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.

Nurses, Prescriptions and Pharma Influence– Under the Radar?

Very interesting point made over at Gary Schwitzer’s Health News Review Blog regarding Industry funding of Continuing Medical Education (CME) for Nurse Practitioners (if you’ve never visited Mr. Schwitzer’s blog you should, he is informative, well written and generally brief).

Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy issued a White Paper last year, “Drug and Device Promotion: Charting a Course for Policy Reform,” which called for a cessation of industry funding of CME. The Center noted:

Reforming Funding for Continuing Medical Education (CME). Most states require physicians to undertake continuing medical education to maintain their medical license. The drug and device industry currently funds over half of the accredited CME courses available to physicians. The Center recommends that industry funding for continuing medical education should be phased out, and replaced by an educational process driven by physicians.

And that

• Ninety-four percent of physicians have some kind of financial relationship with industry, as reported in a major recent national study.

• Commercial support for accredited CME, nearly all of it from drug and device manufacturers, grew from $302 million in 1998 to $1.2 billion in 2006.

But what about nurse practitioners? Schwitzer, who attended the recent Georgetown Conference, “Prescription for Conflict: Should Industry Fund Continuing Medical Education?” noted that:

There are more nurse practitioners (147,000) than there are family physicians (100,000) in the US.

These advance practice nurse professionals can write prescriptions, and it’s estimated that the average nurse practitioner writes more than 6,000 a year.

And about 70-80% of those nurses who regularly attended lunch or dinner “continuing education” events sponsored by drug companies said they were more likely to prescribe the drugs that were highlighted in the lunch.

The presenter was nurse-researcher Elissa Ladd, PhD, RN, Asst. Clinical Professor, Massachusetts General Hospital Institute of Health Professions, who says the possible pharma influence on nurse-prescribers has largely flown “under the radar.”

A little quick and basic math will give us some inkling of just how much flies under that radar. We’ll use the minimum figure in all estimates. So…

147,000 Nurse Practioners each writing 6,000 prescriptions per year = 882,000,000 prescriptions. Yes, that’s 882 million prescriptions per year– conservatively estimated.

“More likely to prescribe the drugs that were highlighted in the lunch” we can estimate at 51%. We wind up with a potentially influenced 449,820,000 prescriptions. Again, conservatively estimated.

So now the only question is just what percentage or how many Nurse Practitioners “regularly attended lunch or dinner ‘continuing education’ events sponsored by drug companies?”

With a total pool of over 882 million prescriptions per year available– at least 450 million of them potentially swayed over lunch–my guess is that Pharma’s answer would be “As many as possible.”

Bad Ads and Doctor Deputies

Earlier this month, the FDA launched a new initiative — the Bad Ad Program — to “help health care providers recognize misleading prescription drug promotion and provide them with an easy way to report this activity to the agency.”  In an article appearing earlier this week in Advertising Age, advertising executives and others decry the program as a “publicity stunt” with the potential to lead to physician “vigilantism” and to become “unbridled and messy.”  Also quoted in the article is PhRMA Senior Vice President Ken Johnson, who states that PhRMA views the Bad Ad Program as “another step to help educate — and receive feedback from — healthcare providers about prescription drug advertising and promotion.”  The Advertising Age article, correctly I think, characterizes this statement as offering only “tepid support.”

There appear to be two central criticisms of the Bad Ad Program: (1) that it is not as low-cost as it seems because it will take up physicians’ time and create more work for the FDA’s already overburdened Division of Drug Marketing, Advertising, and Communications (DDMAC) and (2) that it will be an ineffective compliance tool either because doctors cannot tell the difference between compliant and noncompliant advertising or because doctors will “go on personal jihads on ads they don’t like - ads that very well might be in perfect compliance.”

Both concerns seem overblown.  Doctors do not have to participate if they do not have the time or inclination — it seems likely that most will not — and pharmaceutical companies have been reporting each other’s marketing abuses to DDMAC for years, so the Division has experience sifting through more and less credible information.  Doctors may well have difficulty discerning which ads are compliant and which are not — see, e.g., this study revealing that doctors could not accurately identify the FDA-approval status of a significant percentage of the drugs they prescribe — but this is not an argument against the FDA’s effort to educate them.

The bottom line is that while pharmaceutical companies track what happens in physician offices in multiple ways, including through sales rep call notes and sales message recall studies, they do not, at least not consistently and/or voluntarily, use the information gathered in service of compliance, as opposed to sales, goals.  In the words of Arnie Friede, to the extent that the FDA’s Bad Ad Program creates “an additional incentive for a company to closely monitor and control communications by their sales people” it is “an understandable, perhaps even brilliant move.”

Surety Bond Requirements for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)

By Rachel Jones

The final rule implementing surety bond requirements for DMEPOS became effective March 3, 2009.  The regulation implemented the surety bond requirements for DMEPOS set forth in section 4312(a) and (c) of the Balanced Budget Act of 1997 (BBA).  The Centers for Medicare & Medicaid Services (CMS) proposed a rule on January 20, 1998 (63 FR 2926) reflecting the BBA’s surety bond requirements and solicited comments.  Comments were solicited for advisability with respect to Section 4312(c) of the BBA, which further allowed CMS to require a surety bond from some or all providers or suppliers who furnish items or services under Medicare Part A or Part B and not solely Durable and Medical Equipment (DME) suppliers.  A substantial amount of comments were received and in the final published rule on October 11, 2000 (65 FR 60366), CMS decided to delay the final rule with respect to surety bond requirements for suppliers of DMEPOS in order to further study the issue.  However, in 2003 Congress enacted section 902 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173) (MMA) which prohibits the Secretary of Department of Health and Human Services from finalizing a proposed rule related to Title 18 that was published more than 3 years earlier except under exceptional circumstances.  In response to this CMS proposed a rule on August 1, 2007 (72 FR 42001) to implement the statutory surety bond requirements set forth in the BBA.  CMS received approximately 200 comments that were considered before they published the final rule on January 2, 2009. (FR 30802)

Surety bonds are a financial guarantee whereby a first party (obligee) contracts with a second party (principal) to perform duties in a contract that will benefit a third party (surety).  The first party guarantees that the second party will fulfill its obligation(s) under the contract and in the event that the obligations are not met, the first party will recover its losses via the bond.  CMS has imposed the rule in order to deter fraud and abuse by Medicare suppliers of DMEPOS.  CMS believes a surety bond requirement will (1) limit the Medicare program risk to fraudulent DMEPOS suppliers; (2) enhance the Medicare enrollment process to help ensure that only legitimate DMEPOS suppliers are enrolled or are allowed to remain enrolled in the Medicare program; (3) ensure that the Medicare program recoups erroneous payments that result from fraudulent or abusive billing practices by allowing CMS or its designated contractor to seek payments from a surety up to the penal sum; and (4) help ensure that Medicare beneficiaries receive products and services that are considered reasonable and necessary from legitimate DMEPOS suppliers.  CMS has also instituted other measures– including requiring accreditation for DMEPOS suppliers to deter fraud.

Who is affected by the surety bond requirements?

The regulation affects many healthcare providers; generally any DMEPOS supplier that is registered with the National Supplier Clearinghouse (NSC) may be subjected to the surety bond requirement.  Every DMEPOS supplier to Medicare patients must register with the NSC.  There are several exempt DMEPOS suppliers under the regulation:

I.      Government-owned suppliers,

II.       State-licensed orthotic and prosthetic personnel in private practice making custom made orthotics and prosthetics if the business is solely-owned and operated by said personnel and is billing only for orthotic and prosthetics, and supplies,

III.      Physicians and non-physician practitioners if the DMEPOS items are furnished only to his or her patients as part of his or her professional service, and

IV.      Physical and occupational therapists if: (1) the business is solely-owned and operated by the therapist, and (2) if the DMEPOS items are furnished only to his or her patients as part of his or her professional service.

The economic impact on non-exempt healthcare providers is significant since the regulation requires a minimum of $50,000 surety bond.  This bond amount is required for each National Provider Identifier (NPI).  Since DMPEOS suppliers must obtain an NPI by practice location, this amount can become quite significant for a supplier with multiple locations.  The estimated cost to DMPEOS suppliers is approximately $1200 per $50,000 surety bond, depending on the company’s financial stability.  The regulation also permits an additional $50,000 surety bond for high risk DMPEOS.  For example, if a DMPEOS supplier has an adverse legal action within the last ten years preceding enrollment, revalidation, or re-enrollment then an additional $50,000 surety bond is required per adverse legal action.  An adverse legal action includes: Medicare imposed revocation of any Medicare billing number, suspension of a license to provide health care by any State licensing authority, revocation or suspension of accreditation, a conviction of a Federal or State felony offense or an exclusion or debarment from participation in a Federal or State health care program.

CMS believes that the surety bond will deter fraudulent activity because a fraudulent DMEPOS supplier will not likely post a surety bond.   However, it is more likely the basis for this new requirement is to more easily allow CMS to recoup lost funds due to fraudulent activities.  In addition, the bond requirement allows CMS to track and reprimand those DMEPOS suppliers that have continuously violated the law and stayed in the Medicare

Allergan v. FDA: Where Does Disseminating Safety Information End and Promotion Begin?

In the Fall of 2009, the drugmaker Allergan made waves when it sued the FDA alleging that the ban on off-label promotion was chilling its “First Amendment right to share truthful medical information with physicians about how to safely use Botox off-label [to treat muscle spasticity] to achieve a benefit while minimizing risk of serious adverse events.”  Allergan was back in the news last week when the LA Times reported that trial was set to begin in a case brought against Allergan by the mother of Kristen Spears, a seven-year-old girl with cerebral palsy who died after being injected with Botox to treat muscle spasticity in her legs.

Allergan manufactures two FDA-approved botulinum toxin products, Botox Cosmetic, the well-known anti-wrinkle treatment, and Botox, which is approved to treat, among other conditions, cervical dystonia, “a movement disorder that causes [the muscles of the neck and shoulders] to contract and spasm involuntarily.”  Botox is also frequently used “off-label” for conditions it is not approved to treat, including muscle spasticity.  Per the NIH,  locally-injected Botox “has become a standard treatment for overactive muscles in children with spastic movement disorders such as cerebral palsy.”  The FDA agrees.  An agency physician describes Botox as a “commonly used” and “very effective” treatment for spasticity, which he characterizes as a “significant disability[y.]“  Per the LA Times, Botox can “sometimes help young patients walk without surgery.”

While the NIH’s website states that the undesirable side effects of Botox are “mild and short-lived,” the FDA’s informs physicians that “a Boxed Warning has been added to the prescribing information to highlight that botulinum toxin may spread from the area of injection to produce symptoms consistent with botulism,” “that swallowing and breathing difficulties can be life-threatening and there have been reports of deaths related to the effects of spread of botulinum toxin,” and “that children treated for spasticity are at greatest risk for these symptoms[.]”

In addition to requiring the addition of the black box warning to the Botox label, the FDA has ordered Allergan and other manufacturers of botulinum toxin products to adopt a Risk Evaluation and Mitigation Strategy (REMS) which includes “a Medication Guide [for patients] and Communication Plan, including a Dear Health Care Provider letter, and a timetable for submission of assessments.”

In its complaint against the FDA, Allergan alleges that while “the boxed warning and REMS materials identify the risk of potential distant spread of toxin effect, … they do not give physicians using Botox for spasticity specific guidance about how to further minimize that risk while still obtaining an acceptable therapeutic effect.”  Allergan wants to provide physicians with specific information about treating spasticity including “proper dosing, patient selection, and injection technique.”  Allergan argues, with good reason I believe, that if it were to, say, develop a slide deck about dosing, patient selection, and injection technique in treating spasticity and present it to physicians it would be exposing itself to criminal liability for promoting an off-label use.  In its brief in opposition, the FDA disagrees — sort of — arguing that disseminating safety information about unapproved uses is “not necessarily” promotion and that Allergan has “ample room” “to disseminate truthful, non-promotional information about dangers associated with unapproved uses of Botox.”  (I will have more to say about the parties’ legal arguments in a subsequent post.)

In an interesting twist, the LA Times reports that Kristen Spears’ pediatrician and his nurse practitioner wife testified in depositions that they “learned to use Botox on children with cerebral palsy at Allergan-sponsored seminars in 2000 and 2001″ and that “Allergan’s sales agents discussed the use of Botox for juvenile cerebral palsy patients … repeatedly, visiting the practice about 50 times over several years.”  They also claimed that they were told by sales representatives that other doctors were using “in range of 10 to 15 units” of Botox per kilogram to treat their pediatric patients.  Dr. Mitchell Brin, Allergan’s Chief Scientific Officer for Botox, testified that fifteen units per kilogram, which is the dose given Kristen Spears, is nearly twice the maximum dose that the company considers safe for children.  He also testified that, because of the ban on off-label promotion, Allergan did not disseminate its maximum dosage information to physicians.  If it is true that Allergan’s sales force was providing doctors with dosing information gleaned from anecdotal reports from other doctors they called on while the experts in the company’s medical department kept their dosing knowledge to themselves, it is an example of an all-too-common disconnect between the field and headquarters that in this case may have had tragic consequences.

Financial Remuneration of Clinical Study Investigators

In November 2009, the Center for Health & Pharmaceutical Law & Policy, in its White Paper, Conflicts of Interest in Clinical Trial Recruitment & Enrollment: A Call for Increased Oversight, explored payments to investigators — and other potential motivators — to conduct research.  A study in this month’s IRB: Ethics & Human Research explores the impact payments may have on researchers to conduct and complete studies.  In Motivated by Money? The Impact of Financial Incentive for the Research Team on Study Recruitment, Sharon Unger and her colleagues examine the effect financial remuneration has on researchers in a neonatal intensive care unit (NICU).

Taking advantage of a “fortuitous set of circumstances” in which two separate clinical trials with nearly identical inclusion criteria were conducted simultaneously in an NICU in Canada, the authors looked at two issues: 1) whether financial remuneration impacted the rate at which the research team approached parents about research participation, and 2) whether financial remuneration impacted the rate at which parents provided consent to participate.

In the first study (Study A), a placebo-controlled trial involving a medication that was the standard of care for treatment of newborns nearing extubation to prevent apnea of prematurity, members of the research team were financially compensated for their time if they were successful in obtaining parental consent (parents were unaware of this arrangement).  In the second study (Study B), which involved two different forms of noninvasive respiratory support following extubation, there was no financial compensation of the research team.  Both studies had the same recruiting team.  Study A was federally funded, multicentered and high-profile, while Study B was a single-center, unfunded trial.

The payments in Study A were per capita, which, while creating a direct incentive to recruit individual enrollees, is usually not problematic as long as the payment is not excessive.  The Center recommends “that the benchmark for compensation for physician services for research should be comparable payment for time and services for treatment. This will compensate physicians fairly for their time and services, and will assure that there are no hidden bonuses or incentives for physicians to recruit patients into research or to refer them to research rather than treatment.”  As noted in the study, finder’s fees are increasingly considered “ethically problematic;” the Center recommends a wholesale bar on finder’s fees because they can create conflicts of interest that can incentivize investigators to recruit and retain individuals who do not meet the study’s inclusion and exclusion criteria.

As the authors noted, and as acknowledged in the Center’s White Paper, potential enrollees are increasingly vulnerable as increasing numbers of individuals seek to participate in research either as a primary means of access to treatment or as a form of income.  The results of this study indicate a much higher likelihood of approach when there was a prospect of financial remuneration.  These results are concerning, and were anticipated by the Center’s White Paper, which noted the potential for poor compliance with inclusion and exclusion criteria and pressure to enter or remain in a clinical trial.

However, surprisingly, the authors found that, despite the much higher likelihood of approach for Study A than Study B, parents were much more likely to actually agree to enroll their newborn in Study B — for which there was no financial remuneration of the research team.  The authors explored various explanations for this result, including that the research team was overly cautious about giving the appearance that their approach for consent was motivated by financial compensation, or that parents chose to withhold consent  due to the research team’s  increased pressure.

The authors do acknowledge other potential factors — beyond financial remuneration –  that could have affected the study’s results.  For example, parents’ hesitancy to enroll their newborn in a placebo-controlled drug trial could explain the discrepancy between enrollment in the studies.  Likewise, the authors consider that parents may not have been able to differentiate between the two modes of support being investigated in Study B.  In addition, the recruiting team, when presented with the results of the study, did not recall feeling influenced by the financial arrangement of Study A, but did “recall being highly motivated to ensure the success of Study A as it was part of a high-profile, multicentered trial.”

The authors concluded by noting concerns that “there may be a point at which the amount of the financial remuneration or the manner in which it is assigned could negatively impact the ethical conduct of the researcher,” but cautions that these concerns should be balanced with the value of conducting research in patients’ best interests.  This balancing act is considerably important.  As the Center notes,

Research is critical to the advancement of medical treatment and health. It must be structured to produce high quality data that facilitates the assessment of safety and efficacy in the population for whom the treatment will be used. The good of the enterprise requires that the clinical trial system sufficiently balance the costs and benefits to physicians and prospec­tive trial participants to ensure the continued sufficient supply of researchers and subjects. The system must also be imbued with actual and perceived integrity — so that it produces scientifi­cally reliable results, participants are safe, and people trust the system sufficiently to be willing to participate.

Medical Experts Say Haitians Will Need Health Care Help for Years to Come

The BBC recently reported that medical organizations with members serving the Haitian communities affected by the earthquake on January 12^th warn that one of the larger issues for Haitians will likely be the need for increased medical supplies, such as prosthetic devices and rehabilitation services.

Concerned about infection, doctors in Haiti have had to amputate the limbs of a great many injured patients.  In addition to the need for such resources as medical devices and prosthetic equipment, doctors are also still in need of simple medications.  Antibiotics are needed to prevent the spread of infections and painkillers to help damaged patients simply make it through the day.

Because many of the country’s hospitals were also destroyed by the earthquake, doctors in Haiti are performing most care in makeshift open areas.  And in such environments, infection spreads fast.  Though the few hospitals that are running are reported to be in relatively well-organized condition, many of the patients in those hospitals are not leaving as they have nowhere else to go, except perhaps the streets– where infections await their open wounds. So they stay,  Doctors are left with fewer and fewer areas to treat, and the number of patients increases. To remedy the situation, there are plans at present to quickly build a convalescent center.

The present medical needs are only the beginning.  The concerns of some medical experts extend to the years after the media eye has turned away from Haiti, after the NGOs have left the country, and after foreign doctors have returned to their home-countries.  These experts worry about how the Haitians that are being treated today will be able to continue with one less leg or one less arm in the future.  Without proper rehabilitation services or necessary follow-up medical care, many Haitians will lack the physical capabilities to rebuild their lives.  Mark Hyman, a doctor and volunteer with Partners In Health, calls these future medical needs of the injured Haitian community the “third wave,” and he finds that such aid is not yet realized:

Soon, very soon, there is the need for rehabilitation, helping the thousands with lost or broken limbs get back on their feet or foot again. There are no physical therapists, no facilities, and no place for them to go for care. As the immediate surgical needs are slowly addressed, the psychological needs explode magnified by each minor aftershock.

Some medical device companies have already donated supplies to aid the doctors’ efforts as well as money to support the other necessary aid efforts in Haiti.  While such donations are helping address an urgent need, they are being outpaced by the number of amputations being performed.  Hope lies in the idea that health care systems will be put in place before the external help exits; that prosthetic devices will ultimately be made available to the patients that need them; and that Haitian medical workers are trained to be able to properly care for those who cannot care for themselves.

The needs of the Haitian people are great, and the impact of this disaster will be felt for years to come.  Please give to help those who are working hard towards rebuilding Haiti.  Click here to find a list of the different organizations through which you can donate. And if you happen to be a part of a prosthetic device company which wants to do something amazing, we’d love to write the story.

Medical Marijuana Act Signed Into Law: Some Chronically Ill New Jerseyans Rejoice While Others Continue to Wait

As expected, on January 18, 2010, Governor Jon Corzine signed the New Jersey Compassionate Use Medical Marijuana Act into law, making New Jersey the 14^th state to legalize marijuana for medical use.  Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy endorsed the Act in a position paper distributed to key lawmakers in June 2009.

The Act’s backers celebrated its passage with “hugs and tears,” while its opponents expressed continued concerns, including that the for-profit “alternative treatment centers” that the Act will allow to grow and distribute marijuana will have negative effects on the neighborhoods where they are established.  An interesting abcnews.com article by Susan Donaldson James highlights a third constituency: New Jerseyans with chronic illnesses that are responsive to treatment with marijuana but who are not considered to have debilitating medical conditions under the Act.

The article profiles Jack O’Brien of Laurel Lake, New Jersey who was born without fingers and toes and suffers from “crushing neuropathic pain.”  He wakes up to shooting pain in his arms and legs and can only walk short distances on his deformed feet.  According to O’Brien, smoking marijuana is “like having a valve on the forearm, turning it and having the coolness of relief through my extremities. … I try to walk on these feet and I can go four or five blocks, with my wife. With marijuana, I can go forever.”  State Assemblyman Reed Gusciora, who was a prime sponsor of the Act, explained that while he had empathy for O’Brien and others in his position, the legislature “had to do a measured approach,” citing fears that New Jersey could become another California, where medical marijuana “seemed to be spiraling out of control.”   Assemblyman Gusciora promised that in two years the legislature would “revisit the issue and add ailments.”

Addendum:

While Jack O’Brien’s case provides only anecdotal evidence of marijuana’s efficacy against neuropathic pain, as the Center noted in its position paper, “in the past two years, three placebo-controlled, randomized, double-blind clinical trials published in the medical literature have demonstrated that smoked marijuana is effective against neuropathic pain, including for patients who have tried the available conventional treatments and are still in pain.”   The existence of this evidence is remarkable because, as recent articles in the New York Times and Wall Street Journal explain, researchers must surmount formidable hurdles to study marijuana’s potential medical uses.

For those who are curious, under the compromise version of the Act which was signed into law January 18^th, “debilitating medical condition” is defined to include the following:

• Seizure disorder, including epilepsy, if resistant to conventional medical therapy;
• Intractable skeletal muscular spasticity, if resistant to conventional medical therapy;
• Glaucoma, if resistant to conventional medical therapy;
• HIV or the treatment of HIV, if it causes severe or chronic pain, severe nausea or vomiting, cachexia, or wasting syndrome;
• AIDS or the treatment of AIDS, if it causes severe or chronic pain, severe nausea or vomiting, cachexia, or wasting syndrome;
• Cancer or the treatment of cancer, if it causes severe or chronic pain, severe nausea or vomiting, cachexia, or wasting syndrome;
• Amyotrophic lateral sclerosis;
• Multiple sclerosis;
• Terminal cancer;
• Muscular dystrophy;
• Inflammatory bowel disease, including Crohn’s disease; and
• Terminal illness, if the physician has determined a prognosis of less than 12 months of life.

New Jersey Legislature Passes Medical Marijuana Bill

Yesterday, the last day of its 2008-2009 legislative session, the New Jersey legislature voted to legalize the use of medical marijuana by New Jersey residents suffering from debilitating medical conditions.

The version of the New Jersey Compassionate Use Medical Marijuana Act passed yesterday represents a compromise between the version that the state Senate passed in February of 2009, which Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy endorsed in a position paper distributed to key lawmakers, and the Assembly version, which included a number of amendments intended to bolster the Act’s already strict safeguards against abuse and diversion.  (The differences between the Assembly and Senate versions are outlined here; a summary of the changes made in the final legislation is posted here on the Legislature’s website.)   Governor Corzine is expected to sign the Act into law before he leaves office next week.

Among other changes, the final legislation:

• revises the definition of “debilitating medical condition” to specify that severe or chronic pain, severe nausea or vomiting, and cachexia or wasting syndrome qualify a patient to use medical marijuana if they are symptoms of cancer, HIV/AIDS, “or the treatment thereof.” The new definition also adds inflammatory bowel disease, including Crohn’s disease, muscular dystrophy, and terminal illnesses expected to cause death in 12 months or less to the list of debilitating conditions;

• deletes the Assembly provision that allowed patients to designate an individual to transport marijuana to them in an emergency, and reverts to the Senate language allowing patients to designate a primary caregiver to assist them with their use of medical marijuana on an ongoing basis; and

• preserves the Assembly version’s requirement that patients obtain their marijuana from “medical marijuana alternative treatment centers,” i.e., that they not be allowed to grow their own, but increases the amount of marijuana that patients can be dispensed in a 30-day period from one ounce to two ounces.

Interestingly, the final legislation also requires that the system the Division of Consumer Affairs in the Department of Law and Public Safety establishes to monitor the dispensation of marijuana for medical use must “serve the same purpose as, and be cross-referenced with” the Division’s system for monitoring the dispensation of certain prescription drugs with the potential for abuse.  This is further evidence that marijuana is slowly but surely, as Fordham Law Professor Kimani Paul-Emile writes, “migrating from the criminal regulatory regime into the public health regulatory regime.”

Of Electric Eyes, $20 Knees & Flying Cars

CNN recently featured what it called the Top 10 Health Innovations of 2009. From a $20 knee joint replacement developed by Stanford students (which may in time at least partially replace the titanium versions currently marketed with price tags from $10,000 to $100,000), to a microchip developed by MIT researchers which may, as an “electric eye,” help blind people to regain partial sight. There’s also a smart stethoscope which can transfer monitored data directly to a computer where that which has been transmitted can be further analyzed; a new found process which uses pieces of wood to regenerate broken bones; and a Transcranial Magnetic Stimulation Therapy System which has shown promising results in treating the depression of those who have not been able to obtain relief through anti-depressants. The electromagnetic headpiece “pulses magnetic fields into a patient’s prefrontal cortex, the part of the brain that regulates mood” and “stimulates the neurons to make more mood enhancing chemicals.”  The technology may offer relief to millions of people who suffer from depression. Amazing really.

The award winning New Jersey Journalist Paul Milo has just published a fascinating book entitled “Your Flying Car Awaits: Robot Butlers, Lunar Vacations, and Other Dead-Wrong Predictions of the Twentieth Century.” Milo has produced what Harper Collins has aptly referred to as an “insightful compendium of the most outrageous and completely ridiculous predictions of the 20th Century.” And as I, having grown up in the late Sixties and Seventies, ponder this present dire lack of flying robot cars (we were veritably promised), I can’t help but be amazed that we’ve reached a point where machinery may offer sight to the blind and knees to the poor.

And if still upset about the flying robot cars, there’s always the Transcranial Magnetic Stimulation Therapy System.

The CNN graphic showing the Top 10 Health Innovations is well worth a quick look.

Pharma Marketing, Advanced

With the Senate’s bill clearing late night hurdles, the coverage in the mainstream media is, at least for the moment, broad. But there was a segment on NPR’s All Things Considered in the midst of all that Health Reform bill coverage that is well worth a listen. The segment, “How A Bone Disease Grew To Fit The Prescription,” (transcript linked, audio below) functions as a sort of biography of the evolution of both a drug and a disease– which was not, it seems, an entirely independent process.

The drug is Merck’s Fosomax, the disease is Osteopenia. Fosomax had sales in 1996 of $281.8 million; by 2005, on the heels of what qualifies as a comprehensive and wildly successfull marketing effort, the drug had sales of $3.2 billion.  Osteopenia derives its origin as somewhat of an afterthought, when in 1992 “a group of osteoporosis experts gathered under the auspices of the World Health Organization” and drew a somewhat arbitray bright line to determine what level of bone mass loss was normal and what amount constituted a disease. The term “Osteopenia” was coined, on the spot, to give clinical researchers a term which described those whose bone loss was considered normal, but was close to the line. They never imagined that Osteopenia would come to be considered a disease in itself, but it did. Millions of women are said to have it; millions treat it with Fosomax. The story of how this came to be (and the implications regarding the role of Pharma in health care) is fascinating.

The FDA Steps In: Regulating Prescription Drug Promotion on the Internet

The FDA has been widely criticized for not providing guidance for drug companies eager to promote their products on the internet.  Earlier this year, the FDA expressed the view that the message was what was important, not the medium, meaning that companies should simply apply the rules governing prescription drug advertising in print media to the internet.  On April 2, 2009 the agency issued Notice of Violation letters to 14 companies who sponsored links on internet search engines advertising their products; the links gave the name of the drug and, in some cases, its indicated use, without including the required “fair balance,” i.e., safety information such as contraindications and potential side effects.  In reliance on the so-called “one-click rule” — which had never actually been adopted by the FDA — the companies had put the required safety information one click away on a separate page.

In recent months, the FDA has indicated that it is open to providing internet-specific marketing guidance.  Yesterday and today (November 13^th) the agency is holding a hearing on “Promotion of FDA–Regulated Medical Products Using the Internet and Social Media Tools.”  Representatives from advertising agencies, consumer groups, health-related websites, pharmaceutical companies, and search engines are scheduled to testify.

In written testimony released before the hearing, PhRMA, the pharmaceutical industry’s trade group, proposed that the FDA approve a standard universal warning: PhRMA suggests “All drugs have risks.  Click here for more information from the manufacturer.” — for use “in places throughout the Web where there is not enough room for complete disclosure of all warnings, indications, and contraindications (e.g., search results and microblog posts.)”  Such a warning would, PhRMA argues, allow companies to take advantage of sponsored links, make full use of Twitter, etcetera, while also providing easy access to safety information.  PhRMA even suggests that the warning incorporate the FDA’s logo, arguing that this could mitigate against “the dangers posed by illegal Internet drug sellers.”

It will be interesting to see whether and how the proposals of the other groups represented at the hearing differ from PhRMA’s, and, of course, whether the FDA in the end decides that its “fair balance” requirements should be modified for the web.  Among the other interesting issues FDA may address is companies’ responsibility for web content they do not control.  Google’s introduction of Sidewiki, which allows anyone visiting a pharmaceutical company’s website to leave a comment, has brought this issue to the fore, raising, for example, the prospect of doctors discussing a product’s off-label uses on the manufacturer’s site.

Anyone who wishes to comment on these or other internet-specific promotion issues may do so through February 28, 2010.

Risks to Directors and Trustees of Health Care & Life Sciences Companies: Corporate Compliance in a Distressed Economy

“Risks to Directors and Trustees of Health Care & Life Sciences Companies: Corporate Compliance in a Distressed Economy,” was sponsored by Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy, Epstein Becker & Green P.C., and Navigant Consulting, Inc. The program urged profit and nonprofit health care organizations to prioritize effective corporate compliance programs, particularly in today’s economy.

Moderated by Professor Kathleen Boozang, the program featured keynote speaker Mark Anderson, the New Jersey Medicaid Inspector General, as well as presentations by Lynn Shapiro Snyder and Hervé Gouraige of Epstein Becker & Green P.C. and Sandra Piersol and Geoffrey Kaiser of Navigant Consulting, Inc.

The participants focused on the financial challenges and potential exposure for board members of health care and life sciences entities in maintaining an effective compliance program in order to minimize noncompliant behavior and corporate liability risks.  Current trends in HHS Corporate Integrity Agreements (CIA’s) have shown a movement toward imposing personal liability on boards of directors for failure to ensure that a company has an effective corporate compliance program.

Inspector Anderson first addressed the 2007 statute governing the New Jersey Office of Medicaid Inspector General, focusing in particular on the statute’s broad definitions of “fraud” and “abuse,” which allows his office broad discretion.  Asking the key question, “is your compliance compliant?”, he emphasized that effective compliance programs go beyond simple written policies and procedures, but are specific to the entity’s need to prevent fraud and abuse, and are supported at every level of management — with the tone set “at the top.”  He concentrated on one specific element of compliance programs — self-disclosure of problems within one’s own organization — and stressed that self-disclosure is essential to compliance and is in the company’s best interest, as his office provides incentives to health care entities to self-disclose.  These incentives include forgiveness or reduction of interest payments, waiver of penalties and/or sanctions, timely resolution of overpayment, and a decrease in likelihood of imposition of an OMIG Corporate Integrity Program.

Lynn Shapiro Snyder, Co-Chair of the Health Care Fraud Practice Group at Epstein Becker & Green, spoke about the looming threat of enforcement activities aimed at board members of health care and life sciences entities, and noted that, until recently, the risk has been reputational rather than legal.  She highlighted the blurred line between governance and management obligations, and questioned whether boards need their own consultants to determine whether to sign off on a company’s compliance program.  Later, suggesting a simple, cost-effective way to examine the effectiveness of a compliance program, she recommended that compliance officers file (and follow) a “dummy report” within their own organization, thereby bringing to light gaps and issues in the company’s program.

Sandra Piersol, a Director with the Healthcare Disputes and Investigators practice at Navigant Consulting, addressed how directors and trustees can determine whether they have an effective corporate compliance program.  Discussing the seven elements of an effective compliance program, she emphasized ensuring that the compliance officer has direct access to the board of directors, setting the “tone at the top,” and the need for ongoing training and communication.  She provided a list of structural and operational questions to be considered when examining whether an entity’s corporate compliance program is effective, and concluded with the recommendation that boards should request the performance of an objective and comprehensive review of the program activities performed by persons independent of the compliance program.

Hervé Gouraige, Co-Group Leader of the National Litigation Practice at Epstein Becker & Green, spoke about the risk to board members of personal liability for an ineffective compliance program.  After an overview of the law as it relates to board oversight of compliance, Gouraige discussed the requirement that companies have a process established to address compliance risks within the organization.  Second, he underscored that the process must be executed by the chief compliance officer and monitored by the board.  Finally, he explained that the board must be involved in the selection of a chief compliance officer who is capable of, and willing to, stand up to the board.  He stressed that the chief compliance officer should not also be the general counsel, due to the conflicting duties and obligations of those positions.  He also suggested that there be a separate board committee — which includes the CEO, general counsel, and chief compliance officer — to monitor the compliance program.  Annually, this committee should meet without the CEO and general counsel as well.  Finally, Gouraige suggested that in order to learn about — and address — problems before a prosecutor does, compliance officers periodically spot check internal emails between employees.

Geoffrey Kaiser, Managing Director in the Healthcare Dispute, Compliance and Investigations Practice at Navigant Consulting, focused on the benefits of having an effective compliance program.  He noted that, although it is difficult to quantify the harm avoided by any program, an effective program can reduce or mitigate the risk of violations, particularly through education, which is a cost-effective way to sensitize employees to risk.  Second, having an effective voluntary information and reporting system allows a board of directors to introduce corrective measures proactively.  Third, having an effective corporate compliance program in place can influence prosecutorial discretion.  In addition, having an effective compliance program can reduce the severity of penalties facing an organization at sentencing — not only affecting the amount of the fine, but also the range in which the fine will be imposed.

Overall, each speaker highlighted the cost-effectiveness and benefits of devoting resources to an effective compliance program.  Inspector Anderson, stating that the economic environment cannot dictate compliance policies, emphasized that cutting such programs is short-sighted and a future compliance violation could potentially decimate a company in the long run.  Gouraige explained that it would be a terrible mistake to cut compliance, due to the “wisdom of the long-term investment.”  The speakers, in a question and answer session moderated by Professor Boozang, addressed effective ways to increase board attention to corporate compliance, including focusing on corporate compliance as one of the many legal requirements required by boards and underscoring the investment — rather than the cost — of implementing an effective corporate compliance program.  As attendee Eve Costopoulos of Merck aptly stated, “if you don’t pay today, you’ll pay tomorrow.”

All Photos by Sean Sime

Reform Rodeo

1. Kaiser Health News discusses the details of the House’s latest iteration of their Health bill.

2.  Ezra Klein analyzes whether the public plan will cost insureds more than private insurance.

3.  The New England Journal of Medicine circles back to a reform issue that is often overlooked: primary care and accountable care.

4. Jonathan Cohn at The New Republic looks at how two of the biggest players in the U.S. health care system–the medical device industry and the pharmaceutical industry–are affected by the House bill.

5.  The Healthcare Economist reports on a study released by the Urban Institute that breaks down how the House Bill will affect the number of uninsured.

6.  Wild Card: Eugene Volokh highlights on a case involving one company’s desire to patent a physician’s thought process.

7. In Case You Missed It: The Cost of (Not) Implementing Chronic Care Management by Professor John V. Jacobi.

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