because of illegal marketing claims and trumpet those same FDA warning letters as proof that the marketing claims were deceptive under state consumer fraud statutes.”

Those predictions turned out to be true.  Both Avon and L’Oreal and subsidiary Lancôme have been named defendants in multiple proposed class action suits for defrauding consumers. For cases naming L’Oreal and Lancôme as defendants, see Nino v. L’Oreal USA Inc., Case No. 1:12-cv-12362 (S.D. Fl.), Schwartz v. L’Oreal USA, Inc., Case No. 2:12-cv-5557 (N.D. Cal.), and Kallen v. L’Oreal USA, Inc., Case No. 12-9479 (C.D. Cal.).  For cases naming Avon as defendants, see Trujillo v. Avon Products, Inc., Case No. 12-9084, (C.D. Cal), Quinta v. Avon Products Inc., Case No. CV12-09629 (C.D. Cal.).

Attorneys at Morelli Ratner PC, who took part in filing Nino v. L’Oreal USA, Inc., write on their website: “The complaint alleges that the Defendants have advertised their “anti-aging” creams as having been scientifically tested, making claims and promising results to consumers that the Defendants know to be unfounded. Earlier this month, the Food and Drug Administration sent Lancôme a formal warning letter about the misleading advertising. The complaint alleges that L’Oreal has made millions of dollars by knowlingly  [sic] and willfully misleading consumers.” The complaint addresses that the lawsuit seeks restitution and disgorgement of profits, along with “benefits and other compensation obtained by Defendants from their wrongful conduct.”

All of the complaints for the proposed class actions cite to the Warning Letters issued against the companies.  The class actions against L’Oreal and Lancôme are to be centralized in the New Jersey District Court in the Newark Office with presiding Judge William J. Martini. In re L’Oreal Wrinkle Cream Mktg. & Sales Practices Litig., 2012 U.S. Dist. LEXIS 177694 (J.P.M.L. Dec. 12, 2012). With the potential rise in Warning Letters used in consumer fraud litigation against cosmetics companies, cosmetic companies, as Shook Hardy & Bacon LLP write, can no longer afford “to take a sit-back-and-wait approach.” It would seem that big name cosmetic companies have been put on notice: complying with FDA cosmetics regulations is now necessary for those who wish to maintain good public standing and to avoid costly litigation.

Center for Health & Pharmaceutical Law & Policy Introduces First Edition of Pharmaceutical and Medical Device Compliance Manual

The Seton Hall Law Center for Health & Pharmaceutical Law & Policy, American Health Lawyers Association (AHLA) and the Food and Drug Law Institute (FDLI) have released the first edition of the Pharmaceutical and Medical Device Compliance Manual. The Manual is a guide to deciphering the intricate web of federal and state laws and the practices of regulatory and enforcement authorities within the healthcare and life sciences arena, while also providing the practical skills needed to implement an effective compliance program.

Designed to aid health law attorneys, compliance professionals and others in the pharmaceutical and medical device field, the Manual explains the law in layman’s terms in addition to providing advice and guidelines on creating, managing, monitoring and auditing an effective compliance program, in essence, marrying legal expectations with the operational demands of business units.

The book was co-edited by Seton Hall Law Associate Dean Kathleen M. Boozang, J.D., LL.M., who founded the school’s Health Law program in 1990, ranked among the top 10 by U.S. News & World Report for the past 16 years; and by Simone Handler-Hutchinson, J.D. ’93, Executive Director of the Center for Health & Pharmaceutical Law & Policy.

Dean Boozang notes: “Over the last two decades the trend in government oversight has resulted in a regulatory environment of increased accountability among organizations across a number of sectors, with the health and life sciences industries being the subject of particular attention – a trend that shows no sign of waning. We produced this manual for compliance officers, health and life sciences lawyers and their clients to enable them to build a framework for creating and sustaining an effective compliance function.”

As co-editor, Ms. Handler-Hutchinson said, “Each chapter was written by a leading regulatory official, practicing attorney, or healthcare consultant who has either shaped the policies as an official and/or counsel in the nation’s regulatory agencies, served as counsel to or built compliance functions within life science corporations. They offer first hand, in-depth compliance insight and actionable advice.”

The Pharmaceutical and Medical Device Compliance Manual is available as a softbound book and a variety of eBook formats; it may be ordered by visiting http://law.shu.edu/compliancemanual.

The Seton Hall Law Center for Health & Pharmaceutical Law & Policy advances scholarship and recommendations for policy on the varied and complex issues that emerge within pharmaceutical and health law. Additionally, the Center is a leader in providing compliance training on the wide-ranging state, national and international mandates that apply to the safety, promotion and sale of drugs and devices. 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 experiential learning. Founded in 1951, Seton Hall Law School is located in Newark and offers both day and evening degree programs. For more information visit law.shu.edu.

The American Health Lawyers Association (AHLA) is the nation’s largest nonpartisan educational organization devoted to legal issues in the healthcare field. The Association’s 11,000 members practice in a variety of settings in the healthcare community. For information about our resources, publications, and educational offerings, visit www.healthlawyers.org.

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

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

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

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

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

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

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

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

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

Childhood Cancer: Pushing and Pulling Against a Powerful Foe

Since September is National Childhood Cancer Awareness Month –a calendar of events can be found here– a review of relevant recent and pending federal legislation seemed appropriate.  The Food and Drug Administration Safety and Innovation Act (FDASIA), which the President signed into law on July 9, 2012, included a number of provisions that it is hoped will speed development of drugs to treat childhood cancers and other rare diseases.  As Peter L. Saltonstall, who heads up the National Organization for Rare Disorders (NORD), explains here, the central purpose of the FDASIA was to reauthorize the Prescription Drug User Fee Act, but several separately-introduced bills “of particular importance to rare disease patients and supported by NORD” were incorporated into it.  These included the Creating Hope Act, which was powerfully advocated for by Kids v Cancer and the bi-partisan Congressional Childhood Cancer Caucus.

The Creating Hope Act expands the FDA’s priority review voucher (PRV) program– which was passed to incentivize the development of treatments for neglected tropical diseases, malaria, and tuberculosis– to cover rare pediatric diseases, including childhood cancers.  Under the program, “[t]he [FDA] shall award a priority review voucher to the sponsor of a rare pediatric disease product application upon approval by the [FDA] of such rare pediatric disease application.”  The fully-transferable voucher can be redeemed for review of–and action on–another new drug application within just six months.  In an influential 2006 article in Health Affairs, David Ridley and colleagues estimated that if a “voucher speeds FDA approval by a year, it could increase the present value of sales of a blockbuster drug by more than $300 million.”

While a voucher worth as much as $300 million would seem to add up to an attractive “pull” mechanism, the PRV program for neglected tropical diseases has, unfortunately, not lived up to expectations.  Only one company, Novartis, has received a PRV, for an anti-malaria drug which was already approved and marketed outside the United States.  Writing at The Incidental Economist earlier this year, Kevin Outterson characterized the PRV program as “unsuccessful” and its extension to rare pediatric diseases as “disappointing.”  More promising, Professor Outterson suggests, are “push” mechanisms like the Innovative Medicines Initiative (IMI) in Europe, described here, which will, among other things, funnel $738 million to antibiotics researchers between now and 2020, with the initial goals of “building and training networks of researchers, facilitating and increasing the exchange of research data, and improving the efficiency of clinical trials on new antibiotics through better laboratory tests and better trial design” and the long-term goal of “speed[ing] up the development of much-needed antimicrobial drugs.”  Notably, the IMI was established with $1.23 billion of European Union funds and an impressive $1.23 billion of “mainly in kind contributions (consisting mostly of research activities)” from the European Federation of Pharmaceutical Industries.

The National Pediatric Research Network Act of 2012, which is currently pending in the House and Senate, bears some similarities to the IMI’s antimicrobial drug development effort.  The Act would appropriate government funds to support the establishment and operation of a network of pediatric research consortia that would conduct “basic, clinical, behavioral, or translational research to meet unmet needs for pediatric research” and “train[] researchers in pediatric research techniques.”  The Act provides that “an appropriate number of such awards” must be awarded to consortia that, among other things, agree to “conduct or coordinate one or more multisite clinical trials of therapies for, or approaches to, the prevention, diagnosis, or treatment of one or more pediatric rare diseases or conditions[.]”

Childhood cancers are not specifically mentioned in the text of the National Pediatric Research Network Act, however, and, should it pass, the Network it establishes is likely to focus on other rare pediatric diseases.  An existing network, the Children’s Oncology Group (COG), which is principally supported by the National Cancer Institute, “unites more than 8,000 experts in childhood cancer at more than 200 leading children’s hospitals, universities, and cancer centers across North America, Australia, New Zealand, and Europe in the fight against childhood cancer.”  COG “has nearly 100 active clinical trials open at any given time … include[ing] front-line treatment for many types of childhood cancers, studies aimed at determining the underlying biology of these diseases, and trials involving new and emerging treatments, supportive care, and survivorship.”  The existence and success of COG — it’s “research has turned children’s cancer from a virtually incurable disease 50 years ago to one with a combined 5-year survival rate of 80% today,” although it has suffered from budget cuts in recent years–likely explains why advocates have turned their attention to pull mechanisms like the Creating Hope Act that build on existing incentives aimed at increasing industry investment in drug research.

Another model for increasing industry involvement is to require it.  This could perhaps be described as a strong pull mechanism.  The Pediatric Research Equity Act (PREA) takes this approach, requiring, with some exceptions, that a sponsor of a new drug application study that drug in children.  FDASIA, as the FDA summarizes here, makes PREA “permanent — no longer subject to reauthorization every five years[,] … requires earlier pediatric study plan submission by drug manufacturers subject to PREA and gives FDA new authority to help ensure PREA requirements are addressed in a more timely fashion.”  PREA, though, has not worked to generate research into pediatric cancer treatments, and the FDASIA reforms will not change that.  In remarks delivered at the 2^nd Annual Childhood Cancer Summit in September 2011, Dr. Peter Adamson, the Chair of the Children’s Oncology Group, explained that an exception to PREA’s requirements “can be granted for most new cancer drugs, as the common cancers observed in adults essentially do not occur in children.”

Of course, industry involvement could increase though profit-driven activity without additional pushes or pulls from government.  Childhood cancers have not, thus far, been an industry focus.  In the past twenty years, the FDA has approved just two drugs, clofarabine and erwinaze, to treat pediatric-specific cancers.  It was not until this past August that the agency approved the first “pediatric-specific dosage form” of a cancer-fighting drug, everolimus.  A story reported in Fortune’s September 3, 2012 issue entitled Rare Diseases Mean Big Profits (an online version is available here), suggests that there may be hope that the pace of development will accelerate.  According to Fortune:

Wall Street skews bullish on Alexion[, a specialty pharmaceutical company that developed and sells the drug Soliris which is used to treat two rare disorders,] and its peers in the ultra-rare-disease market.  With Pfizer and other big pharma companies facing devastating revenue drops as blockbuster drugs like Lipitor go off patent, niche players like Alexion look good because of their monopoly pricing power.

Soliris, Fortune reports, costs “around $400,000 per patient per year.”  There may be, then, cause for hope that in the coming years the private sector will increase its investment in the surpassingly important search for treatments for childhood cancers and other rare pediatric diseases.  I welcome your thoughts.

Electronic CDS Prescriptions Proposed in New Jersey

More than two years ago, the Federal Drug Enforcement Administration (DEA) issued interim final regulations permitting practitioners to issue and pharmacists to fill electronic prescriptions for controlled dangerous substances (“CDS”) (see, e.g., 21 C.F.R. § 1306.08).  Regulations of the New Jersey State Board of Medical Examiners (N.J.A.C. § 13:35-7.4A(g)-(h)) and Board of Pharmacy (N.J.A.C. § 13:39-7.11(h)-(i)) similarly permit electronic CDS prescriptions, subject to certain requirements.  But the State’s CDS regulations do not currently permit electronic CDS prescriptions (N.J.A.C. § 13:45H-7.8).

On August 20, 2012, Eric T. Kanefsky, the Acting Director of New Jersey’s Department of Consumer Affairs (“DCA”), proposed regulations to resolve this regulatory inconsistency.  DCA would add a new rule, N.J.A.C. § 13:45H-7.20, which would permit “[a]n individual practitioner [to] issue, and a pharmacist [to] accept for dispensing, an electronic prescription for a controlled dangerous substance, consistent with the requirements of this chapter and Federal law.”  This proposed rule would define “electronic prescription” as “a prescription that is transmitted by a computer device in a secure manner, including computer-to-computer and computer-to-facsimile transmissions.”  DCA also proposes to amend N.J.A.C. § 13:45H-7.8 to expressly permit an electronic prescription for Schedule II narcotics “[i]f permitted by Federal law, and in accordance with Federal requirements.”

These Federal requirements, set forth in 21 C.F.R. Parts 1300, 1304, 1306, and 1311, include provisions intended to balance the desire to permit the use of modern technology while “maintaining the closed system of controls on controlled substances dispensing” (75 Fed. Reg. 16236).  Thus, if DCA ultimately adopts these rules, New Jersey prescribers and pharmacists seeking to exercise their option to issue or fill electronic prescriptions will need to ensure that they comply with all Federal rules, including, as DCA’s proposed rule reminds, a requirement for a third-party audit by a DEA-approved certification organization to verify that the technology used satisfies DEA security standards (see 21 C.F.R. § 1311.300).

In addition to “eliminating any confusion that may exist with respect to filling electronic prescriptions for controlled dangerous substances,” DCA also believes that “[e]lectronic prescriptions are more efficient and less susceptible to errors.”  With proper controls and checks, electronic prescriptions can make it more difficult for patients to try to fill fraudulent prescriptions by, for example, forging doctor’s signatures on stolen prescription blanks or altering the dosage that the doctor prescribed. Electronic prescriptions also support other health care reform initiatives, including increasing the use of electronic medical records, which can facilitate improved care coordination.

The public may comment on DCA’s proposal until October 19, 2012.  But given the potential advantages of electronic prescriptions and the strong controls required by Federal law to prevent their abuse, I would expect the comment to be light and these regulations to be adopted.

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

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

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

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

Additional information and registration is available here.

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

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

Of Drug and Device and a Lack of Personal Jurisdiction

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

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

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

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

I think that’s going to leave a mark.

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

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

First Circuit Finds Generic Drugmaker Had State Law Duty to Stop Selling Unsafe Drug

Earlier this month, the First Circuit surprised observers when it held, in Bartlett v. Mutual Pharmaceutical, that a state law product liability suit founded on the claim that a generic drug was unreasonably dangerous due to a design defect was not preempted by the Federal Food, Drug, and Cosmetic Act (FDCA).  In coming to its decision, the First Circuit distinguished Pliva v. Mensing, in which the Supreme Court held that the FDCA does preempt a state law product liability suit founded on the claim that a generic drug was unreasonably dangerous due to a label that failed to warn of the drug’s dangers.

Pliva hinged on the fact that the FDCA and its implementing regulations “require that the warning labels of a brand-name drug and its generic copy must always be the same– thus, generic drug manufacturers have an ongoing federal duty of ‘sameness.’”  Because the defendant in Pliva could not fulfill its alleged state law duty to add stronger warnings to its label without violating the federal duty of sameness, the Supreme Court held that the state law product liability suits at issue could not go forward.  As the First Circuit put it in Bartlett, “Congress cannot have wanted the generic to pay damages under state law for a label that the FDA required.”

The defendant in Bartlett argued that, because generic manufacturers cannot alter the composition of a drug, “[Pliva's] policy of encouraging generics by preempting state tort claims should extend to design defect as well as claims based on inadequate warning.”  The First Circuit rejected this argument, finding that

“…although Mutual cannot legally make [the drug at issue] in another composition (nor is it apparent how it could alter a one-molecule drug anyway), it certainly can choose not to make the drug at all; and the FDCA might permit states to tell Mutual it ought not be doing so if risk-benefit analysis weights against the drug, despite what the Supreme Court made of similar arguments in the labeling context.”

James M. Beck, at the defense-oriented blog Drug and Device Law calls this result “startling[,]” pointing out that “before Bartlett the post-[Pliva] precedents had universally rejected arguments that supposed state-law duties (no state high court has ever recognized such a duty) to remove generic drugs from the market altogether could survive preemption.”  Beck argues that

“[a]nybody could always avoid liability by not selling any products at all — but that would make preemption ‘illusory,’ and also totally defeat the purpose of the Hatch-Waxman Amendments to encourage production of generic drugs. Sooner or later, one plaintiff or another will argue that every generic drug ever approved should be removed from the market.”

While plaintiffs may argue that generic drugs have design defects and should be removed, their arguments are unlikely to succeed.  As the First Circuit explains, many state courts refuse to review claims that FDA-approved prescription drugs are defectively designed.  Even where such claims are permitted, manufacturers can defend against them by showing that a drug “was unavoidably unsafe but was highly useful and had an adequate safety warning[.]“  For unknown reasons, the defendant in Bartlett “abandoned that defense on the eve of trial.”

That said, Bartlett highlights a number of important questions.  Should generic manufacturers, as the First Circuit decision suggests, have a duty to perform their own continuous risk-benefit analysis of the drugs that the FDA has approved them to sell?  They may be in the best position to do so, although monitoring is likely to be more complicated the more manufacturers of a single drug there are.  Should they have a duty to stop selling a drug as soon as the risk-benefit balance — in their sole estimation — tips?  Maybe, maybe not.  Drugs are, after all, “highly useful” and there are inevitably winners as well as losers when manufacturing is discontinued.  Such a decision might be better entrusted to the FDA.

Legislation is pending in Congress that would overturn Pliva by giving generic manufacturers the same authority that branded manufacturers have to add warnings to their labels.  Perhaps Congress should also clarify manufacturers’ obligations (or lack thereof) with regard to removing drugs from the market.

Online Graduate Certificate Programs in Pharmaceutical & Medical Device Law and Health & Hospital Law

The next sessions for the Seton Hall Law Online Graduate Certificate Programs will commence in June, 2012. These 8-week non-degree programs are designed for individuals who seek a greater understanding of key aspects of the health care field.

The Pharmaceutical & Medical Device Law & Compliance Program will begin on June 10, addressing the legal, regulatory and ethical issues related to the pharmaceutical and medical device industries. Priority application deadline is May 24.

The Health & Hospital Law Program will commence online on June 24 and offers an exploration of the legal, regulatory and ethical issues regarding health care delivery. Priority application deadline is June 2.

Click here to learn more about the Pharmaceutical & Medical Device Program and to apply; here to learn more about the Health & Hospital Law Program and apply. For further information, please contact Helen Cummings, Assistant Dean for Graduate Programs, at helen.cummings@shu.edu or call 973-642-8380.

Must-Read Articles on Drug Shortages

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

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

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

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

A New Insurance Product: Responsible Corporate Officer Defense Insurance

Unsurprisingly, the market has responded to the new risks corporate officials in the life sciences industry face if their companies commit crimes that threaten the public’s health.  On February 7, 2012 insurance broker Marsh USA and insurer Allied Assurance Co. unveiled a new product, called RCO Corporate Response, “which provides insurance coverage for pharmaceutical, life sciences, and health care corporate officers who may be held liable for their companies’ actions under the Responsible Corporate Officer (RCO) doctrine.”

For those who are rusty, The Responsible Corporate Officer Doctrine allows for the conviction of a high-level corporate official (ambiguity of terminology suggests that directors could be liable as well) whose company has violated the Food, Drug and Cosmetic Act irrespective of the official’s knowledge or involvement in the offense if the individual occupied a position that had a relationship with the unit that violated the statute, should have known about the activity, and had the authority to intervene. In short, the government need not produce evidence that the corporate official participated in or was aware of the illegal conduct. Potential penalties include fines, imprisonment, and debarment from the FDA.  As shall be discussed further, these penalties can lead to exclusion from Federal healthcare programs.

The Doctrine, which was first articulated by the Supreme Court in U.S. v. Dotterweich in 1943, was affirmed in 1975 in U.S. v. Park (and so sometimes referred to as the Park Doctrine).  The Dotterweich Court expounded on the rationale for imposing such a hardship on corporate defendants not actually involved in the illegal conduct: the welfare of unwitting consumers who have no ability to protect themselves against dangerous products and services must prevail over the hardship the Doctrine creates for the corporate executive with the position, responsibility and power to protect the public. The Park Court emphasized that guilt was not based solely on the defendant’s corporate position and explicitly recognized an affirmative defense where the defendant is “powerless to prevent or correct the violation.”

The Doctrine has been rarely used, so fast forward to 2007, when the corporate entity Purdue Frederick pled guilty to a felony of misbranding along with the CEO, Chief Medical Officer and Chief Legal Officer who plead to misdemeanor misbranding pursuant to the Responsible Corporate Officer Doctrine. The convictions arose from Purdue Pharma’s off-label promotion of OxyContin, which the FDA approved in 1995 to manage chronic moderate to severe pain.  From 1995 until 2001, contrary to the package insert and evidence on the ground, a number of Purdue employees promoted OxyContin “as less addictive, less subject to abuse and diversion, and less likely to cause tolerance and withdrawal,” as subject to fewer peak and trough blood level effects, and producing less euphoria than other pain short-action opioids. These representations apparently occurred in some instances at supervisors’ urging, or as a result of sales training.

OxyContin became the number one prescribed Schedule II narcotic in the United States, with 5.8 million prescriptions in 2000. OxyContin revenues reached approximately $3 billion in June 2001, accounting for 80% of Purdue Pharma’s revenue.  Despite its various troubles with OxyContin, Purdue Pharma never saw a dip in its revenues.  Effective August 9, 2010, Purdue discontinued manufacturing and distributing the original formulation, replacing it with an FDA-approved reformulation that is apparently more difficult for abusers to penetrate by cutting, breaking, crushing or dissolving.

OxyContin is an effective and efficient analgesic.  In addition to its legitimate use, however, OxyContin became very popular as a street drug, either taken orally, injected, or crushed, which circumvented the controlled release mechanism and allowed a more rapid and intense heroin-like high.   The legal complications began when Appalachia experienced particular challenges with Oxy diversion, leading to criminal charges by US Attorney for the Western District of Virginia against what appears to have essentially been a shell corporation,  Purdue Frederick, as well as three senior corporate officers.  Notably, Purdue Parma, L.P., which is the corporate entity that actually sells OxyContin as well as the company’s other pain medications, was not charged, thereby enabling it to continue to submit drug applications to the FDA and have its products paid for by the Federal healthcare programs.  Purdue Frederick and its executives agreed to plead guilty and pay fines totaling $634,515,475. Almost immediately, the HHS OIG used its discretionary exclusion power to debar all three executives from participating in Federal healthcare programs for twelve years. The executives have been unsuccessful in every level of administrative and judicial appeal thus far. In retrospect, the Purdue Parma execs may feel relieved after hearing that three Synthes executives received multi-month prison terms in addition to their fines pursuant to the RCO Doctrine for their company’s conduct of unauthorized clinical trials of bone cement in which three patients died.

On the heels of this success, the FDA announced that it was increasing its use of misdemeanor prosecutions against responsible corporate officials.  The agency unveiled its internal agency guidance for determining when to forward a case to the Department of Justice for a “Park Doctrine Prosecution.” The guidance provides that a first time conviction for a violation of the FDCA will be a misdemeanor, with the second resulting in a felony.  Further, some misdemeanor convictions can result in debarment by the FDA.  Most importantly for this discussion, the guidance states that “Knowledge of and actual participation in the violation are not a prerequisite to a misdemeanor prosecution but are factors that may be relevant when deciding whether to recommend charging a misdemeanor violation.”  The guidance enumerates the following additional criteria:

• The individual’s position in the company; relationship to the violation; whether the official had the authority to correct or prevent the violation
• Actual or potential harm to the public
• Obviousness of the violation
• Existence of a pattern of illegal behavior and/or failure to heed prior warnings
• Whether the violation is widespread
• Seriousness of the violation
• Quality of the legal and factual support for the proposed prosecution
• Whether prosecution is a prudent use of agency resources

Within the same week, Lewis Morris, Chief Counsel to the Inspector General of Health & Human Services testified before the House Ways and Means Committee that the OIG would review the case of any individual convicted pursuant to the RCO Doctrine for exclusion from participation in Federal healthcare programs.  This, Mr. Morris testified, will overcome the barriers presented by corporations’ attitude that they are too important to the healthcare system to criminally prosecute and that fines are simply a cost of doing business.   Mr. Morris assured the House Committee that the OIG would use this tool judiciously, employing a presumption in favor of exclusion only “when there is evidence that an executive knew or should have known of the underlying criminal misconduct of the organization.”  The HHS OIG criteria for permissive exclusions from Federal healthcare programs includes a consideration of the entity’s misconduct, including whether it is part of a pattern of conduct and whether it caused harm to beneficiaries; the individual’s role in the sanctioned entity with a focus on degree of managerial control or authority and the position’s relation to the underlying misconduct and whether the misconduct occurred in the individual’s chain of command; and finally, detailed information about the nature of the sanctioned entity including its size, revenues, organization and structure.

With this background, one wonders how the new RCO insurance policy would work in these cases?

The benefits of the policy include coverage for:

• Defense costs incurred in the investigation or defense of any misdemeanor criminal proceeding, administrative proceedings brought pursuant to the RCO doctrine, as well as debarment proceedings.
• Defense cost coverage for potential RCO claims.
• Lost future compensation resulting from exclusion/debarment.
• “Recoupment loss” and/or clawback awards, which is the value of any compensation that must be returned or repaid by an insured person as a result of a judgment, decision, or settlement of an RCO claim.

An obvious omission from this list of benefits is the actual fines that are levied as part of the conviction, which are generally in the hundreds of millions. This is undoubtedly because insuring such risk would be against public policy.  Not mentioned on the web site, but revealed in an interview with the Philadelphia Inquirer is that policy exclusions “might” kick in if evidence exists that the insured engaged in affirmative conduct that resulted in conviction. PharmaLot uncovered the same caveat in its interview with Jack Flug, a managing director at Marsh:  “If the government decided the target knew what was going on and intentionally did something wrong, the coverage would cease. The intent factor is critical.”  Again, maybe dictated by public policy concerns.

But how will this work in practice?  Recall that the FDA’s Park Doctrine guidelines – “Knowledge of and actual participation in the violation are not a prerequisite to a misdemeanor prosecution but are factors that may be relevant when deciding whether to recommend charging a misdemeanor violation.”  DOJ will employ a presumption in favor of exclusion only “when there is evidence that an executive knew or should have known of the underlying criminal misconduct of the organization.”   These criteria raise questions of just how the insurance company is going to ferret out evidence of intent, or whether it will use the language of these two government agencies to create its own presumption that intent exists once a conviction occurs, unless the insured can prove otherwise. Ultimately, there’s a real question of just how many payouts will actually be made under these new RCO policies.

Another question, obviously, is whether prosecutors engaged in settlement negotiations will allow these insurance policies to be invoked.  U.S. v. Stein, the 2008 opinion in which the Second Circuit held that prosecutors’ threat to indict KPMG if it paid its employees’ legal fees violated the employees’ Sixth Amendment rights to assistance of counsel, sheds one possible perspective on the outcome of this question.

Finally, the Marsh’s policy description does not mention covering directors, though one would have to imagine it would be willing to sell such a policy if so requested.  While it has yet to happen, given their aggressive stance, the FDA and OIG would not miss the opportunity, with the right facts, to  pursue the Responsible Officer Doctrine against a board member, perhaps on the Audit Committee.

A final twist: according to the Inquirer, upon learning of the new policy, Secretary of Health & Human Services Kathleen Sebelius replied, “I don’t practice law on a regular basis, but usually you can’t insure yourself as a bank robber for robbing banks. That is intriguing. I’d like a list of their customers because that would give us a pretty good target of people to go after.”

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