Recent Trends in Drug and Device Recent Trends in Drug and Device

Recent Trends in Drug and Device - PowerPoint Presentation

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Recent Trends in Drug and Device - PPT Presentation

Regulation Panelists Isabel Duffy Associate Vice President Merck amp Co Inc Jeff Handwerker Partner Arnold amp Porter LLP Michael Labson ID: 736314

sec speech coupons drug speech sec drug coupons amendment manufacturer approved government oig label program information paps federal century




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Recent Trends in Drug and Device





Associate Vice President


& Co., Inc.





& Porter LLP





& Burling LLP



Chief Compliance Officer



Important Information



and comments expressed

during this panel



those of the

participants and

not necessarily those of any current or former employers. Slide4


A Look Back…

Developments in Guidance from the OIG

A Look Ahead…

Update on 21


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


Coupons/Co-Pay Cards

Private Payor Litigation:

Parallel suits by private health benefit plan, on behalf of putative classes of payers


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



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.


Summary of OIG Guidance Re: Coupons


’ 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



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.


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



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



2005 Special Advisory Bulletin:


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


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


Idec – alleges $349M in donations in one year to CDF for MS funds


Independent Foundation


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


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”




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.


Advisory Opinion 14-05

Reduced price program for cash paying patients for product post-LOE



A Look Back…

Developments in Guidance from the OIG

A Look Ahead…

Update on 21


Century Cures Act


between regulatory framework & First AmendmentSlide15



Century Cures Bill (H.R. 6)

Tit. I – Discovery

Tit. II – Development

Tit. III – DeliverySlide16



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



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



Century Cures Bill (H.R. 6

) – Expanded Access

Sec. 2082

Establishes new FDCA Sec.


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”



based on the separate or aggregated clinical consequences of the represented health outcomesMay be comparative to the use of another


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


A Look Back…

Developments in Guidance from the OIG

A Look Ahead…

Update on 21


Century Cures Act


between regulatory framework & First


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)



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


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


Companies may not promote for these uses


FDA’s Traditional View of “Promotion” v. “Scientific Exchange”


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




Scientific ExchangeSlide26

First Amendment Tests


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


Corporations have full First Amendment rights

Citizens United v. Fed. Elec.


, 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


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).


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


v. Sorrell


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


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.



“Speech in aid of pharmaceutical marketing is a form of expression protected by the First Amendment.”Slide30





Supreme Court decision in


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



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


The Trial


“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


for uses that have not been approved by the FDA. He admits it.”

“Caronia was promoting, promoting, trying to get physicians prescribe



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


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


“We conclude simply that the government cannot prosecute pharmaceutical manufacturers and their representatives under the


for speech promoting the lawful, off-label use of an FDA-approved drug.”

The Second Circuit Vacates the Conviction


“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.”


The Second Circuit’s Decision


This discriminatory regime is “subject to heightened scrutiny under


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.”


The Second Circuit’s Decision



“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


essentially legalizes the outcome—off-label use—but prohibits the free flow of information that would inform that outcome.”Slide37

Subsequent Cases

Most recent:







, 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


Drug co.


makes drug


, approved in 2011.

Following a FOIA request to FDA,


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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