Regulation Panelists Isabel Duffy Associate Vice President Merck amp Co Inc Jeff Handwerker Partner Arnold amp Porter LLP Michael Labson ID: 746160
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Slide1
Recent Trends in Drug and Device
RegulationSlide2
Panelists
Isabel
Duffy
Associate Vice President
Merck
& Co., Inc.
Jeff
Handwerker
Partner
Arnold
& Porter LLP
Michael
Labson
Partner
Covington
& Burling LLP
Bryant
Lim
Chief Compliance Officer
Incyte
CorporationSlide3
Important Information
The
opinions
and comments expressed
during this panel
are
solely
those of the
participants and
not necessarily those of any current or former employers. Slide4
Topics
A Look Back…
Developments in Guidance from the OIG
A Look Ahead…
Update on 21
st
Century Cures Act
Debate between regulatory framework & First AmendmentSlide5
Coupons/Co-Pay Cards
Coupons have come under increasing scrutiny from a kickback and litigation perspective
Characteristics of coupons/co-pay cards:
Reductions in patient out-of-pocket cost for a drug without regard to financial need
Often offered to help offset high co-payment amounts set by formulary committees
Can be made in the form of paper coupons, co-pay cards or debit cards
Typically structured as “for as low as”, percentage off, and fixed amount off out-of-pocket cost
Coupons often are multiple times use
5Slide6
Coupons/Co-Pay Cards
Private Payor Litigation:
Parallel suits by private health benefit plan, on behalf of putative classes of payers
Allegations:
Coupon programs caused beneficiaries and physicians to choose higher priced drugs
Coupons should be treated as discounts in reported list price
Legal Framework
RICO and conspiracy to commit RICO
Tortious interference with a contractAll cases now dismissed
6Slide7
OIG
Guidance Re: Coupons
Manufacturer Copayment Coupon Programs
On September 18, 2014, the OIG published a report titled, “Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs,” which discusses the results of a study of 30 manufacturers of the top 100 Part D brand-name drugs with coupons and with the highest Medicare expenditures.
On the same day, the OIG published a special advisory bulletin on Pharmaceutical Manufacturer Copayment Coupon Programs.
7Slide8
Summary of OIG Guidance Re: Coupons
Manufacturers
’ current safeguards may not prevent all coupons from being
used for
drugs paid for Part D. CMS cited a third-party report suggesting a 6-7% error
rate.
Part
D plans and other entities cannot identify coupons from the NCPDP claim forms submitted by
pharmacies.Manufacturers offering coupons may be subject to sanctions if they fail to take appropriate steps to ensure that such coupons are not used by federal program beneficiaries.
Failure to take such steps may be evidence of intent to induce the purchase of drugs paid for by federal healthcare programs.
Manufacturers
may engage industry stakeholders, including CMS, in an effort to identify a solution to ensure that coupons are not used for drugs paid for by Part
D.
Manufacturers
and pharmacies ultimately bear the responsibility to operate these programs in compliance with federal law.Slide9
Patient Assistance Programs (PAPs)
There is no regulatory safe harbor for
PAPs
.
2005 Special Advisory Bulletin:
OIG
recognizes the value of PAPs providing “important safety net assistance” to patients in need, but cautions that cost-sharing subsidies to federal program beneficiaries provided by manufacturer PAPs pose heightened risk of fraud and abuse under the anti-kickback statute
Why? - value provided to patients to induce a purchase of a reimbursable product
Two types are permitted: (1) Independent Foundations; (2) Manufacturer-Sponsored PAPs
9Slide10
Independent Foundation PAPs
Late 2013: published reports that manufacturers using charitable donations for commercial purposes
Seeking Alpha
NY Times
Senator Grassley
OIG investigation ensued, with meetings with various large foundations (e.g. CDF, PAN, etc.) – required to re-certify by end of 2015
May 2015: Qui Tam against
Biogen
Idec – alleges $349M in donations in one year to CDF for MS funds
10Slide11
Independent Foundation
PAPs
Donations from a manufacturer to an independent, bona fide charity PAP that provides cost-sharing to federal program beneficiaries should not raise anti-kickback concerns, provided:
Neither the manufacturer, nor an affiliate, exerts any direct or indirect influence or control over the charity or the subsidy program,
The charity awards assistance in a truly independent manner that severs any link between the manufacturer’s funding and the beneficiary,
The charity awards assistance without regard to the manufacturer’s interests and without regard to the beneficiary’s choice of product or healthcare provider, and
The manufacturer does not solicit or receive data from the charity that would facilitate correlating the amount or frequency of donations with the number of subsidized prescriptions for its products
11Slide12
Independent Charity PAPs
In May 2014, OIG issued new guidance document: re-emphasized the need for independence between donors and charities
Narrowly tailored disease funds that cover few products, or that apply differing eligibility criteria, benefit designs, or off-label policies for certain funds but not others, will be scrutinized closely to determine if the fund structures are for the benefit of a particular donor or otherwise serve as a conduit between a manufacturer and its patients
Specialty therapeutic funds are worth watching
Key is for fund to be defined consistent with “widely recognized clinical standards” and “in a manner that covers a broad spectrum of available drugs”
12Slide13
Manufacturer-Sponsored
PAPs
Only free product; not co-pay subsidies
Should either exclude federal program beneficiaries or be structured such that free product is provided “outside of the federal program benefit”
Patient must not be able to seek reimbursement from the federal healthcare program and Medicare Part D beneficiaries (if applicable) must not count the cost of the free product towards True Out of Pocket Costs (TrOOP) (for Medicare, one option is to enter a data sharing agreement with CMS).
Any federal program beneficiaries who get assistance would need to stay in the PAP for at least the program year, but potentially for life of therapy.
If Medicaid or Medicare subsequently covers the cost of the product, there is a risk that the PAP could be viewed as a means to steer patients to the drug. The above features (e.g. a data sharing agreement, operating outside of the benefit, etc.) mitigate this risk.
OIG
Advisory Opinion 14-05
Reduced price program for cash paying patients for product post-LOE
13Slide14
Topics
A Look Back…
Developments in Guidance from the OIG
A Look Ahead…
Update on 21
st
Century Cures Act
Debate
between regulatory framework & First AmendmentSlide15
21
st
Century Cures Bill (H.R. 6)
Tit. I – Discovery
Tit. II – Development
Tit. III – DeliverySlide16
21
st
Century Cures Bill (H.R. 6
) – Key Drug Development Provisions
Structured risk-benefit framework (sec. 2001)
Use of patient experience data (sec. 2001)
Qualification of drug development tools (sec. 2021)
Accelerated approval development plans (sec. 2022)
Precision medicine guidance (sec. 2041)Application of Bayesian statistics and adaptive trial designs (sec. 2061)Utilizing clinical experience evidence (sec. 2062)Streamlined data review (sec. 2063)Slide17
21
st
Century Cures Bill (H.R. 6
) – Key Drug Development Provisions
Sec. 2121
–
Approval of antibiotics for limited patient populations
Sec. 2153 – Reauthorization of rare pediatric disease priority review voucher
Sec. 2151 – Orphan drug exclusivity extension (6 mos.)Sec. 2181 – Enhancing combination product reviewSlide18
21
st
Century Cures Bill (H.R. 6
) – Expanded Access
Sec. 2082
Establishes new FDCA Sec.
561A
Manufacturer must make publicly available its policy on responding to requests for expanded access, including:
Contact informationProceduresCriteria for granting requestsTimingSlide19
21st Century Cures Bill (H.R. 6) –
Manufacturer Communications
Sec. 2101 – Healthcare Economic Information
Expanded permitted audience
Information must “relate” to an approved indication (vs. “directly relate”)
“Health care economic information” includes the “clinical data, inputs, clinical or other assumptions, methods, results, and other components underlying or comprising the analysis”
May
be
based on the separate or aggregated clinical consequences of the represented health outcomesMay be comparative to the use of another
drugSlide20
21st Century Cures Bill (H.R. 6) –
Manufacturer Communications
Sec. 2102 – Scientific and Medical Developments:
“Not later than 18 months after the date of enactment of this Act, the Secretary of Health and Human Services shall issue draft guidance on facilitating the responsible dissemination of truthful and non-misleading scientific and medical information not included in the approved labeling of drugs and devices.”Slide21
Topics
A Look Back…
Developments in Guidance from the OIG
A Look Ahead…
Update on 21
st
Century Cures Act
Debate
between regulatory framework & First
AmendmentSlide22
A Look Ahead…
The Free Speech Debate Continues
The debate between:
Regulatory definition of speech in the form of ‘labeling’ and ‘advertising;’ and
Commercial speech under the First AmendmentSlide23
Regulation of Drug Promotion Under the Food, Drug, and Cosmetic Act (FDCA)
FDCA
sec.
502 – Misbranding
Labeling is “false or misleading in any particular”
Labeling lacks “adequate directions for use”
Advertisement lacks “true statement” in “brief summary” re side effects, contraindications, and effectiveness
23Slide24
The Off-Label Dilemma
Off-label use may be important for patient care
Doctors may prescribe approved drugs for unapproved uses
Approved labeling may lag medical science
Off label use may be accepted medical practice, supported by literature, and reimbursable
BUT
Companies may not promote for these uses
24Slide25
FDA’s Traditional View of “Promotion” v. “Scientific Exchange”
Advertising
Promotional “labeling”
Other activities that show “intended use“ (e.g., detailing)
Unsolicited med info responses
Support for independent scientific/educational programs
Good reprint dissemination
Bona fide publications/ presentations in scientific
fora
25
Promotion
Scientific ExchangeSlide26
First Amendment Tests
26
Strict Scrutiny
: Speech restriction must further a compelling interest and be narrowly tailored to serve that interest
Political and non-commercial speech, such as scientific exchange
Potentially mixed commercial and non-commercial speech
Intermediate Scrutiny/Central Hudson
:
Regulation of truthful and non-misleading speech must directly and materially further an important government interest in a manner no more restrictive of speech than necessary to achieve the government interest
Commercial speechRational Basis: Regulation reasonably related to any hypothetical government interest
Applies to Government regulation of conduct Slide27
Generally Accepted
First Amendment Principles
27
Corporations have full First Amendment rights
Citizens United v. Fed. Elec.
Comm’n
, 130 S. Ct. 876 (2010)
Free marketplace of ideas – best response to speech is counter-speech, not censorship
Paternalism is not a valid government interestThompson v. Western States Med. Ctr.
, 535 U.S. 357 (2002) (rejecting “the notion that the Government has an interest in preventing the dissemination of truthful commercial information in order to prevent members of the public from making bad decisions with the information.” )Va. State Bd. of Pharmacy, 425 U.S. at 773 (1976) (
Laws based on the fear that truthful information will have an “effect upon . . . its recipients” have long been inherently suspect)
Hostility to a message is not a valid government interest
Snyder v. Phelps,
131 S. Ct. 1207, 1219 (2011) (picketing at military funerals)Slide28
Viewpoint discrimination
is presumptively invalid
28
Speech restrictions that discriminate based on the identity of the speaker or the content of the message are presumptively invalid
Simon & Schuster, Inc. v. Members of the N.Y. State Crime Victims Bd.,
502 U.S. 105, 116 (1991) (Son of Sam law).
R.A.V.
v. City of St. Paul,
505 U.S. 377, 392 (1992) (the government may not “license one side of a debate to fight freestyle, while requiring the other to follow Marquis of Queensberry rules”)
Rosenberger v. Rector & Visitors of the Univ. of Va., 515 U.S. 819, 829 (1995)The Government can no more burden speech based on the content of its message than censor it
Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue,
460 U.S. 575, 592-93 (1983) (ink tax on some newspapers but not others violated First Amendment)Slide29
IMS
v. Sorrell
IMS
v. Sorrell
invalidated under the First Amendment a Vermont law that banned pharmaceutical sales representatives from using prescriber-identifying data when marketing drugs to physicians
29
The Court held that the law discriminated against content and speaker, triggering heightened scrutiny.
The law failed
Central Hudson
because it did not directly advance the government’s interest and was more extensive than necessary.
The Court opens a Pandora's Box of First Amendment challenges.
Kennedy
Breyer
“Speech in aid of pharmaceutical marketing is a form of expression protected by the First Amendment.”Slide30
Importance
of
Sorrell
30
Supreme Court decision in
Sorrell
confirms pharmaceutical companies’ First Amendment right to promote their products
“Lawmakers may no more silence the unwanted speech by burdening its utterance than by censoring its content.”
“If pharmaceutical marketing affects treatment decisions, it does so because doctors find it persuasive. Absent circumstances far from those presented here, the fear that speech might persuade provides no lawful basis for quieting it.”
“But the fear that people would make bad decisions if given truthful information cannot justify content-based burdens on speech.”
“That the State finds expression too persuasive does not permit it to quiet the speech or to burden its messengers.”Slide31
United States v. Caronia
: The Alleged Misbranding of
Xyrem
Xyrem
is manufactured by Orphan
Medical, now Jazz Pharmaceuticals
Approved by the FDA to treat
narcolepsy and excessive day time
sleepinessNot approved for patients under 16 or the elderly
31Slide32
The Trial
32
“Caronia is promoting, he’s marketing a dangerous drug for use not approved by the FDA.”
Oops! My bad.
But promotion is speech protected by the First Amendment.
“He knew the rules: you can’t promote and market
Xyrem
for uses that have not been approved by the FDA. He admits it.”
“Caronia was promoting, promoting, trying to get physicians prescribe
Xyrem
.”
The government is trying to make protected speech the basis for criminal liability.
“A misbranded drug may be shown by a promotion of the drug for an intended use different from that approved by the
FDA.”Slide33
The Verdict
The jury found Caronia guilty of conspiracy to introduce into interstate commerce a misbranded drug
The court sentenced Caronia to one year probation, 100 hours of community service, and a $25 special assessment
33Slide34
“We conclude simply that the government cannot prosecute pharmaceutical manufacturers and their representatives under the
FDCA
for speech promoting the lawful, off-label use of an FDA-approved drug.”
The Second Circuit Vacates the Conviction
34
“The government clearly prosecuted Caronia for his words—for his speech.”
“
A pharmaceutical representative’s promotion of an FDA-approved drug’s off-label use is speech.”
DennySlide35
The Second Circuit’s Decision
35
This discriminatory regime is “subject to heightened scrutiny under
Sorrell.
”
The government’s regime “permits physicians and academics, for example, to speak about off-label use without consequence, while the same speech is prohibited when delivered by pharmaceutical manufacturers.”
DennySlide36
The Second Circuit’s Decision
36
Denny
“If the First Amendment means anything, it means that regulating speech must be a last—not first—resort.”
The government’s prohibiting of “off-label promotion by a pharmaceutical manufacturer while simultaneously allowing off-label use ‘paternalistically’ interferes with the ability of physicians to receive potentially relevant treatment information.”
“The government’s construction of the
FDCA
essentially legalizes the outcome—off-label use—but prohibits the free flow of information that would inform that outcome.”Slide37
Subsequent Cases
Most recent:
Amarin
(
SDNY
)
Manufactures
Vascepa
, an omega-3 fatty acidApproved for patients with very high triglyceridesWants to speak about benefits for patients with persistently high triglycerides, as well as disseminate peer-reviewed literatureSeeks declaration that:Application of FDA restrictions and FCA to speech about this particular off-label use, with the disclaimers Amarin proposed, would be unconstitutional as applied
With disclaimers, contends the speech is not misleading and thus subject to heightened scrutiny under SorrellHearing on preliminary injunction scheduled for July 7Slide38
Hypothetical
Drug co.
Meridia
makes drug
Merdia
, approved in 2011.
Following a FOIA request to FDA,
Meridia
obtains the AE database relating to Merdia.Based on this data, Meridia conducts a meta-analysis with a leading academic expert, and publishes its findings in an article in BMJ in 2015 showing the incidence rate of AEs associated with Merdia, which is < than contained in the PI.
The meta-analysis of this data also shows that Merdia increases HDL cholesterol, which is also included in BMJ article.
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