Controlling the Controllers of Controlled Substances

Despite their name and extensive government regulation, controlled dangerous substances (”CDS”) are far from controlled.  Licensed  health care providers are essential cogs in the prescription drug control machine.  Many faithfully execute their responsibility to prescribe CDS only where necessary and appropriate to relieve patient pain.  But sadly, some professionals are aggravating the situation.  Significant percentages of the professional licensing cases that I prosecuted in my previous position as a deputy attorney general in New Jersey involved abuse of prescribed CDS by patients and licensed professionals.

Some professionals are completely complicit, brazenly selling prescriptions (and their professional integrity) from their offices or cars.

Others aid and abet misuse by writing prescriptions too freely, for varying reasons and to varying degrees of culpability.  Some wear rose-colored glasses and miss tell-tale warning signs or just like to make people happy and have trouble confronting their patients.   Still others lack the training to know what types of questions to ask to identify drug-seeking behavior or how to effectively and safely combine different drugs to treat patients’ particular problems. Patients can be very skilled at keeping their providers in the dark, so some providers simply do not know that they are feeding a habit.   Others rationalize that it is better to keep their patients coming back for treatment than to send them to the streets for illegal drugs.

And, of course, others conscientiously wrestle with how to balance the need to relieve the very real pain they or their patients are experiencing with the reality that they or their patients are developing addictions.  It’s a thorny thicket, for sure.

No matter the reason, the problem of prescription drug abuse is intensifying, and we need to try something new.  This Spring, the Office of National Drug Control Policy (ONDCP) unveiled “Epidemic: Responding to America’s Prescription Drug Abuse Crisis,” which is “a multi-agency plan aimed at reducing the ‘epidemic’ of prescription drug abuse in the U.S. — including the FDA-backed education program that zeros-in on reducing the misuse and misprescribing of opioids.”  This plan has four main components: improving education of patients and health care providers; expanding state-based prescription drug monitoring programs; improving means for proper disposal of unused CDS from homes; and stepping up enforcement to reduce “pill mills” and doctor-shopping.

As part the education part of the plan, the FDA is working to implement a “Risk Evaluation and Mitigation Strategy (REMS)” for extended-release and long-acting opioid products, such as OxyContin and Duragesic (full list of drugs available here).  As FDA’s consumer update regarding this initiative summarizes, “[t]he new REMS plan focuses primarily on: educating doctors about proper pain management, patient selection, and other requirements and improving patient awareness about how to use these drugs safely.”  On May 16, 2011, FDA met with an Industry Working Group to discuss these ideas, including how to assess the effectiveness of the REMS plan.

Although generally I applaud any effort to better educate practitioners about the dangers of CDS, I worry how valuable this plan will be once implemented.  For one, it requires drug companies to prepare the educational materials.    Each has an interest in presenting its drug in the best light so that doctors are not afraid to prescribe it.  Would not government-funded, unbiased academic detailers, expert in pain and addiction medicine, be more effective?

In addition, the REMS plan does not require doctor training.  If we don’t even lead the horse to water, how can we ever quench its thirst?   How can we hope to affect the prescribing practices of health care providers who do not receive critical training?  It seems indisputably reasonable to require training in CDS prescribing before a practitioner is entrusted with the phenomenal responsibility to write prescriptions for CDS.   (According to a November 18, 2010 article by Susan Okie, M.D. in the New England Journal of Medicine, two FDA advisory committees agree with this requirement.)   This is especially crucial in states like New Jersey, where a medical license is plenary, and thus any licensed physician, regardless how little training in pain management s/he has had, may prescribe pain medicine.

Reportedly, other federal agencies are lobbying Congress to require mandatory physician training as a condition to receiving the Drug Enforcement Administration registration number that doctors must have to prescribe controlled substances.  But generally, the federal DEA registration process looks to state law.  If state law permits a physician to prescribe CDS, there normally is not a separate federal requirement.  This policy respects that licensing is among the states’ traditional police powers.  I expect that Congress is well aware that individual state licensing boards would bristle at Washington dictating the rules governing the practice of professions within their borders.

Not surprisingly, then, some states are not waiting for Congress to act.  According to Dr. Okie, the licensing boards in California, Rhode Island, and West Virginia require some degree of pain-management training.  We need to know what their experiences have been.  Is the training making a difference?  Is there any evidence that requiring training is discouraging doctors from prescribing CDS to patients in pain?

Dr. Okie’s article also details a law that is scheduled to go into effect in Washington state in mid-2011 that will require doctors who prescribe opioids to enter their patients’ clinical responses to treatment in a statewide database and to consult with a pain specialist if the prescribed dose exceeds a threshold.  The hope is that physicians who have thus far not changed their prescribing in response to voluntary educational programs and treatment guidelines may respond if their treatment success is being measured.  But some fear there are too few pain specialists to satisfy the demands imposed by this law.  Some practitioners and patients fear this will just drive patients to street drugs like heroin.

Florida, too, which reportedly is the source of eighty-five percent of the nation’s oxycodone and is known as the nation’s “Pill Mill Capital,” is taking bold steps to address prescription drug abuse.  In addition to increasing oversight of clinics, pharmacies, and wholesale distributors of CDS, its new statute signed into law on June 3, 2011 subjects physicians to administrative and criminal penalties for violating prescriptive regulations governing CDS prescribing.  For example, doctors will face a minimum of a six month suspension and $10,000 fine if they overprescribe CDS.  The law also requires certain doctors to register with the State and restricts their ability to prescribe certain controlled substances.  Doctors also must meet more exacting requirements for record keeping, prescription writing, and treatment plans for those receiving CDS.

The Florida law also authorizes the state to create a prescription-drug monitoring database that will help law enforcement track which providers may be indiscriminately prescribing CDS.  Upon request, treating physicians will have access to this data to inform their treatment decisions.  Approximately 34 other states are operating similar databases, although each has its own rules regarding what entities may access the data, what drugs must be reported, etc.

It is beyond the scope of this post to address the policy pros and cons of all of the provisions in Florida’s new law.  With respect to the prescription drug monitoring database, however, I long have thought it would be valuable to provide prescribing providers access to integrated pharmacy records.  I investigated many physicians who had their patients sign agreements promising only to receive CDS from that doctor.   Investigative pharmacy sweeps helped me learn that this doctor was one of many the patients were using to feed their habit.  But doctors in New Jersey have not had any access to this information unless their patients granted it to them.

But that is about to change.  Although it took years to enact, N.J.S.A. 45:1-45 - 1-52 authorizes New Jersey’s prescription monitoring program.  Section 1-46 specifically permits New Jersey physicians to access the program’s data concerning their patients (although physicians are not required to do so).  The same section also permits New Jersey to enter interoperability agreements with other states so that each state may access the other’s data.  The database is not up and running yet, but on April 7, 2011, New Jersey awarded a four-year contract to a company in Ohio to develop the database.

Once this database is operating, it will offer NJ doctors an opportunity to identify which patients are doctor-shopping and tailor their treatment accordingly.  Undoubtedly, there are risks with this system.  Patients may resent that their doctor did not trust them, for example.  In addition, doctors who primarily treat patients in chronic pain could trigger greater scrutiny from regulators because their prescribing of CDS will outpace other providers.  Regulators will need to carefully exercise their investigative powers so as not to discourage physicians from prescribing appropriate CDS.  These risks, however, seem worth the benefit of identifying patients in need of addiction counseling and treatment and reducing diversion.

But we should not rest on assumptions and hopes.  Rather, we should keenly watch what happens in places like California, Rhode Island, West Virginia, Washington, and Florida to evaluate what works and doesn’t.  Professors Diane Hoffmann (see, e.g., here and here [subscription required]) and Anita J. Tarjian (see, e.g., here) at the University of Maryland and Interim Dean Sandra Johnson at Saint Louis University School of Law (see, e.g., here), among others, raise significant concerns that aggressive enforcement of CDS restrictions can discourage physicians from prescribing CDS, which leaves un- and under-treated patients in pain.  This is unacceptable.  We should regulate with an appreciation for the strides achieved by efforts like the Mayday Pain Project to provide better care to patients suffering in pain.  By taking measured steps and being willing to tinker with our enforcement regimes as we learn, we may ensure we do not deprive patients of needed medications or scare ethical, competent pain physicians from serving their patients’ needs.

Perhaps the Federation of State Medical Boards will help lead this effort to learn from these varied efforts at the state and federal level.   According to its 2011 Annual Report, over 40 state boards have adopted the Federation’s Model Policy for the Use of Controlled Substances for the Treatment of Pain.  Clearly, state boards, without ceding their independence, look to the Federation for guidance, akin to how states view the ABA’s Model Rules of Professional Conduct.  Its policy paints in relatively broad strokes and has not been updated in more than seven years.  It would be helpful if the Federation would update its policy to reflect the current state of law and research in this area, including the impact of various reform efforts, to help state boards find balance between reining in indiscriminate CDS prescribing and the need to provide medically appropriate palliative care to patients in need.

Functional Foods: What Happens When Advertising Misleads Consumers?

An article recently published in the New York Times focuses on the complexities of modern-day food labeling. It seems that almost every product in the grocery store touts a label boasting of some health benefits, from supporting heart health to lowering cholesterol levels. These items are referred to as functional foods or nutraceuticals, and they are foods that claim to provide health benefits beyond the traditional nutrients they contain. Functional foods are one of the fastest growing areas in the food industry.

While companies cannot claim that functional foods actually prevent or cure diseases, they can market foods with having health-promoting or wellness-maintaining properties. The article explains how economists refer to items like functional foods as credence goods. For these foods, most consumers are unable to assess the utility of health claims and therefore rely on advertisements to be true. Misleading marketing and advertising can leave consumers confused about what they are buying and about just how helpful some products are in maintaining overall health.

The Federal Trade Commission (FTC) oversees food advertising and has filed recent complaints of deceptive marketing against Kellogg and Dannon. Frosted Mini-Wheats can no longer claim that they are clinically shown to improve children’s attentiveness by nearly 20 percent, and boxes of Rice Krispies are no longer emblazoned with a claim that they support children’s immunity. Dannon was forced to remove claims that its Activia yogurt improves intestinal transit time, as the FTC found no scientific proof for such a claim.

The Food and Drug Administration (FDA), which oversees food labeling, has also noted the problems with false or misleading claims on functional foods. Commissioner Margaret Hamburg wrote an open letter to the industry urging them to examine product labels to avoid violating established labeling standards. But the issue seems too complicated for an open letter to solve. As the FDA’s deputy commissioner for foods Michael Taylor wrote last year,

“Going after [misleading marketers] one-by-one with the legal and resource restraints we work under is a little like playing Whac-a-Mole, with one hand tied behind your back.”

The Deputy Commissioner appears to be right, and not all food companies are willing to give up false or misleading claims or labeling without a fight. In 2010, the FDA found that the makers of POM Wonderful pomegranate juice had violated the Federal Food, Drug, and Cosmetic Act by making therapeutic claims that “establish that the product is a drug because it is intended for use in the cure, mitigation, treatment, or prevention of disease.” When POM did not retract its claims, the FTC filed a complaint against the maker for deceptive advertising based on unsubstantiated scientific claims. POM was initially defiant (calling the FTC complaint unwarranted), but eventually settled and changed their advertising.

The company did, however, file a federal lawsuit against the FTC for acting outside its authority and violating the right to free commercial speech. As NYU Professor Marion Nestle pointed out in an article, POM’s suit is being brought “not because they are claiming they have science on their side, but because they think their health claims, believable or not, are protected by the First Amendment.”

There are other ways to confront misleading ‘healthy’ claims before they are printed on products and sold to consumers. The article notes the approach of the European Food Safety Authority, an independent panel of experts to whom food makers submit applications of scientific evidence backing their desired claims. The panel reviews each case and issues an opinion on the evidence, and will create a list of approved health claims for companies to use in the future.

The FDA’s approach is focused on the other end of the product line, and encourages consumers to learn to read nutrition labels and make wise purchasing decisions. This includes updating the Nutrition Facts Panel printed on the back of food packages, adding calorie counts to restaurant menus, and pushing the Let’s Move initiative to combat childhood obesity. A smarter consumer is an admirable and essential goal, but with the amount of money put into advertising on a global scale, the FDA must issue stricter guidelines for food companies. Hopefully, the outcome of the POM lawsuit will help empower the FDA to do just that.

…After the Horse Has Already Left the Barn: FDA Continues to Postpone Conflicts Review Until Studies Are Complete

On Tuesday, the Food and Drug Administration released a draft guidance on financial disclosure by clinical investigators, targeted at the investigators themselves, at drug and device companies and others who sponsor clinical trials, and at the agency staff who review the disclosures.  In the draft guidance, which updates an earlier one, the FDA briefly reviews the financial disclosure regulations, which have not changed, and then provides heavily revised and expanded answers to frequently asked questions.

The draft guidance is a response to a January 2009 report by the Department of Health and Human Services’ Office of the Inspector General (OIG) which recommended that the FDA (1) “ensure that sponsors submit complete financial information for all clinical investigators[,]” (2) “ensure that reviewers consistently review financial information and take action in response to disclosed financial interests[,]” and (3) “require that sponsors submit financial information for clinical investigators as part of the pretrial application process.”  The draft guidance addresses the first two recommendations but, unfortunately, FDA has still not taken action on the third.

The draft guidance responds to the OIG’s first recommendation in a number of ways, including in its response to the question “What does the FDA mean by due diligence?” which has grown from three sentences in the earlier guidance to four paragraphs in this one.  The draft guidance sets forth in detail what those applying for marketing approval must do to obtain financial information from every investigator who worked on every clinical trial submitted in support of the application.  For example, when an applicant is missing an investigator’s financial information because it cannot find him or her, it must try to locate the investigator by making at least two phone calls, sending at least two certified letters, and requesting new contact information from the investigator’s previous institutions.  From there, the search might progress to contacting professional associations and conducting internet searches.  The draft guidance’s recommendations, if followed, should drastically reduce the number of applications that rely on the due diligence exemption to excuse missing financial information.

With regard to the OIG’s second recommendation, the draft guidance adds and answers the following question: “What will FDA’s reviewers consider when evaluating the financial disclosure information?”  In its answer, the FDA explains that “outcome payments (that is, payment that is dependent on the outcome of the study) elicit the highest concern, followed by proprietary interests (such as patents, royalties, etc.); but these are rarely seen.”  More typical are equity interests and significant payments of other sorts, in which case the agency takes into consideration the amount and nature of the payment as well as other factors such as the total number of investigators and subjects in the study, whether and how the study is blinded, controlled, and randomized, and whether the study endpoints were objective or subjective.  While the agency elsewhere rejects the idea that the financial disclosure requirements be waived for “efficacy studies that include large numbers of investigators and multiple sites[,]” it would appear to agree that the likelihood of a single investigator biasing such a study’s results is low.

The FDA has not taken action on the OIG’s third recommendation, that investigators’ financial information be submitted to the agency as part of the investigational new drug applications (IND) and investigational device exemptions (IDE) applications that are filed before studies in humans are initiated.  The draft guidance does exhort sponsors to consult the FDA early and often to minimize potential bias.  The draft guidance explains that “[b]y collecting the information prior to the study start, the sponsor will be aware of any potential problems, can consult with the agency early on, and can take steps to minimize any possibility for bias.”

When sponsors do choose “to consult the FDA early”, the draft guidance provides that agency staff should “focus on the protection of research subjects and the minimization of bias from all sources.”  The suggestion that agency staff play a role in protecting research subjects is interesting.  It is not mentioned in the regulations or anywhere else in the draft guidance and it is only possible where sponsors voluntarily seek the FDA’s input.  By the time an applicant is required to turn over investigators’ financial information, as part of an application for marketing approval, the horse has left the barn.  The clinical trials are complete and it is too late to protect participant’s rights and interests.  Bias, by contrast, can sometimes be addressed retroactively.  The draft guidance notes that the FDA’s “[r]eviewers might … compare results from more than one investigator, re-analyze the data excluding the investigator’s results, analyz[e] the data in multiple ways, and/or determin[e] if results can be replicated over multiple studies.”  Even bias is better dealt with prospectively, though, not least because agency staff are aware of and sensitive to the expense associated with conducting clinical trials and are likely to be highly reluctant to disregard a trial’s results.

Because prospective review of investigators’ financial information would allow the FDA to “focus on the protection of research subjects and the minimization of bias” across the universe of studies, not just those in which the sponsor chooses “to consult the FDA early,” the financial disclosure regulations should be revised per the OIG’s recommendations to require that financial information be submitted as part of the pretrial application process.

Comments on the draft guidance are due by July 25, 2011.

Ag-Gag: A Black-Boxed Food Supply

I recently discussed the OIRA’s contribution to some terrible incidents in egg safety. Denis Sterns has written a challenging article on the bigger picture, explaining “Why Food in the United States May Never be Safe:”

This article . . . interrogates the idea of food safety by opening the question of whether a rational economic actor in a free market for food can reasonably be expected to invest in improving the safety of the food products he makes and sells. It is precisely the lack of (cr)edibility in the market – i.e., the absence of reliable quality signals, the lack of traceability, the high degree of anonymity, and the destruction of trust – that creates the structural impediments and powerful disincentive for improving the quality and safety of food. . . . Recall the huge public uproar, and swift policy changes, that followed the release of video of “downer” cattle being abused at a California meat plant. To obtain the video, the Humane Society had to sneak someone inside the plant to secretly record the offending conduct.

The secrecy of some food suppliers is very troubling. Stearns proposes constant surveillance of their actions: “With video cameras always in place . . . one can only expect that most of the shocking conditions that are found after the fact of an outbreak would be less likely to occur in the first place.” Stearns also criticizes FDA’s “wholly voluntary and largely ineffective” traceback regulations, which would make it easier to find the source of contaminated food. (Maybe the FDA is too busy chasing down raw milk co-ops.)

Unfortunately, Big Meat appears all too eager to hide their actions from both concerned citizens and animal rights activists. Consider the rash of legislation designed to deter actions like the Humane Society’s:

The animal advocacy group Mercy for Animals sent an undercover investigator to E6 Cattle Company in Texas, where he filmed calf abuse over a two-week period. To prevent such whistleblowing, several states have passed so-called “Ag-gag” laws that would make it illegal to clandestinely film inside slaughterhouses, sparking what animal rights activists fear will be a nationwide trend. . . . “They’re trying to criminalize someone being an eyewitness to a crime,” Jeff Kerr, [PETA]’s general counsel, said.

One of Chinese dissident Ai WeiWei’s biggest “offenses” against the Chinese government was trying to publicize the names of the children killed when shoddy schools collapsed after an earthquake. Criminalization of exposes of contamination and animal abuse in America’s heartland could be one more step toward the convergence of Chinese and US politico-economic structures.

X-Posted: Concurring Opinions.

The FDA’s Move to Combat Prescription Drug Abuse: Educating Patients and Physicians

The Food and Drug Administration (FDA) announced a new risk-reduction program this month to help curb abuse of prescription painkillers. The program, called the Risk Evaluation and Mitigation Strategy (REMS), is targeted at manufacturers of long-acting and extended-release opioids. It requires that these manufacturers develop new medication guides for patients and educational materials for prescribing physicians. Each company has 120 days to submit materials to the FDA for review.

According to the FDA, the focus of the REMS plan is to educate doctors about proper pain management and patient selection, and to improve patient awareness about how to use these drugs safely. The medication guides for patients should include consumer friendly language that explains safe use and disposal. The drugs targeted by the REMS plan include oxycodone, methadone and morphine.

As the plan stands now, physicians are not required to review the educational materials. To help generate interest, the FDA plans to offer continuing education credits for physicians who receive the education. The ultimate goal is to make this training mandatory through congressional approval that would link the training to licensing for physicians who prescribe controlled substances.

The FDA hopes that REMS education will cut down the misuse of prescription painkillers without restricting access. There are an estimated one million emergency room visits a year as a result of prescription drug abuse, and the FDA estimates that more than 33 million Americans misused opioids during 2007. That same year, deaths from drug overdose were second only to motor vehicle crashes among leading causes of unintentional injury death in the U.S.

Encouraging safe disposal of medications is key. Over half of all nonmedical painkiller users get their pills “from a friend or relative for free.” Doctors have also been found to prescribe more doses of painkillers than patients actually use, and patients don’t always dispose of unused medications properly.

What can you do to help combat prescription drug abuse? The Drug Enforcement Administration is sponsoring the second National Prescription Drug Take-Back Day this Saturday. You can find a collection site near you by clicking here. Last year, more than 121 tons of prescription drugs were collected at nearly 4,100 locations. It’s a good reason to extend that spring cleaning to your medicine cabinet!

Left to Our Own Devices?

Lucia Burgos sued Satiety, Inc. after an experimental stomach stapling device perforated her esophagus.  Her first complaint was dismissed on preemption grounds, but she was given permission to “replead her claims as state-law parallel claims.”  So called “state-law parallel claims” are state law tort claims where the duty that the defendant manufacturer is alleged to have violated stems from the Food Drug & Cosmetic Act or its implementing regulations.  Such claims are not preempted because they do not impose additional duties on defendants, beyond those imposed by Congress and the Food & Drug Administration.

Ms. Burgos amended her complaint to state two new claims, including a state law negligence cause of action founded on Satiety’s alleged failure to manufacture the device in conformance with the requirements of its investigational device exemption (IDE).  Ms. Burgos believes that it was the device (as opposed to human error) that caused her injury because of an incident report filed by her treatment team, but, because the documentation supporting the FDA’s grant of an IDE is confidential, her complaint does not specify how the device deviated from the IDE.  On April 5, 2011, Judge John Gleeson of the Eastern District of New York held that Ms. Burgos had stated a claim for negligence and that, despite the lack of specifics, her suit could proceed “to a brief and strictly-cabined period of discovery in order to determine the terms of Satiety’s IDE, and to explore whether or not the specific device used in her procedure was manufactured in accordance with the IDE.”

The Burgos case is of interest to civil procedure buffs because of what the BNA Medical Research Law & Policy Report characterized as Judge Gleeson’s “liberal approach” to the pleading of parallel claims, but it is important to the rest of us, too, because of what it tells us about the state of the products liability backstop to FDA’s oversight of medical devices.  In the words of Ms. Burgos’ attorney, there is only a “narrow window” for parallel claims.

The limited recourse that those injured by medical devices have in court makes the FDA’s pre-market clearance and approval processes and its post-market surveillance and recall oversight efforts that much more important.  Testimony given earlier this month by Marcia Crosse, Health Care Director at the Government Accountability Office, before the Senate’s Special Committee on Aging suggests that there is cause for concern.  As Ms. Crosse explained, in January 2009 the GAO issued a report in which it “found that a significant number of high-risk devices-including device types that FDA has identified as implantable; life sustaining; or posing a significant risk to the health, safety, or welfare of a patient-were cleared for the U.S. market through FDA’s less stringent 510(k) review process.”  Section 510(k) of the FD&C Act allows for streamlined review and clearance of devices that are shown to be substantially equivalent to devices already on the market.  Data from clinical trials is typically not required to make this showing.

The FDA agreed with the GAO’s 2009 recommendations.  If the devices at issue did not actually belong in the highest-risk class, Class III, they should be re-classified.  On the other hand, if they did belong in Class III, they should be subject to the more stringent premarket approval process, which typically requires clinical data in support of an agency determination that a device is safe and effective for its intended use.  In her testimony, Ms. Crosse noted that, to date, the FDA has issued a final rule reclassifying one device — a blood test for herpes — from Class III to Class II.  Rules regarding the classification of another five devices are pending.  “There are still 26 types of high-risk devices, including, for example, automated external defibrillators and implantable hip joints, that can enter the market via 510(k).”  Moreover, since January 2009, “FDA cleared at least 67 individual submissions that fall within 12 of these class III device types through the 510(k) process.”

While the GAO has not completed its review of the FDA’s post-market activities, Ms. Crosse testified that their “preliminary findings suggest that shortcomings in FDA’s oversight of the medical device recall process may limit the agency’s ability to ensure that the highest-risk recalls are being implemented in an effective and timely manner. These shortcomings span the entire range of the agency’s oversight activities-from the lack of a broad-based program to systematically assess trends in recalls, to inconsistencies in the way FDA ensures the effective completion of individual recalls.”

After Makena: Could a Risk Corridors Approach Balance Incentives and Access?

The past few weeks have been worrying ones for expectant mothers who wanted a hormonal treatment designed to stop preterm births. As Rob Stein of the WaPo explains,

A form of progesterone known as 17P was used for years to reduce the risk of preterm birth. . . Because no companies marketed the drug, women obtained it cheaply from “compounding” pharmacies, which produced individual batches for them [at about $20 each]. Doctors and regulators had long worried about the purity and consistency of the drug and were pleased when KV won FDA’s imprimatur for a well-studied version, which the company is selling as Makena.

The list price for the drug, Makena, turned out to be a stunning $1,500 per dose. That’s for a drug that must be injected every week for about 20 weeks, meaning it will cost about $30,000 per at-risk pregnancy. . . . The approval of Makena gave the company seven years of exclusive rights, and KV immediately fired off letters to compounding pharmacies, warning that they could no longer sell their versions of drug.

A day after Stein’s article appeared, the FDA made it clear that it “does not intend to take enforcement action against pharmacies that compound” 17P, “in order to support access to this important drug, at this time and under this unique situation.”

This is a fascinating, and in some ways, troubling response to the accusations of price-gouging by KV. Compounding pharmacists had already averred that “many of [KV's] assertions that the compounding of an FDA approved product is prohibited are not supported by the legal citations it references.” Though the FDA’s letter preserves access to 17P for now, that access could be revoked at any time. As the FDA states on its website:

FDA understands that the manufacturer of Makena, KV Pharmaceuticals, has sent letters to pharmacists indicating that FDA will no longer exercise enforcement discretion with regard to compounded versions of Makena. This is not correct. In order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality, or are not being compounded in accordance with appropriate standards for compounding sterile products. As always, FDA may at any time revisit a decision to exercise enforcement discretion.

Moreover, the problem persists for at least one other drug, colchicine. As Arthur Allen explains at Slate,

The colchicine and [17P] stories have their roots in the FDA’s historically complex relationship with the drug industry. Since 1962, the agency has required that all new drugs be proven safe and efficacious before hitting the market. Many drugs marketed before 1962, however, remain on sale without having been formally approved by the FDA and are technically illegal. In 2006, the FDA launched the Unapproved Drugs Initiative, aimed at getting rid of as many of these drugs as possible. . . .

The FDA campaign has two approaches. In some cases, the agency simply warns companies to stop producing and shipping unlicensed drugs by a given date. In other cases the FDA warns a group of companies producing a particular class of drug, notifying them that it plans to crack down on their unapproved substances. The idea here is to give the companies an opportunity to submit their drugs to the rigorous testing required for FDA approval. This is what happened with . . . at least 86 newly approved drugs. The problem is that after submitting such drugs to expensive testing, drug makers typically jack up the prices, in a position to do so under congressional patent incentives aimed at producing innovative drug research. The FDA has no say in how a drug is priced.

As the Post notes, KV says it “is spending more than $200 million to develop the drug and conduct follow-up studies that the Food and Drug Administration demands.” Had it kept its pricing power, it was estimated that Makena would cost the US health care system $4 billion per year. Assuming that 3/4 of that would be revenue to Makena, and it lasted for the full 7 years of exclusivity, that would be a $21 billion return on a $0.2 billion investment. That seems excessive, especially given that KV didn’t develop the drug. On the other hand, if the Makena price were to be reduced one hundredfold, that’s a $0.21 billion return on a $0.2 billion investment. Unless we hit some serious deflation, that doesn’t cover the time value of the money invested in studies and development.

Are there any better models here? Stein’s story says that “experts said the FTC could sue KV if it concludes the company is illegally impairing competition,” but I don’t see the theory there. The FTC has lamented post-merger price hikes for life sustaining drugs (see FTC v. Lundbeck), but has precious little authority over price hikes here. Perhaps liberal constitutional law professors could fuse the “medical self-defense” theory of Eugene Volokh with the expansive Yoo/Vermeule/Posner theories of executive power, and find inherent executive authority here to save preemies? Probably not; the current Supreme Court is only receptive to creative con law from one side of the political spectrum.

Another idea is for legislation to create “risk corridors” for researchers who engage in the FDA’s Unapproved Drugs program, as CMS has for prescription drug insurance plans in Medicare Part D. As Kip Piper explains,

Using a system of risk corridors that compares actual incurred drug benefit costs to estimated costs submitted in bids, Medicare limits the profits and losses of Part D drug plans. Specifically, if a Medicare drug plan’s actual benefit costs exceed expected (bid) levels by a sufficient degree, the plan will receive an additional federal payment to cover a portion of the loss. However, if a drug plan’s actual spending falls sufficiently below projections, the plan must share some of the profit with the feds. Risk corridors apply to actual and expected drug benefits costs but exclude plan administrative costs and federal reinsurance payments.

Unfortunately, estimates of the value of testing unapproved drugs vary widely. The FDA’s director of the FDA’s Office of New Drugs and Labeling Compliance insists on the importance of these programs. But, looking specifically at colchicine, an Austin rheumatologist said “Doing one trial in patients and a few drug interaction studies doesn’t justify marketing exclusivity and a 50-fold increase in price.” As Allen puts it, we need “legislative remedies to improve the drug supply without costing the public an arm and a leg.”

In health care finance, the “cost-shift” hydraulic is a familiar model. When policymakers cut reimbursements for, say, Medicare or Medicaid, providers still have the same income target, and respond by raising prices for the privately insured. One scholar estimated that the privately insured pay over 120% of costs, while Medicare payments are between 95 and 99%. We might think of pharmaceutical patents as another manifestation of “cost-shifting,” from the future (which will enjoy drugs in the public domain) to the present (which must pay the monopolist’s price). Other forms of exclusivity can also lead to that type of cost-shift, as the Makena controversy makes clear. Perhaps the people most benefited by a regime of pharmacovigilance and evidence-based medicine should be asked to pay something for that new reassurance. But they shouldn’t be price gouged. A risk corridors approach might better balance patients’ interests in research on, and reasonable prices for, unapproved drugs.

Report Raises Questions About ‘Fast Track’ FDA Device Approvals

A report was published last month that seriously calls into question the effectiveness of the FDA’s regulation of medical devices. Authored by Diana Zuckerman Ph.D. et al., in the Archives of Internal Medicine, the report investigates the two-pronged process that governs medical device regulation under the FDA.

The first prong, known as the premarket approval (PMA) pathway, requires a device company to prove that its medical device is safe and effective. PMA applies to Class III devices which are defined by regulation to include those devices that support or sustain human life, are of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury. Class III devices include heart valves, pacemakers, and artificial hips.

The second (and less stringent) prong is what is known as the 510(k) pathway. As the FDA states:

A 510(k) is a premarket submission made to FDA to demonstrate that the device to be marketed is at least as safe and effective, that is, substantially equivalent, to a legally marketed device . . . A legally marketed device . . . is a device that was legally marketed prior to May 28, 1976 (preamendments device), for which a PMA is not required . . . or a device which has been found [substantially equivalent] through the 510(k) process.

The upshot is that as long as the device manufacturer can demonstrate that their device is “substantially equivalent” to a “predicate device” that has presumably passed the more stringent PMA process, they are subject to far less exacting standards. Most notable is the fact that these iterations of devices approved through the 510(k) pathway do not require specific evidence of clinical safety and effectiveness; they can bootstrap off of the predicate.

Zuckerman’s study examined the recalls of medical devices and whether those devices were approved under the PMA or 510(k) process. The authors found that:

There were 113 recalls from 2005 through 2009 that the FDA determined could cause serious health problems or death. Only 21 of the 113 devices had been approved through the PMA process (19%). Eighty were cleared through the 510(k) process (71%), and an additional 8 were exempt from any FDA regulation (7%). Cardiovascular devices comprised the largest recall category, with 35 of the high-risk recalls (31%); two-thirds were cleared by the 510(k) process (66%; n = 23). Fifty-one percent of the high-risk recalls were in 5 other device categories: general hospital, anesthesiology, clinical chemistry,neurology, or ophthalmology.

The authors conclude that:

Most medical devices recalled for life-threatening or very serious hazards were originally cleared for market using the less stringent 510(k) process or were considered so low risk that they were exempt from review (78%). These findings suggest that reform of the regulatory process is needed to ensure the safety of medical devices.

Not surprisingly, the medical device industry doesn’t  agree with Zuckerman’s findings. Stephen J. Ubl, the CEO of the Advanced Medical Technology Association, has pointed to “three recent studies [that] have all found that the 510(k) process has a remarkable safety record with extremely low recall rates–one study reported a rate of less than two-tenths of one percent.”

Aside from the issue of whether 510(k)-approved devices pose a greater risk of recall, health care professionals have underscored a more systemic problem relating to the paucity of evidence-based medicine supporting medical devices.  Orthopedic surgeon Dr. Andrew Pearle told ABC News in a recent report that,  ”[s]ince patients are exposed to new products through direct-to-patient marketing, they assume these products have been time-tested and well-established. But often there is little clinical data to support the marketing claims.”

The FDA believes there is enough of an issue to warrant a reevaluation of the 510(k) process. This past January the FDA announced that it will be revisiting the 510(k) process. A press release describes the key actions to include:

• Streamlining the “de novo” review process for certain innovative, lower-risk medical devices,
• Clarifying when clinical data should be submitted in a premarket submission, guidance that will increase the efficiency and transparency of the review process,
• Establishing a new Center Science Council of senior FDA experts to assure timely and consistent science-based decision making.

Meanwhile, individuals with recalled artificial hips manufactured by DePuy Orthopaedics are determining whether to undergo a new operation to replace the recalled equipment. Somewhat ironically, DePuy just unveiled a new line of artificial hips last month that also received approval through the fast-tracked 510(k) pathway.

Professor Emeritus Margaret Gilhooley: “Drug User Fees, Health Priorities, Politics, the Deficit and Reform Directions”

Professor Emeritus Margaret Gilhooley of Seton Hall Law has posted “Drug User Fees, Health Priorities, Politics, the Deficit and Reform Directions” to SSRN. The paper examines the FDA’s funding mechanism in relationship to industry and raises questions as to the appropriateness of the arrangement as presently configured. The abstract alone is telling:

Abstract:
The Food and Drug Administration now depends on user fees paid by drug companies to support more than half the salaries of the medical reviewers who advise the agency on the appropriateness of approving a drug. The funding creates a substantial risk of “capture” of the agency by the industry. Under the program, which started in 1992, drug companies pay a fee that permits the agency to hire additional reviewers to make more timely reviews on whether a drug can be approved. Under the law, the agency seeks to meet performance goals for the timing of reviews, giving the program the appearance of having a fee-for-service basis.

The legislative authorization for the fees expires every five years, and the agency and the industry negotiate behind closed doors on the renewal and the performance goals for the reviews. The need for renewal creates an opportunity for the passage of laws that might not have been enacted separately. Some believe the Administration may accept measures of debatable merit to avoid having to layoff needed reviewers. Limiting the user fee support to half the Government appropriation for the program, and making the program permanent can alleviate the capture and linkage problems.

This paper maintains that reforms and changes in the policy rationale for the program are needed before locking-in a permanent funding commitment at a time of debate about growing budget shortfalls. Instead of a fee-for-service rationale, the program should be based on a health review rationale. A study is needed to identify better priority rankings and goals for drug reviews, rather than the simple categories and negotiations that now exist. To avoid the risk of capture, the revenues from the fees should not exceed the Government funding for the program. Making the fee program permanent would address the linkage problem but providing permanent funding can undercut Congress’ responsibility to determine important budget allocations in a time of concern about deficits. If the program is made permanent, the law should make clear that Congress can reduce the funding level for the fees to deal equitably with funding cutbacks in other programs made in light deficit considerations. Congress should also have to approve any major increases in the fee levels. The significance of the user fee program and the reforms needed, before it is made permanent, warrant wide attention.

Guidant Defibrillator Enforcement Reaches a Conclusion

On January 12, the U.S. District Court for the District of Minnesota convicted and sentenced Guidant LLC for criminal violations of the Federal Food, Drug, and Cosmetic Act, nearly a year after charges were filed.  The Court ordered Guidant to submit to three years probation, against the recommendation of the prosecution, and to pay more than $296 million in fines and forfeitures included within the plea agreement.

The Charges

On February 25, 2010, the Department of Justice (DOJ) brought charges against the Boston Scientific Corp. subsidiary and medical device manufacturer for “its mishandling of short-circuiting failures of three models of its implantable cardioverter defibrillators” (according to a recent press release).

After a four-year investigation, the DOJ concluded that Guidant became aware of design defects which rendered its products inoperative in 2002 and 2004.  Guidant was charged with “making materially false and misleading statements on report(s) required to be filed” with the Food and Drug Administration (FDA) on Aug. 19, 2003, when it informed the FDA that a design change to correct the flaw did not affect the safety and effectiveness of device.  Guidant was also charged with “failing to promptly notify” the FDA of a device “correction” which was made to “reduce a risk of health posed by the device.”  In 2005, Guidant recalled the ICD devices.

The Court Rejects the Plea Agreement

On March 11, 2010 — within a month of the indictment — Guidant and the Department of Justice submitted a plea agreement in which Guidant agreed to plead guilty to both counts, to pay a criminal fine in the amount of $253,962,251, and to pay a criminal forfeiture of $42,079,576.  On April 5, 2010, Guidant pled guilty and FDA Commissioner Margaret A. Hamburg, M.D. declared that the “entry of a guilty plea by Guidant LLC and the proposed resolution would represent the largest criminal penalty ever imposed on a device manufacturer for violating the Food Drug and Cosmetic Act.”

However, on April 27, 2010, District Judge Donovan W. Frank rejected the plea agreement.  He found that “after careful deliberation,” it was “not in the best interests of justice and [did] not serve the public’s interests.”  In his opinion, Judge Frank cited arguments raised by a class of “consumers of Guidant products at issue” regarding restitution and the absence of a probation provision among the reasons for his delayed decision.  He concluded that restitution was inappropriate because there were “no victims directly and proximately harmed by Guidant’s criminal conduct.”

The absence of a provision requiring probation proved fatal to the agreement.  Specifically, Judge Frank stated that Guidant “could be ordered to perform community service designed to repair the harm caused by its offenses…” or to establish or expand a compliance and ethics program.  Furthermore, the presentence investigation report would enable “the Court to consider the feasibility of any of these suggestions or of additional conditions of probation.”

The Sentencing Hearing

On January 4, 2011, both parties submitted further information in anticipation of the January 12 sentencing hearing.  Guidant provided summary information regarding its continued and expanded compliance activities, including its five-year Corporate Integrity Agreement with HHS-OIG, and its charitable and community service activities.  The government stood by its original plea agreement and did not advocate for probation.

On January 12, the Court signed the plea agreement with modification.  In addition to Guidant’s payment of the fines and forfeitures outlined in the agreement, Guidant will submit to probationary period of three years.  According to the DOJ, “Guidant is required to make quarterly reports to the Probation Office and to submit to regular, unannounced inspections of its records by the Probation Office.   The court also required Guidant to notify its employees and shareholders of its criminal conviction.”

Looking Ahead

Having been hailed the “largest criminal penalty ever imposed on a device manufacturer for violating the Food Drug and Cosmetic Act,” it is noteworthy that the Court did not accept the sentencing recommendations offered in the plea agreement.  Despite evidence of compliance changes and a five-year Corporate Integrity Agreement with the HHS-OIG, the Court felt it necessary to add probation to Guidant’s sentence.

In a time when individuals face exclusions from federal health programs even absent criminal sanctions, health-related corporations should likewise keep an eye on the resolution of future criminal cases.  Is this a single “victory for one federal judge who put his foot down… until he got what he thought was a fair deal,” as Law.com reports, or the start of a trend?

A complete record of the filings can be found here.

60 Minutes, Glaxo’s Bad Day & Why Compliance is So Terribly Important

In case you missed it: 60 Minutes segment with whistleblower Cheryl Eckerd, a former manager of global quality assurance for GlaxoSmithKline. She describes her experience inspecting Glaxo subsidiary, Cidra, in Puerto Rico. It views like an in-house counsel’s nightmare and a PR professional’s worst day. CBS states:

“But in November, we found out just how much could go wrong at one of the world’s largest drug makers. A subsidiary of GlaxoSmithKline pleaded guilty to [a felony] distributing adulterated drugs.

“There was reason to believe that some of the medications were contaminated with bacteria, others were mislabeled, and some were too strong or not strong enough.”

Ms. Eckerd brought suit under the Federal Whistleblower Act, with the government ultimately recovering $750 million; Ms Eckerd who was “downsized” by Glaxo, received $96 million as her share of the recovery. In addition, when Ms. Eckerd made the information she had gathered about the plant in Puerto Rico available to the FDA, federal agents executed a search warrant and seized drugs worth “hundreds of millions of dollars.”

Human Farming & the Limits of Medical Research

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Heckuva Job, OIRA

Remember the massive 500 million egg recall back in August? At least 2,000 people reported illness from the eggs; countless others may have mistakenly blamed their misery on some other source of food poisoning. We are now beginning to understand how regulatory pathologies beyond the usual capture story allowed this entirely preventable outbreak of salmonella.

Lyndsey Layton’s article on salmonella-tainted eggs offers an excellent case study of the toxic consequences of deregulatory ideology and a broken “cost-benefit analysis” apparatus. Layton describes years of controversy over bad eggs, which appeared to finally resolve in the late 1990s as the most responsible egg producers realized the terrible reputational consequences they were suffering because of their wild west competitors:

In the spring of 2000, a deal was struck. The egg industry agreed that the federal government would for the first time set rules for egg farms. At a private meeting on the eighth floor of a sleek office building overlooking Washington’s Union Station, Klippen, representing the egg farmers, shook hands with Richard Wood of Farm Animals Care Trust, who was negotiating on behalf of consumer groups. The regulators looked on, approvingly.

“This is how government and industry are supposed to work together,” Judy Riggins, a policymaker at the USDA, whispered to Klippen. And then, nothing. For the next nine years, the government failed to deliver the rules.

Old battles between the USDA and FDA explain some of the lethargy. But I found most remarkable this intervention from the OMB, whose Office of Information and Regulatory Affairs performs cost-benefit analysis on proposed regulations:
Read more

OIG Excludes K-V Chairman Pursuant to New Guidance

As previously reported, the Department of Health and Human Services Office of Inspector General (OIG) recently issued new Guidance on permissive exclusion of individuals, including owners, officers, and managing employees.  Accordingly, “if the evidence supports a finding that an owner knew or should have known of the conduct, OIG will operate with a presumption in favor of exclusion.”

On November 17, K-V Pharmaceutical (K-V) announced that Marc S. Hermelin, a member of its board of directors and son of K-V founder Victor Hermelin, had resigned and was being excluded from participation in federal health care programs.  He is the first pharmaceutical company official to be excluded who was not also convicted of a crime.

The exclusion by OIG took place within a month of the new Guidance, but follows almost two-years of compliance problems for K-V with the Food & Drug Administration (FDA).  As Larri A. Short of Arent Fox LLP told BNA:

This is an important development since it represents the OIG’s first use of its permissive exclusion authority under 42 U.S.C. 1128(b)(15)(A)(ii) and comes within a very short time after the OIG publicly announced its intention to begin using its discretion to exercise this authority after a company has been sanctioned. … The excluded individual is not just a board member, he was the Chairman of the Board and the majority stockholder with about 48 [percent] of the company’s stock. If he were not selling his stock and resigning, it appears that the OIG was also prepared to exercise its discretion to permissively exclude K-V itself under its authority at 42 USC 1128(b)(8)(A) and (B).

The history of K-V pharmaceuticals indicates under what circumstances OIG may pursue a permissive exclusion.  Also, the actions taken by Mr. Hermelin and K-V Pharmaceutical upon learning of his impending exclusion may be of some value to other organizations and individuals who may find themselves in a similar position.

K-V Pharmaceutical’s History with HHS

A 2008 FDA inspection determined that K-V was (1) not complying with a 2007 FDA enforcement notice requiring pre-market approval for a time-release drugs containing guaifenesin, and (2) manufacturing and distributing unapproved new drugs.  As a result, the FDA filed a civil forfeiture action in the Eastern District of Missouri in July of that year and seized $24.2 million in unapproved new drugs.

In December 2008, Mr. Hermelin left K-V after 35 years with the company.  K-V announced that Mr. Hermelin was being investigated for mismanagement and had been fired for cause.  Mr. Hermelin announced that he had chosen to retire.

In January 2009, K-V voluntarily suspended manufacture and distribution of all products and voluntarily recalled most of its products.  Under a consent decree announced in March 2009, K-V was barred from resuming manufacture and distribution until FDA officials and an independent expert inspected and certified that K-V facilities were in compliance.

In February 2010, Ethex Corp., a wholly-owned subsidiary of K-V, pled guilty to two felony counts for allegedly misbranding and adulterating drugs and not disclosing to the FDA that it had been producing oversized painkiller tablets.  K-V agreed to pay an administrative forfeiture and restitution in the amount of $27.6 million.  K-V received FDA approval to introduce its first drug to market this past September.

K-V Pharmaceutical’s Reaction to Mr. Hermelin’s Exclusion

When the owner of a company participating in federal health care programs is excluded by OIG, it places the entity in a precarious position.  Mr. Hermelin and K-V Pharmaceutical took immediate steps to avoid any adverse impact on the company.

K-V confirmed through counsel that OIG had notified Mr. Hermelin of his impending exclusion.  According to the company’s SEC filings:

If a director of our Company, or a shareholder with an ownership interest of five percent or more, is excluded from participation in federal or state health care programs, then the Department of Health and Human Services, Office of Inspector General (”HHS OIG”) has discretionary authority also to exclude the Company from such participation.

According to a K-V Press Release, in order to prevent the discretionary exclusion of K-V, Mr. Hermelin:

• resigned his position on the board of directors on November 10;
• resigned his position as trustee on all family trusts holding K-V stock; and
• agreed to divest his personal ownership of Class A Common and Class B Common stock pursuant to a divestiture plan and schedule approved by OIG.

Notice of Mr. Hermelin’s exclusion was posted on the OIG website.

Anti-Smoking Efforts Light Up

In an effort to discourage Americans from smoking, the Food and Drug Administration (FDA) recently unveiled a proposal requiring cigarette packages and advertisements to display large, color graphic warnings.  The proposal calls for nine warning statements accompanied by a color graphic depicting the health consequences of smoking, such as addiction, stroke and heart disease, cancer, open sores, harm to children via second-hand smoke, harm during pregnancy, and death.  (Click here and here to see the 36 proposed statements and color graphics.)  Members of the public can submit their comments to the FDA until January 11, 2011.  The FDA will make its selection in June 2011.  Come October 2012, the warnings will cover 50% of the front and back of a cigarette package, and 20% of the space of a cigarette advertisement.

So what brought about this change?  You may have missed the news last summer, but a new law called the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) gave the FDA the authority to regulate tobacco products and required these large, graphic modifications to cigarette packages and advertisements.  According to FDA Commissioner Margaret Hamburg, “every pack will become a mini-billboard that tells the truth about smoking.”  The American Academy of Physicians notes that

[t]he FDA has taken several steps since it was given authority to regulate the tobacco industry last year. The agency already has prohibited the use of the terms ‘light,” “low” and “mild” in cigarette marketing and packaging; banned cigarettes with fruit, candy, and spice flavors; and restricted the sale and marketing of tobacco products so that young people are less likely to be exposed to tobacco ads.

Approximately 20% of Americans smoke.  The government hopes to reduce that number to 12% by 2020.

In August 2009, R.J. Reynolds Tobacco Company (maker of Camel, Pall Mall, Doral, Kool, Winston, and Salem) and several other tobacco companies filed a lawsuit in the Western District of Kentucky to “protect their First Amendment right to communicate with adult tobacco consumers products.”  ¶51 of the complaint stated that

[b]ecause the Act virtually eliminates Plaintiffs’ ability to communicate to adult consumers through advertising, the only remaining vehicle for such communication is product packaging. But the Act destroys this as well, seizing a substantial portion of Plaintiffs’ packaging for a Government-drafted anti-tobacco message–including, for cigarette packaging and advertising, the use of shocking, graphic color imagery–as well as other mandated information….

The tobacco companies didn’t win on that point.  Obviously.

However, America won’t be the first country to employ “scare tactics” (and I use that phrase in a neutral way).  Canada, England, Brazil, Thailand, Turkey, and Australia are among the 39 countries to cover their cigarette packages with graphic warning labels that “tell it like it is” (that phrase was less neutral).  Last month, the Canadian Cancer Society released its “Cigarette Package Health Warnings: International Status Report” which summarized health warning requirements by country/jurisdiction and showed graphic labels from around the world.  (Ironically, the report comes across as a little competitive when it compares the size of the graphic labels.)

Yet supporters and critics alike question the effectiveness of this approach.

Take our neighbors to the north.  Although The Wall Street Journal reported that smoking rates dropped 3% among Canadians after their graphic warning labels appeared, the newspaper also noted how “other tobacco prevention measures, such as cigarette tax increases and new restrictions on public smoking, came at the same time.”  On NPR’s All Things Considered, David Sweanor, a law professor at the University of Ottawa, observed that

[w]hat we see with these sorts of warnings is that it does increase motivation…. People are more aware of the risks. They are wanting to quit. But that has to be combined with services that make it more likely.

Professor Sweanor went on to say that the desired outcome — fewer smokers – has been disappointing because the “[Canadian] government hasn’t provided enough access to smoking cessation programs.”

At home, The Wall Street Journal interviewed Jonathan Whiteson, medical director of NYU Langone Medical Center’s cardiac and pulmonary wellness and rehabilitation program, who suggested the labels should promote a “positive message” emphasizing the benefits of a smoke-free life, because

[w]hen we emphasize feeling good, the sense of mastery that comes from making a behavioral change or the promise of an enhanced chance of avoiding heart disease or cancer — that [produces] a much more positive and effective response from patients.

Mr. Whiteson added that smokers already are aware of the negative consequences of smoking, but just might be in denial about them.  He also noted how the public generally becomes desensitized to shocking images.

So could reverse psychology work better?  A relatively recent study published in the Journal of Experimental Psychology found that certain smokers who based their self-esteem on smoking were not deterred by death-related warnings.  Instead, the study found that

warning messages that were unrelated to death effectively reduced smoking attitudes the more recipients based their self-esteem on smoking. This finding can be explained by the fact that warnings such as ”Smoking brings you and the people around you severe damage” and ”Smoking makes you unattractive” may be particularly threatening to people who believe the opposite, namely that smoking allows them to feel valued by others or to boost their positive self-image. To the degree that warning messages undermine the high smoking-based self-esteem, smoking may be devalued.

I was interested to come across this study because Prescriptions, a NY Times blog, recently wrote about R.J. Reynolds’ special-edition packs of Camel linking the cigarettes with hip images of certain American cities, including the Williamsburg neighborhood in Brooklyn.  The Williamsburg package says

Some call it the most famous hipster neighborhood.  But it’s not about hip. It’s about breaking free. It’s about last call, a sloppy kiss goodbye and a solo saunter to a rock show in an abandoned building.  It’s where a tree grows.  It’s Camel in the Williamsburg corner of Brooklyn.

If self-esteem and smoking are connected for some people… well, I can see a spin-off warning statement and graphic there which might be an effective deterrence.  Can you?

Alongside the FDA graphic warnings proposal, the Department of Health and Human Services has announced other tobacco-related projects in the works, including:

• The Affordable Care Act is giving Americans in private and public health plans access to recommended preventive care, like tobacco use cessation, at no additional cost.
• The American Recovery and Reinvestment Act (ARRA) invested $225 million to support local, state and national efforts to promote comprehensive tobacco control and expand tobacco quitlines.
• The Prevent All Cigarette Trafficking Act (PACT) aims to stop the illegal sale of tobacco products over the Internet and through mail order, including the illegal sale to youth. [...]
• The Children’s Health Insurance Program Reauthorization Act (CHIPRA) raised the federal cigarette tax by 62 cents per pack.  Raising the price of tobacco products is a proven way to reduce tobacco use, especially among price-sensitive populations such as youth.

Just as an FYI, check out this NY Times article about ongoing efforts in other countries to restrict the the marketing of cigarettes.

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