Puff, Puff, Passed! - President Obama passes the Family Smoking Prevention and Tobacco Control Act

By: Jordan Mummau, CIS Compliance Associate
jordanmummau@cis-partners.com

Imagine yourself back in high school; this may take some longer than others. You pull up to the Friday night party that you were never really invited to, blasting “Fight for your Right to Party” in your parents car, which you begged to use after you accidentally backed into the garage door. You step out of the car and scan the scene, waiting for the right time to make your appearance. After giving a few winks and a head nod, you reach into your Lee Dungaree jean pockets and pull out a comb to carefully sculpt your hair, which is almost as greasy as your face. Next, you reach into the pocket of your vintage polo t-shirt, which you won at a church retreat 3 years ago, and pull out a pack of cigarettes. You are not an experienced smoker, however, while leaning on the hood of your father's 1960 Oldsmobile Cutlass, the messages endorsed by ritzy celebs and a cartoon camel run through your mind as they entice you to puff away. The night ends. You now have fewer friends than when you came, there is a dent in the hood of your father’s car, and you have acquired a horribly sore throat that even Chuck Norris couldn’t fight (Okay, so everyone might not have had the same teenage experience).

Back to 2009. The messages and advertisements the tobacco industry have used for decades to lure society's impressionable young adults, will now come slapped with a giant WARNING label[i].

Kathleen Sebelius, Secretary of Health and Human Services states that, “the Food and Drug Administration’s (FDA) regulation of tobacco products will be a critical piece of a coordinated effort to save lives, lower costs and reduce suffering from heart disease, cancer and other tobacco-related illness.”[ii] This statement comes after President Obama’s decision to sign the Family Smoking Prevention and Tobacco Control Act, which hopes to alleviate some of the pressure tobacco companies allegedly place on America’s youth by regulating the methods in which the companies produce, market, and sell their products. The Congressional Budget Office has estimated that the new law could reduce youth smoking by 11 percent and adult smoking by 2 percent over the next decade[iii].

Under this new legislation[iv]:

- Cigarette packages will have warning labels that cover 50 percent of the front and rear. The word "WARNING" must be included in capital letters.
- Any remaining tobacco-related sponsorships of sports and entertainment events will be banned, as well as giveaways of non-tobacco items with the purchase of a tobacco product. A federal ban will be imposed on all outdoor tobacco advertising within 1,000 feet of schools and playgrounds.
- Point-of-sale advertising will be limited to adults-only facilities, and remaining vending machines will disappear except in places restricted to adults. Retailers who sell to minors will be subject to federal enforcement and penalties.
- Smokers, particularly young adults, will find they can no longer buy cigarettes sweetened by candy flavors or any herbs or spices such as strawberry, grape, orange, clove, cinnamon or vanilla. Cigarettes advertised as "light" or "mild," giving the impression that they are not as harmful to health, will no longer be found on store shelves.

The bill passed by Obama, who ironically is a smoker, represents a bill of historic measures that will hopefully reduce the number of people suffering from heart and lung diseases, cancer, and other illnesses that are related with tobacco use. Sebelius remarked, “These illnesses kill hundreds of thousands of Americans every year, and the new law gives us the tools to effectively address this major public health issue”ii. There are an estimated 45 million smokers within the United States. Of that 45 million, a projected 443,600 people die each year from a tobacco related illness[v].

Hopefully you wash your once greasy hair more than once a month, and have acquired more friends over the years than just your shadow. However, if you still smoke, be prepared for drastic changes per the FDA including changes in labeling, marketing, and the content of the actual product itself. Remember, the FDA is synonymous with ‘safe to use’ products. If the FDA is going to approve anything that contains already known harmful material, it is most likely going to be regulated to cause as little harm as possible, which could mean major changes for the entire tobacco industry. For those of us in the pharmaceutical realm, it will be interesting to monitor the regulations placed on tobacco products, to determine if these regulations set by the FDA will result in fewer people seeking healthcare treatment for tobacco related illnesses in the years to come.

As a side note, if your father still has that 1960 Cutlass, minus the dented hood, give me a call.

Sources:

[i] Windish, Joe. "The Family Smoking Prevention and Tobacco Control Act." The Moderate Voice. 13 June 2009. 22 June 2009 http://themoderatevoice.com/35259/the-family-smoking-prevention-and-tobacco-control-act/

[ii] "News Release." US Department of Health and Human Services. 11 June 2009. 22 June 2009 http://www.hhs.gov/news/press/2009pres/06/20090611d.html

[iii] "Obama to Sign Sweeping Anti-Smoking Bill." MSNBC. 22 June 2009. Associated Press. 22 June 2009 http://www.msnbc.msn.com/id/31481823/ns/politics-white_house/

[iv] "Obama to Sign Tobacco Regulation Bill." Kyw News Radio. 22 June 2009. 22 June 2009 http://www.kyw1060.com/Obama-to-Sign-Tobacco-Regulation-Bill/4647399

[v] "Cigarette Smoking." Cancer. 21 May 2009. American Cancer Society. 24 June 2009 http://www.cancer.org/docroot/PED/content/PED_10_2X_Cigarette_Smoking.asp

ACCME Considers Placing a Label on CME

By: Jackie O’Connor, CIS Marketing Associate
jacquelineoconnor@cis-partners.com

Following up on a previous CIS CME blog article, The ACCME (Accreditation Council for Continuing Medical Education) recently held ‘Calls for Comment’ on their website regarding new procedures that would differentiate between CME activities that are commercially funded and those that are not. “ACCME proposes to consider a new designation and review process for providers that wish to identify their program of CME as one that does not utilize funds from commercial interests that have been donated to support continuing medical education, e.g., Commercial Support-Free.”[1] The ‘ACCME-defined designation of Commercial Support –Free Accredited Continuing Medical Education’ has received responses from The Pharmaceutical Research and Manufacturers of America (PhRMA) and The Alliance for Continuing Medical Education (The Alliance).

The Alliance does not support the proposed plan. They believe “that all continuing medical education for health care professionals should be unbiased and based on the rigor of scientific and clinical discovery regardless of funding source.”[2] Their concern is what this proposal is implying about the current CME system – that commercially funded CME courses are biased and inferior to those that are support-free. Offering their input, “The Alliance recommends that organizations receiving funds from advertising or promotion establish firewall between the promotional and education departments and not “bundle” education activities with promotional fees.”2 The ACCME needs to maintain a barrier between the organizations that fund the activities and the CME content.

PhRMA response shares similar concerns as the Alliance. PhRMA recognizes the influence that pharmaceutical manufacturers have in supporting quality CME programs. Creating two types of CME programs would indicate that the quality of the courses varies simply based on whether it was funded or not. They point out that their main concern is to focus on who could potentially be affected, for example, “ any distinction that creates such an inference potentially harms physicians and patients because educational programs may not be funded, notwithstanding documented needed, because Providers may believe that such a designation is important for their program.”[1]

The key issue is both PhRMA and The Alliance feel this new system is without merit, since there is no proven evidence that the CME providers affect the quality of the content and knowledge offered at sponsored events.

This isn’t a cut and dry situation, and putting label, especially one associated with a negative connotation, on CME programs could lead to a rift in communication and confidence in CME activities. The bottom line is that there shouldn’t be a difference in the content between sponsored and non-sponsored CME courses. The quality of knowledge and intentions should remain the same so that these courses are truly beneficial to those attending them, and to the end result, their patients.

Sources:
[1] http://policymed.typepad.com/files/phrma-letter-to-accme-5-27-09.pdf
[2] http://www.acme-assn.org/advocacy_pg/Alliance'sResponseToACCMEApril09CallForComments.doc
ACCME website:
http://www.accme.org/index.cfm/fa/alerts.detail/alert_id/d43685f0-0218-4c77-906c-f18ae16f24bf

The American Recovery and Reinvestment Act of 2009

By: Dave Rice, CIS Director of Federal Contracting
daverice@cis-partners.com

On February 17, 2009 the President signed PL 111-5, the “American Recovery and Reinvestment Act of 2009” (ARRA)[1]. The ARRA imposes a number of requirements on Executive Branch departments and agencies receiving Recovery Act funds.

Many FSS contract holders have, or will shortly receive, a voluntary bilateral modification from the National Acquisition Center (NAC)[2] to modify their FSS contracts to incorporate new clauses implementing the ARRA[3]. These clauses include the following:

• 52.203-15 Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009
• 52.204-11 American Recovery and Reinvestment Act – Reporting Requirements
• 52.212-4 Contract Terms and Conditions-Commercial Items
• o Changes ( r) to incorporate bulleted clauses above
  o Provides for the Comptroller General of the United States, IG appointed inspector, or authorized representative to have access to and the right to examine any of the Contractor’s or any sub-contractors’ records that pertain to, and involve transactions relating to this contract; as well as the right to interview any officer or employee regarding such transactions.

Compliance with the ARRA reporting requirements is significant. It requires manufacturers to provide quarterly reports, which are due by the 10th day following the end of the quarter. Reporting elements include:

• Jobs created as a result of funding by the ARRA.
• Jobs retained as a result of funding by the ARRA.
• Total Compensation earned by the executive during the past fiscal year (includes salary, bonus, non-equity incentive plans, change in pension value, deferred compensation, and other compensation).
• Contract numbers
• List of all significant services performed or supplies delivered.
• Narrative description of the employment impact of work funded by the ARRA.
• Many additional elements[4].

Acceptance of the Recovery Act modification and its clauses is voluntary. However, if your firm elects not to accept the modification, your firm WILL NOT be eligible to receive or accept orders that are funded, in whole or in part by the Recovery Act.

The ARRA provides over $59 billion in funding for healthcare. The available funding focuses on modernizing the healthcare system, reducing medical errors and improving quality.

Based on our initial review of ARRA material, and discussion with NAC personnel, it appears that the vast majority of the recovery funds will be geared towards equipment and capital items rather than pharmaceutical purchases. Due to the limited opportunities in the pharmaceutical market, the significant reporting requirements, and the change in FSS contract clauses, we would encourage your firm to evaluate your product opportunities relative to the requirements of these new clauses. We understand that if you elect NOT to accept the modification at this time, it does not preclude you from changing that election in the future.

Sources:
[1] http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.txt.pdf
[2] http://www1.va.gov/nac/
[3] ARRA Amendment of Solicitation: http://gp.cis-pcx.com/federal-programs/veterans_affairs_health_program,5/guidance_documents,325/
[4] ARRA Q&A Document – June 2009: http://gp.cis-pcx.com/federal-programs/veterans_affairs_health_program,5/guidance_documents,325/

CBO Report Hurts Senate HELP Committees Reform Attempts

By: Clarissa Crain, CIS Compliance Director
clarissacrain@cis-partners.com

The week of June 15th through the 22nd proved to be pivotal for the movement forward of the Administration’s attempts to reform the health care system. With both victories and setbacks, the future scope of health care reform remains in question. The Congressional Budget Office (CBO) released findings that showed that the Senate HELP Committee’s proposed “Affordable Health Choices Act” would cost an exorbitant amount of money, far more than the Administration had estimated, and not yield the increase in coverage sought by the Administration.[i] At the same time, the Administration witnessed a huge win when PhRMA members agreed to pay $80 billion towards Medicare Part D over the next ten years (see Katie Lapin’s recent blog article, Good PR for Pharma). The administration is left in the wake of last week battling back against criticism of the current health care reform attempts based on the CBO’s findings, while trumpeting the ‘victory’ in increased financial support by the pharmaceutical industry for Medicare Part D.

From a perspective of understanding where health care reform stands and how the Senate HELP and Finance Committees are doing in their efforts to move legislation through Congress and onto the President’s desk by October, it is important to understand the recent CBO report.[ii] The legislation presented to the CBO by the Senate HELP committee was found to miss the mark both financially and on the Committee’s insured targets. The CBO found that the HELP Committee’s “Affordable Health Choices Act” would only extend health care coverage to an additional 16 million Americans, while costing a higher than expected, $1 trillion, between 2010 and 2019. The CBO’s findings shocked the HELP Committee and left supporters of the Committee’s efforts reeling.

In reviewing the findings of the CBO, it is apparent that the legislation presented to the CBO for review is missing key components that were previously cornerstones of the proposed legislation. Speculation is that these key components: the public plan, the employer mandate, and the individual mandate, were left out of the bill to help gain bipartisan support.[iii] However, by leaving out these components, the HELP Committee left out components that were projected to drive substantial increases in insured persons. Also interesting to note for those in the Medicaid space, there was no mention in the CBO’s report of the increase in the Medicaid Drug Rebate Amount for branded or generic drugs, as outlined by the Senate Finance Committee’s white paper issued in late May.[iv]

As of late last week the Senate HELP Committee was looking to draft and submit updated legislation to the CBO for review, in hopes that the updated legislation would bring them closer to the goals originally outlined by the Administration. Until then, it is likely that the introduction of health care reform legislation will meet strong resistance.

Sources:
[i] http://www.cbo.gov/ftpdocs/103xx/doc10310/06-15-KennedyLetter.shtml
[ii] http://kennedy.senate.gov/newsroom/press_release.cfm?id=1D9CB1D9-42F6-4FA0-81A8-00F645381877&type=archive
[iii] http://voices.washingtonpost.com/ezra-klein/2009/06/did_the_congressional_budget_o.html
[iv] http://finance.senate.gov/sitepages/leg/LEG%202009/051809%20Health%20Care%20Description%20of%20Policy%20Options.pdf

Good PR for Pharma

By: Katie Lapins, CIS Director of Small and Mid-Market Pharma
katielapins@cis-partners.com

Two announcements over the last week have contributed to a bit of positive public relations for the pharmaceutical industry.

The first announcement came from Pfizer; the company announced that it has developed a program called “MAINTAIN” (Medicines Assistance for Those who Are in Need) to provide Pfizer drugs to Americans who have lost their jobs since January. Highlights of the program include:

• The program was initiated by employees who saw family members, friends and neighbors losing their jobs.
• Participants must have been taking Pfizer medications for at least 3 months prior to their unemployment.
• There is no prior income restriction.
• The benefit can last for up to 12 months.

The second announcement came this weekend from Pharmaceutical Research and Manufacturers of America (PhRMA) that the industry has agreed to spend $80 billion towards Medicare Part D over the next 10 years to help defray the cost of President Obama's health care reform. With Medicare Part D, there is a gap in the coverage, often referred to as the “doughnut hole,” where participants must pay for the entire cost of their medications. With the new proposal, drug companies would pay half of the cost of brand-name drugs for seniors who are in the doughnut hole phase.

Health care reform has taken a bit of a back-seat to other issues over the last few months, but the general consensus remains that Americans can see significant changes to the health care system in the near future. I think both of these announcements are indicators that change is on the horizon, and the pharma industry is already adapting to the anticipated environment.

More information on both announcements can be found at:
http://www.pfizer.com/news/press_releases/pfizer_press_releases.jsp?rssUrl=http://mediaroom.pfizer.com/portal/site/pfizer/index.jsp?ndmViewId=news_view&ndmConfigId=1016273&newsId=20090514005582&newsLang=en

http://health.yahoo.com/news/ap/us_health_overhaul.html

Specific information on Pfizer’s MAINTAIN program can be found at:
http://media.pfizer.com/files/pfizer_maintain_fact_sheet_051409.pdf

What did you do last year? The District of Columbia and the State of Maine want to know by July 1

By: Judy Fox, CIS Senior Compliance Manager
judyfox@cis-partners.com

On July 1, pharmaceutical manufacturers are required to disclose their expenditures on Healthcare Practitioners (HCPs) to the State of Maine and the District of Columbia (DC). If you haven’t looked at a calendar lately, July 1 is right around the corner. Scrambling for the correct reportable expenditures? The following is a snapshot of the Maine and DC requirements. Are you ready?

In DC, the reporting requirements apply to manufacturers and labelers of prescription drugs dispensed in the District that employ, direct or utilize marketing representatives in the District. Not only is the report due by July 1, but it must be accompanied by a fee to support, and help offset the cost of, the work of the Department. The content of the annual report is to include a report of the value, nature, purpose and recipient of the expenses for marketing prescription drugs in the District that includes:

o All expenses associated with advertising, marketing and direct promotion of prescription drugs through radio, television, magazines, newspapers, direct mail and telephone communications as they pertain to District residents.
o The aggregate cost of all employees or contractors who engage in advertising or promotional activities including all forms of payment to those employees as it pertains to the District, or to the recipients who are residents or are employed in the District.
o All expenses with regard to any licensed Healthcare Provider or person employed by a Healthcare provider in DC including:

• All expenses associated with educational or informational programs, materials, seminars and the remuneration for promoting or participating in the programs, regardless of whether the manufacturer provides the program or materials.
• All expenses associated with food, entertainment, or gifts for more than $25 or anything provided to an HCP for less than market value. 1

Maine requires an annual report that includes the following information as it pertains to marketing activities conducted within the State in a format that provides the value, nature, purpose and recipient of the expense including:

o All expenses associated with advertising, marketing and direct promotion of prescription drugs through radio, television, magazines, newspapers, direct mail and telephone communications as they pertain to residents of Maine. (Expenses associated with advertising for a regional or national market that includes Maine are excluded).
o The following information for all persons or entities licensed to provide healthcare in the state, including anyone employed by a licensed HCP, health plan and benefits managers, pharmacies, hospitals, nursing facilities and clinics:

• All expenses associated with educational or informational programs, materials, seminars and the remuneration for promoting or participating in the programs, regardless of whether the manufacturer provides the program or materials,
• All expenses associated with food, entertainment, gifts valued at more than $25 and anything provided to a healthcare professional for less than market value,
• All expenses associated with trips and travel,
• All expenses associated with product samples, with the exception of samples that are distributed free of charge to patients,
• The aggregate cost of all employees or contractors of the manufacturer or labeler who engage in the advertising or promotional activities, including all forms of payment to the employees. The cost reported must reflect only the portion of payment to employees or contractors that pertains to activities within Maine or to the recipients of the advertising or promotional activities who are residents of or are employed in the State. 2

On the surface, the reporting requirements may seem straightforward; they can be if a manufacturer has been collecting and recording the required information in a manner that flows easily into an annual report. However, more often than not, that is not the case. The various departments and systems used to handle the collection of information can prove to be challenging when relying on the information to flow accurately into a report.

If you aren’t ready yet, it is time to get busy identifying where and how the necessary information is going to be collected into the July 1 report.

1. DC ST § 48-833.02 and § 48-833.03
2. 22 M.R.S.A.§2698-A

Articles of the Week!

Courtesy of Kerri McCutchin, CIS Compliance Associate
kerrimccutchin@cis-partners.com

1) Process Begins to Define “Meaningful Use” of Electronic Health Records
http://www.hhs.gov/news/press/2009pres/06/20090616a.html

2) Watson to Buy Arrow in Global Drug Bid
http://dealbook.blogs.nytimes.com/2009/06/17/watson-to-buy-arrow-in-global-drug-bid/?scp=1&sq=pharmaceutical&st=cse

3) Pharmaceutical Institute Launches New E-Course Focused on Health Policy http://www.redorbit.com/news/health/1707279/pharmaceutical_institute_launches_new_ecourse_focused_on_health_policy/index.html?source=r_health

4) Drug Firms Jockey for Space Online
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/12/AR2009061203230.html

5) Massachusetts Faces Costs of Big Health Care Plan
http://www.nytimes.com/2009/03/16/health/policy/16mass.html
*

The Beginning Constitutes the End – The Importance of an Accurate Class of Trade Schema

By: Tonya M. Brown, CIS Senior Manager
tonyabrown@cis-partners.com

Those of us in the pharmaceutical industry, specific to Government Programs, are aware that Class of Trade is where the story begins. Class of Trade (COT) is the systematic approach to categorizing a manufacturer’s sales transactions based upon the nature of its business. COT is the Alpha, the Commencement, the Birth of a manufacturer’s compliance in calculating statutorily mandated government rebates.

For many years, the Centers for Medicare and Medicaid Services (CMS), formerly the Healthcare Financing Administration, has published vague definitions of the components that should be included and excluded from the various pricing calculations that ensure Best Price is given to government entities. To further complicate the puzzle, the responsibility has been with the manufacturer to define and defend the nature of each facility in its membership repository. If and when a manufacturer is successful in identifying each of its customers by member type and transaction, it must class each facility to make sure any sales and discounts are captured and accurately reported to the government.

Sound simple? Well, this is merely where the story begins… from there the plot thickens. To further complicate the seemingly insurmountable task of classifying your customers, the inability to correctly identify and class sales transactions by facility could, and in some instances does, create erroneous reporting, contract termination and severe penalties.

Examples of Category Discussions:

• Should Third Party Logistics Providers be considered a Class of Trade or should they be included in the Wholesaler category?
• Should Public Health Service be considered a Class of Trade?

If a manufacturer incorrectly classifies any of its sales transactions, it is at risk of inaccurately calculating its Average Manufacturer Price (AMP), Best Price (BP), Average Sales Price (ASP), and Non-Federal Average Manufacturer Price (Non-FAMP). In addition, Public Health Service (PHS) and Federal contract prices could be incorrectly reported as a result of these inaccurate calculations.

The Deficit Reduction Act (DRA), enacted in 2007, makes an attempt to better define these unclear areas; however, each attempt raises additional questions and the possibility of creating additional layers in a manufacturer’s schema. While the debate goes on from one subject matter expert to the next, we can and do all agree that an accurate COT Schema should be the first step in any manufacturer’s line of defense.

It is imperative that manufacturers have current policies and procedures specific to their COT schema. These policies and procedures should be adhered to, and updated as changes in COT operations and government regulations occur. A customized training program should be put into effect to train employees on their roles and responsibilities, to ensure a successful implementation of COT operations.

The debate is not over, but the reality is that COT designations are somewhat subjective, and will continue to evolve as manufacturers enter and exit the playing field.

Please feel free to contact me to share your thoughts, or to ask questions about creating or revising your Class of Trade Schema, at tonyabrown@cis-partners.com.

Paper Compliance Just Isn’t Enough

By: Meredith Taylor, Esq., CIS Senior Compliance Manager

meredithtaylor@cis-partners.com

In order to have an effective Corporate Compliance Program, it is not sufficient to point to a binder full of Policies and Procedures on your Compliance Officer’s desk. This is a common pitfall for many pharmaceutical companies that do not have a robust Corporate Compliance Program and do not have many resources to implement, monitor, and audit the documents. Without a process in place to monitor and audit employees’ compliance with written Policies and Procedures, the documents are nothing more than words on a page, and they certainly do not constitute a Corporate Compliance Program.

Does this sound at all familiar? Imagine that PharmaCo is a small pharmaceutical company with 10 NDCs. The Compliance Officer is also the VP Finance, with no compliance staff to support him. The Compliance Officer, in an attempt to create an effective Compliance Program pursuant to OIG guidelines, decides that Sales and Marketing and Operational Compliance documents must be drafted. He studies the relevant laws, regulations, and guidance documents; conducts interviews and meets with key stakeholders; and begins to draft the documents. After a year of hard work and long hours, PharmaCo has plethora of Corporate Compliance documents! The Compliance Officer follows his new Document Control SOP, finalizes all of the documents, and ensures that they are signed. Over the course of the next few months, the Compliance Officer holds various training sessions for relevant employees, and all the employees sign off on the documents, pursuant to the new Training SOP. A few months pass, and there are some regulatory and company changes that require him to update his documents. He does this, and holds the appropriate training sessions. This pattern goes on for the next two years.

Seems like PharmaCo is in pretty good shape right? Not quite. PharmaCo failed to monitor and audit its employees’ compliance with the terms of its Policies and Procedures. For all the Compliance Officer knows, the sales reps could be distributing sports tickets to doctors, the Marketing Department could be promoting the Grants Program, and employees could be forgetting to retain documents pursuant to the Document Retention Policy. Just having the documents and training the employees on them is not enough; there is no way to know if the employees are compliant without systematically monitoring and auditing their compliance.

Monitoring and auditing may seem synonymous, but I can assure you they are not. Your Company must conduct both on an annual basis in order to maintain an effective Corporate Compliance Program.

Monitoring
Monitoring is defined as ongoing, real-time checks and balances implemented and executed by a functional/operational group to ensure proactive evaluation, identification, and mitigation of risk.
Monitoring is typically performed by the Corporate Compliance Officer. It is his or her responsibility to determine whether employees are complying with established Policies and Procedures, and whether the documents should be revised. Typically, documents are scheduled for monitoring every quarter, but monitoring can also take place on an ad hoc basis when deemed necessary. The Compliance Officer will review those documents to ensure that they still make sense from a compliance standpoint; he may also seek assistance from the legal department. If he feels there is a need to revise a document, it should be put through the Document Control process. Assuming the document is sound, he will interview a few (not many and not randomly selected) employees, pull training records to ensure employees are being trained, review call notes or other documentation (not many and not randomly selected), etc to see if the employees are following the policies and procedures in those documents. If not, the document should be re-reviewed by the Compliance Officer and another member of senior management, and revised if necessary.

The training materials should also be reviewed and revised if necessary to ensure they are in line with the document. Then, training should be held again for relevant employees. This document should be monitored again at least one year later.

Auditing
Auditing is defined as the routine evaluation of the effectiveness of controls and adherence to laws, regulations, and guidance documents as incorporated in Company Policies and Procedures. Audits should be performed by a party who possesses substantive expertise in the subject matter, but is not affiliated with the functional/operational group or task being audited.

Audits typically assume the legal sanctity of the Policies and Procedures, and test criteria is prepared to test compliance against the requirements in the documents.

The process of auditing compliance with the documents begins by selecting a sample size. This typically should be random, but some subjective decision making may be required. Next, a formal communication should go out to all employees in the sample, and to all audit sponsors, to announce the audit. A document request may also be distributed to the sample size. The employees in the sample size are then interviewed, and may be asked to perform a task. The auditors may then perform the same task, using the Policy and/or Procedure document as a guide, to ascertain if the same result is found. Testing criteria against the Policy and Procedure is typically developed and completed during a review of any documentation. A final Audit Report is prepared with a section for Management Reponses. The key stakeholders have an opportunity to respond and remediate.

Here is a summary chart (courtesy of Clarissa Crain, CIS Compliance Director) to decipher between Monitoring and Auditing:


I cannot stress enough how important it is to systematically monitor and audit compliance with your Policies and Procedures. If the Government ever audits your compliance in this area, it will want to know whether your documents are actually implemented and whether employees are truly complying with them.

Fourth Waver Sighting!

Courtesy of CIS Founding Partner Toni Barsh

tonibarsh@cis-partners.com

Dear Readers,

In the past, Pharma Compliance Blog creator Steven Moore has opined on the legend of the mythical "Fourth Waver" (The Infamous Fourth Wave: The Sasquatch of the GP Compliance World). In spinning his tale, "The Steven" speculated about what these Fourth Wavers might do, IF they existed:

"They would go on stage and play drums and make a dueling piano bar whole. They would get up on tables around town and shake things that shouldn’t necessarily be shaken... They would form circles and have an individual GP dance competition... They would declare that their main goal would be to become the Director of Beer or Director of Goose for a fine establishment..."

These are all amazing, if hypothetical, acts. However, I think Steve may have overlooked one major tenet of Fourth Wavedom: a Fourth Waver would leap onto the stage and dance the crocodile dance to celebrate a birthday, even if it wasn't his (or her) own. Said Fourth Waver would so impress the crowd with his dance moves, that he would be allowed back on stage by popular demand, even after having been kicked off.

Again, this has all been hypothetical behavior... that is until now. Because at the recent CBI conference, a Fourth Waver was sighted committing exactly the kind of acts described above! And CIS captured him on film!

I know that I am breaking the first rule of Fourth Wave (do not talk about Fourth Wave), but we at CIS strive to always keep you informed of breaking developments in the GP space, and I feel I would be remiss in my duties if I did not bring this to your attention.

So without further ado, please head into the weekend with a smile on your face, knowing that you have also seen the mythical FOURTH WAVER!

Photo courtesy of Karin Moore (no relation). Thanks Karin!

Connecticut’s Representatives have Universal Healthcare on Their Minds

By: Amanda Zanetti, CIS Compliance Associate
amandazanetti@cis-partners.com

On May 20th, 2009 Connecticut’s House of Representatives passed two plans that have the potential to dramatically change the state’s healthcare system. “SustiNet (H.B. 6600) would make a new public health insurance choice available to individuals and businesses. The Health Care partnership (H.B. 6582) would open the state employee health insurance plan to municipalities, nonprofits and small employers.”[i]

According to The Hartford Courant, the SustiNet plan is “aimed at achieving universal health care in Connecticut by creating a public insurance pool that anyone could join regardless of their health history.”[ii] While private insurance plans would still exist, this new public insurance pool would create competition between the two. The proposals passed with flying colors through the House (107-35); however, they still have to go through the Senate and Republican Governor M. Jodi Rell.

So what may have caused these proposals to come into play? The New Britain Herald writes, “In Connecticut, the state and most metropolitan areas are considered “highly concentrated” under U.S. Department of Justice guidelines. Consolidation of this kind means an insurer can, without fear of consequences, raise premiums and/or reduce the variety of plans or quality of services offered to customers.” [iii]

This new insurance pool would give residents of Connecticut more options and more freedom when it comes to their insurance plans. In addition, if this proposal is passed, it may slow the rapid increase in health insurance premiums that has occurred all over Connecticut in the past ten years. However, if Connecticut does adopt universal health care, it may be taking on a whole new kind of problem.

For the past two years, Massachusetts has required most of its “residents to have health insurance and provides state-subsidized plans for the poor.”[iv] While the state has the lowest percentage of uninsured residents (2.6%), it has different issues as well. For example, many doctors in Massachusetts are not accepting new patients, or won’t see patients with certain types of insurance, and “rejection rates for low-income adults and those with public insurance were double the rates for higher-income residents and those with private coverage.”[v] This is just one example of the dangers of healthcare reform, but Connecticut’s government may want to proceed with caution when it comes to universal healthcare.

Sources:
[i] http://www.newbritainherald.com/articles/2009/05/25/news/doc4a1b4890543e0170209587.txt
[ii] http://www.chicagotribune.com/topic/hc-2universal-health-care0521.artmay21,0,6516996.story
[iii] http://www.newbritainherald.com/articles/2009/05/25/news/doc4a1b4890543e0170209587.txt
[iv] http://www.nytimes.com/2009/05/28/health/policy/28massachusetts.html?_r=1&ref=health
[v] http://www.nytimes.com/2009/05/28/health/policy/28massachusetts.html?_r=1&ref=health

If You Can’t Take the HEAT…

By: John Avicolli, CIS Senior Compliance Associate
johnavicolli@cis-partners.com

Fact – “Three HealthEast Care System hospitals have agreed to pay the United States $2.28 million to settle allegations that the health care facilities submitted false claims to Medicare.”[1]

Fact – “Regency Nursing and Rehabilitation Centers Inc. nursing home chain will pay the United States $4 million to settle allegations that Regency submitted false claims to Medicare and the Texas Medicaid program.”[2]

Fact – “Executives and employees at WellCare Health Plans Inc. engaged in an elaborate scheme to defraud the Florida Medicaid program and the Florida Healthy Kids Corporation. In order to avoid a health care fraud conviction on these charges WellCare must, among other things, consent to the civil forfeiture of $40,000,000 and pay an additional $40,000,000 in restitution to the Florida Medicaid and Healthy Kids programs to repay proceeds from those programs to which WellCare was not entitled.”[3]

Medicare fraud cases cost taxpayers billions of dollars. Fraud scams run the gamut from phantom billing, performing unnecessary procedures, and providing substandard care then seeking Medicare reimbursement, to offering free services in exchange for Medicare or Medicaid number. These instances illustrate a few of the devious ways health care fraud perpetrators are stealing billions of dollars from the federal government and, ultimately, crippling the long term solvency of the Medicare and Medicaid programs.

In an effort to combat the mounting number of fraud cases, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius recently announced the creation of a new interagency effort, the Heath Care Fraud Prevention and Enforcement Action Team, which will be known as “HEAT.” Additionally, they announced the expansion of Medicare Fraud Strike Force (MFSF) team operations, already being run in Los Angeles and South Florida, to Detroit and Houston. The MFSF team in South Florida with enjoyed measured results; it has already convicted 146 defendants and secured $186 million in criminal fines and civil recoveries.

“The HEAT team will include senior officials from the Department of Justice (DOJ) and HHS who will build upon and strengthen existing programs to combat fraud while also investing new resources and technology to prevent fraud, waste and abuse before it happens,” reported HHS.[4] HEAT and MFSF utilize a “data-driven” approach to identify unexplainable billing patterns with respect to investigating fraudulent activity. Part of this data driven approach is steeped in examining claims and identifying facilities that appear to be producing more claims than would be expected, given the demographic makeup of a surrounding area.

Although recouping millions of dollars in fraudulent billings is a primary concern for HEAT, there is a significant emphasis placed on prevention and ensuring front end compliance within the system. HEAT is committed to “improving data sharing between the Centers for Medicare & Medicaid Services and law enforcement so additional patterns that lead to fraud can be exposed,” “strengthening program integrity activities to monitor and ensure compliance,” and “increasing training for providers on Medicare compliance and supplying the knowledge and resources for providers to identify and prevent fraud.”[5]

Sources:
[1] http://www.usdoj.gov/opa/pr/2009/May/09-civ-497.html
[2] http://www.usdoj.gov/opa/pr/2009/May/09-civ-498.html
[3] http://medicare-fraud.net
[4] http://www.hhs.gov/news/press/2009pres/05/20090520a.html
[5] http://www.hhs.gov/news/press/2009pres/05/20090520a.html

Health Care Reform – Forging Ahead

By: Grete Dudek, CIS Compliance Associate
gretedudek@cis-partners.com

With Congress in session, it seems like every day there are new reports in the news of discussions and agreements taking place over what changes to make to the country’s health care system. The reports range from insurers and employers being able to reward people for healthy behavior, the idea of taxing people with costly health insurance to fund insurance for those who are currently without, and healthcare providers agreeing to cut healthcare costs.

Although President Obama is urging Congress to enact health care reforms before the end of 2009, it might not be until the next session of Congress that any changes start to occur. The one thing that everyone seems to agree on is that the current system isn’t doing enough for enough people. But what is the best course forward? With Medicare “expected to run out of money in 2017, two years sooner than projected last year1,” and healthcare costs projected to rise at 6.2 percent a year2, President Obama is calling on industry leaders to commit to slowing the increase. Industry leaders wrote President Obama a letter last month, expressing their commitment to slowing the increase of healthcare costs.

“The letter was signed by executives of the Advanced Medical Technology Association, a lobby for medical device manufacturers; the American Hospital Association; the American Medical Association; America’s Health Insurance Plans, a trade group for insurers; the Pharmaceutical Research and Manufacturers of America; and the Service Employees International Union2.” They committed to reducing over-use and under-use of health care, reducing hospitalization, and better management of chronic diseases.

The letter also acknowledges that there are “factors driving health care costs that are beyond the control of the delivery system alone,” and specifically mentions focusing on obesity prevention as one way to fight rising costs. This could be done by employers, since “Congress is planning to give employers sweeping new authority to reward employees for healthy behavior, including better diet, more exercise, weight loss and smoking cessation4.” President Obama’s plan for a healthy America, which is committed to lowering health care costs and providing health care for all, and the current financial situation make this the perfect time for change, but it will take some time before anyone knows for certain what those changes will be.

Sources:
1. http://www.nytimes.com/2009/05/13/us/politics/13health.html
2. http://www.nytimes.com/2009/05/11/health/policy/11drug.html
3. http://graphics8.nytimes.com/packages/pdf/politics/20090511_HealthGroups_Letter.pdf
4. http://www.nytimes.com/2009/05/10/health/policy/10health.html

A Transcript of my CBI Cocktail Hour Speech On Dreams

By: Steven Moore, CIS Director of Business Development

stevenmoore@cis-partners.com

In thinking about how I wanted to recap this past CBI Medicaid conference --- which was littered with good times, good laughs, great food, friends and, of course, Diet Cokes --- I realized that some of my favorite friends were not present this year. I know with the economy the way it is, and budgets being tight, that a conference may be sacrificed here or there. I wanted you to know that you were all missed and I thought it would be a nice idea to make you ‘feel’ as if you were there. In addition, I wanted to get this out there for those who were sleeping or had already ducked out of the conference at this time (or were already at the bar).

Therefore, I decided to provide a transcription of my cocktail hour speech about dreams. It was in PowerPoint with magic wands and movement (Yes, CIS pays me for this), so some of it will be lost, but I think the pictures should give you the gist.

Here’s to hoping I’ll see y’all at the next conference - especially IIR in September in the beautiful Windy City! (I’m an equal opportunity conference sponsor sponsor - Welcome to the Department of Redundancy Department.)

“Hello, my name is Steven Moore and I’m a proud member of the Compliance Implementation Services (better known as CIS) team.

This is a speech about dreams. It’s about picturing what you want and doing everything you need to do to get it.

Before I get started, I’m going to lay out the golden rule for this speech. I realize that I am, in fact, the last person standing between you and that first drink --- notice I said first. Therefore, I will do everything I can to keep this brief. If anyone knows me well enough, they'll also know that I'm standing between myself as well.

So, as we think about dreams, let’s start with this young man. Any thoughts out there? This young man dreamed of playing professional baseball --- but his dream was way more specific. He dreamed of being the best player and the captain of the greatest sports franchise this earth has ever seen - the New York Yankees. Of course, I’m talking about Derek Jeter. He is the Yankee captain, has won four world series titles, and has more hits than any player in baseball in the last 10 years (and- I don’t think - he does steroids like ex-Boston Red Sox like Manny Ramirez).

Since Derek realized his dream, I thought, in the spirit of Disney, that we’d make another dream come true. Ladies and gents, allow me to present CIS’ Chris Cobourn. (I do have copies of my resume handy --- as most of you know Chris is a die hard Red Sox fan)

Next there is this little fella. Any thoughts? He dreamed big. He dreamed of shattering every golfing record there is and he’s well on his way. Of course, I’m talking about none other than Tiger Woods. He is the winner of 14 major championships and over a hundred tournaments worldwide. He’s also well on his way to becoming the first “billion dollar athlete.”

Again, since Tiger realized his dream, let’s grant one more wish for CIS’ newest kid on the block: Bill Baxter.

Finally, there is this young man. His dreams were a bit different and a bit larger than the others. He was a bit awkward and people had trouble understanding why he called his mother’s father AMPa. He dreamed of the legends in the industry.

I’m proud to say that this young man is Me. Steven Moore. A proud GP Geek.

Finally, I will not make this a commercial, but will tell you that I couldn’t imagine a better place to work or a better group of people. I encourage you to stop by our booth and introduce yourself.

We’ve had a great year at CIS and, as a thank you to those who have helped make it happen and those who will help us come back even stronger next year, the drinks are on CIS tonight. Thank you.”

New Draft Guidance on Presentation of Risk Information

By: Chris Didizian, CIS Senior Associate
chrisdidizian@cis-partners.com

Preface: Based on the title you may already know the contents of this blog entry, but it must be said that the following is not a full summary of the guidance. For the full document (and it is worth the read!) please click here.

On May 26, 2009 the FDA issued a draft guidance titled Presenting Risk Information in Promotion. In the past, manufacturers relied on Warning and Untitled Letters to determine the most current “focus” areas regarding promotional materials. In other words, it is safe to say that manufacturers often had to “guess” whether a promotional piece would be approved or not. While the actual process is more complicated than that, the lack of guidance was costing companies a significant amount of money, and forcing them to incessantly request some sort of direction in an effort to save money and remain compliant. This absence of this type of guidance for the past few years begs the question: how consistent is the FDA in assessing the accuracy/completeness of a promotional piece without “standard” guidelines? Undoubtedly, the draft is a step in the right direction toward providing the manufacturer with specific guidelines and ensuring a sense of consistency in the approval process. But is the guidance comprehensive?

The twenty-seven page draft details exactly the level of information (and even formatting) that will be approved, while also highlighting the standard for reviewing advertisements. This “reasonable consumer standard” maintains efforts to protect the safety of the consumer by providing the appropriate information in an educational manner. However, while much of the guide is useful, it fails to address unique technical issues concerning the Internet, which houses a significant amount of promotional material. These situations are unique because, for example, information that appears on one browser/computer may not show on another browser/computer. It goes without saying that there are a number of problems with the previous example, but to find a solution the agency will have to delve deep into this advertising technology, so it is understandable that this guidance does not yet address that type of issue.

As stated, the guidance is just a step in the right direction. By not addressing the technical issues for advertising via the internet, the FDA is leaving out a huge area of advertising/promotion. In any event, the guidance will be far more useful to manufacturers than reading warning and untitled letters in order to figure out a standard for what to (and not to) advertise.
*

The Promoting Innovation and Access to Life-Saving Medicine Act

By: Scott Hoffman, CIS Associate
scotthoffman@cis-partners.com

As I am sure everyone reading this is aware, one of the key goals of the Obama administration is to bring affordable healthcare to all Americans, and the administration is currently working on a variety of initiatives to ensure that goal comes to fruition. One of the initiatives being brought to the floor is the “Promoting Innovation and Access to Life-Saving Medicine Act,” which is sponsored by Representatives Henry Waxman, Frank Pallone, Nathan Deal, and Jo Ann Emerson. The overall goal of this bipartisan act is to allow the Food and Drug Administration (FDA) to approve affordable copies of biotech drugs, as the FDA currently lacks clear authority to approve generic versions of these products, allowing companies to charge monopoly prices even after all patents have expired [1]. Rep. Deal stated,

While biologics are highly effective medications in the treatment of a host of
debilitating and life-threatening medical conditions, biologic drugs often cost
on average 22 times more per daily dose than chemical medications, the most
expensive of which costs well over $100,000 per year. It is expected
approximately 50% of all drugs approved in 2010 will be a biopharmaceutical, a
projection which only underscores the need for this legislation as the strain on
state and federal governments grows [1].

Under the current rules, biotech producers are able to make minor structural changes to their existing patented products, allowing them to obtain additional periods of exclusivity, which in turn allow the producers to continue to charge “monopoly prices” [1]. This process, referred to as evergreening, is addressed in this act by allowing generic manufacturers to produce “biosimiliar” products. A biosimiliar product is considered to have no clinically meaningful difference between the biological product and the original product in terms of the safety, purity, and potency [2]. However, in order for the FDA to approve a biosimiliar product, the application must demonstrate the following:

• The product is highly similar in structure to the original product;
• No clinically meaningful differences between the products are expected;
• The two products have the same mechanism of action, if known;
• The proposed product label carries one or more of the approved indications for the original product;
• The route of administration, dosage form, and strength, are the same as the original product; and
• The controls used in manufacturing the product are adequate to assure identity, strength, quality, and purity [2].

The act contains an additional stipulation for FDA approval of a biosimiliar drug; it must also be interchangeable, which means the risk of switching the patient one or more times between the original product and the biological product can be expected to be not significantly greater, in terms of safety or diminished effectiveness, than the risk of continuing to use the original product without such switching [2]. In order to prevent delays in the FDA approval of biosimiliar products, the act stipulates that the FDA must approve or disapprove the application for a comparable biological product within ten months after submission, or 180 days after the application is accepted for filing by the FDA, whichever is earlier, unless the final action date is extended by joint agreement of the applicant and the FDA [2].

Currently, the bill has a wide range of support from consumer groups, businesses, unions, patient groups and payers. Additionally, there is an expected companion Senate bipartisan bill being introduced by Senators Chuck Schumer, Susan Collins, Sherrod Brown, and David Vitter [1]. As this bill comes to vote on the floor it will be interesting to see how both the House and the Senate vote, as this legislation could set a framework for future bills on generic chemical drugs, as well as potential stem cell based drugs, in the future.

Sources:
[1] http://energycommerce.house.gov/index.php?option=com_content&task=view&id=1528&Itemid=1
[2] http://energycommerce.house.gov/Press_111/20090311/hr1427_detailedsummary.pdf

Final Rule for Over-the Counter Pain Relievers and Fever Reducers

By: Amanda Zanetti, CIS Compliance Associate
amandazanetti@cis-partners.com

Manufacturers of over-the-counter pain relievers and fever reducers may need to revise their labeling practices within the next year, due to the April 28th Final Rule[i] issued by the Food and Drug Administration requiring manufacturers to prominently display active ingredients and include warnings of potential safety risks associated with taking pain relievers and fever reducers.[ii] According to Matthew Holman, the FDA's Deputy Director for the Division of Nonprescription Regulation Development, those at the FDA “believe the new labeling requirements will add information concerning severe adverse effects of over-the-counter pain relievers and fever reducers that many consumers may not be aware of.”[iii]

The final rule targets acetaminophen, which is found in brands like Tylenol, and nonsteroidal anti-inflammatory drugs, which include aspirin, ibuprofen, naproxen, and ketoprofen. Products containing acetaminophen and NSAIDS must warn customers of the potential risks which include stomach bleeding (NSAIDs) and severe liver damage (acetaminophen). In addition, manufacturers must include a warning on products containing acetaminophen, instructing consumers to ask a doctor before taking the blood thinning drug Warfarin.[iv]

So how is this rule going to impact pharma companies? To start, while some manufacturers have taken the initiative to voluntarily change labeling to include safety warnings for their products, in most cases, these new labels do not address all of the requirements issued in the FDA’s new rule. This means that within the next year, manufacturers are going to have to revise their current labels, costing them considerable time and money. In addition, the new warning labels have the potential (which I feel is unlikely but still, it could happen) to deter potential consumers. For some, the safety warning may cause consumers to shy away and choose a more natural substitute.

Sources:
[i] http://edocket.access.gpo.gov/2009/pdf/E9-9684.pdf

[ii] http://www.fiercepharma.com/story/fda-requires-stronger-otc-pain-med-labels/2009-04-28
[iii] http://www.reuters.com/article/healthNews/idUSTRE53R4Z020090428
[iv] http://www.fda.gov/bbs/topics/NEWS/2009/NEW02004.html

The Role of Affect in your Culture of Compliance

By: Joe Calarco, CIS Senior Manager
joecalarco@cis-partners.com

The Fox Television Drama “Lie to me” tells the story of a “leading deception expert who studies facial expressions and involuntary body language to discover not only if someone is lying, but why.”[1] The show is based on the recent scientific work of Paul Ekman, Ph.D. [2] and a theory developed by the late Silvan S. Tomkins Ph.D. called Affect Theory[3].

We all have experiences that forever change the way we view our world and the study of affect theory had that impact on me about ten years ago when studying human behaviour. The theory helps explain everything from the raw facial expressions of a newborn to the scripted behavioural norms of the world’s differing cultures. Seeing affect theory used to support a major network drama is evidence of the theory’s growing acceptance, and has prompted me to write about the importance of affect in the business world.

For those who seek more information about affect theory, a book (1992) by Donald Nathanson, M.D. entitled “Shame and Pride” is an excellent introduction. For the purpose of this blog article, I ask you to trust that humans are born with nine innate affects, from which all experiences are filtered. They are listed below with corresponding facial/behavioral expressions. Some are listed in low/high intensities.

Positive:
Enjoyment/Joy - smiling, lips wide and out
Interest/Excitement - eyebrows down, eyes tracking, eyes looking, closer listening

Neutral:
Surprise/Startle - eyebrows up, eyes blinking

Negative:
Anger/Rage - frowning, a clenched jaw, a red face
Disgust - the lower lip raised and protruded, head forward and down
Dissmell (reaction to bad smell) - upper lip raised, head pulled back
Distress/Anguish - crying, rhythmic sobbing, arched eyebrows, mouth lowered
Fear/Terror - a frozen stare, a pale face, coldness, sweat, erect hair
Shame/Humiliation - eyes lowered, the head down and averted, blushing

Affects assign importance to the infinite amount of information bombarding the Central Nervous System at any given moment, and are the basic building blocks of emotion and scripted behavior. One may liken them to the role of letters in building words or notes in a musical composition. Most importantly, affect is contagious and, as a result, is a critical part of our non verbal communication.

So why is all this important to Compliance? Let’s me develop a hypothetical situation to make my point. Your team is frantically processing data for a critical path trial for a filing that is mission critical to your company’s success over the next five years. Are you feeling the distress yet? How about the fear? Now let’s throw in a surprise FDA audit of your data. Is your group prepared to manage this pressure? In my experience, teams that know what to expect during an audit typically have the game plan (or scripted responses) to effectively manage such a scenario. The point here is that compliance mistakes may occur unintentionally when we are under significant distress.

Affect and Scripts play a significant role in normal operations and crisis management. In the next several months, I will expand upon this concept and the role affect theory plays in developing your culture of compliance.

Sources:

[1] FOX Broadcasting Company (April 10, 2009) Lie to me
http://www.fox.com/lietome/

[2] http://www.paulekman.com/

[3] Wikipedia (April 10, 2009) Affect Theory
http://en.wikipedia.org/wiki/Affect_theory

CIS and ExL Pharma Present:

Mastering the Government Programs Systems Environment:

Assessing Your Current Toolset and Evaluating Your Options
Wednesday, June 3, 2009

1:00 PM - 3:00 PM, EDT

Leaders:
Bill Baxter, Strategic Advisor, Government Affairs, CIS
Chris Cobourn, Vice President of Regulatory Compliance, CIS
Joseph DelPonte, Sr. Director of Price Reporting & Contract Operations, Stiefel Laboratories, Inc.
Catrina Hirschauer, Manager of Government Pricing and Reporting, Xanodyne Pharmaceuticals, Inc.
Todd Leduc, Sr. Government Sales Analyst, Contract Pricing and Reimbursement, Solvay Pharmaceuticals, Inc.
Marika Thiessen, Director of Sales Operations, Sirion Therapeutics

Webinar Summary:
Multiple regulatory agencies publish statutory calculation guidance across Medicaid,
Medicare Part B, the PHS program, the VA program and now Tricare. Each manufacturer
has to be able to understand the guidance as it applies to them, develop appropriate calculation
methodologies for each of the calculation types, and then have the right toolset to perform the calculations. In this seminar, we evaluate your options and discuss the challenges and issues that manufacturers face. This includes budgetary and resourcing challenges faced by small and mid-market companies, as they try to find a practical balance between compliance and operational costs while ensuring that they are reporting accurately to the Federal and State Governments.

A Note from Chris Cobourn:
All companies have some “system” for performing their calculations, whether using spreadsheets or other tools, implementing a commercial GP system, or having a third party perform the calculations. Companies may be evaluating their options and trying to determine the appropriate path for them, or they may want to know how to evaluate the compliance of their current systems. I have had discussions with many companies on this topic, so I thought it would be good to have a forum where companies could hear from CIS and their industry counterparts.

In our Webinar next week, we will discuss the core components and requirements of a good GP system, and have industry representatives talk about the approaches they selected and why.

I hope that you will consider attending, it should be a good discussion, and will definitely give you some food for thought as you evaluate your current toolset and options. Feel free to reach out to me with an email if you would like to know more about the Webinar.

Chris
chriscobourn@cis-partners.com

5 Easy Ways Register:
Mail: ExL Events, Inc., 555 8th Ave., Ste. 310, New York, NY 10018
Email: register@exlpharma.com
Phone: 866-207-6528
Fax: 888-221-6750
Online: www.exlpharma.com

An Update on the False Claims Act

By: Meredith Taylor, Esq., CIS Senior Compliance Manager
meredithtaylor@cis-partners.com

On May 20, 2009, the Fraud Enforcement and Recovery Act of 2009[1] (“FERA”) was signed into law by the President. FERA amends the Civil False Claims (FCA) by imposing liability on any person or entity who submits a false claim to the government, with or without overt intent, in exchange for payment, whether the claim was submitted to the government directly or indirectly, and whether the Government ever actually paid the claim.

The FCA, prior to the amendment, imposed liability on anyone who:

(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;
(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
(3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid; …[2]

Recently, the Courts have interpreted the FCA to narrow the scope of liability, and Congress has made multiple attempts o to amend the FCA to expand its scope and overturn those Court decisions. Until last week, none of those Bills were successful. S.2041 and. H.R.4854, both known as “the False Claims Corrections Act,” and H.R.3180, known as “The Whistleblower Recovery Act of 2007” failed to make it out of session. After these failures Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vermont) drafted a Bill which finally passed.

Senate Bill S.386 (amended by the House) was passed by the Senate and amended by the House, and has been signed by the President. According to the Bill’s proponents, S.386 was crafted from portions of the unsuccessful Bills and was fueled by the desire to undo the “harm” that was done by the Allison Engine[3] case.

In the Allison Engine case, the Court ruled that a government contractor was not liable under the FCA because it did not intend to present a false claim to the federal government. In that case, a subcontractor used false information to receive payment, but from another contractor, not directly from the government. The Court held: “it is insufficient for a plaintiff asserting a § 3729(a)(2) claim to show merely that “[t]he false statement's use ... result[ed] in obtaining or getting payment or approval of the claim,” 471 F.3d 610, 621 (C.A.6 2006) or that “government money was used to pay the false or fraudulent claim,” id., at 622. Instead, a plaintiff asserting a § 3729(a)(2) claim must prove that the defendant intended that the false record or statement be material to the government's decision to pay or approve the false claim.[4] This case requires a clear showing of intent to defraud the government.

The first S.386 passed by the Senate on April 28, 2009, included these changes to the FCA:

• Presentment - The requirement that the false statement be presented to a representative of the federal government would be done away with. Now, the false statement could be provided to a government contractor or a third party.
• Claim – What used to require requests or demands for money directly from the government would now include money provided by the government, in whole or part, for work in furtherance of a government interest.
• Material – The false statement used “to get” a false claim paid would now only require that the false statement was “material” to the false claim. An influence of the false claim could be enough.
• Reverse false claims – An addition of FCA violations for knowingly and
  intentionally avoiding a repayment of money owed to the government, as a result of an overpayment.
• Retroactivity - This section of the Bill seeks to reach back to Allison Engine
  and those cases that relied on Allison Engine as precedent, and apply this new
  Bill to those facts, to essentially reverse many decisions.

The amended S.386 passed by the House on May 6, 2009, included these amendments to
the Senate Bill:

• Qui Tam Intervention - The government can join suit with realtors by filing its own
  complaint, or by amending the Qui Tam complaint to clarify or add detail to the
  claims. The government’s complaint relates back to the realtor’s filing date.
• Civil Investigation Demands – The Attorney General, or a designee, can
  share information with the realtor if appropriate to investigate the claim.
• Anti-retaliation – An employee who is terminated or demoted as a result of lawful acts done in furtherance of reporting or stopping FCA violations is entitled to
  reinstatement with the same authority.

Finally, the President signed the Bill on May 20, 2009. It should be noted that the final version of FERA states that the amendments to the FCA take effect on the date of the enactment, May 20, 2009, and apply to conduct on or after that date, but there are limited exceptions. As such, the retroactivity amendment above in the Senate Bill did not survive.

FERA will lead to more liability because it will take less to prove a violation of the FCA. The fraudulent claim, statement, or information does not have to be directly presented to the government for payment. Now, if false information submitted indirectly to the government is material in the false claim, liability could attach.

Sources:
[1] P.L. 111-21
[2] 31 USC 3729
[3] Allison Engine Co., Inc. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008).
[4] Id. at 2128-2130

Massachusetts Marketing Code of Conduct and the Effects on Drug and Device Marketing Research

By: Jess Ebert, CIS Compliance Associate
jessicaebert@cis-partners.com

On March 11, 2009 the Massachusetts Public Health Council released the new Marketing Code of Conduct to regulate the interactions between healthcare practitioners and pharmaceutical and medical device manufacturing companies. The regulations require mandatory reporting of the “value, nature, purpose and the recipient of any fee, payment, subsidy, or economic gift” with a value of $50 or more, that is provided through the company or by company agents for sales and marketing activities. The new regulations also apply to payments to healthcare practitioners participating in marketing surveys. [1]

The Marketing Research Association (MRA) has stated that the regulations will severely impact research with practitioners. [2] Pharmaceutical and medical device manufacturers are required to publicly disclose the name of the participant, which will make practitioners less likely to participate in important and beneficial marketing research. The MRA states that reduced participation will lead to less research being performed, which can have a number of adverse implications down the line, including loss of jobs and a significant decrease in income for the state of Massachusetts (medical conventions held in Boston generate millions of dollars in visitor spending per year, but some groups have already canceled their convention, and others have stated that they are avoiding Boston because of the uncertainty with the law). [3]

The intent of the regulations is to prevent undue influence in the relationship between manufacturers and healthcare practitioners. However, the MRA has issued a statement advocating that marketing research incentives be exempt from the reporting requirements. The MRA states that the “regulation will severely hinder survey and opinion research with healthcare professionals, whose participation is often tied to sizeable research incentives, because of the high demands on and cost of their time” and that the “regulation will damage the quality of research by injecting bias [because] in most research the participants – and often the interviewers – are unaware of who sponsored the study.” They also point out that publicly disclosing personally identifiable information undermines the ethical code of survey and opinion research to maintain confidentiality of participants. [4]

The statement also highlights the value that marketing research brings to the public and patients, including patient compliance, prevention of medical errors, and simulations that ensure patient safety.

While there is a need for transparency in the relationship between healthcare practitioners and drug and device manufacturers, the MRA has made a valid argument for marketing research incentives to be exempt from the reporting requirements.

To read more about the MRA and their position on the Massachusetts Marketing Code of Conduct, visit their website: http://www.mra-net.org/.

Sources:
[1] http://www.cmor.org/ga/gaArticle04_09.cfm
[2] http://www.policymed.com/2009/04/marketing-research-association-to-massachusetts-slow-down.html
[3] http://meetingsnet.com/medicalmeetings/news/massachusetts_law_medical_conventions_0109/
[4] http://www.cmor.org/pdf/mra_issue_paper-mass_healthcare_reg.pdf
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Articles of the Week!

Courtesy of Debbe Saez, CIS Senior Compliance Manager
debbesaez@cis-partners.com

For those of you still in the office today, here are some interesting articles to help you kill those last few hours before the long weekend. Enjoy!

Vermont Acts to Make Drug Makers’ Gifts Public
http://www.nytimes.com/2009/05/20/business/20vermont.html?_r=1&ref=health

HHS Makes $75 Million Available to States to Expand Health Insurance Coverage
http://newsroom.hrsa.gov/releases/2009/stateaccessmay.htm

Senate Finance Committee's Health Reform 'Options Paper' Prompts Swift Academy Response
http://www.aafp.org/online/en/home/publications/news/news-now/government-medicine/20090520options-response.html

New Online Features Translate Vision Science to Everyday Life
http://www.nih.gov/news/health/may2009/nei-18.htm

Daschle Still Key Player on Health Care
http://www.usatoday.com/news/washington/2009-05-20-daschle_N.htm
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Vermont Act 80 - Expect Your Letter in the Mail

By: Amy VanDeCar, CIS Compliance Manager
amyvandecar@cis-partners.com

If you recently received a letter from the Office of Vermont Health Access and aren’t quite sure why they’re asking your company for money, here’s some background information that may help…

In 2007, Vermont passed into law Act 80.[1] You may be familiar with the Act in the context of its restrictions on “prescriber-identifiable” prescribing data, and the subsequent lawsuit filed by IMS Health, Wolters Kluwer Health and Verispan.[2] What you may not know is that the Act also requires pharmaceutical manufacturers who participate in Medicaid, and related programs in Vermont, to pay a fee to the Office of Vermont Health Access (OVHA). The 0.5% fee, based on the amount OVHA spent on your company’s prescription drugs, will fund:

(1) Collection & analysis of information on pharmaceutical marketing activities;
(2) Analysis of prescription drug data needed by the attorney general’s office for enforcement activities; and
(3) An evidence-based education[3] program that will provide information on the therapeutic and cost-effective use of prescription drugs.

Pharmaceutical Research and Manufacturers of America (PhRMA) challenged the constitutionality of imposing a fee on prescription drug manufacturers in order to fund an education program into which the manufacturers have no input, and whose message would be determined by private entities. While the lawsuits were pending, Vermont did not attempt to collect the fees. On April 23, 2009, however, the US District Court for the District of Vermont upheld Vermont Act 80, as amended by Act 89,[4] ruling that there is insufficient evidence at this time to strike down the sections of the Act challenged by PhRMA and the data providers. In his ruling,[5] US District Court Judge J. Garvan Murtha noted that the (Vermont) Department of Health is responsible for the content of the education program and, therefore, that any input into the message by private entities is “irrelevant.”

Now that the case has been decided in US District Court, Vermont has wasted little time in requesting payment of the fees for 2007 and 2008 from manufacturers. If you’ve received the letter, the invoice will soon follow; payment dates are scheduled for one month after the billing dates.

In addition, another invoice from Vermont may soon be coming your way…. Vermont Bill S.48,[6] which includes an annual fee of $500 from “each manufacturer of prescribed products with marketing expenditures” in Vermont, has passed both houses of the Vermont General Assembly. The purpose of the proposed fee may sound familiar – the fee will be used to “fund collection and analysis of information on activities related to the marketing of prescribed products.”

Sources:
[1] http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/acts/ACT080.htm
[2] http://www.imshealth.com/deployedfiles/imshealth/Global/Content/StaticFile/Vermont/Legal_Complaint_for_Vermont.pdf
[3] http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=18&Chapter=091&Section=04622
[4] http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/acts/ACT089.htm
[5] http://www.wcl.american.edu/pojip/go/ims-v-sorrell
[6] http://www.leg.state.vt.us/docs/2010/bills/Passed/S-048.pdf

The Convergence of Pharmaceutical and Medical Device Regulations

By: Matt Hotz, CIS Senior Associate
matthotz@cis-partners.com

Pharmaceutical regulations and medical device regulations have been converging. This strengthening of the linkage between drugs and devices statutes has implications for companies in both industries.

The Medical Device Safety Act of 2009, introduced in the House of Representatives by Rep. Frank Pallone [D-NJ], would remove the preemption clause from the Medical Device Amendments of 1976, allowing state and local governments to enforce standards more stringent than the FDA. There is no comparable preemption clause for the pharmaceutical industry, a fact that was reinforced in the recent Supreme Court decision in the case of Wyeth v. Levine. With the proposal of the Medical Device Safety Act, lawmakers hope to close this regulatory gap between drugs and devices, giving state and local governments the same standing in the device industry as they have in the drug industry.

Another bill which illustrates this trend towards using the same regulatory standard in both the pharmaceutical and the medical device industry is the Physician Payments Sunshine Act of 2009, introduced in the Senate by Chuck Grassley [R-IA] and Herb Kohl [D-WI]. In this bill, the term, “drug,” is used sixteen times, and in fifteen of those sixteen instances, the term “drug” is immediately followed by the term, “device.” The lone outlier is the proper name of the regulatory body, the Food and Drug Administration. The two terms are used essentially as inseparable parts of the same whole.

This trend isn’t limited to Congress, either: in a January 2009 report entitled, “The Food and Drug Administration’s Oversight of Clinical Investigators’ Financial Information,” the OIG defined the term, “investigational products,” as a blanket term to cover drugs, medical devices, and biological products. Effectively, the OIG drew no distinction between drugs, medical devices, or biological products with regards to FDA oversight of potential conflicts of interest.

What does this trend mean for pharmaceutical companies and medical device companies? Manufacturers in each industry should expect distinctions between their industry and the other to continue to shrink. Manufacturers should also expect the more stringent standard to be one adopted in cases where the regulations between the two industries differ significantly.
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Preemption and the Distinction between Drugs and Devices

By: Matt Hotz, CIS Senior Associate
matthotz@cis-partners.com

On March 4, 2009, the Supreme Court issued their decision on Wyeth v. Levine, one of the most important court cases in recent history for the pharmaceutical industry. The central issue in the case presented to the Supreme Court is preemption – the idea that federal law trumps state law in cases where the two potentially conflict.

The Supreme Court ruled that Federal Drug Agency (FDA) approval of the warnings on pharmaceutical product labels does not preempt state court decisions in civil suits claiming that those warnings are inadequate. Interestingly, a year earlier, in the case of Riegel v. Medtronic decided on February 20, 2008, the Supreme Court ruled that premarket approval from the FDA preempted common-law claims challenging the safety or effectiveness of a medical device.

Why did the Supreme Court rule that FDA approval preempts state law for medical devices but not for pharmaceutical products? As the NY Times explained, “the discrepancy reflects the different legal issues in the two cases.” While this is true that each of these cases brought different issues before the Supreme Court, the differences can be attributed to the fact that some of the decades-old regulations underlying the medical device industry differ from those underlying the pharmaceutical industry. The 1976 Medical Device Amendments (MDA) to the Federal Food, Drug, and Cosmetic Act explicitly bar state and local governments from imposing requirements on medical devices that differ from the requirements established by the FDA. No pharmaceutical equivalent to this preemption provision exists.

In the wake of the Supreme Court’s decision in Wyeth v. Levine, the Medical Device Safety Act of 2009 (H.R. 1346) was introduced in the House of Representatives by Rep. Frank Pallone [D-NJ]. If passed, this bill would, “prohibit specified provisions preempting state and local requirements for medical devices intended for human use from being construed to modify or otherwise affect any action for damages or the liability of any person under state law.”

In short, this bill would reverse the Supreme Court’s decision in Riegel v. Medtronic and, “place medical devices and drugs on a level playing field with respect to patient lawsuits,” according to an editorial in the New England Journal of Medicine. This change would not only apply to future claims – it would also be applied retrospectively. The language of the Medical Safety Act of 2009 states that it would:

(1) take effect as if included in the enactment of the Medical Device Amendments of 1976 (Public Law 94-295) and
(2) apply to any civil action pending or filed on or after the date of enactment of this Act.

In practice, this bill would give standing to pending medical device cases that probably would have been dismissed in the wake of Riegel v. Medtronic. The retroactive removal of preemption protection in these cases would obviously have enormous ramifications for the medical device industry. Bizarrely, the actions set into motion by the Supreme Court decision in Wyeth v. Levine may have a larger impact on the medical device industry than the pharmaceutical industry.

Whether the Medical Device Safety Act of 2009 passes or not, its introduction is part of a trend to reduce the regulatory differences between the pharmaceutical industry and the medical device industry. Companies in the pharmaceutical and medical device industries should note this trend and adjust their corporate compliance programs accordingly.
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The Pharmaceutical Industry Has Convinced Me That I am a Bad Mother

By Judy Fox, CIS Senior Compliance Manager
judyfox@cis-partners.com

Despite enjoying a wonderful Mother’s Day with my family, our industry often makes me feel like a bad mother. This month it’s the folks at Pharmaceutical Formulation & Quality (PFQ) who are calling my motherly aptitude into question through no fault of their own. Thank goodness my children are grown, or the pressure from our industry to spare them yucky tasting medicines would be too much to bear. Instead I am just questioning the way I treated them when they were sick, and find myself feeling guilty about not feeling guilty, which is a big burden for an Italian-Catholic.

I read an industry article in the April/May 2009 issue of PFQ entitled, “The Taste of Success – Choose your drug flavor carefully to improve patient compliance.” 1 I am fascinated by the flavor business and the studies on patient compliance based on the taste and flavor of medicines, especially those for children. After all, there is genuine science to the patient’s response to certain flavorings and aromas in medications. My local pharmacy even has a sign instructing all of the good parents to ask about the variety of flavorings offered to make their children’s medication more appealing. If it tastes bad there are parents who will go back to the pediatrician and ask for something else. I used to work for a pediatric pharmaceutical company, and the taste of medicine was a weighty issue. We held frequent taste tests for reformulations and product launches. The taste and flavor was also a selling point emphasized in the marketing materials for the medications we manufactured. The interesting thing is that our medicines were indicated for children as young as two months old. That’s the age that children drink baby formula – have you ever tasted that stuff? I don’t think even the good parents of the world have ever asked their pediatrician for a better tasting baby formula.

While my children are all healthy adults, we did have our share of illnesses and hospitalizations. Some serious – two cases of bacterial meningitis, several illnesses that required hospitalization, and a few operations - and plenty of cases of strep throat, mono, ear infections, and even one combined case of Lyme disease and West Nile virus just to keep us on our toes and test our sanity. My point in mentioning the details is that these illnesses were treated with medicines we had to administer at home. I don’t remember any of my three sons ever saying, “Yum! That tastes good!”, nor do I remember caring if they liked the taste. What I do remember was going through the same ritual that I went through as a kid; the boys would hold their nose with one hand and hold a glass of water in the other. For really foul tasting stuff, they were treated to a Popsicle.© I thought offering my kids a Popsicle© was especially smart of me when I was treating strep throat. I never even considered calling the pediatrician to see if there was any tastier medication on the market. I wanted them to get better, so the matter was not up for discussion. I will admit, other than an asthma inhaler, they never had to take anything for an extended period of time, so maybe that would have made a difference in their long term “compliance.” I reason it out like the allergy shots that my oldest had to have for 4+ years. He got used to it. There are cultural foods that many people refer to as an “acquired taste,” and while I never understood why you would keep eating something you didn’t like until you acquired a taste for it, maybe medications can be an acquired taste as well.

I like to think that I would have been somewhat concerned if the taste of their medicine was really good, because then I would have worried about them wanting it all the time. I admit that I didn’t have the special locks on the toilets and medicine cabinet. I just didn’t let them play in the bathroom – or under the kitchen sink for that matter. I know that things can happen in the blink of an eye and you can never be too careful, but there is a degree of worry that seems like overkill and there is a degree of pampering our children that I just don’t understand. I may have missed the memo, but when did kids start deciding whether or not they were going to take their medicine?

In the mean time, I will have to second guess my kids’ childhood until they all start presenting my husband and me with grandchildren to babysit. I will make sure that I do everything right this time. I may not have been the ever-vigilant mother, but there is not a chance that I will risk being anything but the world’s greatest grandma! If they want bubble gum flavored medicine, they will get it. Heck I may even give them a Popsicle© too!

Source:
1 Pharmaceutical Formulation & Quality, Volume 11, Number 2, April/May 2009. “The Taste of Success, Choose your drug flavor carefully to improve patient compliance.” by David Tisi.

See-Through Clinical Trials

By: Karen Brown, CIS Marketing Director
karenbrown@cis-partners.com

In a continued effort to push for more transparency around clinical trial data, Pharmaceutical Research and Manufacturers of America (PhRMA) has updated the 2002 Principles of Conduct of Clinical Trials and Communication of Clinical Trial Results. [1]

The revised voluntary Principles, which take effect on October 1, 2009, require PhRMA’s member companies to record “the timely registration of all interventional clinical trials involving patients – including some early Phase 1 studies – on a public website, to help patients who need medical care to enroll in relevant studies.” [2]

According to the Principles, “timing” is within 21 days of enrollment of the first patient. With regards to Phase I studies, it’s a little more ambivalent, and is best described in this PhRMA Q&A:

Q: Company D has completed an exploratory, controlled clinical trial in healthy
adults of a product involving a novel and highly proprietary study design.
Should Company D communicate the results of this trial?

A: Perhaps.
Exploratory trials conducted in healthy adults rarely provide information of
significant medical importance. However, if such a trial did provide significant
medical information, sponsors should work with the investigators to communicate
the results of the trial. [1]

PhRMA also notes that this commitment extends to “all interventional clinical trials involving patients – regardless of whether the medicines are approved or the particular research programs have been discontinued.” [2]

Under these Principles, if the clinical trial results are thought to be of significant medical importance, the sponsor should work with investigators to communicate the results of the trial through posting or publication.

And, when it comes to publishing results, changes involving research paper authorship include:

• Adoption of the International Committee of Medical Journal Editors (ICMJE). Under these revised Principles, only individuals who make substantial contributions to medical manuscripts will be recognized as authors.
• Further alignment with ICMJE standards regarding disclosure in medical journal manuscripts of all financial or personal relationships that might present a conflict of interest – whether in an article or a letter. What’s more, authors of medical journal manuscripts should describe the role of sponsors in designing the study, collecting and interpreting data, and writing the report. [2]

Sources:
1. http://www.phrma.org/files/042009_Clinical%20Trial%20Principles_FINAL.pdf
2. http://www.phrma.org/news_room/press_releases/revised_clinical_trial_principles_reinforce_phrma%92s_commitment_to_transparency/

How to Address the TRICARE Retail Refund Program

By: Dave Rice, CIS Director of Federal Contracting
daverice@cis-partners.com

The clock is ticking… the deadline to make a decision on what your company wants to do regarding TRRx refunds is fast approaching. We are at T-minus-14 days until the Tricare Final Rule's Effective Date of May 26, 2009 - 14 days until retail refunds, and any requests for full or partial compromise, are due. The Tricare Management Authority (TMA) has taken a carrot and stick approach to influence companies to voluntarily participate in this mandatory program. The stick is the threat of assigning Tier 3 status to your products, and requiring prior authorization on products not voluntarily made part of the program. These actions would result in a significant loss of sales in the retail market. The carrot is the implied assurance that retroactive rebates are open to negotiation and compromise, allowing companies to avoid all or a portion of their retroactive liability.

Because of the vague direction provided by the TMA, and the lack of clarity related to compromise approval criteria, protocol, and approval authority, many companies have struggled with how they want to deal with the requirements imposed by the TRICARE Final Rule. It was the intent of TMA (presumed) to incent companies to voluntarily participate (avoiding costly and lengthy litigation) in the program by offering an opportunity to negotiate retroactive refunds for the period of January 28, 2008 to May 26, 2009. However, the criteria for compromise, paradoxically, requires companies to litigate or threaten litigation for a compromise to be considered. TMA has authority to approve compromises up to $100,000; amounts greater than that require approval by the Department of Justice (DOJ). It is unclear what direction has been provided to the DOJ, or what recommendations TMA may have made to influence the criteria to be used by the DOJ in granting compromise requests. It is also unclear whether the DOJ will take a hard line stance and reject all requests for compromise, forcing companies to litigate.

CIS has developed different strategies for manufacturers to use, based on size of their liability, and their willingness to compromise on retroactive refunds. One strategy will be to sign a Pricing Agreement, preserving Tier 2 status and avoiding a Prior Authorization, and request a full or partial compromise of the retroactive liability based on TMA approval authority. We believe this will give companies with liabilities less than $100,000 the greatest chance for a expeditious settlement with minimal costs.

Companies with liabilities significantly exceeding TMA’s authority may want to consider a delay strategy. This would require signing a Pricing Agreement, and requesting a compromise on the full retroactive liability. This would preserve Tier 2 status with no Prior Authorization, and delay a decision on the retroactive refunds due. The compromise request would not be evaluated until the August P&T committee meeting, where it would be referred to the DOJ, most likely delaying a ruling until late Fall. This delay could provide us time to see how the Courts will rule on the Coalition of Government Procurement’s pending litigation on this matter, and how TMA and/or the DOJ may rule on compromise requests submitted by those who are up first.

CIS is partnering with Joe Metro, Esq. at Reed-Smith, LLP to provide assistance to companies that wish to preserve their Tier 2 status, avoid a Prior Authorization, minimize payment of retroactive refunds (with or without litigation), and comply with the requirements of the Tricare Final Rule. The clock is ticking… contact CIS immediately for assistance in formulating your compromise request strategy and compromise request documentation.

For more information, please feel free to contact Steven Moore, CIS Director of Business Development.
stevenmoore@cis-partners.com
484-445-7207
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HHS Articles of the Week

Courtesy of Dana Zelig, CIS Senior Compliance Associate
danazelig@cis-partners.com

On April 29, 2009 Kansas Governor Kathleen Sebelius was sworn in as Secretary of the Department of Health and Human Services (HHS). During her first few weeks in office Sebelius has been busy, handling issues ranging from health care reform to the recent H1N1 flu outbreak. To bring you up to speed on the work being done by HHS and the Agency for Healthcare Research and Quality, we have compiled the following recently published articles:

HHS Releases New Report: Hard Times in the Heartland: Health Care in Rural America
http://www.hhs.gov/news/press/2009pres/05/20090504a.html

Statement by HHS Secretary Kathleen Sebelius and by Acting CDC Director Dr. Richard Besser Regarding the Change in CDC’s School and Child Care Closure Guidance
http://www.hhs.gov/news/press/2009pres/05/20090505a.html

Secretary Sebelius Highlights Two New Reports on Health Care Quality, Says Improving Quality is Key Component of Health Reform
http://www.ahrq.gov/news/press/pr2009/qrdr08pr.htm

HHS Secretary Sebelius Welcomes Deputy Secretary Bill Corr, Indian Health Service Director Dr. Yvette Roubideaux
http://www.hhs.gov/news/press/2009pres/05/20090507a.html

HHS Announces Members of Committees That Will Advise on Implementation of Health IT
http://www.hhs.gov/news/press/2009pres/05/20090508a.html

Secretary Sebelius Announces HHS Office of Health Reform Personnel
http://www.hhs.gov/news/press/2009pres/05/20090511a.html
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Transparency Implications on Industry Support for Continuing Medical Education

By: Jess Ebert, CIS Compliance Associate
jessicaebert@cis-partners.com

At a time when transparency is being called for in many different aspects of the pharmaceutical and medical device manufacturing industry, it’s important to realize the effects that such transparency can have on physicians and patient care. The Physician Payments Sunshine Act of 2009 requires the public disclosure of payments to physicians and physician-owned entities related to marketing, education and research with a value of $100 or more, with a few exceptions. How is physician education tied into this?

Continuing Medical Education (CME) is required of every physician, but has recently come under fire from “public interest” critics and a few leading members of Congress. Pharmaceutical and medical device manufacturers are responsible for funding approximately half of CME activities, and many critics believe that the support creates bias, and unjustly influences the physicians to use their products. The need for transparency in this area is understandable, but it’s important to establish regulations that do not impede the exchange of valuable information between pharmaceutical and device manufacturers and physicians.

The Center for Medicine in the Public Interest (CMPI), a non-profit public policy group that is dedicated to promoting solutions that advance medical progress, and the Coalition for Healthcare Communication, a drug marketing group that defends the right of healthcare professionals and consumers to receive truthful information regarding pharmaceutical and medical products, released a report in April 2009 titled ‘Industry Support for Continuing Education of Healthcare Professionals – An Evidence-Based Evaluation.’ The report contains the views of physicians and others who organize and conduct private sector CME programs that were brought together in a conference to discuss how recently proposed legislation will impact physicians and patients.

The general message of each participant was that commercially supported medical education is greatly benefiting physicians and patients alike. Manufacturers have a responsibility to present information concerning their product’s safety and efficacy, whether favorable or not. Supporting CME is the best way to keep physicians updated on the latest medical advances, and in turn, the physicians are able to use this information to offer new therapies to their patients [1].

Marissa Seligman, Senior VP of the Pri-Med Institute, a for-profit education company, also participated in the conference, and spoke about how physicians would be impacted if industry support was no longer available. Pri-Med’s analysis revealed through a survey that 92% of physicians said banning commercial support for CME activities is not a good idea. “Physicians stated that loss of commercial support would increase their personal cost of getting CME and their resources to do this are limited. Second, it would decrease the quality of CME out there by eliminating the ability of providers to do the education that matters, and it would also provide them with fewer opportunities” [1].

In addition to the large number of physicians that favor industry support, several professional associations are also in agreement with the CMPI’s report, including the American College of Cardiology. Jack Lewin, M.D. and CEO of the American College of Cardiology was also a participant in the conference, and stated that “were we not to have these additional services which we believe rapidly advance the education of our members and the translation of science to the point of care, the patients and doctors who serve them will be harmed’ [2].

Another concern of several participants is the effect that reducing industry support will have on the underserved communities. “Underserved” implies inner city practitioners who are working in clinics, with scarce resources, and for little pay, offering care to the homeless and those with insufficient or no insurance coverage. Offering industry supported CME is critical to these practitioners, who otherwise would not have the resources to pay for CME, further lessening the quality of care they are able to provide [2].

Those interviewed for the report do not deny that there have been some problems and abuse within the current system, and some even agree that transparency is a good idea. If not ‘overdone’, the Physician Payments Sunshine Act, and other similar legislation, could be beneficial.

The report contains many more supporting arguments and information on the issues discussed above, and is certainly worth reading to gain a better perspective on how industry support of CME is beneficial to both physicians and patients.

Sources:
[1] http://cmpi.org/uploads/File/CMPI_CME_Report.pdf
[2] http://www.policymed.com/2009/05/cme-commercially-supported-medical-education-benefits-those-who-need-it-most.html
For prior PCB coverage of the Physician Payments Sunshine Act, see: http://pharmacomplianceblog.blogspot.com/search?q=sunshine

Current Healthcare Policy and its Potential Impact on Government Programs

By: Chris Cobourn, VP of Regulatory Compliance
chriscobourn@cis-partners.com

Change is coming to the healthcare industry in the United States, and it appears very likely that it will impact the way we view Federal and State Programs. There will be a change in the way we view the Government as a customer, as well as how we view the business and financial impact of this growing customer base.

Let’s look at three key converging factors:

1) Increased Need - the socio-economic factor: An aging baby boomer population will soon become Medicare eligible. Economic issues, such as the rising unemployment rate, will cause an increase in Medicaid eligibility (this includes the crisis of the Dual Eligibles, 8 million people in 2007, who are both Medicare and Medicaid eligible, and represented $239 Billion in healthcare spending in 2008).

2) Financial Crisis: A Financial crisis at the Federal and State level presents a challenge of how to fund existing programs, let alone plan for the expanded need.

3) Political Traction: With the Democratic party controlling both the executive branch and legislative branch of the Federal Government, and with their public advocacy of healthcare reform, it is certain that some, or many, budget and legislative initiatives will take place.

The discussion is evolving daily, and will surely evolve dramatically over the next few months, and Senators Baucus and Kennedy reiterated these issues in a letter to the President on April 20, in which they committed to “moving health reform legislation in the Senate this year, and announced that their committees will mark-up comprehensive health care reform legislation in early June.” (1)

Keep in mind, as well, the important factor of Senator Arlen Specter moving to the Democratic Party. His shift, combined with the potential of Al Franken taking the Senate seat for Minnesota, and with the two independent senators voting with the Democrats, you have the potential of a Filibuster-proof Senate.

So, what does this have to do with Federal Programs as we understand them today?

First:

Let’s look at the President’s proposed budget, which includes a $633.8 Billion Health Care Reserve Fund and a $316 Billion dollar “Financing Component,” to finance part of the reserve fund. When you look at the details of the Financing Component in the budget, it looks like a lot of it will impact Pharma, including:

• Increasing the minimum Medicaid prescription drug rebate from 15.1 to 22.1 percent of the Average Manufacturer Price, and applying it to new drug formulations,
• Allowing states to collect rebates from Medicaid Managed Care plans,
• Reducing drug prices, establishing a pathway for FDA approval of generic biologics, preventing drug companies from blocking generic drugs from consumers,
• Strengthening Program Integrity by adding dedicated resources to CMS to improve oversight and program integrity.

Second:

Look at the legislation currently on the House and Senate Floor, keeping in mind that much of it represents legislation from prior sessions that never came to a vote, and are now in a potentially Filibuster-proof and reform-minded Congress. This includes over 15 pieces of legislation, covering areas such as:

• Expanded SCHIP participation (passed),
• Extending Medicaid Rebates to Medicaid Managed Care,
• Government negotiation of Medicare Part D Rebates and Government sponsored Medicare Part D plans,
• Increased use of Generics,
• Broadening and enhancing the 340B Program, with expanded eligibility and enhanced administrative components,
• Drug importation,
• Requirements that manufacturers participate in State programs.

In Summary:

This is a business issue as much as it is a compliance and operational issue. 50% of Americans are expected to receive benefits through publicly funded programs by 2016. The Government may soon represent one of your largest customers, and the legislative action that is on the floor now may very well impact some of the price points of that customer base.

The tone of an administration that includes Nancy-Ann DeParle, Counselor to the President and Director of the White House Office of Health Reform, seems to be that Healthcare Reform, this time around, will be a more collaborative and cooperative process. What this means to me is that the concept of Universal Health Care is on hold over the short term. What is practical and realistic over the next few years will be to take incremental steps, through budget and legislative action, to change the eligibility and financing components of our current programs.

It is important that manufacturers have the ability to step back and look at how these pending changes may impact their products and their customers. The changes will impact branded, generic, and biotech companies very differently. Legislative changes in the programs over the next year or two may impact your business model over the next five to ten years. These changes, combined with the consideration that the government may eventually become a larger (if not your predominant) customer, makes this a topic well worth watching.

Concurrent to these changes is the message coming from the OIG and the States of an increased need to audit and monitor fraud and abuse. This translates to another key financing consideration, as the Federal government is seeing a 17 to 1 return on investment on their audit and investigative activity, and is continuing to pursue a collaborative process between the OIG, the DOJ and the States. (2)

The question, ultimately, is not whether there will be key changes to the Federal and State programs, it is whether we can be prepared for the inevitable changes and manage them from both a business and a compliance perspective.


Sources:
1. http://kennedy.senate.gov/newsroom/press_release.cfm?id=1D9CB1D9-42F6-4FA0-81A8-00F645381877

2. http://oig.hhs.gov/testimony/docs/2009/4-22-09HomelandSecurity.pdf
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50,000!

By: Steven Moore, CIS Director of Business Development
stevenmoore@cis-partners.com

The Pharma Compliance Blog was launched in April of 2007, and two years later we at the PCB have hit a great milestone: 50,000 visitors! To put it in perspective, that is about the capacity of the new Yankee Stadium, the greatest franchise on the planet (that one’s for Chris Cobourn, our esteemed Practice Lead). It’s about the number of students in Penn State’s student body. It’s also about the amount of dollars that Alex Rodriguez makes in one at bat. Wait --- that makes it sound small…

During the past two years we’ve learned, we’ve laughed, we’ve cried (like when I had Lyme Disease --- sorry CIS, had to get that one in there for a snicker at me), and we’ve even embraced the term “GP Geek”. Collectively, I’m proud to be a “Compliance Geek” with all of our fellow readers!

The Blog was always intended to be a gathering place where members of the Pharmaceutical industry, and anyone else who is interested, can gain access to insightful analysis on pressing compliance issues - outside of the conference world. We aimed to create a space where Pharmaceutical professionals could gather, without fear of pop ups or advertisements about CIS (or about anything else, for that matter). Basically, the intent of the Blog was to make it a knowledge repository, almost like a ‘virtual conference,’ and I’m proud to say that two years later, we have stuck to this plan (and have even had a little bit of fun along the way).

As we move forward, I encourage you to send me (stevenmoore@cis-partners.com) and Dana Zelig (who has taken over managing the blog on a day-to-day basis --- and done quite a fantastic job; danazelig@cis-partners.com) any suggestions that you may have to help make the Blog more informative and/or useful to you and your respective teams. I lost my pride a long time ago, so we’re always open to suggestions. We do, however, prefer good ones. (I would make a smiley face here, but I hate that --- so just assume I’m smiling.)

Back when I obviously had time on my hands, I would try to ‘Google’ “Pharma Compliance” (of course in quotes because it helps narrow the search down) and spend about 4 hours trying to find a hit for the Blog. Now, when I do the very same thing, it’s the 3rd hit on Google, thanks to all of you visiting and helping to improve the content of our site. We take note of what you’re reading and try and tailor our approach to what seemingly makes you tick, and we promise to apply that same mentality moving forward.

I thank all of you who have been following the Pharma Compliance Blog during the past two years for reading, and for your comments on our content. CIS looks forward to continued work with you and your respective teams. Once again, please never hesitate to contact us with questions or comments.

Finally, know that the Pharma Compliance Blog is, and will remain: Your Space. For Your Space.

Next up: 75,000.

:)

(so I lied...)

Steven.
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Protection of FDA Whistleblowers

By: John Jordan, CIS Senior Compliance Associate
johnjordan@cis-partners.com

A whistleblower is someone who reports the misconduct of a certain entity. The misconduct could be a violation of a law, rule, regulation, and/or a direct threat to public interest, such as fraud, health/safety violations, and corruption. Senator Chuck Grassley, Republican of Iowa, has been a vocal advocate in the protection of FDA Whistleblowers. Grassley is a longtime advocate of whistleblower protections for federal employees. He co-authored the Whistleblower Protection Act of 1989, and has since co-sponsored legislation to update the law. Grassley also conducts extensive congressional oversight. He has sought administrative and legislative reforms to address problems he has revealed at the Food and Drug Administration (FDA) during the last five years.

Last month, Senator Grassley protested a signing statement President Obama attached to the American Recovery and Reinvestment Act, the $410 billion spending bill that was issued as a stimulus to our nation's economy, for the way it contradicts the protection of whistleblowers. President Obama’s signing statement says,

“I do not interpret this provision to detract from my authority to direct the
heads of executive departments to supervise, control and correct employees’
communications with the Congress in cases where such communications would be
unlawful or would reveal information that is properly privileged or otherwise
confidential.”(1)

The senator thinks the signing statement sends a message from the President that will prevent whistleblowers from coming out to report misconduct. Senator Grassley also stated last month that employees of the FDA deserve clarification from their Acting Commissioner about their ability to communicate with Congress and the Inspector General, following a memo issued last week, warning employees about releasing information.

Grassley further goes on about the protection of whistleblowers by stating,

"Federal laws protect whistleblowers and allow people who work in the federal
bureaucracy to discuss what's happening inside an agency with other officials.
Attempts to silence whistleblowers are illegal. If the memo sent last week
was intended to have a chilling effect on FDA employees who want to speak up
about problems, then that memo is contrary to the President's call for open and
transparent government, and the Acting Commissioner needs to set the record
straight."(2)

In a letter to Dr. Frank Torti, Acting Commissioner of the FDA, Grassley states his feelings towards the protection of whistleblowers by saying, “The right of employees, individually or collectively, to petition Congress or a Member of Congress, or to furnish information to either House of Congress, or to a committee or Member thereof, may not be interfered with or denied.”(2) He asks for additional clarification of protection for whistleblowers, and outlines successful changes that whistleblowers have brought about.

Whistleblowers provide a check and balance that our organizations need. Without them companies could, knowingly or unknowingly, get away with violations that could have been prevented. Whistleblowers cause more organizations to be proactive in making sure they are compliant with the laws, rules, and regulations set in place for them. They also help the government in finding the organizations that cross the line of misconduct and must be punished for their actions. As Senator Grassely states, "FDA employees...have the right to be free from fear of retaliation or reprisal."(2)

Sources:
1. Obama Undercuts Whistle-Blowers, Senator Says:
http://www.nytimes.com/2009/03/17/us/politics/17signing.html?_r=1

2. Grassley Works to Protect FDA Whistleblowers: http://www.pharmaceuticalonline.com/article.mvc/Grassley-Works-To-Protect-FDA-Whistleblowers-0001

Nurse-midwives in PA Have Won the Right to Write

By: Judy Fox, CIS Senior Compliance Manager
judyfox@cis-partners.com

Nurse-midwives across the state of Pennsylvania have been waiting for an important, and much anticipated arrival. For years, Pennsylvania has been the only state that prohibited Nurse-midwives from prescribing drugs, but that is one distinction Pennsylvania no longer carries. In 2007, PA Governor Ed Rendell signed House Bill 1255, granting prescriptive authority to Nurse-midwives. The Board of Medicine had 12 months to construct regulations to implement the law. In early April of this year the law went into effect, but the Board of Medicine still has to construct the application for mid-wives who want to apply for the authority, so it may be some time yet before the law is fully realized.

Why was Pennsylvania one of the last states to allow Nurse-midwives the practice of writing prescriptions? Previous attempts to grant the rights were met with resistance from physicians who often cited potential abuse as one of their concerns. Don McCoy, a Pennsylvania Medical Society Vice President and one of the authors of the regulations implementing the law, said that the abuse concern was addressed by requiring that a written agreement between the Nurse-midwife and a collaborating physician be on file with the Board of Medicine.

There are over 300 Nurse-midwives in the state of PA, but according to Vivian Lowenstein, President of the Pennsylvania Association of Licensed Midwives (PALM), only about 250 are practicing. In order to be licensed by the state Board of Medicine, applicants must be Registered Nurses; complete a midwife program; and must have and adhere to a collaborative agreement with a supervising physician.

In order to prescribe medications, Nurse-midwives must:

1) Have a Masters degree or its substantial equivalent (Certified Nurse-midwives (CNM’s) are not required to have a Master’s degree to practice);

2) Complete at least 45 hours of coursework specific to advanced pharmacology;

3) Have at least 16 hours of the 30 CEU’s required to renew the RN license every 2 years to be in pharmacology in order to continue prescribing;

4) Have a collaborative agreement with a physician that, at a minimum, identifies the categories of drugs the CNM may prescribe or dispense and the drugs which require referral, consultation or co-management;

5) Ensure that the collaborative agreement is with a physician with hospital clinical privileges in the specialty area of the care in which the physician is providing collaborative services;

6) Limit prescriptions for Schedule II drugs to 72 hours and not extend the prescription without the approval of the collaborating physician;

7) Prescribe Schedule III-IV drugs only up to 30 days and with any refill approval by the collaborating physician;

8) Consult with the collaborating physician before prescribing Psychotropic drugs.

The requirements certainly seem to provide controls around Nurse-midwives prescribing drugs, and to address the concerns about potential abuse, but PALM is justified in its position that there is a difference between an unlicensed midwife and a Nurse-midwife. Those differences support the feeling that the concerns for potential abuse are unwarranted and the requirement for collaborative agreements is nothing more than needless red tape.

In the meantime, there continues to be a gap in women’s healthcare access. Over the past several years, the rising cost of medical malpractice insurance has diverting many obstetricians and gynecologists from Pennsylvania. Nurse-midwives certainly help to fill the gap for pregnant women, if - and when – the Commonwealth of PA and the Board of Medicine empowers them to do so.

Sources:
www.pamidwives.com
www.ap.org
http://readingeagle.com
House Bill 1255: http://www.legis.state.pa.us

Corporate Compliance and the Foreign Corrupt Practices Act

By: Alaina Anderson, CIS Compliance Manager
alainaanderson@cis-partners.com

It seems with every corner we turn, there are more reasons to have a comprehensive corporate compliance program. Here in the pharmaceutical arena, we often discuss the Office of Inspector General (OIG) Compliance Program Guidance for Pharmaceutical Manufacturers, the False Claims Act, the Anti-Kickback Statute, the PhRMA Guidelines and various state laws on the related topics.

However, it appears that the Foreign Corrupt Practices Act (FCPA) should be held in the same light as the above mentioned laws and guidelines. This is essentially an anti-kickback law regarding conduct with foreign officials. In my eight years in the industry, I have not worked with a pharmaceutical company that did not conduct business across international borders, which means this law likely applies to a great number of pharmaceutical companies.

The FCPA specifically applies to:

• US persons, or agents thereof
• US companies, or agents thereof
• Entities subject to US securities laws, or agents thereof
• Any person committing a prohibited act of corrupt payments while in the territory of the US

The anti-bribery provisions of the FCPA prohibit “payments, offers, or authorization of the payment of money or anything of value to a foreign official, either directly or through an intermediary, in a corrupt effort to obtain or retain business, or to receive an improper commercial advantage.[i]” A prohibited activity could take on limitless forms and activities it seems. What we have observed from those in our field, including medical device companies, is that these prohibited practices are taking place to gain or retain business at hospitals. Remember, many countries have government funded healthcare which means healthcare professionals can qualify as ‘foreign officials’ under the FCPA.

A few accounts from the 2009 Global Ethics Summit cite the Deputy Chief of the Criminal Fraud Section of the Department of Justice (DOJ), Mark Mendelsohn, and his predictions for 2009. He anticipates an increase in activity through additional enforcement resources and increasing multi-jurisdictional investigations. Additionally, he specifically called out the enforcement efforts involving pharmaceutical and medical device industries, domestically with the Anti-Kickback Act and internationally with the FCPA.

Most of the concerns heard earlier this year at CBI’s Pharmaceutical Compliance Congress in relevance to FCPA adherence are regarding interactions with third party vendors. The discussions at the Compliance Congress emphasized the following: If experiencing cultural or regional resistance to a written agreement or the terms of a written agreement, it is recommended that your legal department/firm handles the negotiations. But the fact remains that here in the US, a written agreement is expected and audit rights must be followed; simply naming your audit rights in the agreement is not nearly enough.

In order to adhere to the FCPA and avoid related allegations, a comprehensive compliance program is recommended. Such a program includes:

• Written policies and procedures
• Training on applicable laws, regulations, policies and procedures
• A hotline for reporting compliance issues
• Auditing and monitoring activities

Additionally, and more specific to the FCPA, your organization should develop guidelines relevant to business hosting, gifts, and entertainment appropriate to the local jurisdictions in which it does business, including internal controls such as pre-authorization.

It is vital that reported allegations whether involving internal or third party personnel is taken seriously. Allegations should be investigated in a timely fashion and documentation should be maintained that describes the investigation and remediation, if applicable. And last, but far from least, remember to include FCPA as a regular part of your corporate compliance auditing and monitoring program. If you do discover inappropriate activities related to the FCPA, it is vital that you disclose them to the DOJ.

Sources:
[i] Pilchen, S. M. et al. FCPA and False Claims Act Enforcement: Corruption Crackdown in the US and Abroad presented March 12, 2009.

Gerlach, P.V. et al. (2007). US and PRC anti-bribery laws: regulation: risk and prevention in the life sciences industry. Retrieved from www.practicallaw.com/7-378-8724

Myers, C. (2009) FCPA Enforcement Under the Obama Administration: Siemens Case Sets New Precedent. Retrieved from www.hklaw.com/id24660/PublicationId2578/ReturnId31/contentid53964/

Measuring Drug Risks and Benefits, with One Simple Box

By: Amanda Zanetti, CIS Compliance Associate
amandazanetti@cis-partners.com

Changes may be coming for Pharma companies if all goes well for researchers at Dartmouth University, and these changes would come in the form of new direct-to-consumer advertisements. Researchers Dr. Steven Woloshin and Dr. Lisa Schwartz just released the results of two randomized trials for drug facts boxes, that would accompany direct-to-consumer print ads. These boxes are similar in structure to the nutrition facts you would see on a food or beverage. However, they would be informing the potential consumer of the risks and benefits associated with the drug. Consumers would be able to see how well the drug worked compared to a placebo, and learn the type and frequency of side effects. In addition, the box offers the drug’s indications, guidance as to who should and should not take the drug, and things to consider while on the drug. According to the results of the trial, consumers who viewed an advertisement with a drug facts box were more knowledgeable about the drug than consumers who viewed only the print advertisement.

If federal regulators adopt these drug facts boxes, one result will be a more educated consumer. The drug fact boxes give the consumer an easy way to see some of the information they would probably ignore in the fine print. They allow for consumers to make a decision based on facts rather than what an ad says. With a drug facts box, consumers can decide for themselves if the perceived value is greater than the perceived risk.

However, not everyone is in agreement that the drug facts boxes are beneficial. Some argue that one can already find all the information contained in the drug facts box in the fine print, and that adopting these boxes may be a bit excessive. In addition, some feel that these boxes could pose a threat to manufacturers and consumers alike; while the boxes do inform consumers, the risks may scare them away from a potentially beneficial drug. This could be bad news for pharmaceutical companies, but also for consumers who would really benefit from the drug treatment.

Sources:
http://www.annals.org/cgi/content/full/0000605-200904210-00106v1

http://www.nytimes.com/2009/02/26/business/media/26adco.html?scp=1&sq=a%20push%20to%20spell%20out%20a%20drug's%20risks&st=cse

The Device and Drug Double Standard is Coming to an End

By: Justin Will, Esq. CIS Compliance Manager
justinwill@cis-partners.com

As the push toward transparency in the healthcare industry is making the world of devices and drugs more and more similar, there still remains a glaring difference that was created by the U.S. Supreme Court several months ago. The discrepancy was put in motion in February of 2008 in Riegel v. Medtronic[1] when the Supreme Court ruled in favor of Medtronic that federal law prohibits suits in state courts for product liability against makers of heart stents, artificial joints and other critical medical devices. Then, in March 2009, in a product liability suit (Wyeth v. Levine[2]) involving a drug maker the court ruled that this type of case is not prohibited. In other words – an injured consumer can sue a drug maker but not a device manufacturer.

On March 5, 2009 - a day after the Wyeth ruling, U.S. Reps. Frank Pallone, Jr. (D-NJ), Chairman of the Energy and Commerce Subcommittee on Health, and Henry A. Waxman (D-CA), Chairman of the Energy and Commerce Committee, introduced legislation in the House that will reverse the U.S. Supreme Court decision in Medtronic that denies injured patients the ability to seek compensation for their injuries and gives medical device makers blanket immunity.[3]

Representative Waxman’s press release states, “The Medical Device Safety Act of 2009 is designed to protect patients from dangerous and defective devices by correcting the Court's flawed interpretation of the MDA. The legislation explicitly clarifies that state product liability lawsuits are preserved.”

Sources:
[1] Riegel v. Medtronic, Inc. 128 S.Ct. 999 (2008)
[2] Wyeth v. Levine 129 S.Ct. 1187 (2009)
[3] Press Release, Rep. Henry Waxman, “Health Leaders Introduce Legislation Reversing Supreme Court’s Medical Device Decision” (March 5, 2009).
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CIS Updates!

Dear Readers,

Just wanted to take a minute to point your attention to the CIS Upcoming Events bar on the left side of the blog. CIS is proud to be participating in the following upcoming conferences and events:

CBI’s 11th Annual Medicaid Rebates Conference
Tuesday, May 19th – Thursday, May 21st
Walt Disney World Swan Hotel
Orlando, FloridaCIS is an event sponsor!

CIS will also be presenting on the following topics:
Managing Customer Data for Your Government Calculations
Chris Cobourn
Recent Events and Trends in Auditing and Monitoring
Clarissa Crain
CIS Cocktail Reception on Wednesday, May 20th!

Click here for conference info!


Mastering the Government Programs Systems Environment -Assessing Your Current Toolset and Evaluating Your Options
Hosted by CIS and ExL Pharma
Wednesday, June 3, 3009
1PM – 3PM, EDT

To register online click here! (Sign up before May 8th for Early Bird Pricing!)


DIA – 45th Annual Meeting
Sunday, June 21st – Wednesday, June 24th
San Diego Convention CenterSan Diego, CA
CIS is an event sponsor!!

Click here for conference info!

To get more information about these events, please contact CIS Marketing Associate Jackie O'Connor at jacquelineoconnor@cis-partners.com. As always, we look forward to seeing you!
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CIS Gets Published!

"Organizing Your Commercial Compliance Programs"
(as published in Pharmaceutical Commerce on March 28, 2009)

By: Christopher Cobourn, CIS VP of Regulatory Compliance and Clarissa Crain, CIS Compliance Director
chriscobourn@cis-partners.com and clarissacrain@cis-partners.com

Two of CIS' finest were published in Pharmaceutical Commerce last month, and we are extremely proud! Their article "Organizing Your Commercial Compliance Programs" was published on March 28, 2009.

We are providing the article's intro on the PCB; for the entire article please see the following link: http://www.pharmaceuticalcommerce.com/frontEnd/1122-compliance_OIG_off_label_PhRMA_Coburn_Crain.html

Regulatory attention has intensified over commercial activities.
Here’s what to do to minimize risks and raise compliance levels:

The concept of Commercial Compliance in U.S. manufacturing has evolved
very quickly over the past 5 or 6 years, resulting in increased regulatory
requirements and investigation activity. While the security of the supply chain
and the ethical promotion of drugs has been a significant focus, recent
investigative trends show a shift in the government’s focus. Now, the federal
government and states are becoming increasingly interested in sales, marketing,
and distribution activities that ultimately affect the sales or prices witnessed
by the government. This has led to an increase in Federal False Claims Act
investigations and Off-Label Promotion investigations...

Congratulations Chris and Clarissa, keep up the good work!

Understanding the Changing GP Calculation Environment and Evaluating your System Options

By: Chris Cobourn, VP of Regulatory Compliance
chriscobourn@cis-partners.com

There are 3 key things to consider when evaluating the evolving "GP Pricing Environment."

1. Guidance is continually evolving, sometimes dramatically as in the case of the Final Rule. We in the pharma industry must continue to keep our methodology current, and to update our systems and tools.

2. The "Audit-ability Factor" has grown. With certification requirements, the CMS 10-Year Rule, and the OIG Work-plan creating the need for a proactive audit environment, we must have the capability to view complete and accurate detailed transactional data in order to demonstrate that our calculations are accurate.

3. Your company’s choice of systems and tools can affect your audit-ability. There are low cost, resource intensive tools such as Microsoft Excel (lower audit-ability), large Commercial GP systems (higher audit-ability), and third parties who use automated tools to perform your calculations and provide GP expertise (high audit-ability).

Regardless of the size or type of your company, we all face similar challenges, and some of these considerations may be keeping you up at night. Can you rely on your current systems and toolset? Can you feel comfortable with your certification? What are the real risks to the business? What are my options?

We work with companies at various stages across the GP spectrum: those who have a system in place but want to audit or assess their system, those who are implementing a system and want to make sure that GP requirements are being met, and those who are struggling with spreadsheets but are not sure what other options they have, or what is right for their business.

Wherever you are on the spectrum, I think it is important to be informed and to focus on "audit-readiness." I would also encourage you to reach out to others in the industry - you will soon realize that you are facing similar challenges. Feel free to give me a call or send an email as well, I can provide a fresh perspective and answer the questions you might have when evaluating different systems.

Those who work in the GP space understand the complexities and challenges of an always-evolving GP compliance environment. Often, your key struggle is articulating your needs within your own organization, especially in this very budget-conscious environment. Managers on the business side of your organization want to be able to evaluate the true risk to the organization, and to conduct practical value and cost-benefit analyses for your business.

Thanks, and again, feel free to reach out to me at any time with questions and comments!

Chris

Observations of a Traveling Salesman: A Few of My Favorite Things

By: Steven Moore, CIS Director of Business Development
stevenmoore@cis-partners.com

I love Business Development. I love getting out there and meeting new people on a weekly basis. I love presenting, and interacting with both clients and potential clients alike. I love providing compliance solutions that help clients protect their growth for years and years to come. But being on the road does have its humorous and, quite honestly, annoying side. Hey, you can’t have it all! So, in the spirit of The Sound of Music, here are a few of my favorite things:

Conference calls on the road. Besides the constant annoyance for those on the call with the ‘whirring’ of cars and other noises from the road, it’s IMPOSSIBLE to get a word in and, when you do, it’s as if you’ve channeled Darth Vader. Blue Tooth devices have been a savior for this part of being on the road, but it’s another toy to play with while you’re trying to drive. I had to laugh to myself the other day when I realized that I had operating --- at the same time --- the following: Garmin Navigation System, iPod, Cell Phone, Blue Tooth, Phone charger, and Automobile. I’m thinking final component in this series should get a bit more attention. Anyone else? So I can type in navigation directions, email, text, surf the internet, pick a playlist from my iPod, charge my phone, make a call, operate my blue tooth and, oh yeah, DRIVE A CAR! I drive a red HHR folks. Stay away. You can usually spot me at a Rest Stop.

Eating on the road. Not a great recipe for health. I recently went to client lunch at Red Robin with these brilliant aspirations that I was going to find something healthy and stick with my new OLC (“Operation Lifestyle Change” for those of you playing along at home --- this is an article for another day). So I scanned the menu and realized that Red Robin could be the last remaining establishment on the face of the Earth without a single healthy thing (salads don’t count because, well, I would only order a Chicken Caesar and a Chicken Caesar is like a safe cigarette. You think you’re being healthy but you’re clearly not.) I also just recently ate a lunch from 7-11. I then stopped at a Rest Stop again.

Rest stops. Remarkable places, really. I mean, who doesn’t love ‘people watching’ . Every time I stop along some road, I marvel at the diversity of the people at EVERY rest stop. Chinese, Indian, Black, White, Brown, Purple… It’s America in a nutshell! I’ve also seen some of the most fascinating individuals at rest stops…but we won’t go there. I have to ask: Where do they all come from? And, perhaps most importantly, where are these people going?

Peeing on the road. Well, not on the road... most times. When you’re trying to make it to a meeting and are amped (GP pun intended) up on 6 cups of coffee, your bladder begins to yell at you to pull over at every available rest stop. I was recently on a two hour trip to North Jersey (which is the best for rest stops because the NJ Turnpike has about 4,000) and stopped 3 times to pee. I highly recommend the Joyce Kilmer Rest Stop as it usually has lighter traffic and shorter lines than the Walt Whitman --- of course, that is if you can hold it on your way North. Three stops for a two hour trip is a lot of stops for anyone --- let alone a 29 year old. All I can say is that Boehringer Ingelheim could make some good money marketing FloMax to future prospects like this guy.

The Airport Security Line. I’m a big believer in getting places early but, inevitably, I get to the airport too early. I hate the thought having to run through the airport and potentially miss a flight for an important meeting. That being said, the whole Airport Security thing is quite a hassle. I remember the days of throwing some stuff into a tray and walking through the scanner relatively simply. Now, don’t get me wrong, I’m ALL about security, especially in the wake of some of the awful events of recent past and the current global situation, but I never thought I’d have to get naked to get on a plane. First it was the belt, then my sport jacket, then the shoes (thanks shoe-bomber guy). The ladies, of course, like it when I go through security but, as you all know, I’m a shy guy. Then there’s this whole liquid thing. It has to be less than 3oz and has to be in clear zip lock bag --- but not just any kind --- it has to be the smaller kind. I recently forgot that I had put a full Vitamin Water in my bag and got through security and they asked if they should throw it away or if I wanted it. I had time, so I took the Vitamin Water back --- chugged it --- and got naked again to go through security. Take that, The Man. Of course I then had to pee 4 times on the plane ride…

There you have it --- a few things that make road trips that much more enjoyable. So when I show up at your place next time, know that I’m well fed, fully clothed, and that I avoided any accidents in the entertainment center that is my car. I may, however, ask to use your restroom.

For Your Space,
Steven.
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A Possible End to Deal-Making Between Pharma Companies and Generic Drug Makers

By: Suma Kallurkar, CIS Senior Compliance Manager
sumakallurkar@cis-partners.com

Patent protection is one of the most critical factors in a pharmaceutical company's financial success. Expiration of a patent for a key drug product, and the ensuing competition from generic products launched in the market, presents a tremendous challenge that pharma companies spend years preparing to overcome. Many pharma companies over the years have utilized the tactic of paying generic drug manufacturers to delay the launch of their generic products, in essence buying more time in which they retain exclusivity and allowing them to realize billions of dollars more in sales.

However, if the current Democratic administration gets its way, pharma companies may no longer be able to make such deals with generic drug makers to ward off the entry of competing generic products. The administration has been focusing on evaluating ways to reduce health care costs. It believes that bringing an end to such deals between pharma companies and generic drug makers would help save billions of dollars in costs, as generic drugs are often available for as little as a quarter of the cost of brand-name counterparts. Such savings would undoubtedly benefit consumers directly.

The Federal Trade Commission (FTC) has sought to fight such payments for the last several years by filing lawsuits against them, but these attempts have not fared well. In addition, similar legislation has been unsuccessful when raised in the recent past. The house has re-introduced a bill (originally introduced in the last Congress) to ban the above-described payments in patent litigation settlements between pharma companies manufacturing branded products and generic drug makers. A subcommittee hearing on the bill was held Tuesday, March 31. Proponents of the legislation hope to enact it into law this year with the support of President Obama, although it is not completely clear at this time whether or not Obama will indeed support it.

Currently, approximately 10 brand-name prescription drugs are protected by such agreements made with generic manufacturers. From the pharma perspective, eliminating the option to make deals with generic drug companies to delay the marketing of generic products will undoubtedly increase the challenges already faced from generic competition. A major concern is that reduced revenue based on entry of generics could hurt the ability to re-invest in research and innovation. However, from the health care and consumer perspective, the benefits of the significant cost savings cannot be understated, and could contribute greatly to a reduction in health care costs, thereby also benefitting economic growth. It remains to be seen whether this administration will be successful in eliminating such deals between pharma companies and generic drug makers.

Sources:
House of Representatives Committee on Energy and Commerce:
http://energycommerce.house.gov/Press_111/20090331/rush_open.pdf

Wall Street Journal:
http://online.wsj.com/article/SB123843757514670479.html

It’s That Time Again – Revisit Your GP Documentation!

By: Katie Lapins, Director Small and Mid-Market Pharma, and Chris Cobourn, VP of Regulatory Compliance
katielapins@cis-partners.com and chriscobourn@cis-partners.com

The recent Tricare legislation and the introduction of additional state reporting requirements for Medicaid related data may mean it’s time to update your GP documentation to account for these changes. While investigating new programs and their impact on your operations, it is also a great time to review all of your documents, including those affected by the changes made by the Final Rule. Key components that changed and should receive special attention include smoothing of assumptions, and evaluation of discounts and bona fide fees for services.

A core component of an effective documentation program is to define and implement a reasonable and consistent review cycle that ensures documents are compliant with current regulations. Here are a few areas where dramatic changes may have occurred in your company’s operations and are not yet captured in your documentation:

• The new Tricare rule, which may require separate policies and procedures, and its impact on your existing documents (i.e. clarifying the treatment of Tricare sales and rebates in your other GP calculations
• SPAP and Supplemental Programs (your company’s participation may have evolved over time)
• State Medicaid reporting requirements, such as those required by Maine and New Mexico
• Updates based on findings from an internal assessment or audit
• Updates based on a change in the company’s products and/or contracting strategies

The industry gave a lot of attention to the impact of the Final Rule when it was issued in 2007. The first step was to implement required methodology changes to the systems used to perform the calculations, (i.e., spreadsheets, commercial GP Systems). Coordinated with, or immediately following that effort, most companies put their efforts toward revising their policies and procedures. This was often followed by an assessment or audit in order to validate the accuracy of the procedures as well as the systems. The final step now is to return to the standard review cycle of the policies and procedures. It has been approximately 18 months since the Final Rule should have been implemented, so revisions to your documentation should be complete. These new areas requiring a focus on documentation provide a great opportunity to review all of your GP policies and procedures.

The key takeaway is this: Don’t let that GP Documentation just sit on your shelf! You have to see the documents as living and breathing, and they must be kept current in terms of your operations and the regulations.

As a final note, be sure to develop and implement a document naming convention that indicates the version of the document used at any given time and that you are using the current version. Remember, with the 10-Year Rule, you want to be able to show which policy and procedure documentation was valid at the time of the calculation, so document change control is a key component of audit-ability!
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Is Health Care Weighing Down the U.S. Economy?

By: Barb Lutz, CIS Senior Compliance Manager
Barbaralutz@cis-partners.com

President Barack Obama has only been in office for a little over two months and has already started his push for Congress to overhaul the U.S. Health Care system in 2009. He was quoted as saying, “The cost of our health care has weighed down our economy and the conscience of our nation long enough.”1 In fact, he even places part of the increasing budget deficit on expanding medical expenses. One of the biggest health care issues the nation is facing is that as the U.S. population ages, the costs of Social Security, Medicare and Medicaid will increase. CMS (The Centers for Medicare and Medicaid Services) recently reported that government spending on Medicare and Medicaid will reach $721 billion in 2009. These programs cover around 100 million people. Another major issue is that there are approximately 46 million people without health coverage because it is unaffordable.

I found these statistics to be pretty disturbing and was anxious to see what steps President Obama would be taking to correct surging health care costs. So far, he has not given exact specifics on what steps he will take to correct this issue, but has made some recommendations to Congress for a plan to slow down the increasing costs of Social Security, Medicare and Medicaid by identifying fraud in the program. He even expects Congress to reduce funding for underperforming programs that are not yielding the desired responses. President Obama wants to put into place changes that will help Americans afford coverage, and even expand government health programs to cover more uninsured Americans. This may even include the possibility of expanding Medicare coverage to Americans as young as 55. Obama also wants to modernize and create efficiencies in the health care system by moving health records into a single digital format.

I also read that President Obama is holding five Regional White House Forums on Health Care Reform. The first was held on March 12th in Dearborn, Michigan. Although President Obama did not attend, 400 people did attend the two-hour forum, including CEOs of health care systems and insurance companies; representatives of labor unions, workers, retirees, nursing professors, as well as other stakeholders in the health care overhaul debate. The overriding message from the forum was that “widespread agreement on the need for health care reform was made clear by comment after comment.”2 Other discussions included the need to accentuate preventive, wellness and primary care and to find a way to better utilize health information technology. This forum was one of five scheduled throughout the country.

It will be very interesting to see how President Obama’s recommendations on overhauling U.S. health care and the future forums play out in the next few months. Expect to see upcoming blogs on this subject as I continue to follow the upcoming Health Care Forums, and President Obama’s progress on this tough issue facing our nation.

Sources:
1. http://www.bloomberg.com/apps/news?pid=20601202&sid=aKlHsp88FGh0&refer=healthcare
2. http://kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=57470

Overseeing the Overseers

By: Gary Miller, CIS Compliance Associate
garymiller@cis-partners.com

What happens when the individuals or groups, put in place to be the formal oversight of a process, have insufficient oversight themselves? Eric G. Campbell, PhD, of the MGH Institute for Health Policy, says in situations such as these, they cannot accomplish their fundamental mission of ensuring appropriate conduct.1 In this case he speaks of the IRBs (Institutional Review Boards) , “committees charged with ensuring that clinical studies uphold patient rights and follow ethical guidelines.”1

In a study done by the Massachusetts General Hospital Institute for Health Policy, it was discovered that many IRBs do not require members to disclose industrial relationships, and that procedures for defining , reporting, and handling conflicts vary widely among institutions.1 Research Hospitals, and subsequently the millions of patients impacted by the decisions these IRBs are making, rely on these committees to have safe, ethical, and successful trials as their main goal, with total disregard for any personal or business benefit. Without a proper, consistent policy on relationship disclosure and conflict of interest measures, who is to know the agenda of the members of these committees?

The FDA, under the Bioresearch Monitoring (BIMO) Program, “conducts inspections to determine if IRBs are operating in compliance with current FDA regulations and statutory requirements and if the IRBs are following their own written procedures.”2 In reviewing the Information Sheet Guidance For IRBs, Clinical Investigator and Sponsors: FDA Institutional Review Board Inspections, published by the FDA, it is unclear who, if anyone, reviews the actual policies under which the IRBs are operating. As shown in this study, however, it is clear the policies that some IRBs have in place are lacking vital regulations necessary for them to fulfill their main purpose of ethical guidance.

The FDA, along with the Department of Health and Human Services (HHS), has recently released a Final Rule on IRB registration requirements, stating the need for IRBs to register with the federal government through a system maintained by the HHS. The rule states that the IRB registration requirements will make it easier for FDA to inspect IRBs and to convey information to them.3 However, the final rule seems to omit addressing the issue of conflict of interest disclosure. The final rule does not mandate the need to disclose conflicts of interest that may exist within an IRB, continuing this gap between protocol and proper agenda.

As CIS continues to grow its breadth of expertise, and with the publication of this study, research hospitals may be looking for resources to review the policies and protocols they have in place for their IRBs. This will ensure they are prepared for any inspections conducted by the FDA, and will ultimately allow the IRBs to properly perform their job on a consistent and honest basis.

1. Boards Overseeing Clinical Studies Don't Always Require Members To Disclose Potential Conflicts, Article Date: 27 Mar 2009 - 2:00 PDT, Sue McGreevey, Massachusetts General Hospital, http://www.medicalnewstoday.com/articles/143853.php

2. Information Sheet Guidance For IRBs, Clinical Investigator and Sponsors s: FDA Institutional Review Board Inspections, http://www.fda.gov/oc/ohrt/irbs/reviewboard.pdf

Are You Tiptoeing Through Mid-level Sampling, or Plowing Through It?

By Judy Fox, CIS Senior Compliance Manager
judyfox@cis-partners.com

Note: For the purpose of this article, the term “mid-level practitioner” means an individual practitioner other than a physician, such as a nurse practitioner, who is licensed, registered, or otherwise permitted to prescribe and/or dispense prescription drug products.

While the title of this article is a nod to the tulips and daffodils that have started to bloom here in PA, ”tiptoeing” also serves as an accurate description of the delicate maneuvering required to achieve compliance in mid-level sampling.

Navigating numerous state laws isn’t easy, and sampling training is never the most popular subject at sales meetings. But both must be done, and both must be based on state laws. The guidance is specific, so training and procedures should be equally specific. The guidance states:

“One comment stated that, in some States, advanced practical nurses are licensed
to prescribe certain drugs, but are prohibited from obtaining samples of the
same drugs. The comment asserted that, under the proposed definition of
“licensed practitioner,” such non-physician practitioners would be permitted to
obtain samples. In developing the proposed definition of licensed
practitioner, the agency was not aware that some States may permit practitioners
to prescribe certain drugs, but prohibit them from obtaining samples of those
drugs. Because the agency does not wish to interfere with States’
authority to determine who may request and receive drug samples, the agency
clarifies that a practitioner who is prohibited by State law from receiving
samples of certain types of drugs is not permitted to do so under PDMA even
though he or she is licensed or authorized to prescribe those drug.”1

At CIS, we conduct our fair share of Sample Accountability Audits and Assessments, and we review sampling training and documentation. Often, the transactions reviewed during these audits aren’t pretty when it comes to compliance for sampling mid-level practitioners.

CIS has reviewed corporate programs that contain all sorts of caveats to mid-level sampling: training slides that specifically prohibit it, procedures that require signed collaborative agreements, or training and compliance manuals that don’t address the issue at all. During interviews with members of sales forces, we have found, time and time again, that many sales representatives and managers have little, if any knowledge of the existence of state sampling laws. Nevertheless, mid-levels are sampled frequently, creating a potential compliance risk for the manufacturers.

Some procedures and training programs outline a one-time sampling rule, in which a sales representative could sample a new target, and would be notified if he or she had sampled an invalid practitioner. This notification would include instructions to cease any additional sampling to the practitioner in question. The sales force had been trained that “no news was good news” when it came to the practitioner in question, but compliance with the verification and notification procedures were never fully monitored or tested. As a result, no news was not, in fact, good news. No news was just what it sounded like: no news.

Corrective actions in such a situation would require the sales representatives to cease sampling certain targets, making for an uncomfortable conversation for some who had worked hard to build a relationship with the mid-level practitioner.

Sampling is no more secure when it is tracked electronically through a Sales Force Automation (SFA) tool. While most SFA systems can be programmed to “lock-out” a practitioner and prohibit sampling someone without a valid state license, not all systems will lock out a mid-level practitioner based on the corresponding state laws. During the interview process, we at CIS have come to find out that not only are sales forces largely unaware of state laws governing mid-level sampling, but manufacturer and SFA vendors rarely discuss the SFA user requirements for sampling mid-level practitioners.

Where does that leave an already resource-strapped sample compliance department? The issue has been identified, but finding the right solution to the problem and finding the resources to implement it can be difficult. The DEA offers a chart entitled, “Mid-Level Practitioners Authorization by State;”2 however, this chart is limited to the restrictions regarding the sampling of controlled substances. The FDA does not provide such assistance. The compliance risk presented by mid-level practitioner sampling can only be mitigated through research. A company looking to engage in mid-level sampling should conduct a state-by-state search of applicable regulations, in order to develop the appropriate procedures for compliant sampling.

Sources:
1 www.fda.gov
2 http://www.deadiversion.usdoj.gov
3 http://kcsun3.tripod.com/id110.htm

TRICARE Guidance Documents Available on the TMA Website

By: Meredith Taylor, Esq., CIS Senior Manager
meredithtaylor@cis-partners.com

The TRICARE Final Rule was published on March 17, 2009, and since then CIS has been providing up-to-date information and interpretations of the Rule. In addition to the conference call CIS and Reed Smith hosted on March 26, 2009 (a recording of the call is available upon request, see note below), CIS has been providing you with various blog postings including: Dana Zelig’s article summarizing the rule, Clarissa Crain’s article summarizing and interpreting the comments, and Dave Rice’s article addressing next steps for manufacturers.

In this article, I would like to address the various guidance documents provided for Manufactures on the TRICARE Management Activity’s (TMA) website. TMA is an office of the Department of Defense (DoD) and runs the TRICARE Program. NOTE: The DoD frequently posts Responses to Manufacturer Questions. This article addresses the responses posted on March 19, 2009. Additional questions and responses were posted on March 31, 2009 and can be found here.

Dear Manufacturer Letter – March 18, 2009[1]

This Dear Manufacturer Letter was distributed to advise manufacturers of the publication of the TRICARE Final Rule. The letter states the portion of the National Defense Authorization Act[2] (Act) that pertains to TRICARE, and explains that the Act required the DoD to publish regulations to interpret and implement to provisions in the Act.

The letter advises manufacturers that utilization data for the four quarters of 2008 continues to be available to manufacturers. As you may recall, in order to obtain utilization data, a manufacturer must have filled out a questionnaire and returned it to the DoD, which allows the DoD to provide the data. This has been available over the past year. In regard to Q1 2009 data, the letter indicates that it will be available on April 15, 2009.

The letter explains that refund payments calculated from this data will be required and are due on May 26, 2009, unless a waiver or compromise is negotiated. As you may recall from prior blog articles and the conference call, pursuant to the Federal Debt Collection Act[3], the DoD is permitted to enter into Agreements with manufactures to reduce or waive the refunds that are due. The DoD does not believe that these refunds are retroactive because manufactures have been on notice (since the enactment of the Act in January 200), that refunds would be collected once the regulation was published.*

Finally, the letter addresses the Agreements that manufacturers must enter into with the DoD in order to be considered for Tier 2 on the Uniform Formulary. The DoD will provide further guidance about the procedures for the Agreements and compliance with the Final Rule, but they anticipate that Agreements will have to be executed by June 1, 2009. Manufacturers must enter into an Agreement with the DoD in order to be eligible for Tier 2, but this does not necessarily mean they will be placed on Tier 2; depending on the drug, they may still be placed on Tier 3 even if they enter into an Agreement. Additionally, manufacturers should negotiate these Agreements in a timely manner because the DoD is more likely to reward proactive negotiations with a compromise/waiver on the refunds that are due.

DoD Formulary Pricing Agreement (draft) [4]

The DoD published a draft sample “Retail Refund Pricing Agreement Between TRICARE Management Activity (TMA) and the Manufacturer Identified in Section IX of this Agreement.” This is only a draft Agreement; manufacturers must negotiate their own Agreement with the DoD. The sample Agreement indicates that it does not need to be used as a template and manufacturers may deviate from this particular structure; however, the terms should be similar. The sample Agreement also notes that it does not cover the drugs that are currently part of an executed Uniform Formulary Voluntary Agreement; those arrangements are covered by pre-existing Agreements.

The sample Agreement contains the following sections:

1. Definitions

2. Manufacturer's Responsibility
- Manufacturers must provide refund payments within seventy days from the date of submission of the utilization data, unless they are going through the Dispute Resolution Process.
- There are two calculation methods to choose from in regard to refund calculation: (1) difference between the average Non-FAMP and FCP, and (2) the difference between FCP and the direct commercial contract sales prices attributed to the reported TRICARE paid pharmaceuticals.
- There are two calculated methods to choose from in regard to per unit refund amount: (1) based on units report on utilization reports, and (2) total number of package sizes units (divides total metric quantity by the package size) and round to the next whole number.
- Manufacturers must retain all relevant records for at least three years.

3. TMA's Responsibility
- TMA must include all drugs listed in Appendix A on the three tiered formulary, and consider the drugs for Tier 2.
- TMA must ensure the availability of drugs on Tier 2.

4. Dispute Resolution
- See below.

5. Confidentiality Provisions
- Proprietary information submitted will remain confidential.
- Manufacturers will hold audit information confidential.
- Confidentiality remains even if the agreement is not renewed or is terminated.

6. Non-Renewal and Termination
- The Agreement is effective for one year, and is automatically renewed unless written notice is provided 90 days before the end of the period.
- Manufacturers may terminate for any reason. Termination becomes effective sixty days after written notice is received.
- TMA may terminate for failure to honor the Agreement in writing after sixty days
- If the Agreement is not renewed/terminated, Manufacturer cannot enter into another agreement for at least one compete calendar quarter, unless there is good cause.

7. General Provisions
- Manufacturers must have an existing FSS contract for all drugs in Appendix A .
- Upon transfer of ownership, Agreement is assigned to a new owner.

8. Effective Date
- The Agreement is effective upon signing.
- This is not to be confused with the Effective Date of the Act - January 28, 2008.

9. Signatures

10. Appendix A - Covered Drugs

11. Appendix B - Dispute Resolution Process
- See below.

Dispute Resolution Process [1]

If a manufacturer disputes the accuracy of the utilization data, payment for the disputed refund amount is deferred during the resolution process. When the dispute is resolved, the refund owed, and any interest accrued, are paid by the manufacturer or credited by TMA during the next quarter.

The Dispute Process is as follows:

1. The Pharmaceutical Operations Directorate (POD) submits a Reconciliation of Quarterly Invoice (RQI), with each invoice, to the manufacturer.

2. The manufacturer submits the RQI to the POD if appropriate. The RQI has pre-populated fields, as well as fields to be filled out by the manufacturer (units paid, units disputed, dispute code, withheld invoice amount, rebate amount paid).

3. The manufacturer must submit a disputed claims report for each disputed claim. There is no standard claim form, but the claim must include: RX number, NDC, product name, units, date of service, pharmacy ID number, claims number, dispute code, and supporting documentation.

4. The manufacturer may submit disputes by email, fax, or in hardcopy. A POD point of contact will be provided.

5. The manufacturer must pay the portion of undisputed refunds.

6. The POD and the manufacturer will use their best efforts to resolve the dispute within sixty days.
- If they are unable to resolve the dispute, the Director of POD will issue an administrative decision.
- This decision may be appealed.

TRICARE Retail Refunds Program Responses to Manufacturer Questions[2]

TMA updated the Q&A document on their website to answer specific questions about the Final Rule. The following are a few of the answers that were provided:

- All TRICARE sales are government sales that should be excluded from Best Price. TRICARE sales are treated as government sales for AMP, Non-FAMP, and ASP as well.

- If a Manufacturer signs an Agreement, they are eligible for Tier 2, but not guaranteed Tier 2 placement. It is reviewed at the next P&T Committee.

- The old UF-VARR Agreements are still effective but may be amended if a price above FCP is being offered. It is not required to re-negotiate an old Agreement if FCP was offered because the proper price was being offered.

- Agreements for an additional amount off FCP for preferred formulary placement may be negotiated. If a manufacturer does not negotiate an Agreement, their drugs may still be purchased by TRICARE recipients and refunds must still be paid, so participation in TRICARE is no longer voluntary.

- Refund payments for utilization data from January 28 through December 31, 2008 are due May 26, 2009 unless a waiver or compromise of the amount is granted. Agreements do not have to be signed until June 1, 2009, but it is in the Manufacturer’s best interest to enter into the Agreement before then in order to waive or comprise refund payments due.

*Words in italics are my opinions and commentary on the information provided in the TMA documents.

Note: As mentioned above, CIS' Tricare Final Rule teleconference was recorded and is available upon request. For a copy of the teleconference, please email PCX GP Module Manager, Dana Zelig at danazelig@cis-partners.com

Sources:
[1] http://www.tricare.mil/pharm_mfg/downloads/Dispute%20Resolution%20Process_Web.pdf

[2] http://www.tricare.mil/pharm_mfg/downloads/Response%20to%20Manufacturer%20Questions.pdf

CIS' TRICARE Final Rule Teleconference

By Dave Rice, Director Federal Contracting
daverice@cis-partners.com

I am new to CIS and to the Pharma Compliance Blog, so let me introduce myself. I’m Dave Rice, CIS’ new Director of Federal Contracting. I have over 25 years diverse pharmaceutical industry experience including FSS Contracting, Business Development, FSS Compliance, Pricing and Contracting, Finance and Auditing. Prior to joining CIS, I worked at WSI, Pharmacia, Pharmacia & Upjohn and The Upjohn Company where I held key positions in Auditing, Pricing and Contacting, Federal Government Compliance, and Federal Government Business Development. I am also a past Chairman of the AMSUS-Sustaining Members (Association of Military Surgeons of the United States), an industry organization that brings together private healthcare industry representatives with key Department of Defense (DoD), Department of Veterans Affairs (VA), and U.S. Public Health Service decision makers to facilitate discussion of issues common to all.

Thank you to the to the 95 -100 pharmaceutical company participants who were part of the Tricare Final Rule teleconference sponsored by CIS and Reed Smith on March 26, 2009. There was a lot of information covered in a very short period of time, so I thought it would be good to summarize my thoughts on this “Hot Topic.”

As the Tricare Retail Pharmacy (TRRx) Program moves forward in seeking FCP pricing, and thereby witnessing estimated savings of hundreds of millions of dollars, manufacturers are left with many challenging questions around the legalities and operational aspects of the Final Rule. It is the DoD’s opinion that NDAA-08 and the other additional legal underpinnings sited within the Final Rule are clear… this is a mandatory program, and rebates will be retroactive to 28 January 2008. Pharmaceutical companies must decide if they should challenge the legitimacy of the Final Rule through litigation or participate in the TRRx Program. Litigate or participate… the clock is ticking.

I would break the process of deciding how to act into three parts, 1) Risk Assessment, 2) Waiver Negotiation, and 3) Operational Components.

Risk Assessment
First and foremost, manufacturers must assess the risk of not participating in the TRRx Program. As a manufacturer, you might ask yourself:

• What is the potential liability of calculating refunds back to January, 2008? Is it material?
• If you elect not to participate, and are therefore moved from Tier 2 to Tier 3 on the DoD’s Uniform Formulary, what is the impact on your sales in the retail market segment of going from a $9 copay (Tier 2) to a $22 copay (Tier 3)?
• What is the impact of having a Prior Authorization placed on your product in the various market channels?
• What is the probability that you would be referred to the Department of Justice for collection and/or other legal actions?
• If you were to litigate, what is the probability that you would be successful; and if unsuccessful, how much would it cost you in legal fees and refunds?

Waiver Negotiation
If manufacturers decide to participate in the TRRx program, some of their key considerations should be:

• What is our prospective refund liability?
• What is our retroactive refund liability?
• How much of the retroactive refund can we negotiate away if we voluntarily enter into a Manufacturer’s Agreement with the DoD?
• What is the negotiation process? Is it face to face?
• What rationale would we present for a request of waiver?
• Is the waiver request a written communication?
• How confident are we that the Director of Tricare Management Activity (TMA) would accept our waiver request?
• If the request for waiver is denied, can we resubmit another waiver request?

Understanding the negotiation process is a key component of determining your success in negotiating a waiver of refunds, and in determining if you want to voluntarily and proactively participate in the TRRx program.

Operational Component
If you determine you are going to participate in the TRRx program, there are a number of operation issues to consider:

• How will I validate the legitimacy of the data received from TMA?
• How do I calculate the refund amount?
• What is the procedure for paying the refund?
• How will paying the refund impact my FCP calculation? AMP? ASP?
• What SOP’s will need updating?

There are still more questions than answers related to the Tricare Retail Refund Program, but with only 2 months until the Final Rule’s effective date of May 26, 2009, the clock is ticking. CIS plans to continue dialog with the DoD to get clarification on many of these issues, and will be happy to present your messages and questions. Please tell us your concerns, and feel free to share any ideas you have to make the process work better for all of us.

The bottom line is that “litigate or participate” is not as cut and dry as we would like it to be. Many factors, including a manufacturer’s size, the number and type of drugs in its portfolio, and all the questions raised above, all go into determining your next steps as a manufacturer. What we can tell you is that CIS has the tools to help you weigh this information and come up with the best plan of action. Please feel free to contact me any time, to make sure your company is moving in the right direction. And remember… the clock is ticking.

Sincerely,
Dave Rice
daverice@cis-partners.com

CIS would also like to extend a special thanks to Joe Metro, Esq. from Reed Smith LLP for providing the Legal Perspective on the Tricare Final Rule during yesterday's teleconference. For more information, please see Reed Smith's Life Sciences Health Industry Alert: TRICARE Retail Pharmacy Program Subject to Federal Ceiling Prices Under New DoD Rule.

NOTE: For those of you who missed the May 26th teleconference, it is currently being edited and will be posted on the Pharma Compliance Exchange for reference. Details to follow...

Former President Bill Clinton and Health Care in the United States

By: Kate Lapins, CIS Director of Small and Mid-Market Pharma
katielapins@cis-partners.com

On Larry King Live on March 11, 2009, former President Bill Clinton was interviewed by Sanjay Gupta, MD, about various health care related issues. As many of you probably remember, President and Mrs. Clinton attempted to reform the US health care system during his first term without success. More than 15 years later, it is one of the big issues on the national agenda and it was interesting to hear President Clinton speak on it. Below are highlights of two issues raised in the conversation. (Please note, I have attempted to accurately represent what was said, but I do not have a transcript of the event.)

What are the differences between the previous attempt to reform health care and the current one?

• From 1993 to 2008, US health care costs have gone from 14% to 16% of GDP, whereas in the rest of the developed world, outside of Switzerland, costs have gone from 10% to 11%. Our costs are not only more but they are increasing at a faster rate.
• A greater portion of the US population is underinsured.
• Insurance companies are not as unified against reform, and some are even in favor of it.
• Doctors are more unified for reform.
• Small business owners now want reform.
• Democrats have the majority in the Senate and the House of Representatives so there is less risk of a filibuster, although it is still a risk.
• Coverage is not the challenge this time like it was last time; cost will be the challenge.

What effect does this have on the pharmaceutical industry?

• With pharmaceutical companies, the US had an unofficial “deal” that a greater proportion of the costs associated with research and development would be absorbed by the US, because we recognize its importance and we like having these activities in the US.
• In the US, we paid $66 billion more for drugs than if these same items had been purchased in other parts of the world – according to a Woods Mackenzie study.
• To close the $66 billion gap, there has to be honest, open dialogue with all parties.
• Keeping the drug companies in the US must still be a priority, but the US can no longer afford to fully subsidize the rest of the world.
• The number of new drugs introduced has decreased.
• Many pharmaceutical companies have lost their emphasis on research and development because it is cheaper to acquire late stage products, and the nature of patents has shifted to smaller components and compounds.
• The first step to lower the costs in the short-term is for the Federal government to negotiate prices for Medicare Part D. They have the volume to negotiate better prices and could serve as a model for future programs.

The other big point raised by President Clinton is that the US is spending more and getting less for health care. He said we need to find solutions that allow us to focus on prevention, screening and early treatment that can provide realized savings over the long term.

Besides the current economic crisis, health care is going to be one of the top priorities of President Obama’s administration and I think the opinions expressed by President Clinton may be indicative of the nature of the discussions and the future changes we can expect.

For more on the interview, see the following sources:
http://www.cnn.com/2009/POLITICS/03/11/lkl.bill.clinton/index.html?iref=newssearch
http://www.cnn.com/video/#/video/bestoftv/2009/03/12/lkl.bill.clinton.cnn

Drug Sales Eke out 1.3% Growth in 2008

By: Amy Lotman, CIS Senior Compliance Manager
amylotman@cis-partners.com

Sales of prescription drugs in the United States rose an anemic 1.3 percent in 2008 to $291 billion, as patients opted for cheaper generic versions of their prescriptions, or chose to go without treatment due to the economic downturn.

This has resulted in the sale of prescription drugs in the United States showing the slowest growth in at least 47 years.

It’s a new, lower-growth environment than seen in the past, although some of the factors causing the slowdown have been present for a while. In previous years, U.S. prescription drug sales rose 3.8 percent in 2007 and about 8 percent in 2006 -- those years themselves reflecting a slowdown from annual double-digit percentage sales growth often seen in earlier decades.

The worrisome snapshot comes from information supplied by IMS Health Inc, which compiles market data on the pharmaceutical industry.

Drugs that lower “bad” cholesterol and triglycerides, or raise “good” cholesterol, were the most widely dispensed U.S. retail prescription drugs on a volume basis in 2008, the report showed. These drugs were followed by drugs containing the narcotic painkiller codeine, anti-depressants, and two types of blood pressure drugs called ACE inhibitors and beta blockers.

In terms of overall prescription sales through retail and non-retail channels, antipsychotics led all therapy classes, followed by lipid regulators, a leading class of ulcer drugs called proton pump inhibitors, and anti-seizure medicines.

Even as sales growth slowed in the United States, three large U.S. drugmakers are girding for patent expirations on their biggest medicines in 2011, which will leave them prey to competition from cheaper copycats.

They include Pfizer and its $12 billion-a-year cholesterol fighter Lipitor, Bristol-Myers Squibb and its Plavix blood clot preventer, and Eli Lilly and its schizophrenia treatment, Zyprexa.

Some industry analysts have expressed concern that U.S. sales of prescription drugs could come under even greater pressure if Congress and the Obama Administration require drugmakers to negotiate prices of their branded products.

The United States is the only major industrialized country that does not have price regulations on prescription drugs, a reason the U.S. is the world's most lucrative market for medicines… at least for now.

Sources:
http://www.imshealth.com/portal/site/imshealth
http://www.marketwatch.com/news/story/bristol-myers-cfo-preparing-plavix-plunge/story.aspx?guid=%7BC25B4491-AD4A-400C-98A2-52D9498C1C06%7D
http://www.iht.com/articles/2009/01/14/business/pfizer.php
http://www.zimbio.com/FDA/articles/307/Meltdown+101+drugmakers+deal+down+economy

SPECIAL EVENT: TRICARE Final Rule Conference Call

Department of Defense Publishes the TRICARE Final Rule!

Join CIS and Reed Smith, LLP for a discussion on the business and legal implications of the TRICARE Final Rule.

TRICARE TELECONFERENCE

WHO: CIS and Reed Smith, LLP are offering a free teleconference for all clients who may be impacted by the recent TRICARE Final Rule provisions.

WHAT: Understand what the Final Rule is, how to interpret it, and key aspects that will be of interest to manufacturers.

DATE: Thursday, March 26th

TIME: 11:00 am - 12:00 pm EST

ACTION: Contact CIS to reserve your space for this free teleconference event.

CONTACT: cispcx@cis-partners.com
Please include your name, title, company name, telephone number, and email address.

INFO: For more information on 3.16.09 Federal Register Notice - Final Rule Click here, log in to your GP PCX account and click on HOT TOPICS.

Spaces are limited, so register today!
*

The TRICARE Final Rule: What’s in the Comments?

By: Clarissa Crain, Senior Compliance Consultant
clarissacrain@cis-partners.com

The issuance of the Final Rule, TRICARE: Inclusion of TRICARE Retail Pharmacy Program in Federal Procurement of Pharmaceuticals, amends 32 CFR 199 and implements standards outlined in the National Defense Authorization Act for Fiscal Year 2008 (NDAA-08). The Final Rule states that prescriptions for covered drugs procured by the DoD through the TRICARE Retail Pharmacy Program (TRRx) are eligible for pricing under 38 U.S.C 8126(a) and (b), thereby making FCP pricing related to TRRx a reality.

While the amendments to 32 CFR 199 are not lengthy, the Final Rule document itself is lengthy. Interpreting the regulatory changes is important, however, much of the most pertinent information to manufacturers is within the “Public Comments” section (Section C). In this article I’ve highlighted sections of the Final Rule Comments that respond to some of the most pressing questions coming from manufacturers. Please note that, in some cases, language within this post is pulled directly from the TRICARE Final Rule. However, in other instances, the document has been paraphrased. Please reference the actual Final Rule for direct quotes from the DoD. Additionally, this article is merely informational in nature, and is based on my personal interpretation of the Final Rule. This article is not meant to act as legal guidance or interpretation, and should not be used as such.

What does the TRICARE Final Rule address?

The Final Rule sets out to implementing regulations in response to the National Defense Authorization Act for Fiscal Year 2008 (NDAA-08).

The NDAA-08 states that any prescription filled on or after January 28, 2008 (the date of enactment for NDAA-08) shall be treated as an element of the DoD for purposes of procurement, and be covered by pricing requirements of 38 U.S.C. 8126 (a) and (b) (commonly known as the Veterans Health Care Act of 1992). The pricing calculation requirement outlined by section 8126 is referred to as the Federal Ceiling Price (FCP).

Debate exists between manufacturers and the DoD as to whether or not section 8126 can be extended to TRRx. The DoD argues that TRRx acts as a “depot contracting system” - defined in 8126 as within the scope of FCP:

“a centralized commodity management system through which covered drugs procured
by an agency” are “delivered directly from the commercial source to the entity
using such covered drugs,” 8126(h)(3)

This issue was contested as part of earlier legal actions taken by manufacturers (resulting in the 2006 overturning of the DoD’s previous attempt at obtaining FCP pricing for TRRx), however, the issue of whether or not 8126 extends to TRRx through the interpretation of the “depot” definition was not heard by the court. The overturning of the DoD’s earlier efforts was based on the DoD’s failure to use the proper rule-making channels, and therefore the question of the definition of depot was not explored. This issue could be raised again by manufacturers as contest to the DoD’s current regulation.

Is participation in the TRICARE Retail Pharmacy Program (TRRx) mandatory?

The DoD acknowledges that, in large part, the pharmaceutical industry does not agree with its interpretation of 8126 to extend TRRx through the definition of depot, therefore the DoD is requesting that manufacturers partake in the TRRx Program through voluntary, separate agreements between manufacturers and DoD, independent of the VA Master Agreements. Independent agreements would indicate that a manufacturer agrees to make TRRx prescriptions subject to FCP, unrelated to VA agreements and therefore unrelated to 8126.

By making the TRRx program voluntary, the DoD is not saying that it believes there is no legal obligation to participate, however, it feels that voluntary action consistent with the law is preferable to reliance on enforcement action. Further, the DoD states that it has no reason to, and expressly does not, waive the right to pursue any action authorized by law. The DoD suggests that in order for manufacturers to remedy uncertainties that may exist with respect to the potential existence or scope of enforcement actions, they should enter into voluntary agreements, making uncertainties moot.

While the DoD believes it has the statutory authority to require a manufacturer to agree to provide all covered products at FCP, the DoD is allowing agreements to be negotiated on a product-by-product basis.

What products fall within the purview of the Final Rule?

The DoD states that regardless of whether drugs are currently on the TRICARE Uniform Formulary or are non-formulary drugs, any prescriptions for covered drugs filled on or after January 28, 2008 are subject to FCP pricing (FCPs that apply are those in effect in the year in which the prescription is filled). Therefore, any drug meeting the definition of a covered drug falls within the parameters of 10 U.S.C. 1074g(f) and is subject to FCPs. Manufacturers have argued that U.S.C. 1074 g(f) does not expressly address refunds and, therefore, that refunds can only be required by establishing regulation or entering into contract/agreement with a given manufacturer. With this argument, overpayment reconciliation as requested by the DoD will most likely be contested. Expect to see manufacturers argue this in their request for waiver/compromise on refunds from the NDAA-08 enactment date through final rule effective date, if not as a more formal industry appeal.

It should be noted, however, that if a drug was on formulary during the timeframe of January 28, 2008 through enactment of the Final Rule, and a manufacturer elects not to sign an agreement to honor FCP going forward, the DoD is stating in commentary that this does not change the legal obligation with respect to prescriptions filled on or after the enactment of NDAA-08. Therefore, the DoD seems to expect that overpayments will be reconciled, despite the fact that the manufacturer is not agreeing to honor FCP.

How has the Pharmacy and Therapeutics (P&T) Committee and the Uniform Formulary process been affected?

There are three tiers of drugs on the Uniform Formulary:
Tier 1 – Generics
Tier 2 – Brand name Uniform Formulary Drugs
Tier 3 – Non-Formulary Drugs

Tier 2 drugs are provided at co-payment values of $9, as opposed to higher copayments of $22 dollars for non-Formulary drugs in the TRRx program. In order for Tier 3 drugs to be dispensed through TRRx, a pre-authorization is required. The DoD provides details on how pre-authorization and the utilization of the TRICARE Mail Order Pharmacy Program relate to Uniform Formulary for TRRx.

Based on the DoD’s interpretation of 1074 g(f) and 1074g(a), DoD decisions made by the P&T Committee with respect to Uniform Formulary status will be based on both relative and fixed standards. Relative standards will relate a drug’s cost effectiveness to other drugs in the class. The fixed standard will not allow for a drug to be placed on formulary if its price exceeds the maximum price – FCP. Based on the standards outlined by the DoD, a manufacturer’s agreement to honor FCP pricing has become a condition of Tier 2 status. The only time at which the fixed standard will be waived is when there is not at least one drug in a given drug class (Tier 1 or 2).

Products that have already gone through formulary review, for which uniform formulary status has been granted based on an agreement to honor pricing at or below FCP, will remain on formulary. Products on formulary based on agreements for pricing exceeding FCP, continuation of formulary status will be subject to the requirement that an agreement to honor FCP be in place. Failure to agree to honor FCP pricing will result in the product being reclassified as Tier 3. For drugs remaining on Uniform Formulary through agreement to honor FCP pricing, the secondary, relative review requirement for cost effectiveness will be waived pending the next periodic review of the drug class involved.

Are refunds retrospective?

The NDAA-08 required that regulations be put into place implementing the statute. Manufacturers argued that despite the statute’s intent, in the absence of a regulation the statute had no legal effect. The DoD counters this by arguing that the absence of a regulation does not mean the statute has no legal effect. Therefore, from the enactment of the NDAA-08 on January 28, 2008 through the effective date of the Final Rule, the statute states in express terms that all prescriptions filled on or after the date of enactment “shall” be treated so as to “ensure” that they are subject to FCP. Therefore, with respect to prescriptions filled on or after January 28, 2008, drug companies have a right to payment at FCP and no more. If payment was received in excess of FCP for prescriptions during this timeframe, the transaction produced an overpayment and an overpayment refund is required.

In order to enter into an agreement to honor FCP on a “going forward” basis, manufacturers will be required to refund overpayments accrued on or after January 28, 2008. Overpayments are calculated as either based on average commercial sales price less FCP or non-FAMP less FCP, dependent on how the product was procured.

However, understanding that manufacturers will site a multitude of legalities surrounding overpayment refunds, the DoD has added a provision to the final rule to address the request for compromise or waiver of overpayment refunds.

Paragraph (q) of the final rule addresses a request for waiver or compromise of a refund amount. Although the DoD prefers that agreements to honor FCP also include refund procedures, the DoD provides that manufactures may request waiver or compromise of a refund amount separate from a manufacturer’s written agreement to honor FCPs. Therefore, during the pendency of the refund amount waiver/compromise, a manufacturer may honor the FCP pricing agreement on a go forward basis and not be considered to fail to uphold regulation.

Possible reasons for waiver/compromise request already sited by the industry in comments submitted to the final rule include safe harbor issues with respect to anti-kickbacks, financial reporting issues for historical periods, the lack of appropriate utilization data, and the existence of prior incentive pricing agreements between the DoD and a given manufacturer. It should be noted that waiver criteria (q)93)(iii)(c) does allow a manufacturer to request voluntary exclusion of a covered drug from TRRx and a waiver of refund obligations.

***note: the VA has already provided guidance stating that the there is no need for reclassification of 2008 sales data to redesignate commercial sales as DoD sales because of section 1074g(f).***

What happens to existing Uniform Formulary Voluntary Agreements?

The DoD will continue voluntary negotiation concerning price, but does not have the authority to accept prices above FCP. For existing UF-VARR agreements above FCP, cancelation by the FCP is anticipated. However, it should be noted that they are not canceled merely by the issuance of the Final Rule.

Where will the DoD be responding to additional questions?

The DoD will continue to provide means to answer specific manufacturers’ questions regarding refund procedures, Uniform Formulary, etc. at http://tricare.mil/tma/Pharmacy.aspx

Join CIS and Reed Smith, LLP Thursday, March 26th at 11:00 AM EST for a discussion of the TRICARE Final Rule. To sign up, please send your Name, Title, Company Name, Telephone Number, and preferred Email Address to cispcx@cis-partners.com. A confirmation email with dial-in information will be provided.

Spaces are limited, so sign up today!

The TRICARE Final Rule!

By: Dana Zelig, CIS Senior Associate
danazelig@cis-partners.com

Well readers, it has finally happened. The Department of Defense (DoD) has published the TRICARE Final Rule it has been working on since January 28, 2008. On March 17, 2009, Federal Register Vol. 74, No. 50 announced the TRICARE Final Rule: Inclusion of TRICARE Retail Pharmacy Program in Federal Procurement of Pharmaceuticals. According to the Federal Register’s Summary:

Section 703 of the National Defense Authorization Act for Fiscal Year 2008 (NDAA–08) states with respect to any prescription filled on or after the date of enactment of the NDAA, the TRICARE Retail Pharmacy Program shall be treated as an element of the DoD for purposes of procurement of drugs by Federal agencies under section 8126 of title 38, United States Code (U.S.C.), to the extent necessary to ensure pharmaceuticals paid for by the DoD that are provided by network retail pharmacies under the program to eligible covered beneficiaries are subject to the pricing standards in such section 8126. NDAA–08 was enacted on January 28, 2008. The statute requires implementing regulations. This final rule is to implement section 703 of the NDAA–08… This final rule is effective May 26, 2009.

Background

If you’ve read the Pharma Compliance Blog for a while, you will remember that CIS Senior Compliance Manager Meredith Taylor has been tracking the DoD’s progress in drafting this document, and providing answers to manufacturers confused and frustrated by the lack of guidance around processing TRICARE utilization data. For example, you wondered if you were really supposed to use Medicaid ROSI templates to process TRICARE rebates. In her April 16, 2008 TRICARE Update: Where Oh Where is My Utilization Data?, Meredith confirmed that the DoD did, in fact, want manufacturers to use the ROSI templates (used to process state Medicaid rebate claims) to submit TRICARE rebate data to the federal government.

TRICARE Proposed Rule

On July 25, 2008 the DoD issued a Proposed Rule, to address the TRICARE provisions outlined in the NDAA-08 (see TRICARE Proposed Rule by Meredith and Katie Lapins, Director of Small and Mid-market Pharma). The Proposed Rule established refund procedures, and stated that:

…in the case of the failure of a manufacturer of a covered drug to make or honor an agreement to ensure that DoD pays no more than the Federal Ceiling Price (FCP) for covered drugs provided through the TRICARE Retail Pharmacy Network component of the program, the Director, TRICARE Management Activity (TMA), in addition to other actions referred to in the rule, may take any other action authorized by law. (Federal Register Vol. 74, No. 50 - Section B. Provisions of the Proposed Rule)

However, many companies still struggled to format TRICARE utilization data, calculate rebates, and accrue refunds (see Manufacturers Wrestle with TRICARE Data). Now that the TRICARE Final Rule has been issued, manufacturers are hopeful that a clear-cut path to participating in the TRICARE Retail Pharmacy Program and dealing with TRICARE data has been provided.

Provisions of the TRICARE Final Rule

Section D. Provisions of the Final Rule, describes changes and additions made to the Proposed Rule, based on comments provided by the pharmaceutical industry (good work peers!) and the retail pharmacy sector (Section C. Public Comments), and additional research performed by the DoD between issuing the Proposed Rule on July25, 2008, and issuing the Final Rule on March 17, 2009. We have included the most relevant excerpts from Federal Register Vol. 74, No. 50, Section D for your review:

Like the proposed rule, the final rule adds to section 199.21 of the TRICARE regulation a new paragraph (q) regarding pricing standards for the retail pharmacy program… to state in simpler terms DoD’s interpretation of the statute as requiring that all covered drug TRICARE Retail Pharmacy Network prescriptions are subject to Federal Ceiling Prices under 38 U.S.C. 8126.

Paragraph (2) provides that a written agreement by a manufacturer to honor Federal Ceiling Prices in the retail pharmacy network as required by the statute is with respect to a particular covered drug a condition for inclusion of that drug on the Uniform Formulary (Tier 2) and for the availability of that drug through retail network pharmacies without preauthorization. A covered drug not under such an agreement requires preauthorization to be provided through a retail network pharmacy. This preauthorization requirement does not apply to other points of
service… The final rule adds to the list of non-covered drugs for this purpose any drug provided under a prescription and dispensed by a pharmacy under the Section 340B program.

The final rule adds a new paragraph (q)(2)(iv) stating that the requirement for a manufacturer’s agreement to honor FCPs in the Retail Pharmacy Network as a precondition to Uniform Formulary (Tier 2) placement may, upon the recommendation of the P&T Committee, be waived by the Director, TMA if necessary to ensure that at least one drug in the applicable drug class is included on the Uniform Formulary. Any such waiver, however, does not waive the statutory requirement that all covered TRICARE Retail Pharmacy Network prescriptions are subject to Federal Ceiling Prices; it only waives the exclusion from the Uniform Formulary of drugs not covered by agreements.

Paragraph (q)(3) addresses refund procedures. Paragraph (q)(3)(i) states that refund procedures to ensure that pharmaceuticals paid for by DoD that are provided by retail network pharmacies under the Pharmacy Benefits Program are subject to Federal Ceiling Prices shall be established. Such procedures may be established as part of the agreement referred to above, or in a separate agreement, or pursuant to section 199.11…

Paragraph (q)(3)(ii) provides that the refund procedures shall, to the extent practicable, incorporate common industry practices for implementing pricing
agreements between manufacturers and large pharmacy benefit plan sponsors. The
procedures will provide the manufacturer at least 70 days from the date of the
submission of the TRICARE pharmaceutical utilization data needed to calculate
the refund before the refund payment is due. The basis of the refund will be the
difference between the average non-federal price of the drug sold by the manufacturer to wholesalers, as represented by the most recent annual non-Federal average manufacturing prices (non-FAMP) (reported to the Department of Veterans Affairs (VA)) and the corresponding FCP or, in the discretion of the manufacturer, the difference between the FCP and direct commercial contract sales prices specifically attributable to the reported TRICARE paid pharmaceuticals, determined for each applicable NDC listing. The current annual FCP and the non-FAMP on which it was based will be those applicable during the calendar year in which the prescription was filled.

As under the proposed rule, paragraph (q)(3)(iii) provides that a refund due under the law is subject to section 199.11 of the TRICARE regulation, the section that governs recovery of overpayments. The final rule provision has been revised to clarify that the refund amount will be treated, in the vernacular of section 199.11, as an erroneous payment. The final rule has also been revised to elaborate that the
applicability of section 199.11 brings with it a procedure for a manufacturer to request waiver or compromise of a refund amount due under the statute. During
the pendency of any request for such a waiver or compromise, a manufacturer’s
written agreement to honor FCPs shall be deemed to exclude the matter that is
the subject of the request for waiver or compromise so that the agreement, if
otherwise sufficient, will continue to be sufficient for purposes of satisfying the precondition to Uniform Formulary Tier 2 placement.

Also, during the pendency of any such request, the matter that is the subject
of the request shall not be considered a failure of a manufacturer to honor an
agreement for purposes of remedies for noncompliance. The final rule is further
revised to state that a request for waiver may also be premised on the voluntary removal by the manufacturer in writing of a drug from coverage in the TRICARE Pharmacy Benefit Program. This change further protects a manufacturer from involuntary involvement in the program.

One other change to the refund procedures paragraph is that a new paragraph
(q)(3)(iv) has been added to state that in the case of disputes by the manufacturer of the accuracy of TMA’s utilization data, a refund obligation as to the amount in dispute will be deferred pending good faith efforts to resolve the dispute. If the dispute
is not resolved within 60 days, the Director, TMA will issue an initial administrative decision and provide the manufacturer with opportunity to request reconsideration or appeal consistent with procedures under the TRICARE regulation. When the
dispute is ultimately resolved, any refund owed relating to the amount in dispute will be subject to an interest charge consistent with the normal regulatory practice.

Paragraph (q)(4) provides that in the case of the failure of a manufacturer of a covered drug to make or honor an agreement under paragraph (q), the Director, TMA, in addition to other actions referred to in the paragraph, may take any other action authorized by law. This paragraph is unchanged from the proposed rule.

Finally, a new paragraph (q)(5) has been added. It provides that in cases in which a
pharmaceutical is removed from the Uniform Formulary or designated for
preauthorization, the Director, TMA may for transitional time periods determined
appropriate by the Director or for particular circumstances authorize the continued availability of the pharmaceutical in the retail pharmacy network or in MTF pharmacies for some or all beneficiaries as if the pharmaceutical were still on the Uniform Formulary.

Look for an in-depth account of these changes on the Blog and in the upcoming PCX Newsletter, and feel free to contact CIS at any time to discuss how the changes might affect you and your company! We at CIS are working hard to make sure you have the tools you need to comply with the TRICARE Final Rule by its effective date of May 26, 2009!

Also stay tuned for an upcoming CIS conference call, where we will take your questions and provide our insight into the TRICARE Final Rule.

*

FDA Drug and Device Requirements Workshop

This week HHS announced the Association of Food and Drug Officials (AFDO) 113th Annual Education Conference, which will be held in Chicago from June 6-10, 2009. The following information was posted in the Federal Register, Vol. 74, No. 49:

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA–2009–N–0664]

Industry Exchange Workshop on Food and Drug Administration Drug and Device Requirements; Public Workshop

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice of public workshop.

SUMMARY: The Food and Drug Administration (FDA) Chicago District, in co-sponsorship with the Association of Food and Drug Officials (AFDO), is announcing a public workshop entitled ‘‘Drugs and Devices—Promoting and Protecting the Public Health Through Risk Management and Product Cycle Improvement.’’ This 2-day public workshop is intended to provide information about FDA drug and device regulation to the regulated industry.

Date and Time: The public workshop will be held on Monday, June 8, 2009, from 10:20 a.m. to 5 p.m. and Tuesday, June 9, 2009, from 8 a.m. to 5 p.m.

Location: The public workshop will be held at the Doubletree Hotel Chicago—Oakbrook, 1909 Spring Rd., Oak Brook, IL 60523, 800–222–TREE, 800–222–8733, or 630–472–6000, FAX: 630–573–1909.

Attendees are responsible for their own accommodations. To make reservations at the Doubletree Hotel Chicago—OakBrook, at the reduced conference rate, contact the Doubletree Hotel Chicago—OakBrook before May 5, 2009, citing meeting code ‘‘AFDO
Conference’’.

Contact: William Weissinger, Food and Drug Administration, 550 W. Jackson Blvd., 15th Fl., Chicago, IL 60661, 312–596–4210, FAX: 312–596–4242, e-mail: William.weissinger@fda.hhs.gov.

Registration: You are encouraged to register by May 12, 2009. The AFDO registration fees cover the cost of facilities, materials, and breaks. Seats are limited; please submit your registration as soon as possible. Course space will be filled in order of receipt of registration. Those accepted into the course will receive confirmation. Registration will close after the course is filled. Registration at the site is not guaranteed but may be possible on a space available basis on the day of the public workshop beginning at 7:30 a.m.

The cost of registration is as follows:
Government (AFDO/North Central AFDO Member) - $395.00
Government (Non-Member) - $495.00
Non-Government (AFDO/NCAFDO Member) - $450.00
Non-Government (Non-Member) - $550.00
*To be added to registration fee for workshop registration postmarked after May 12,2009 - $75.00

If you need special accommodations due to a disability, please contact William Weissinger at least 7 days in advance of the workshop.

Registration instructions:
To register, please submit your name, affiliation, mailing address, phone, fax number, and e-mail, along with a check or money order payable to ‘‘AFDO.’’ Please mail your payment to: AFDO, 2550 Kingston Rd., suite 311, York, PA 17402.

To register via the Internet, go to http://www.afdo.org/. (FDA has verified the Web site address, but is not responsible for subsequent changes to the Web site after this document publishes in the Federal Register).

The registrar will also accept payment by major credit cards (VISA/MasterCard only). For more information on the meeting, or for questions on registration,
contact AFDO, 717–757–2888, FAX: 717–755–8089, or e-mail: afdo@afdo.org.

SUPPLEMENTARY INFORMATION:
The public workshop helps fulfill the Department of Health and Human Services’ and FDA’s important mission to protect the public health. The workshop will provide FDA-regulated drug and device entities with information on a number of topics concerning FDA requirements related to the production and marketing of drugs and/or devices. Topics for discussion include the following:

• Risk management approach to consumer protection and industry regulation
• How quality management systems (including corrective and preventive action) contribute to product cycle improvement
• Supplier management and component controls for drugs and devices
• Adverse drug event reporting requirements
• Medical device reporting requirements
• Recalls, corrections and removals
• Complaint handling from the FDA investigator’s perspective.

FDA has made education of the drug and device manufacturing community a high priority to help ensure the quality of FDA- regulated drugs and devices. The workshop helps to achieve objectives set forth in section 406 of the Food and Drug Administration Modernization Act of 1997 (21 U.S.C. 393), which includes working closely with stakeholders and maximizing the availability and clarity of information to stakeholders and the public. The workshop also is consistent with the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104– 121), as outreach activities by Government agencies to small
businesses.

Dated: March 4, 2009.
Jeffrey Shuren,
Associate Commissioner for Policy and
Planning.
[FR Doc. E9–5648 Filed 3–13–09; 8:45 am]
BILLING CODE 4160–01–S

Elaborate Medicare Fraud Schemes Rob Taxpayers and Patients

By: Meredith Taylor, Esq., CIS Senior Compliance Manager
meredithtaylor@cis-partners.com

Medicare waste, fraud, and abuse are running rampant in our country and costing taxpayers billions of dollars a year. The ultimate price to be paid, however, is the deteriorating medical care provided to seniors and the disabled. In his February 24, 2009 address to Congress, President Obama acknowledged this problem and pledged to “root out the waste, fraud, and abuse in our Medicare program” through comprehensive healthcare reform.[1]

The U.S. Department of Health and Human Services, along with the U.S. Department of Justice, investigates and prosecutes fraudulent Medicare claims. With the assistance of state investigators, this “multi-agency team of federal, state and local investigators is generating results.”[2] The following examples are some of the most current fraudulent Medicare schemes that were identified, investigated, and prosecuted (or are being prosecuted) by the Government.

On February 13, 2009, six employees at a Miami clinic, claiming to specialize in treating HIV/AIDS patients, were indicted in a $10 million Medicare fraud scheme. Three doctors and other clinic employees ordered infusions and injections for patients who they claimed, through false medical records, were HIV positive. In some cases, the infusions were ordered but never provided. The doctors and clinic employees also manipulated HIV positive blood samples in order to make it appear that the patients had certain HIV-related conditions warranting particular treatments. The doctors and clinic employees billed over $10m to Medicare for unnecessary services, and for services that were never provided, over the course of three years. This case is currently pending in Florida’s Federal court.[3]

On February 19, 2009 in Dallas, the owner of a medical equipment supplier was sentenced to five years in prison and fined $132,955.35 for Medicare fraud. The supplier paid a hospital employee for information on Medicare patients, then sold that information to other medical equipment suppliers. These suppliers used the information to submit Medicare reimbursement forms, claiming that wheelchairs were provided to the patients. The 200 false claims indicated that the patients had prescriptions for the wheelchairs, when they did not, and cost Medicare over $804,344.42.[4]

On February 9, 2009, a business owner and his daughter admitted to falsely billing Medicare on behalf of his company for counseling services made to patients in personal care homes. In fact, these counseling services, in the amount of $67,000, never took place. Once the investigation began, the business owner created false records to try to persuade investigators that the services were rendered. These fraudulent billings could lead to a sentence including a $500,000 fine, and imprisonment for up to 18 years.[5]

On February 26, 2009, a doctor in California pled guilty to administering less than the prescribed dosage of drugs to AIDS patients. He then billed his patients' health insurance providers for the full dose of the drugs, even when patients were no longer taking the drugs, and billed for doctor administration when patients were self-administering the drugs. This doctor estimated that he fraudulently billed Medicare for approximately $350,000, but the Government estimates the fraudulent amount to be closer to $660,955. This doctor is currently awaiting his sentence. [6]

On February 24, 2009, a man in Florida was sentenced to 28 years in prison as a result of healthcare related fraud and money laundering. This man submitted $5.4 million dollars in claims for durable medical equipment over the course of two years. Medicare paid approximately $1.3 million of the claims. The investigation revealed that the medical equipment was never prescribed, or provided, to any patients.[7]

These are only a few examples of the elaborate schemes providers, suppliers, manufactures, and individuals have concocted to defraud Medicare. President Obama is certainly on point with highlighting blatant Medicare fraud as an enormous waste of taxpayers’ money that must be stopped immediately. I look forward to learning more about his plan!

Sources:
[1] http://medicareupdate.typepad.com/medicare_update/2009/02/medicarereform.html
[2] http://www.hhs.gov/medicarefraud/
[3] http://www.usdoj.gov/opa/pr/2009/February/09-crm-122.html
[4] http://www.usdoj.gov/usao/txn/PressRel09/sanders_hcf_sen_pr.html
[5] http://www.usdoj.gov/usao/kyw/press_releases/PR/20090209-01.html
[6] http://www.usdoj.gov/usao/cac/pressroom/pr2009/018.html
[7] http://www.usdoj.gov/usao/fls/PressReleases/090225-01.html

Pharmaceutical Companies Change Sales and Marketing Strategy

By: Justin Wutti, CIS Senior Associate
justinwutti@cis-partners.com

For years, the model for sales and marketing in the pharmaceutical industry has been a mass-market approach. Employing a huge sales force and spending millions of dollars on samples and television advertising has long been the norm in the industry. However, this approach seems to have run its course.

According to a report published by PricewaterhouseCoopers LLP, pharmaceutical companies will completely revamp their sales and marketing strategies over the next 10 years. The new target-market approach is believed to create revenue growth and value for patients (1). “Pharmaceutical companies will need to package products and health services in a way that adds value, demonstrating that their medicines really work, that they provide value for the money and potentially reduce healthcare costs by being better than alternative forms of intervention," said Anthony Farino, PricewaterhouseCoopers' U.S. pharmaceutical and life sciences advisory services leader (1). Large sales forces will transform into smaller groups of smarter, more effective sales representatives. Companies will be forced to hire people who can negotiate with powerful healthcare payers. In reference to the shrinking sales forces, Joe Palo, an advisor to PwC Pharmaceutical and Life Sciences Advisory Practice says, “It’s not going to go to zero, you are going to have blockbuster products and sales forces going into primary care, but there will be less” (2).

There is much evidence that the current large sales force approach simply isn’t working anymore. For example, 1 out of 5 doctors now refuses to see sales representatives, and return visits to doctors have declined (2). Additionally, the number of sales representatives has been growing 3 times faster than the number of physicians. Because of the increased number of specialty products being sold, pharmaceutical companies will also recruit people with a clinical background, such as nurses and pharmacists. Many companies are investing in genomics, proteomics, and metabolomics for specialty therapies (2).

All of these changes will force payers, providers, and physicians to work more closely in order to figure out what is best for the patient, which will become increasingly important as the healthcare system changes to focus more and more on patients’ health and well-being.

SOURCES:
(1) http://www.msnbc.msn.com/id/29386637/
(2) http://www.mmm-online.com/Pharma-sales-forces-will-shrink-clinical-skills-in-demand/article/127857/

Medicare Part D Drug Benefit: A Strong Candidate for Government Reform

By: Clarissa Crain, CIS Senior Compliance Specialist
clarissacrain@cis-partners.com

On January 1, 2006, the Medicare Part D Program was launched in order to provide Medicare eligible patients with access to prescription drugs. The intent of the program was to lower prescription drug costs witnessed by Medicare patients, and thereby ensure that patients in need had access to necessary drugs.[i] However, a little over three (3) years after its launch, the Medicare Part D program is under intense pressure to change.

Millions of elderly Americans gained access to needed drugs through Medicare Part D; however, lawmakers claim that this access is coming at a cost above that which the taxpayers should incur. This claim is illustrated by considering the case of Medicaid-Medicare Dual Eligibles.

Dual Eligibles are defined as individuals entitled to Medicare coverage, as well as some level of Medicaid assistance.[ii] Prior to the 2006 implementation of the Medicare Modernization Act (2003), Dual Eligibles received pharmacy benefits through state Medicaid programs. However, upon the launch of Medicare Part D prescription drug coverage program, these patients were transferred to Medicare Part D for their pharmacy benefits.

Today there are approximately 6 to 8 million individuals that fall within the category of Dual Eligibles, representing 40% of the nation’s Medicaid spending and 25% of the nation’s Medicare spending. Recent analysis shows that spending on Dual Eligible pharmacy benefits has increased a dramatic 30% since the enacting of the 2003 MMA. This is largely attributed to the higher drug costs witnessed by the Medicare Part D program, as opposed to the Medicaid Drug Reimbursement Program (MDRP). Because Medicare Part D benefits are not administered through the federal government, they do not witness the same ‘best prices’ provided through MDRP.[iii]

Lawmakers, such as Chairman of the House Energy and Commerce Committee Henry Waxman, point to this rapid increase in spending, and question whether Part D plans are getting the best discounts for Dual Eligibles. By referencing research showing that price discounts provided to Part D plans are much less substantial than price rebates through MDRP, Waxman seeks to introduce legislation requiring that Medicare receive the same level of discount witnessed by MDRP. Calling the current model of Dual Eligible coverage an opportunity for pharmaceutical manufacturers to witness “windfall revenues,” Waxman notes that the increase in cost is a direct result of statutory laws written by Congress.

The example of Dual Eligibles allows for a side-by-side comparison to Medicaid coverage; however, it can be deduced that costs witnessed for patients covered only by Medicare Part D are also above the government’s intended rates. As the new administration continues to push towards universal health care coverage, while also battling a recessed economy and budget shortfalls, Medicare Part D and Dual Eligible coverage will not be left unaffected. However, legislative changes in the Medicare Part D program are likely to go beyond changes in Dual Eligible reimbursement/pricing, by focusing on pricing witnessed throughout the Part D program.

When Part D was originally launched it was believed that the competitive, privatized market would drive down costs, yet that intention has not been realized to the extent the government had hoped (see Dual Eligibles example above). Instead, reformers call for a move away from Medicare Part D privatization, allowing the government to negotiate directly with manufacturers on pricing – thereby utilizing the government’s buying power to drive down cost. Other suggestions include a formulary similar to that in place for the VA program, or the utilization of AMP or ASP prices to develop rebate/pricing structures.[iv] Regardless of the avenue through which reform is made, it is coming.

Sources:
[i] Medicare Program-General Information. http://www.cms.hhs.gov/MedicareGenInfo/.
[ii] Overview. Medicare / Medicaid Dual Eligibles. http://www.cms.hhs.gov/DualEligible/01_Overview.asp#TopOfPage.
[iii] Analysis of Dual Eligible Pharmacy Costs Under Medicaid and Medicare Part D. http://www.communityplans.net/Portals/0/ACAP%20-%20Dual%20eligible%20pharmacy%20analysis%20final%20091808.pdf.
[iv]Medicare, Medicare Advantage, and Part D: Likely Policy Changes in 2009 and 2010. http://www.piperreport.com/

FDA Encourages use of Graphics and Tables for Clinical Pharmacology Sections

By: Chris Didizian, CIS Senior Associate
chrisdidizian@cis-partners.com

The Clinical Pharmacology section of labeling for prescription drugs and biological products, one of many that must be included in a drug or biologic’s Full Prescribing Information, should contain “information that is important for safe and effective use of the drug,” states the FDA in 21 CFR 201.57 and its draft guidance. This information should be written for practitioners who may not be well-versed in clinical pharmacology. Before taking a closer look at the actual wording with which the FDA encourages the use of graphics and tables in the Clinical Pharmacology section, note that this is a draft guidance and that even a finalized version reflects suggestions and recommendations, not requirements.

Section II. Clinical Pharmacology Section, Part F. Use of Pharmacokinetic, Dose-Response, and/or PK/PD Graphs and Tables, contains a small but important piece of information:

Graphs and/or tables depicting Pharmacokinetic (PK) attributes, exposure- or
dose-response relationships, and/or PK/PD [Pharmacodynamics] relationships can
be helpful in simplifying and/or clarifying the labeling and their use is
encouraged. When graphs or tables are used, variability measures should be
included.

The above is the entire section lifted directly from the guidance. The use of graphs and tables should give labels for new drugs quite a facelift, while also educating practitioners to make more informed decisions, based on statistics. Manufacturers already have this information in their promotional materials, so transferring it to their Package Inserts should not be costly. However, manufacturers must be sure to represent this data accurately, and not to manipulate the numbers through their graphs and tables.

For more information, see the draft guidance in its entirety. If you have specific questions, contact information for the appropriate CBER/CDER representatives is provided on page 1 of the guidance.

Merck and Schering-Plough Announce Merger

By: Dana Zelig, CIS Senior Associate and PCB Editor
danazelig@cis-partners.com

On Monday, March 9, 2009, Merck & Co., Inc. announced a merger with fellow pharmaceutical manufacturer Schering-Plough Corporation. The tagline for the proposed merger, as posted on Merck’s website, provides the following explanation of the deal’s anticipated outcome:

COMBINED COMPANY POSITIONED FOR SUSTAINABLE GROWTH THROUGH SCIENTIFIC INNOVATION
AND A STRONGER, MORE DIVERSIFIED PRODUCT PORTFOLIO[1]

Merck and Schering-Plough announced that their respective Boards of Directors had unanimously approved Merck’s purchase of Schering-Plough, in a cash and stock transaction totaling $41.1 billion. As reported by the Associated Press (AP), “Shares of the two companies traded furiously after the announcement, with Schering's shares skyrocketing and Merck's dropping, typical for a company doing a big acquisition.”[2] The deal is structured as a “reverse merger,” meaning that Schering-Plough will be “acquired” by Merck, but will continue as the surviving public corporation. The combined company will operate under Merck’s name, and be led by Richard T. Clark, Merck’s current Chairman, President, and CEO. In his press release, Clark said:

We are creating a strong, global healthcare leader built for sustainable growth
and success. The combined company will benefit from a formidable research
and development pipeline, a significantly broader portfolio of medicines and an
expanded presence in key international markets, particularly in high-growth
emerging markets. The efficiencies we gain will allow us to invest in
strategic opportunities, while creating meaningful value for shareholders.[3]

Merck, already a leading manufacturer of pills and vaccines, will utilize Schering-Plough’s success with biologics to increase market share and allow it to compete in our changing industry. According to the AP, the merger “will also give Merck one of the world's biggest animal health businesses and a sizable consumer health division that includes products such as allergy pill Claritin, Dr. Scholl's foot products and the Coppertone sun-care line.”[4]

According to the press release distributed by the two companies, the “Strategic Benefits of the Transaction” include:

• Complementary Product Portfolios and Pipelines Focused on Key Therapeutic Areas, including cardiovascular, infectious disease, neuroscience, oncology, and women’s health
• Robust R&D to Deliver Innovative Medicines for Patients
• Stronger Commercial Organization
• Expanded Global Presence with Geographically Diverse Revenue Base, and
• Increased Manufacturing Capabilities

The “Financial Benefits of the Transaction” include:

• Strong Financial Profile
• Commitment to Maintain Merck Dividend
• Substantial Cost Savings
• Accretive to Earnings
• Ability to Optimize Investments for Maximum Benefit[5]

For more information on the details or proposed benefits of the merger, see the full press release at Merck.com or Schering-Plough.com.

Sources:
[1] Merck and Schering-Plough to Merge
http://www.merck.com/newsroom/press_releases/corporate/2009_0309.html
[2] Merck Buying Schering-Plough in a $41.1B Deal
http://biz.yahoo.com/ap/090309/merck_schering_plough.html
[3] Merck and Schering-Plough to Merge
http://www.merck.com/newsroom/press_releases/corporate/2009_0309.html
[4] Merck Buying Schering-Plough in a $41.1B Deal
http://biz.yahoo.com/ap/090309/merck_schering_plough.html
[5] Merck and Schering-Plough to Merge
http://www.merck.com/newsroom/press_releases/corporate/2009_0309.html

Strategic and Operational Risk Factors Involved in the Review and Approval of Promotional Materials

By: Joe Calarco, CIS Senior Manager
joecalarco@cis-partners.com

Anyone who spends most of their time in R&D lives for the euphoria a company experiences upon receiving FDA approval of a product; everyone in the company feels a sense of accomplishment. However, what many in R&D do not witness is the effort it takes to coordinate an effective and compliant promotional campaign for the product.

From the time the product became a viable candidate for FDA submission, the company’s Marketing representatives have been developing a strategy to effectively market the product. This strategy likely includes discussions on how to comply with the federal regulations involving promotions overseen by the FDA’s Division of Drug Marketing, Advertising and Communications (DDMAC). The following is the mission of DDMAC:

To protect the public health by assuring prescription drug information is
truthful, balanced and accurately communicated. This is accomplished through a
comprehensive surveillance, enforcement and education program, and by fostering
better communication of labeling and promotional information to both healthcare
professionals and consumers. [1]

Based on the number of DDMAC related warning letters issued over the last 12 months, [2] it would seem compliance regarding promotional materials is taken very seriously.

There are two high-level risk factors your organization needs to consider prior to implementing any marketing campaign. The first involves evaluating strategic risk. What factors are shaping the current regulatory environment? What is your corporate culture’s tolerance for risk? Some companies are more risk averse regarding industry regulations. On a more micro-level, how strong does your medical staff feel your empirical data is? Is your product best in class? Does it treat an underserved population? Does the product have potential to be addictive or to have extensive off-label use? (This question is critical, because companies can be cited for the promotion of off-label uses.) These are all good questions to address, because the answers will go a long way to framing your promotional campaign.

The second type of risk to consider when designing your promotional campaign is operational risk. There are many people involved in executing a promotional campaign, who must coordinate multiple activities. Are roles and responsibilities clearly defined, especially among your Medical, Legal, and Regulatory (MLR) reviewers? Are your MLR reviewers aligned with your risk strategy? From a pure operations perspective, who is shepherding promotional items through the development process from development to DDMAC 2253 form submission.[3] Finally, does your organization have the vendor relationship-management skill to effectively work with the host of vendors your organization will utilize to produce promotional materials?

What is at stake often cannot be quantified because it is hard to put a price on potential regulatory actions. However, at the very least, regulatory actions in the form of a warning letter will likely force your company to remove some of the promotional material in question from the market place. Lost time marketing your product may also have a negative impact on sales and market share.

Given the limited time that a product may enjoy patent protection, any delay in marketing can cost a significant amount. If your strategy is well devised and properly implemented, you can minimize the risk you take in promoting your product. Most leaders are willing to accept agreed-upon strategic risks. On the other hand, operational excellence in any process is a baseline expectation. Regulatory action due to poor operational compliance is likely not going to sit well with company leadership.

In closing, promoting an approved product, one that your company believes brings value to society and profitability to the company, should be one of the more enjoyable times in a product’s life cycle. If compliance with regulations regarding promotional materials is a significant concern, talk to a CIS representative about ways to improve your promotional strategy, or enhance your development process.

Sources:
[1] FDA (2008, April 9). Citing electronic sources retrieved March 8, 2009 from http://www.fda.gov/cder/ddmac/
[2] FDA (2009, February 27). Citing electronic sources retrieved March 8, 2009 from http://www.accessdata.fda.gov/scripts/wlcfm/subject.cfm?FL=D
[3] FDA (2007, October). Citing electronic sources retrieved March 8, 2009 from
http://www.fda.gov/opacom/morechoices/fdaforms/FDA-2253.pdf

Obama's 2010 Budget Unveiled: The Health Reform Reserve Fund

By: Chrissy Spicer, Senior Manager

Many have claimed that the economy cannot be fixed without addressing the cost and access to healthcare. At a macro level, it is clear that spending on health will continue to be a large portion and necessary component of the Gross Domestic Product (GDP); however, due to the exponential increases in health costs coming during a recessed economy, more and more families will be forced to face the ramifications of the high costs of healthcare or delay the attention of much needed healthcare. In a recent statement, President Barack Obama said “because of crushing health care costs and the fact that they drag down our economy, bankrupt our families and represent the fastest-growing part of our budget, we must make it a priority to give every single American quality, affordable health care [1]” On Thursday, Obama has exercised this commitment through the recent development and launching of his budget related to healthcare reform. The following provides a macro evaluation of the costs related to healthcare and the resulting outline of the fiscal 2010 budget related to healthcare reform.

In 2009, the National Healthcare Expenditures (NHE) in the United States is projected to increase 5.5 percent while Gross Domestic Product (GDP) is anticipated to decrease 0.2 percent [2]. According to a news release by Center for Medicare and Medicaid Services (CMS), “over the period 2008 – 2018, average annual health spending growth (6.2 percent) is anticipated to outpace average annual growth in the overall economy (4.1 percent). By 2018, national health spending is expected to reach $4.4 trillion and comprise just over one-fifth (20.3 percent) of GDP [3].” Additionally, Obama’s budget indicates “after adjusting for inflation, family health insurance premiums have risen 58 percent since the year 2000, while wages have increased only 3 percent. Nearly 46 million Americans have no health insurance [4].”

The truth behind the numbers has most in agreement that there is a desperate need for healthcare reform in America. Who pays and how the expansion for health insurance comes to fruition becomes the next series of questions that Obama has outlined in his budget. Overall, Obama’s plan includes a $634 billion payment over 10 years as a reserve fund to fuel healthcare reform that would be derived from multiple sources including: increasing taxes to the wealthy, decreasing Medicare and Medicaid Payments to insurance companies, and decrease payments to drug makers and hospitals.

According to a summary provided by Ropes & Gray LLP, the details that impact the healthcare industry the most are summarized below [5]:

Financing the Health Reform Reserve FundAbout half of the president’s $633.8 billion health care reserve fund is financed by reducing federal Medicaid and Medicare spending by $316 billion over 10 years. $19.5 billion that is directly related to an increase of Medicaid rebated from 15.1% to 22.1%. These Medicaid and Medicare savings fall into three broad categories:

1. Aligning incentives toward quality ($20.5 billion):
· Reduce Medicare payments to hospitals with high readmission rates ($8.4 billion)
· Link a portion of Medicare inpatient payments to hospital performance on quality measures (pay for performance) ($12 billion)


2. Promoting efficiency and accountability ($287 billion):
· Reduce overpayments to Medicare Advantage plans by establishing a competitive bidding system ($175 billion)
· Bundle Medicare payments for hospital inpatient services and certain post-acute services in the 30-day period after discharge ($17.8 billion)
· Increase the minimum Medicaid prescription drug rebate from 15.1 to 22.1 percent of the Average Manufacturer Price, allow states to collect rebates from Medicaid managed care plans, and apply rebates to new drug formulations ($19.5 billion)
· Establish a pathway for FDA approval of generic biologics ($9.2 billion)
· Restructure Medicare home health care payments ($37 billion)
· Use radiology benefit managers to ensure appropriate Medicare payments for imaging services
· Expand Medicaid family planning services ($190 million)
· Use the National Correct Coding Initiative edits for Medicaid payments ($620 million)
· Reallocate Medicare and Medicaid Improvement Funds that currently support Quality Improvement Organizations ($24 billion)
· Address conflicts of interest in physician-owned specialty hospitals (negligible savings)

3. Encouraging shared responsibility ($8 billion):
· Extend means testing for certain high-income Medicare beneficiaries to Part D drug coverage premiums ($8 billion)

Now more than ever, pharmaceutical manufacturers should begin to strategically evaluate their relationship with the government as a customer and gain a full understanding and planning of how the proposed changes may impact current operations.

Sources:
To view the 2010 Fiscal Year Budget: http://www.whitehouse.gov/omb/assets/fy2010_new_era/A_New_Era_of_Responsibility2.pdf
[1] http://bulletin.aarp.org/yourhealth/policy/articles/obama_s_health_reform.html
[2] February 24, 2009, CMS Medicare News
[3] February 24, 2009, CMS Medicare News
[4] http://bulletin.aarp.org/yourhealth/policy/articles/obama_s_health_reform.html
[5] http://www.ropesgray.com/frameworkforhealthreform/

Articles of the Week!

Courtesy of Amy Lotman, CIS Senior Manager
amylotman@cis-partners.com


HBA names J&J's Gorsky Honorable Mentor
http://www.mmm-online.com/HBA-names-JJs-Gorsky-Honorable-Mentor/article/127921/?DCMP=EMC-MMM_Newsbrief

Obama offering drug industry R&D "olive branch"
http://www.in-pharmatechnologist.com/Industry-Drivers/Obama-offering-drug-industry-R-D-olive-branch/?c=uMn0b%2BuA8EnDO2OE87EIFA%3D%3D&utm_source=newsletter_weekly&utm_medium=email&utm_campaign=Newsletter%2BWeekly

FDA Sends Letter to GlaxoSmithKline Over Avodart Ad
http://pharmalive.com/news/index.cfm?articleID=608132&categoryid=43&newsletter=1

Small Drug Firms Thriving
http://www.therapeuticsdaily.com/news/article.cfm?contentValue=1890862&contentType=sentryarticle&channelID=33

On Young Doctors and Long Workdays
http://www.nytimes.com/2009/03/03/health/03chen.html?_r=1&ref=health

Enjoy!

Sebelius to Accept Secretary of HHS Nomination

By: Chris Didizian, CIS Senior Associate
chrisdidizian@cis-partners.com

Throughout the past few weeks, the media has consistently fed us phrases like, “a step in the right direction” or “positive change on the horizon…” when referring to healthcare reform. While I adamantly contend the notion that healthcare reform is, in fact, positive, the most recent newsfeed highlighting Kansas Governor Kathleen Sebelius as the next HHS Secretary is certainly worth some discussion because it is a significant cabinet position.

On Monday, March 2nd President Obama nominated Mrs. Sebelius to replace Tom Daschle, who withdrew from nomination when his failure to pay over 100k in taxes was discovered. Championed as a candidate more than capable to carry out health care reform, Sebelius lacks the necessary, personal connections and relationships that Tom Daschle was well known for.[1] As a result, she may face some challenges. Despite the anticipated struggle, Sebelius has demonstrated success in promoting health care provisions as written in the stimulus bill, in leading health care meetings with Obama and Biden in attendance, and in expanding her state’s Children’s Health Insurance Program.[2] This experience should serve her well as she will be bombarded with issues relating not only to health reform but also recent issues facing Medicare and food safety.

There are, however, a few ironies of this potential nomination. Sebelius is supposed to be Obama’s best back-up for the role of HHS Secretary, yet back in December she withdrew her name from consideration for any cabinet position.[3] Why now is she being considered? Is there no better candidate to push for health reform? In addition, her family and administration have traditionally been bipartisan. Perhaps the explanation here is that Obama is keeping his promise of creating a bipartisan cabinet, despite many of his recent selections. Finally, unlike Daschle, Mrs. Sebelius will not be in charge of the White House health committee that will be key in drafting health policy. While I understand that the plan for Daschle to occupy both positions was unique, I cannot help but wonder whether the two individuals, one the HHS Secretary – one the chair of the health committee, will be somewhat confrontational and, therefore, less efficient. We will have to wait and see.

Sources:
[1] http://wonkroom.thinkprogress.org/2009/02/19/sebelius-hhs/
[2] Ibid.,
[3] http://www.nytimes.com/2009/02/19/us/politics/19health.html?_r=2&hp

Prescription Drug Advertisements: A Tutorial

By: John Jordan, CIS Associate
johnjordan@cis-partners.com

Prescription (Rx) drug advertisements can provide useful information for consumers, as they work with their health care providers to make wise decisions about treatment. But it is important for pharmaceutical manufacturers to know that there are different types of drug advertisements, which are evaluated differently by the FDA. Some examples of Rx drug advertisements are:

1. Product Claim Ads, which name a drug, the condition it treats, and talk about both its benefits and risks;
2. Reminder Ads, which name a drug, but do not discuss its use; and
3. Help-Seeking Ads, which describe a disease or condition, but do not recommend specific drugs for treatment.

Product Claim Ads are required to provide the name of the drug (brand and generic), at least one FDA-approved use for the drug, and the most significant risks associated with the drug. The benefits and risks of the drug should be provided in equal fashion. For example, the font used for the benefits of taking the drug should not be bigger than the font used for the side effects. Information about the drug in the ad must be from well-designed studies that are FDA approved; any other information is misleading, and is a violation of FDA guidelines.

Reminder Ads assume that the audience already knows what the product is for. These ads give the viewer no knowledge of risks or benefits. Anything in the ad that could be used to remind the viewer what the drug is used for is not allowed. These types of ads cannot be used for certain Rx drugs that are associated with serious health risks. Drugs that can cause serious risks must include special warnings, called “boxed warnings,” in their FDA-approved prescribing information. Because of their seriousness, the risks associated with these drugs must be highlighted in all ads for them.

Help-Seeking Ads describe the symptoms of a disease or condition, and encourage people experiencing those symptoms to ask their doctors about the advertised Rx drug designed to treat them. These ads can include the company’s name, and usually provide a way to contact the company for more information. The FDA does not consider help-seeking ads to be official drug ads, and does not regulate them; however they are still regulated by the Federal Trade Commission (FTC).

The FDA takes action against any manufacturer whose ads violate the laws that regulate prescription drug advertising. The simplest and most common way for the FDA to take action is to send a warning letter to the manufacturer. The letter explains how the ad has violated the law, and generally asks the manufacturer to withdraw the ad. In some cases (like marketing for Yaz) the FDA will ask the drug company to fix the misimpression made by the violating ad, by publishing a corrective ad. The FDA is most likely to take this action when the misimpression poses a serious threat to public health. Sometimes the FDA takes additional enforcement action, which can include taking drug companies to court, bringing criminal charges against them, asking for an injunction (a court-enforced ban of specific activities), and even seizing supplies of the drug being advertised.

For more information on the various types of Rx drug advertisements, please see “What You Should Know about Prescription Drug Advertisements” on the FDA’s website:
http://www.fda.gov/cder/ethicad/index.htm
*

AdvaMed and PhRMA Take Similar Approaches to Health Care Providers

By: Justin Will, Esq., CIS Compliance Manager
justinwill@cis-partners.com

The Advanced Medical Technology Association (AdvaMed) recently joined the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Commonwealth of Massachusetts[1] in denouncing the giving of promotional products to physicians to advertise drugs or other medical related services. On December 18, 2008, AdvaMed released a revised “Code of Ethics on Interactions with Health Care Professionals”[2] which is effective beginning on July 1, 2009. The revised code further restricts allowable conduct between healthcare professionals, and reflects the ongoing government and industry focus on transparency in the healthcare industry. As stated by Michael A. Mussallem, Chairman of AdvaMed, “This updated and more rigorous Code of Ethics reflects the medical technology industry’s ongoing commitment to openness, transparency and high ethical standards.”[3]

The revised code includes new or additional provisions including:

1. A Code Compliance section of the AdvaMed website for companies to certify that they are members of AdvaMed.

2. A prohibition on providing entertainment, recreation or gifts of any kind (regardless of value) to Health Care Professionals.

3. Guidelines regarding royalty arrangements with HCPs.

4. A new section addressing Evaluation and Demonstration Products.

5. An expanded section addressing the provision of research grants.

Similar to the PhRMA “Code on Interactions with Healthcare Providers”[4] which went into effect January 1, 2009, the revised AdvaMed Code includes limitations regarding the provision of gifts and entertainment or recreational events to HCPs. Some of the similarities between the revised AdvaMed and PhRMA codes include: the prohibitions of non-educational branded material, the prohibition on entertainment or recreational events, provisions for certification, and the provision of company compliance program contact information.[5]

This is yet another development in the push for transparency that is changing the face of the pharmaceutical and medical device industries. For more background on transparency and how it affects you, see these recent posts:

1. Transparency and Its Implications for Pharmaceutical and Medical Device Manufacturers
2. Health Care Reform, Economic Stimulus, and Transparency
3. The Sunshine Act... It's Only a Matter of Time
4. Transparency Articles of the Week


Sources:
[1] See February PCX Newsletter article by CIS Consultant Judy Fox for more information regarding the Massachusetts reglation.
[2] See http://www.advamed.org/MemberPortal/About/code/ for the revised AdvaMed Code.
[3] See http://www.advamed.org/MemberPortal/About/code/ for the December 18, 2008 AdvaMed Press Release.
[4] See http://www.phrma.org/code_on_interactions_with_healthcare_professionals/ for the revised PhRMA Code.
[5] For a complete breakdown of the differences and similarities between the new AdvaMed and PhRMA codes see http://www.advamed.org/NR/rdonlyres/36342E58-E037-45CA-9FFA-9B4947346691/0/ADVAMEDCOMPARISONCHART.pdf.

Unemployment Affecting Possible Compliance Risks

By: Gary Miller, CIS Associate
garymiller@cis-partners.com

With unemployment on the rise, so is the demand for prescription drug assistance from clinics all over the country. “There is no comparison to the demand we’re seeing that I can recall,” says Ken Trogdon, Welvista’s CEO. (Welvista is a Columbia, S.C.-based mail-order pharmacy that collects and supplies free medications from a dozen different pharmaceutical companies.) Like many other similar organizations, Welvista saw its patient-assistance applications nearly double in January. Luckily for these organizations, they have been able to keep up with demand due to an influx of additional samples being supplied by more and more physicians across the country. The Dispensary of Hope, a Nashville-based not-for-profit that supplies free prescription drugs to people with no coverage and low incomes, depends largely on physicians to send in surplus prescription samples from drug-industry reps that would otherwise soon expire.[1]

With this new influx of inventory, and greater demand for the products, a large window for possible non-compliance has opened with it. With clinics handling more drugs then they ever have before, and having a greater need for a quick turnaround to meet the rising demand; clinics may not be equipped to properly meet all the regulatory requirements outlined by the FDA in 21 CFR 203.39 for drug sample donations. Currently, the FDA is in the process of revising the regulation as it pertains to free clinics, to relieve the clinics of some burdensome tasks they were previously required to perform. However, the FDA does provide a suggested guidance to the clinics, and reserves the right to exercise enforcement of the guidance at its own discretion. The “Guidance for Industry Prescription Drug Marketing Act — Donation of Prescription Drug Samples to Free Clinics,” specifically states that the:

FDA, in the exercise of its enforcement discretion, does not intend to object if
a free clinic fails to comply with § 203.39(b), (d), (e), (f), and
(g). For the most part, these subsections focus on recordkeeping
requirements. FDA does, however, expect free clinics to comply with §
203.39(a), (c), (h), and (i). For the most part, these subsections focus
on ensuring the integrity of samples stored and dispensed by clinics, and should
not be too onerous for free clinics to comply with and still operate
effectively.[2]

With this unprecedented flow of drugs in and out of the clinics, this will be a good test for the clinics and the FDA to see how strictly regulations will, or even can, be followed. This opens up some opportunities for CIS as well, to provide their services to look into these regulations and activities. To be able to provide recommendations and process improvements to ensure all parties involved are safe and happy.

Sources:

1. As More Lose Jobs and Coverage, Free Drugs are a Booming Business; Posted by Vanessa Fuhrmans, February 19, 2009
http://blogs.wsj.com/health/2009/02/19/as-more-lose-jobs-and-coverage-free-drugs-are-a-booming-business/

2. Guidance for Industry Prescription Drug Marketing Act — Donation of Prescription Drug Samples to Free Clinics; U.S. Department of Health and Human Services, Food and Drug Administration, Center for Drug Evaluation and Research (CDER), March 2006
http://www.fda.gov/CDER/GUIDANCE/5519fnl.htm

Vendor Credentialing: Genius or Scam?

By: Alaina Anderson, CIS Manager
alainaanderson@cis-partners.com

Sales Representatives in the Pharmaceutical industry aren’t being cut any slack. Thousands have lost their jobs and the trend continues. The new PhRMA Code and various state laws have put restrictions on interactions with healthcare providers. And just recently I heard of another hurdle: vendor credentialing.

As a compliance specialist, I think the concept is great. Basically, to ensure vendors who are entering hospitals have appropriate training (e.g., patient privacy) and vaccinations, a third party vendor conducts this check and provides access to the hospital by issuing identification badges. The hospitals sign up for the program, but to avoid anti-kickback issues no money is exchanged. These programs are funded by the vendors, who pay the credentialing service provider to participate and gain access to the hospitals.

Now if I’m a hospital or a patient, this sounds pretty good. I’d like to know that not just any vendor can enter a patient area without proper training or vaccinations. As a hospital, it is a lot of work to check each vendor representative’s credentials and keep records of them. So a free service is pretty awesome. But some of these vendor credentialing service providers offer a greater range of services than others.

There are a lot of mixed opinions regarding these vendor credentialing services. Some of the individual’s I’ve spoken with indicate “they are a joke; there is no consistency.” Other feedback I’ve heard is some of these service providers require certificates of training, but there is no check as to what the content or scope of the training was.

Sales Representatives, especially who service inner city hospitals, are running into these vendor credentialing service providers. In order to gain access to a hospital they must pay a fee, submit their credentials, and in return they may access the hospital with, of course, no guarantee of business.

To be honest, I don’t think hospitals have the extra cash to sit around reviewing and filing the credentials of all of their vendors. But will hospitals begin to absorb the cost of these programs via a mark-up to the products and services they do purchase?

Regardless, it does seem like good practice to ensure those who enter patient areas are appropriately trained and vaccinated. But maybe we just need to employ some standards to really gain all the benefits this service has the potential to offer.

Sources:
http://www.nci-cg.com/blog/post/Vendor-Credentialing-Distributor-Perspective-Bill-Vitez.aspx
http://www.hpnonline.com/inside/2008-04/0804-CBS.html

Electronic Medical Records and the Economic Stimulus Bill

By: Suma Kallurkar, CIS Senior Manager
sumakallurkar@cis-partners.com

Among the many provisions in the approximately $787 billion economic stimulus bill that the US House and Senate came to agreement on recently, one very interesting one is a $19 billion provision to implement a national Health Information Technology (HIT) system for use by doctors and hospitals. In other words, we are talking about the implementation of an electronic medical record system – an issue that the health care industry has long been considering and debating. With the current Obama administration pushing for this modernization of health care technology, we may finally see an electronic medical record system be adopted in the near future.

Many of us have experienced receiving a not-so-legible hand-written prescription from a doctor that could be mis-interpreted by a pharmacist. I recently experienced a social security number notated incorrectly on official medical papers, and in turn manually corrected. It is obvious that one of the most significant benefits of electronic medical records is the reduction of such errors. When it comes to notating drug and treatment information, such errors can be fatal. An electronic medical record system would achieve significant efficiencies in health care by significantly reducing administrative errors and their associated negative health outcomes.

Proponents of electronic medical records believe that improvements in health care can also be achieved by the sharing of medical information that such technology would facilitate. An electronic medical record system would allow for faster and easier communication of a patient’s medical history, current prescription drugs, treatment regimen, etc. between doctors and hospitals. Such easier and faster sharing of information can allow health care providers to make more informed and faster decisions in treating a patient.

On the reverse side, opponents of an electronic medical record system (as being advocated in the stimulus bill) worry that easier access to medical information will infringe on a patient’s right to privacy. Many fear that businesses will be able to access patient health information and use it for sales and marketing purposes. Strong concerns also exist about the government having access to patients’ records and interfering in medical decisions made between doctors and patients. However, the bill agreed upon between the Senate and House calls for stronger privacy law to protect personal medical data from wrongful use.

On February 17, 2009 President Obama signed the $787 billion economic stimulus bill into law. How the money will be spent, and how quickly it will affect Americans, remains to be seen; however, the implementation of an electronic medical record system was indeed a significant component of the final stimulus bill. If we ensure the protection of patients’ health information against misuses, then an electronic medical record system adopted on a national basis should indeed result in significant improvements in quality of health care and billions of dollars in cost savings. Achieving such efficiencies in health care could be a key component in getting the economy back on the right track.

References:

http://www.speaker.gov/newsroom/legislation?id=0273#health

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOQrsih0y1BU&refer=home

http://www.foxnews.com/politics/first100days/2009/02/11/critics-says-stimulus-gives-government-say-health-care/

http://blog.hittransition.com/

A Cry for Uniformity

By: Chrissy Spicer, CIS Senior Manager
chrissyspicer@cis-partners.com

As states issue regulations one-by-one to promulgate requirements related to pharmaceutical marketing activities, manufacturers in the industry have been challenged to uniformly satisfy the state requirements in their compliance programs. In the future, it is expected that more and more states will continue to issue regulations; at the same time, the push for transparency in interactions with physicians will continue to shape the agenda of the new administration.

Now more than ever, Corporate Compliance Departments have revisited their compliance programs, including their codes of conduct, policies & procedures, training programs, and monitoring & auditing plans. Although the future may hold uniformity in some of the market disclosure rules, other new state requirements around corporate compliance programs will need to constantly be reevaluated to ensure alignment within the organization. The codes of conduct adopted by states like California, Nevada, and Massachusetts are great examples of this lack of uniformity.

In California Codes SB 1765, the regulation states:

(a) Every pharmaceutical company shall adopt a Comprehensive Compliance
Program that is in accordance with the April 2003 publication "Compliance
Program Guidance for Pharmaceutical Manufacturers," which was developed by the
United States Department of Health and Human Services Office of Inspector
General (OIG). (b) Every pharmaceutical company shall include in its Comprehensive Compliance Program policies for compliance with the Pharmaceutical Research and Manufacturers of America (PhRMA) "Code on Interactions with Health Care Professionals," dated July 1, 2002. The pharmaceutical company shall make
conforming changes to its Comprehensive Compliance Program within six months of
any update or revision of the "Code on Interactions with Health Care
Professionals."[i]

In this example, California applies the guidance published by the OIG and PhRMA Code in establishing rules for pharmaceutical manufacturers conducting business in California.

On January 30, 2008, regulations promulgated by the Nevada State Pharmacy to implement AB 128 required “a written marketing code of conduct which establishes the practices and standards that governs the marketing and sale of its products.”[ii] Adoption of the most recent version of the Code on Interactions with Healthcare Professionals developed by the Pharmaceutical Research and Manufacturers of America (PhRMA) satisfies these requirements. If a manufacturer chooses not to adopt the PhRMA code, then a marketing code of conduct must be submitted and approved that addresses the following:

1. The basis for interactions;
2. Informational presentations by or on behalf of a manufacturer;
3. Third-party educational or professional meetings;
4. The use of consultants;
5. Speaker training meetings;
6. Scholarships and educational funds;
7. Educational and practice-related items;
8. Independence of decision making; and
9. Adherence to the marketing code of conduct.

In summary, Nevada suggests the adoption of the PhRMA code; however, if a different code is adopted, then Nevada must approve that marketing code of conduct.

Lastly, Massachusetts will be issuing a Marketing Code of Conduct that will go into effect July 1, 2009. The Marketing Code of Conduct is currently being drafted; it will address the same activities outlined in the PhRMA Code, but with heavier restrictions. [iii]

To summarize, the requirements related to establishing a marketing code of conduct:

1. California: The OIG’s Compliance Program Guidance for Pharmaceutical Manufacturers and PhRMA Code are mandated requirements for pharmaceutical compliance programs.
2. Nevada: The adoption of the PhRMA Code as established, or if the manufacturer develops a marketing code of conduct, then the Code needs to be reviewed and approved by Nevada.
3. Massachusetts will develop and issue a code of conduct that must be followed.
In the end, manufacturers have found themselves starting with the OIG Guidance as a foundation, and slowly integrating the additional or more restrictive requirements state-by-state. It does not look like the future holds any promises for providing a federal law that preempts all state laws for the adoption of a marketing code of conduct, requirements for a compliance program and marketing financial disclosures.

Sources:
[i] California SB 1765
[ii] Nevada State Board of Pharmacy Compliance Packet for Manufacturers, Wholesalers of Drugs, Medicines, Chemicals, Devices, or Appliances
[iii] Massachusetts Part I. Title XVI, Chapter 111N., §2. Marketing Code of Conduct; Adoption; Prohibited Practices

More Advertising Woes Wrack the Industry

By: Grete Dudek, CIS Associate
gretedudek@cis-partners.com

While watching Grey’s Anatomy a few weeks ago, an interesting advertisement came on. It was for Yaz, the most popular birth control pill in America, and it began with, “You may have seen some Yaz commercials recently that were not clear. The FDA wants us to correct a few points in those ads.” After pointing out the difference between PMS and PMDD, the ad mentioned a wide variety of side effects, including “Yaz contains DRSP, a different kind of hormone that for some may increase potassium too much, so you shouldn’t take Yaz if you have kidney, liver or adrenal disease…” At the end, I thought to myself, “Wow. That was weird.”

My curiosity was answered when I came across an article while reading the New York Times on February 10 about the ad. (1) I discovered that Bayer’s advertising troubles started in 2007, when the FDA sent them a warning letter regarding non-disclosure of the risks involved in taking Baycol. Something similar happened again in 2008, this time with Yaz. According to the warning letter issued in October of 2008 by the FDA, “[t]he TV Ads are misleading because they broaden the drug's indication, overstate the efficacy of YAZ, and minimize serious risks associated with the use of the drug.” (2) The two direct-to-consumer ads “misled consumers into thinking that Yaz treats premenstrual syndrome and promoted the contraceptive as a treatment for types of acne that the drug is not approved to treat.” (3)

“Bayer’s 2008 marketing of the oral contraceptive Yaz violated the terms of the 2007 agreement by not disclosing the uses the Food and Drug Administration (FDA) has approved for Yaz.” (4) Because of the popularity of Yaz, the FDA required Bayer not just to discontinue or correct the advertisements, but to embark on an unusual campaign to set the record straight.

“Bayer agreed last Friday to spend at least $20 million on the campaign and for the next six years to submit all Yaz ads for federal screening before they appear” (1). The ad campaign began on February 9 with the ad I saw, which was put out to set the record straight. This ad is much clearer about what Yaz is and is not approved for, and listed more side effects than I’ve ever seen televised. In addition to submitting ads to the FDA prior to their appearance, Bayer must also comply with all changes suggested by the FDA.”(4) The “director of the FDA’s Division of Drug Marketing, Advertising, and Communications, added, ‘This is a great example of collaboration between the FDA and state Attorneys General…. This significantly benefits the public by ensuring that consumers are not misled about information relating to their health.’” (4) In their print ads as well, Bayer must clearly disclose what symptoms can be treated with Yaz.

Sources:
1. http://www.nytimes.com/2009/02/11/business/11pill.html?_r=1&ref=health
2. http://www.fda.gov/cder/warn/2008/YAZ_wl.pdf
3. http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=ACBJ&date=20090209&id=9593063
4. http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=pressrelease&f=2009_02_09_bayer_settlement&csid=Cago

Articles of the Week!

Courtesy of Debbe Saez, CIS Senior Manager
debbesaez@cis-partners.com

Sanofi-Aventis and AZ Launch YouTube Sites
http://pharmexec.findpharma.com/pharmexec/Marketing/Sanofi-Aventis-and-AZ-Launch-YouTube-Sites/ArticleStandard/Article/detail/582363?contextCategoryId=43753

CDC: 'Young invincibles' have significant health concerns
http://www.cnn.com/2009/HEALTH/02/17/cdc.young.people/index.html

FDA Bill Would Strengthen Agency's Regulatory Authority
http://www.aafp.org/online/en/home/publications/news/news-now/government-medicine/20090217fda-bill.html

Another State Banning Medical Promos?
http://www.corporatelogo.com/hotnews/minnesota-banning-medical-promos.html

FDA approves brain-zapping device to relieve OCD
http://www.usatoday.com/news/health/2009-02-19-fda_N.htm


Enjoy, and have a great weekend!
The PCB

The Infamous Fourth Wave: The Sasquatch of the GP Compliance World

By: Steven Moore, Business Development Director
stevenmoore@cis-partners.com

“The first rule of Fourth Wave, is you do not talk about Fourth Wave.” - Unknown

So it’s Saturday AM and I am reflecting upon another great, successful conference for our industry, the IIR MDRP Conference in be-a-utiful Baltimore, MD. There was a lot of talk about the Waves and where everyone fits in. For those of you playing along at home, the new folks to the blog, and as a refresher, here is the definition of Waves 1 through 3:


The First Wave:

The First Wave is the dinner wave. This is where we all break bread together, share some drinks and laughs, and try to talk a little shop --- but not so much that we lose sight of the importance – fun. Most everyone can jump in and join the First Wave --- and enjoy themselves thoroughly. Thankfully, this year I had the pleasure of sitting next to one of CIS’s founding partners, Jim Collins. He watched me say ‘yes’ to about 27 appetizers for the table as we ordered drinks and pricey wines. Perhaps there is a reason he says I set my career back a little bit more at each conference. Or maybe it is because of the subsequent Waves… We shall see.

Anyway, once dinner is over the First Wavers make their exit. They generally yawn and tell you they have work or that they have to speak the next day, thank you and head to bed. This is the Wave I long to be a part of some days --- that is, until the Second Wave starts…


The Second Wave:

The Second Wave is the after dinner drinks crew. This Wave usually congregates at the hotel bar or another one nearby. There are drinks and laughs --- high fives and cheers --- yawns and tears. About an hour and a half into this session, the Second Wavers pronounce they have had enough, or that they are “too old for this,” and make their prompt exit. Chris Cobourn lumps himself into the Second Wave and, generally speaking, he does fit into this area. You will know when the Second Wave is coming to an end when you hear someone say, “Shots!” This is the moment when all remaining Second Wavers run to the nearest exit or elevator. This is also when you find out if anyone is ready to graduate to Third Waver status, or if they realize it’s far past their bedtime and scamper away.


The Third Wave:

To some it’s legend or myth --- to others, it’s a tiresome reality. The Third Wave is when things really get cranking. The time frame is generally between 12:30 and ? You would think that most Third Wavers are the young GP protégés who still have a bit of the college life in their memories --- but you would be wrong.

Third Wavers come in all shapes, sizes and ages. Third Wavers do not discriminate when it comes to welcoming a fellow Third Waver into the fray. We are a proud group of people who enjoy a good time so much that we actually try to make sure the night never ends. We laugh and skip around town to the beat of our own drum. We get back home and wake up our roommates and get 3 hours of sleep, only to wake up and go at it again early the next morning. Third Wavers are not lore --- in fact, they are quite real, and their claims the next morning are true. You’ll know when you see one by the looks of them. They will be drinking coffee, doing stretches or calisthenics, telling stories, and sometimes, staring at the ceiling wondering if there are any sharp butter knives nearby.

So with that recap, I think it’s time to provide some framework around what a Fourth Waver would be --- IF, and I mean IF, one actually existed.


The Fourth Wave:

In my opinion, I think that IF there was a Fourth Waver, they would do things that you just wouldn’t expect. They would be things that really seem out of their normal daytime character. They would go on stage and play drums and make a dueling piano bar whole. They would get up on tables around town and shake things that shouldn’t necessarily be shaken. They would show up at places when the normal cover charge of $20 is now $2, because the establishment realizes that there are 12 people inside and it will be the easiest $2 per person they ever make. They would make sudden right turns on the walk home. They would form circles and have an individual GP dance competition. They would talk about making calendars and who would be AMP or COT. They would forget to pay bar tabs. They would lose their sport coat, belt or even their sweater. They would declare that their main goal would be to become the Director of Beer or Director of Goose for a fine establishment. They would text in their own codes.

In fact, they may even be seen wearing GP Geek T-Shirts over their button down and taking Shirley Temple shots filled with whipped-cream, provided by prospective clients.

So there you have it. A theoretical framework of what a Fourth Waver WOULD look like.

(DISCLAIMER: Any resemblance between myself and the"mythical" Fourth Waver are purely coincidental...)

For Your Space,
Steven.
*

IIR - A New Forum for Discussion

By: Chris Cobourn, VP of Regulatory Compliance
chriscobourn@cis-partners.com

I would like to thank everyone who participated in this year’s IIR Conference in Baltimore, in both our Full-Day Advanced Government Programs Workshop (which ran concurrent to MDRP 101), as well as our open Panel Discussions Thursday and Friday. We have received very positive feedback from participants on the panels as well as attendees, and we look forward to continuing this tradition in the future, so look for the 3rd Annual Advanced GP Workshop next February!

Our goal was to create an environment to foster open dialog between the many people involved in Government Programs, including agencies, auditors, consultants, lawyers, and industry professionals. We had a number of issues to discuss, developed from our work with clients, CMS, the OPA and the VA. We also hit on hot topics like TRICARE, and the potential impact the new administration could have on the industry (especially with Medicare Part D plans, Dual Eligibles, and the 340B Program Improvement and Integrity Legislation).

As you know, the GP community is a small and close knit group. We all know each other by first name, and most of us have been doing this for some time. CIS felt that what the community really wanted, and needed, was an open forum for meaningful dialog. I felt really positive about the conference last week, and I welcome your input or feedback so that we can continue to develop and build upon forums like this.

CIS heard lots of great information at the conference, and is currently writing Blog and PCX Newsletter articles on topics including (but not limited to) Medicaid Restatements, Penny Pricing, and Inpatient vs. Outpatient Assumptions, so keep an eye out for those articles in the coming weeks! Tomorrow we'll have Business Development Director Steven Moore's take on the "Infamous Fourth Wave..." Stay tuned!

Also, many of you had the opportunity to meet Dave Rice at the CIS booth. Dave will be starting with CIS in March, leading our Federal Contracting offerings. We look forward to Dave joining the team!

Thank you again
Chris

How Leadership Styles Influence Your Culture of Compliance

By: Joe Calarco, CIS Senior Manager
joecalarco@cis-partners.com

Managing compliance activities in a Clinical Operations group was an implicit expectation. Ensuring compliance with government regulations, corporate policies and departmental performance metrics all required routine oversight. As a result, keeping staff engaged and vested in company outcomes was a top priority. This required the ability to create a productive and responsible work climate.

This sounds simple enough, yet every corporate culture I have been a part of has struggled to consistently establish such a climate. In fact, most employees speak of such peak engagement as a fleeting experience incapable of being sustained. Interesting, more research is starting to quantify the financial impact of employee engagement [1]. Allow me to take you back to your Introduction to Psychology class and discuss how traditional leadership styles may impact both employee engagement and compliance efforts.


Participative Leadership

Involving employees in the identification and resolution of compliance challenges will heighten engagement. Such dialogue also allows leaders to justify the importance of compliance efforts (e.g. risk mitigation, improved resourcing/productivity, etc.) in the context of the company’s mission and strategy while affording staff the ability to report on situations they face in their day-to-day activities. This approach has been called “participative” or “collaborative”[2] and should be utilized in a majority of situations. The positive outcome from this approach should be twofold: 1) more productive/content employees and 2) better risk management. The improved risk management comes from employee willingness to speak up on potential concerns, thus reducing the number of surprises that may catch an organization off guard.

I once had a colleague say to me, “If I practice participative leadership, I will constantly have people in my office whining”. So let me set the record straight, participative leadership does not mean being a push over or hanging out your therapy shingle. As the leader, you still have the decision-making authority and may not always implement advice or address a concern of staff. What remains vital is for staff to feel they can come to you with their concerns and/or ideas.


Authoritarian and Delegative Leadership

The alternative to participative leadership is authoritarian or delegative leadership[2]. Authoritarian leadership has its time and place in any corporate culture when one needs to handle a crisis. When teaching communication workshops I tell my participants that I do not seek input from my four-year-old regarding his desire to play in the street. Some situations simply require a call be made quickly and not be questioned. Most employees respect this no matter how unpleasant it may feel at the time. However, if used as the primary approach to staff interactions, the authoritarian style will lead to what I call “morale compliance failures”. Staff will quickly learn to not question authority, and thus stop letting you know of any potential concerns. Worse, they may stop caring completely and allow compliance risks to go unnoticed.

The delegative style leaves the decision making responsibility solely up to the staff. I would equate it to a ship without a rudder. Without any guidance from leadership, staff at best will guess correctly sometimes and at worst surprise leadership with a significant compliance problem.


Leadership and effective communication styles are critical to a successful compliance program and should be tailored to the compliance culture your organization wants to create. Feel free to contact a CIS consultant to discuss strategies to create your collaborative culture of compliance.



Sources:

[1] Towers Perrin (October 22, 2007) Towers Perrin Study Finds Significant "Engagement Gap" Among Global Workforce
http://www.towersperrin.com/tp/showdctmdoc.jsp?url=HR_Services/United_States/Press_Releases/2007/20071022/2007_10_22.htm&country=global
[2] About.com:Psychology Lewin’s Leadership Styles
http://psychology.about.com/od/leadership/a/leadstyles.htm

Articles of the Week!

Courtesy of Justin Wutti, CIS Senior Associate
justinwutti@cis-partners.com

It's been a big week for transparency. Not only as it pertains to manufacturers, health care reform, and the revised Sunshine Act, but also as it affects Executive Salaries for firms who take bailout money, the Peanut Corporation of America and how much information it must provide to the FDA when it finds salmonella in its product, and Tom Daschle's short-lived nomination to take over as Secretary of HHS. (That actually does pertain to pharma. How could Daschle effectively monitor physician payments when he can't even keep track of his own income, which just happens to include money for pricey speaking engagements? Don't get me started.)

In any event, transparency is a big deal, so Senior Associate Justin Wutti has compiled some Articles of the Week, outlining the more relevant ways it might affect you. Thanks Justin!

- Dana Zelig, Senior Associate and PCB Editor

Articles of the Week:

"Pharma Beats Sunshine Act to the Punch"
http://pharmexec.findpharma.com/pharmexec/News/Pharma-Beats-Sunshine-Act-to-the-Punch/ArticleStandard/Article/detail/580863?contextCategoryId=43753

"Orthopedics Firms To Lose Oversight, Keep Payment Controls"
http://money.cnn.com/news/newsfeeds/articles/djf500/200902111528DOWJONESDJONLINE000844_FORTUNE5.htm

"AAFP Expresses Concerns About Revised Physician Sunshine Act"
http://www.aafp.org/online/en/home/publications/news/news-now/professional-issues/20090209sunshine-act.html

"PPAI Urges Action to Preempt the Physician Sunshine Act"
http://www.corporatelogo.com/hotnews/ppai-urges-action-against-promo-legislation.html

*

The Sunshine Act... It's Only a Matter of Time

By: Dana Zelig, CIS Sr. Associate and PCB Editor
danazelig@cis-partners.com

As described in Matt Hotz’s article, “Transparency and its Implications for Pharmaceutical and Medical Device Manufacturers,” transparency is going to be an increasingly important theme in new government laws and regulations, including those monitoring pharmaceutical and medical device manufacturers. The most relevant example is the bill by Senators Chuck Grassley and Herb Kohl, which has recently been revised and resubmitted as the Physician Payments Sunshine Act of 2009 (S. 301, 111th Cong.).

The Sunshine Act has been drafted in an attempt to require all manufacturers of drugs, devices, biologics and medical supplies to report any payments to doctors and group purchasing organizations (GPOs) that could influence their decisions to purchase, prescribe, and endorse these products. As described in the Act:

The term ‘payment or other transfer of value’ means a transfer of anything of
value and includes… any compensation, gift, honorarium, speaking fee, consulting
fee, travel, services, dividend, profit distribution, stock or stock option
grant, or ownership or investment interest. [1]

The Pharmaceutical Research and Manufacturers of America (PhRMA) are also paying attention to the money spent on physicians. PhRMA’s updated “Code on Interactions with Healthcare Professionals for 2009” limits the amount of money manufacturers can spend on meals, promotional items, and speaking engagements for doctors.[2] This coincides with Grassley and Kohl’s desire to limit the influence manufacturers have on physicians. As explained on PhRMA’s website:

The Code is based on the principle that a healthcare professional’s care of
patients should be based, and should be perceived as being based, solely on each
patient’s medical needs and the healthcare professional’s medical knowledge and
experience.[3]

On the heels of the new PhRMA Code, which took effect on January 1, 2009, Grassley and Kohl introduced their revised Sunshine Act to the Senate with some significant changes from the 2007 version of the bill (S. 2029, 110th Cong.).[4] For example, the 2007 version required reporting of any payments totaling at least $500 per recipient per calendar year, and the 2009 version lowered the threshold to $100. The new version also increased the maximum penalties for failing to report, from $5,000 to $10,000 for individual payments, and from $50,000 to $150,000 for annual submissions. In addition, “The current version of the Sunshine Act requires the Secretary to submit each year to Congress a report of the information provided to the Secretary aggregated by manufacturer and a description of any enforcement actions taken.”[5] These revisions could mean serious changes for manufacturers if the bill is passed.

But how will the revised Sunshine Act serve to increase transparency and effectively monitor the influence manufacturers have over physicians and GPOs? Senator Grassley ties it all together nicely:

Shedding light on industry payments to physicians would be good for the
system. Transparency fosters accountability, and the public has a right to
know about financial relationships. Patients rely on their doctors' advice.
Taxpayers spend billions every year on prescription drugs and medical devices
through Medicare and Medicaid. They also fund tens of billions of dollars of
medical research each year, and the doctors conducting that research have a big
influence on the practice of medicine.[6]

Despite the proposed merits of transparency, however, the Physician Payments Sunshine Act is one Senators Grassley, a Republican from Iowa, and Kohl, a Democrat from Wisconsin have long been unsuccessfully trying to push through Congress. But pharmaceutical and device legislation is gaining traction in President Obama’s new era of transparency, and Senator Grassley is confident that the revised Sunshine Act, which would establish penalties as high as $1 million a year for non-compliant manufacturers,[7] will soon be a reality, saying:

Since we first introduced the bill, there has been a groundswell of support from
every corner. Patients want to know that they can fully trust the relationship
they have with their doctor. I am confident this legislation will pass during
the 111th Congress.[8]

In anticipation of the bill’s eventual approval, many manufacturers have already taken steps to proactively report payments and incentives provided to physicians. However, some large manufacturers have met with setbacks, finding that reporting dollars spent on lunches, honorariums, grants and speaking fees would be easier if records had been consistently maintained across their various divisions.[9] If meeting internal reporting goals has proven difficult for manufacturers, they can expect even more pressure if the revised Sunshine Act passes as anticipated. The Act would set a reporting deadline of March 31, 2011 for all manufacturers of drugs, devices, biologics, and medical supplies.


[1] The Physician Payments Sunshine Act
http://aging.senate.gov/letters/ppsabill2009.pdf

[2] PhRMA Code on Interactions with Healthcare Professionals
http://www.phrma.org/files/PhRMA%20Marketing%20Code%202008.pdf

[3] PhRMA.org
http://www.phrma.org/code_on_interactions_with_healthcare_professionals/

[4] Senators Grassley and Kohl Introduce a Revised Version of the Physician Payments Sunshine Act of 2009
http://www.ebglaw.com/showclientalert.aspx?Show=9667

[5] Senators Grassley and Kohl Introduce a Revised Version of the Physician Payments Sunshine Act of 2009
http://www.ebglaw.com/showclientalert.aspx?Show=9667

[6] Grassley, Kohl Continue Campaign To Disclose Financial Ties Between Doctors And Drug Companies
http://www.medicalnewstoday.com/articles/136470.php

[7] The Physician Payments Sunshine Act
http://aging.senate.gov/letters/ppsabill2009.pdf

[8] Grassley, Kohl Continue Campaign To Disclose Financial Ties Between Doctors And Drug Companies
http://www.medicalnewstoday.com/articles/136470.php

[9] New Rules on Doctors and Medical Firms Amid Ethics Concerns
http://www.nytimes.com/2009/01/24/business/24device.html?_r=3&pagewanted=2

Health Care Reform, Economic Stimulus, and Transparency

By: Matt Hotz, CIS Compliance Specialist
matthotz@cis-partners.com

The top priority of the Obama administration is undoubtedly the stabilization of the economy. A casual observer might conclude, therefore, that health care reform would have to wait until the economy was stabilized, postponing the implementation of legislation that would bring greater transparency to the pharmaceutical and medical device industries. A closer look at the administration, though, reveals that the President and his advisers consider health care reform a necessary and inextricable component of long-term economic stability.

The incoming head of the Office of Management and Budget (OMB) Peter Orszag clearly stated his position on the relationship between the nation’s economic future and health care reform on the blog he maintained while serving as director of the Congressional Budget Office (CBO):

Although this [health care reform] may not seem immediately relevant given our
current difficulties, it will be crucial to address the nation's looming fiscal
gap -- which is driven primarily by rising health care costs -- as the economy
eventually recovers from this current downturn.

This view is not unique to Orszag. According to Ezra Klein at The American Prospect, Jeanne Lambrew, “aggressively framed health reform as a response to the fiscal crisis,” at the Academy Health National Health Policy Conference in January. Lambrew, who was profiled here on the Pharma Compliance Blog in December, is the Deputy Director of the newly minted Office of Health Reform (OHR), and could be taking on a larger role in the administration in the wake of Tom Daschle’s withdrawal from consideration for the top job at OHR.

This sentiment, that health care reform and long-term economic stability are inseparably linked, is not limited to health policy professionals: Senate Finance Chairman Max Baucus (D-MT) made this linkage a recurring theme of his speech at the Academy Health National Policy Conference, and the President himself listed health care reform as one of the key elements to American economic recovery during his inaugural address. These strong words are leading to strong action: 20% of the funds included in the economic stimulus package will be directed towards health care.

The state of the economy is clearly the administration’s top priority, and health care reform is viewed by the administration as vital to the state of the economy. The administration’s attention and the openness and accountability provisions in the economic stimulus package will bring a culture of transparency with them. Pharmaceutical and medical device manufacturers that have not adopted transparency in their own corporate culture will stand out as contrarian once the administration targets health care reform in earnest, which could happen this year.

Transparency and Its Implications for Pharmaceutical and Medical Device Manufacturers

By: Matt Hotz, CIS Compliance Specialist
matthotz@cis-partners.com

Transparency is a hot topic these days, not just in the pharmaceutical industry, but for all industries facing new regulations under the Obama administration. Due to the attention being paid to transparency legislation and its potential implications, we at the PCB have put together some articles to describe how these changes might affect you. I officially declare this week "Transparency Week!"

Regulations requiring disclosure of physician payments by pharmaceutical companies and medical device manufacturers have been developing for years. Several states have already passed their own versions of these so-called sunshine laws, and at the federal level, the first iteration of the Physician Payment Sunshine Act was introduced in the Senate in 2007. The 2009 incarnation of the Physician Payment Sunshine Act was released by Senators Herb Kohl (D-WI) and Charles Grassley (R-IA) two days after the inauguration of President Obama.

The concept motivating these laws is transparency, and in government, it applies to much more than payments made to physicians by pharmaceutical companies. But what does transparency mean in this broader context? In short, transparency means conducting government business openly; transparency involves making everything from government processes to legislative deliberations to financial data available to anyone who wants to see it. Transparency enables oversight of the workings of government, and this oversight, in theory, makes government less susceptible to corruption. A famous quote from Supreme Court Justice Louis Brandeis illustrates the idea behind open government so well that its inclusion in any discussion of transparency is all but mandatory:

Publicity is justly commended as a remedy for social and industrial diseases.
Sunlight is said to be the best of disinfectants; electric light the most
effective policeman.

President Obama has employed transparency as one of his recurring themes since his general election victory in November 2008. During his inaugural speech, in a passage about federal spending, the President stated that:

Those of us who manage the public's dollars will be held to account -- to spend
wisely, reform bad habits, and do our business in the light of day -- because
only then can we restore the vital trust between a people and their government.

The new administration’s commitment to transparency was formalized in a pair of memos issued on January 21, 2009. The first memo addresses the Freedom of Information Act and states that “all agencies should adopt a presumption in favor of disclosure” for all decisions involving the Freedom of Information Act (FOIA). The second memo is titled Transparency and Open Government, and it explicitly announces the Obama administration’s attitude towards government and its relationship with the public.

The prominence of transparency as a dominant theme of the nascent Obama presidency is a call to action for pharmaceutical and medical device manufacturers. As the concept gains traction, it will be applied more broadly. Sunshine laws addressing physician payments will likely become stronger, and legislation requiring disclosure far beyond the scope of physician payments will likely follow.

Clearly, companies looking to mitigate their audit risk should try to anticipate the types of regulations and standards likely to be implemented in the near future. Consequently, companies should develop compliance strategies for any potential regulations and standards which would necessitate investments of time, resources, or both. These steps, though, will no longer be sufficient. In an environment that values transparency, the attention of regulators, industry watchers, and the public will be drawn to companies that choose to disclose as little as necessary to maintain compliance. Companies should take steps now to foster an atmosphere of transparency across their entire corporate culture.

Physician Social Networks: Opportunities for Pharma

By: Jess Ebert, CIS Compliance Specialist
jessicaebert@cis-partners.com

With the updated and enhanced PhRMA Code on Interactions with Healthcare Professionals taking effect in January 2009, pharmaceutical companies are no doubt finding it more difficult to effectively market their products. No longer being able to provide entertainment, recreation, or any of the other fun stuff (pens, mugs, note pads, etc.) is sure to have an impact on the way that companies sell themselves. That said, pharma companies need a more efficient way to get their name out there and remind physicians that, free meals and vacations aside, they still have something to offer.

A great area to target that is perhaps overlooked is physician online social networks. It’s exactly what it sounds like; an online community exclusive to healthcare professionals, where they can share their knowledge with each other, discuss important topics and emerging trends, ask questions, and provide new insights into medications and devices. The most popular sites are Medscape, Sermo, and SocialMD, just to name a few.

On January 20, 2009, Manhattan Research, a pharmaceutical and healthcare market research company, released a physician analysis titled “Physician Online Communities: Physician Social Networking and the New Online Opinion Leaders.” The analysis focuses on the characteristics of physicians, such as their specialty and pharma company interactions, currently using, or interested in using, online social networks. This analysis should be of interest to pharma companies looking for a new marketing angle, as it revealed that physicians participating in an online network write a mean of twenty-four more prescriptions in a week than non-participating physicians[1].

What’s the reason for this? Research shows that it may be the work of an “opinion leader”. An opinion leader in a physician online community is generally a physician who has a significant medical background, holds academic titles at medical schools, and has contributed to peer-reviewed publications[2]. General practitioners prescribe the most drugs, but often request the opinion of a specialist who has more knowledge than they do, when making prescribing decisions. Therefore, if the opinion leader can be targeted and detailed by a pharma company, it is likely that the information would be passed along to many more general practitioners.

With 60% of physicians already using or interested in using online networks, there is big potential in directing marketing efforts to opinion leaders, as their influence on those who seek their advice could have a huge impact on sales.

To read an excerpt from the “Physician Online Communities: Physician Social Networking and the New Online Opinion Leaders” analysis and for more information about it, visit:
http://www.manhattanresearch.com/products/Research_Modules/Physician/physician-online-communities.aspx
1. http://www.drugs.com/news/physician-social-networkers-prescribers-more-likely-engage-pharma-15701.html
2. http://globaltechforum.eiu.com/index.asp?layout=rich_story&channelid=3&categoryid=7&title=Social+networks+impact+the+drugs+physicians+prescribe&doc_id=10534

Roll Up Your Sleeves... and Hold Onto That Job!

By: Katie Lapins, CIS Senior Compliance Consultant