Articles of the Week!

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

1) When FDA Fails to Follow-Up on Rapid Drug
http://blogs.wsj.com/health/2009/10/26/when-fda-fails-to-follow-up-on-rapid-drug-approvals/

2) Industry Years Behind on Testing Approved Drugs
http://www.nytimes.com/2009/10/27/health/policy/27fda.html?_r=1&ref=health

3) Kids on Psych Drugs Have Alarming Weight Gain.
http://www.msnbc.msn.com/id/33494879/ns/health-mental_health/

4) US Swine Flu Vaccine Outlook Improving, CDC Says
http://news.yahoo.com/s/ap/20091028/ap_on_he_me/us_med_swine_flu

5) House Democrats Prepare to Unveil Health Bill http://news.yahoo.com/s/ap/20091028/ap_on_bi_ge/us_health_care_overhaul;_ylt=AhZoRmwe3EwJkqPVZdQAeyTVJRIF;_ylu=X3oDMTJvM2JuYmtrBGFzc2V0A2FwLzIwMDkxMDI4L3VzX2hlYWx0aF9jYXJlX292ZXJoYXVsBGNwb3MDMQRwb3MDMgRzZWMDeW5fdG9wX3N0b3J5BHNsawNob3VzZWRlbW9jcmE-

Department of Veterans Affairs Dear Manufacturer Letter - October 16, 2009

By: Dave Rice, CIS Director of Federal Contracting – daverice@cis-partners.com,
and John Avicolli, CIS Project Manager – johnavicolli@cis-partners.com

Dear Colleagues and Friends,

As you know, the Department of Veterans Affairs issued a Dear Manufacturer letter on October 16, 2009, and the “GP Geeks” at CIS would like to share our thoughts, opinions and analysis on the implications of this letter, as it relates to Non-FAMP reporting in accordance with Section 603 of Public Law 102-585 (Veteran’s Health Care Act of 1992; 38 U.S.C. 8126), as well as provide some key take-away points.

The U.S. Bureau of Labor Statistics indicates the percent change to the Consumer Price Index for All Urban Consumers (CPI-U) is -1.28%. As such, a zero (0) will be used as the CPI-U for the Federal Ceiling Price (FCP) calculations due on November 16, 2009.

The permanent FSS contract price for dual priced manufacturers is the September 30, 2009 price charged to other, non-“Big Four,” government agencies.

The lower of the 2009 annual Non-FAMP calculation and the 2010 FSS Price Cap will become the 2010 FCP.

Manufacturers must back out TRICARE sales/units that went to wholesalers/merchant middlemen at Wholesale Acquisition Cost (WAC). Direct sales to retail chains/retail pharmacies are not included in the calculation as they are not part of the merchant middleman transaction.

The periods in play for the application of backing out TRICARE sales/units are as follows: 2nd quarter 2008, 3rd quarter 2008, 4th quarter 2008, and 1st quarter 2009. Tricare Retail Pharmacy (TRRx) utilization is captured based on the due date (not the paid date). As the due date for payments is 70 days after the invoice date, this creates a two quarter lag.[1]

Sub-ceiling contract transactions that are executed through the 340B Prime Vendor are accordingly considered 340B transactions and are excludable from Non-FAMP calculations.

Sales of specific inpatient covered drugs to disproportionate share hospitals at Sec. 602 prices may be excluded from Non-FAMP if manufacturers have obtained a “hold harmless” letter from the VA.

It should be noted that manufacturers DO NOT have to re-perform Non-FAMP calculations to reflect TRICARE usage for prior periods. The Secretary of the VA has issued a re-filing waiver that is applicable to every manufacturer regardless of when or whether the manufacturer actually paid DoD refunds/rebates for TRICARE script purchases during this timeframe.

We recommend that all manufacturers submit their calculations electronically to Pharmacy Benefits Management (PBM) at the following email address: NonFamp@va.gov.

The PBM will review Non-FAMP submissions and calculate changes in Non-FAMP, additional discounts, and 2010 FCP. Upon conclusion, the PBM will electronically send its calculations back to the manufacturers.

We highly recommend that all manufacturers review the returned files from the PBM for accuracy and completeness. If there are any discrepancies with the PBM’s calculations, manufacturers must contact the PBM (preferably by email) within five working days. If the manufacturer does not question the consistency of the calculations, this will constitute acceptance of the VA’s FCP calculations.

You can find a copy of the VA's October 16, 2009 Dear Manufacturer Letter on the GP PCX (http://gp.cis-pcx.com/) under "Hot Topics." To register for a 30 day free trial of the GP PCX, please click here: http://gp.cis-pcx.com/register/

Additional source:
[1] Process and Procedures Guide – Retail Utilization Refunds and Voluntary Agreements for Uniform Formulary Placement: http://www.tricare.mil/pharm_mfg/downloads/PROCESS%20AND%20PROCEDURES%20GUIDE_040209.pdf

Could This Be The Future Of Smoking?

By: Aimee Hummel, CIS Compliance Manager
aimeehummel@cis-partners.com

I was driving into work the other day when I heard a commercial for electronic cigarettes. The thought of an electronic cigarette sounded ridiculous, but as I listened, they caught my interest. They claim that they are a safer alternative to regular cigarettes. The commercial made them seem like a no brainer for those trying to quit smoking. They do not smoke like traditional cigarettes so you can use them in public places, they do not smell bad, and they say they are not as harmful. And in this case, they were offering a free trial. It just seemed too good to be true, and it might be…

The FDA released a warning on July 22, 2009 regarding the health risks associated with electronic cigarettes. There are many concerns about the use of these new “e-Cigarettes,” mostly due to the fact that they are not FDA-regulated. Currently, FDA scientists are testing the product to determine the potential health risks.

E-Cigarettes offer smokers nicotine without the tobacco or smoke. The e-Cigarette is a small cylinder that looks like a regular, or “analog,” cigarette. It has a battery operated heating element that vaporizes the liquid in the mouthpiece cartridge which contains nicotine. Users exhale a vapor that looks like smoke but without cancer causing tar and carbon monoxide, or so they say. E-Cigarettes are offered in varying levels of nicotine just like regular cigarettes, for example, light and ultra light. The whole idea is that they simulate real smoking, unlike other quitting devices such as patches or gum. This new technology is appealing to smokers who are trying to quit because it allows them to “smoke” indoors, around friends, and even in bars and restaurants. There is no need for ash trays and there is no smell; therefore, some business owners actually support it as an unobtrusive way to help smokers quit.

Since the e-Cigarettes are not FDA-regulated, it is not known if there are any harmful effects, or if they are in fact safer than regular cigarettes. So far the FDA has taken the following measures to protect the public: it has been fighting in court, seizing shipments into the US, and conducting testing to analyze the safety of e-Cigarettes. The FDA has found that e-Cigarettes generate cancer causing chemicals and other impurities, including low levels of diethylene glycol, a toxic component of antifreeze. The FDA believes that e-Cigarettes should be regulated as a new drug product, just like other nicotine products, such as patches and inhalers, which are only available by prescription. In order for e-Cigarettes to be regulated they will need to undergo clinical trials to show that they do indeed help people quit. Apparently, the suppliers are in the process of doing this, so only time will tell. In the meantime, healthcare professionals are advised to report serious adverse events or product quality problems associated with the use of e-Cigarettes to the FDA through the MedWatch Program.

In addition to health and efficacy concerns, it is also feared that since there are no age restrictions on electronic cigarettes, and they are distributed online and in malls, that teens will start to use them. They are offered in a variety of flavors such as chocolate, strawberry, and mint, which were recently banned in regular cigarettes because they were believed to increase tobacco use in young people.

Those who support e-Cigarettes, including some doctors, believe that this is the future of smoking. They believe that e-Cigarettes could help save the 400,000 Americans who die each year from tobacco, as well as the 48,000 who die each year from second hand smoke, and the 700 people who die in fires caused by smoking.

As you can see, there are both good and bad claims regarding e-Cigarettes, and until they are regulated we will not know if they are safer or better than traditional cigarettes. If indeed they are proven to be safe, this will be a huge development against cancer and other smoking related illnesses.

Sources:
1) http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm173222.htm
2) http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm173401.htm
3) http://www.fda.gov/NewsEvents/PublicHealthFocus/ucm172906.htm
4) http://www.dailyherald.com/story/?id=327689

Who’s Watching the Doc?

By: Jon Dellaquila, CIS Compliance Manager
jondellaquila@cis-partners.com

Sponsor companies, the company supporting a clinical trial, within the pharmaceutical industry are constantly under the watchful eyes of government agencies responsible for the safety and well-being of the general public. These companies are expected to adhere to the highest ethical standards and have various procedures in place to support their activities. However, when a company is inspected by a government agency and found to have violated a specific regulation or law, the information is made public and garners significant media attention.

When companies are cited during an inspection and receive a warning letter (such as a 483), it is in their best interest to reply in a timely manner. In the event that a timeline for resolving compliance issues mandated by the FDA is not met by the sponsor company, the FDA has the right to enforce daily monetary fines against the company. [1] Sponsor companies are in complete control of their manufacturing and drug development processes, making them solely responsible for the products they produce. However, once clinical trials begin, an additional variable, the role of the investigator, becomes significant. Although companies have procedures in place to ensure they work with doctors who have no previous criminal activity, it is imperative that companies also have procedures in place to provide the proper oversight regarding investigator behavior.

An October 22 article published in the Wall Street Journal titled ‘FDA Slow to Debar Doctors Who Commit Crimes, Report Says’ should raise some eyebrows in the pharmaceutical community. In the report, it states that the FDA took 11 years to debar a physician who had been convicted of 53 counts of criminal offense, including concealing the attempted suicide of a clinical-trial patient and prescribing a drug without a license.[2] The government watchdog report also stated it takes the FDA on average, four years to debar a physician. Although the FDA does its best to oversee doctors, it is ultimately the responsibility of the sponsor company supporting the trial. Since the FDA debarment process is four years on average, it is imperative the sponsor companies ensure their clinical trial sites are being adequately monitored. The FDA does not have the resources to monitor every doctor on a day-to-day basis. Sponsor companies must do their part to ensure trials are not compromised and avoid any unnecessary issues or monetary penalties.

The FDA is working diligently to create positions to provide physician oversight. However, they are limited in their abilities to debar physicians. In fact, physicians who are barred from participating in a drug trial still have the ability to participate in a medical device trial and vice versa. [2] This further emphasizes the need for sponsor companies to ensure that their monitoring activities are adequate and any identifiable issues are being resolved. For instance, if a sponsor company lacked site oversight and a particular physician was found to have acted unethically and was debarred, the data gathered from that site for a trial would not be valid. This could significantly impact trial endpoints resulting in severe financial losses.

Time and time again it has become evident that it is in the best interest of the sponsor companies to do their due diligence and ensure they have the correct procedures and preventative measures in place to minimize compliance risks. Besides the obvious financial savings, it would also eliminate a lot of unnecessary headaches among employees. One could say, it literally pays to be inspection ready.

Sources:
[1] http://findarticles.com/p/articles/mi_qa5351/is_200006/ai_n21457185/
[2] http://online.wsj.com/article/SB125622345164801405.html

Articles of the Week!

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

1) Vote on Medicare Payment Cuts Divides Democrats
http://online.wsj.com/article/SB125613897074399103.html

2) Key senators may rebuff Obama on health care
http://news.yahoo.com/s/ap/20091022/ap_on_go_co/us_health_care_obama_s_challenge

3) F.D.A. Lags in Banning Researchers After Fraud
http://www.nytimes.com/2009/10/22/health/policy/22fda.html?_r=1&ref=health

4) RNAi-Boom or Bust?
http://www.pharmalive.com/magazines/randd/view.cfm?articleID=8247

5) Medical marijuana policy move sparks cautious optimism
http://www.cnn.com/2009/HEALTH/10/21/medical.marijuana.policy/index.html

*

SURPRISE! : How’s a Manufacturer to Accrue for Unpredictable Medicaid Invoicing Practices?

By Karen Agama, CIS Compliance Consultant
karenagama@cis-partners.com

One quarter, a state bills for a little over $3,500.00. The next, over $40,000.00!! All the summary level variance tests look fine, and wondering how this can possibly be, you ask the state for claims level detail. Not seeing anything amiss with the numbers, you call your state contact for an explanation of the 1,000+% increase. Your end of the conversation sounds something like, “Oh, I see…the state withholds reimbursement to its providers when it runs out of budget money at its fiscal year end, then catches up when the coffers are replenished in the new budget year. The state has withheld reimbursement for six months? Oh, yes. I do see service dates in the detailed data that correspond with that period. Thank you for the explanation.” Now, you have to prepare your message to the higher ups in your company to help them understand how this can happen when dealing with Medicaid programs and why the accrual projections did not set aside nearly enough of your company’s budget money for the payment that’s about to hit the books.

How can this happen? Is this practice allowed? If this scenario can occur, what else could pop up? Can manufacturers ever know if a shock like this is lurking around the proverbial bend?

Since the Medicaid Drug Rebate Program (MDRP) was instituted with the Omnibus Budget Reconciliation Act of 1990 (OBRA ’90), no restriction on the amount of time for which the states could seek retroactive rebates has ever been imposed. A manufacturer could therefore expect to potentially be invoiced for claims, or receive adjustments to prior claims invoiced, going all the way back to 1991. Fortunately, the states are generally more current in their submissions, but it is possible and allowable for states to present manufacturers with the scenario described above, and with smatterings of “found” claims from prior periods in the current period’s invoice totals. It works the other way, too, with states reversing claims from prior periods that have been found to be ineligible for the MDRP.

A second scenario relates to the submission of congested J-Code (HCPCS) claims. Since January 2008, states have been required to submit utilization data for all single-source, and at least the top 20 multiple-source, physician-administered drugs, but identifying which multiple-source product’s NDC is associated with an HCPCS claim has historically been problematic. To facilitate state submission of these claims, an NDC to HCPCS crosswalk table was established (see https://www.dmepdac.com/crosswalk/index.html), and physicians are required to report the NDCs of the products used in each procedure. With these resources in place, the Deficit Reduction Act of 2005 (DRA) prohibits the states from receiving federal participation related to physician-administered drugs unless they submit claims as required.

State governments are not always adequately funded or resourced to move quickly on these types of mandates, and may either outsource the work to a qualified vendor or update their internal systems and processes. In either case, creating multiple-source crosswalks can be slow and laborious, and for process-specific reasons, the result can be multiple quarters submitted within a single invoice processing cycle.

Are manufacturers then allowed to rebate at the rate that was in effect at the time of the original claims service? In the J-Code scenario, each quarter’s claims are typically invoiced separately, even though they are all sent at one time, so the rebate is calculated at the period-specific rate. Where the budget causes the backlog, there is no provision in the law for making any such adjustment, and as a practical matter, doing so would cause extra work for the manufacturer and the state, as the adjustments may require manual calculations outside of your GP system. Consider too, that the states could opt to take their budget considerations a step further and instruct their providers to stop approving claims and buying your products when the money runs dry.

In the end, it looks like surprises are to be expected now and then. Can manufacturers accrue for them so they hurt less? The budget shortfall scenario can be considered a case study for the wisdom of getting to know the states and how they operate. Those processing Medicaid invoices may be able to help their Accounting counterparts by sharing insights about such state-to-state nuances so that the historical data trend used to establish accruals is expanded to capture more quarters for a more predictable pattern. The J-Code solution seems more elusive. I know of no centralized effort currently underway (or planned) designed to compile a report in which states are able to process all of their required J-Code claims or how much of a backlog exists. Short of doing that, it looks like we can all look forward to more surprises in the future.

If you have questions about processing your state Medicaid claims, please contact me at karenagama@cis-partners.com!

Busted! : Emerging Drug Anti-Counterfeiting Technologies

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

Over the years, pharmaceutical companies have sunk millions of dollars into anti-counterfeiting efforts, and yet counterfeit drugs still remain a prevalent (and growing) public health concern. Not only are consumers receiving medication that they believe is safe and effective, but harm can befall the manufacturers as well. Irreparable damage can be done to a company’s reputation due to a loss of brand integrity, leading to a significant loss of profits. An influx of costly returns and recalls can also be expected, further damaging company image and possibly resulting in consumer litigation. The World Health Organization (WHO) estimates that the black market for fraudulent drugs will be worth $75 billion by 2010. It is also estimated that 10% of drugs that enter the global supply chain are counterfeit (this figure rises to more than 25% in developing countries) [1]. Considering the effects that fraudulent medication can have on consumers and manufacturers alike, the question is, what anti-counterfeiting efforts does your company have in place, and how effective are they?

The statistics above are evidence enough to show that counterfeiters are able to get around many of the roadblocks the industry is throwing at them. With every new control, we see an increase in the sophistication and technical capabilities of counterfeiters. To give you a background on the types of problems counterfeits can cause, here are six categories into which fraudulent drugs can be placed:

• Products without active pharmaceutical ingredients (APIs)
• Products with incorrect quantities of APIs
• Products with the wrong ingredients
• Products with the correct quantities of APIs but with fake packaging
• Products with high levels of impurities and contaminants
• Copies of the original product made using unlicensed manufacturing processes

The products that contain the wrong chemical composition, impurities and/or contaminants can be easily identified using a variety of techniques including nuclear magnetic resonance (NMR) and infrared spectroscopy, thin layer chromatography, and X-ray diffraction. It can become more difficult to identify counterfeit drugs that have the correct chemical composition, and those that have packaging identical to that of the manufacturer [1]. The following techniques have been developed specifically to combat these issues.

Serialization
Packaging serialization is gaining a lot of momentum lately due to its effectiveness in preventing counterfeiting, as well as allowing traceability of products from the point of manufacturing to the pharmacy. Serialization refers to a unique code that is printed on the primary package or on the unit-dose tablet or capsule. The codes are “written” onto a radio-frequency identification (RFID) tag for tracking. The codes are then uploaded into a repository database that can be accessed by pharmacists, regulatory agencies, and even the consumer. It also serves as a resource for ensuring that returned product is legitimate, and for conducting recalls more efficiently [2].

It’s always wise to stay ahead of regulatory requirements and many agencies are requiring use of serialized bar codes for products, beginning in Turkey in 2010 and in France in 2011. California has instituted a similar requirement called the ePedigree law, which takes effect in January 2015, and requires that a unique mark be placed on each product’s package [2].

Surface Analysis Techniques
Surface analysis techniques have been become invaluable to the pharmaceutical industry, because not only can they identify counterfeit product, but they can also identify whether the product was manufactured using a licensed or unlicensed process. The following are two of the techniques that have been developed:

1. X-ray Photoelectron Spectroscopy (XPS) is a technique that provides detailed information through analysis of surface material. The information includes composition and empirical formula of a drug, and detects contaminants that are present on the surface.
2. Secondary Ion Mass Spectroscopy (SIMS) is a depth profiling technique that analyzes the surface, as well as sub-surface, of a material. Information about the chemical composition is revealed by analyzing ions produced from the material [1].

Not only is it important to identify the elements of a suspected counterfeit drug, but also whether a licensed process was used to manufacture it. Even if the drug contains the correct elements in the correct quantities, any deviation from the licensed process can prove fatal to patients. The techniques described above can detect the distribution of magnesium stearate, a lubricant commonly used in the manufacturing process. The difference in distribution provides information on how the tablet was manufactured; if it differs from that of the expected manufacturing process, a counterfeit can be detected [1].

Physical Chemical Identifiers (PCIDs)
In July 2009, the Food and Drug Administration (FDA) issued a draft guidance titled “Draft Guidance for Industry: Incorporation of Physical Chemical Identifiers into Solid Oral Dosage Form Products for Anticounterfeiting.” The document provides guidance to manufacturers on the addition of inks, pigments, flavors, and other identifiers to medications in order to make them more difficult to duplicate by counterfeiters.

According to the guidance, a PCID “is a substance or combination of substances possessing a unique physical or chemical property that unequivocally identifies and authenticates a drug product or dosage form.”

In addition to inks, pigments and flavors, which are easily detectable by wholesalers, pharmacists and patients, manufacturers can also add molecular taggants. Taggants can be physical or chemical markers added to materials to allow for specific testing and identification of the marked product. In these cases, specialized instruments and techniques are needed to detect the PCIDs (e.g., photolithography, laser scanning devices) [3].

The FDA anticipates that most of the chemical identifiers will be food additives that are currently in use and have established safety profiles. Safe as they may be, the FDA is still recommending that the lowest detectable level of PCIDs be used to minimize side effects in drug products [3].

Space Age Technology (literally)
In early September, a team of scientists from Perpetuity Research and Consultancy International (PRCI) and the University of Leicester’s Space Research Centre, revealed that they discovered a way to quickly identify counterfeit drugs [5]. The technology, which can detect the differences in the characteristics of light reflecting from printed packaging of drug products, was developed from a spectrograph originally designed for the Space Research Centre.[4].

“The unique light source incorporated within the systems and the selection of the critical points in the packaging at which the tests are conducted provides a degree of randomness that is not known to the counterfeiter and restricts the ability to be replicated.” Trials so far have produced a 100% success rate of detecting differences in printed packaging that the naked eye could not detect [4].

Counterfeiters have proven that they have the knowledge and resources to keep up with the obstacles that the industry throws at them. In order to protect consumers and company reputation, manufacturers must always strive to be one step ahead, and must constantly assess their anti-counterfeiting programs and their effectiveness. The above mentioned techniques are a good place to start!

[1]- http://www.pharmaquality.com/ME2/Audiences/dirmod.asp?sid=325598564E8C4B3EB736C7159241312D&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=D3E3C719D8D44216836DCA4F4144BEC4&tier=4&id=42EFE4778B8B431A96B18708EA8262ED&AudID=
[2]- http://www.verifybrand.com/brand-protection-news/pdfs/How-serialization-can-reduce-pharma-counterfeiting.pdf
[3]-http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM171575.pdf
[4]- http://www.medicalnewstoday.com/printerfriendlynews.php?newsid=163257

Articles of the Week!

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

This week in the industry healthcare reform continues to be on the radar screen as legislation continues to be drafted and bipartisan support continues to be sought.

Health bill clears hurdle with support from Snowe
http://news.yahoo.com/s/ap/20091013/ap_on_go_co/us_health_care_overhaul

Senate Panel Passes Bill Limiting Generic Drug Deals
http://online.wsj.com/article/BT-CO-20091015-712619.html

On October 16, 2009 Pfizer announced that it was combining operations with Wyeth. While questions remain with respects to the impact to both companies, initial announcements have been made.

Pfizer And Wyeth Become One: Working Together For A Healthier World™
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=20091015006478&newsLang=en

Pfizer Closes Wyeth Sites in New Jersey, Pennsylvania
http://www.bloomberg.com/apps/news?pid=20601103&sid=ajmYujiT2rFQ

Articles of the Week! is back by popular demand. Look for it every Friday on the PCB. Have a great weekend, bloggers!

For Your Space,
Dana Zelig and Jess Ebert, PCB Editors

What Do We Know About Compounding Pharmacies?

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

On a recent trip to New Jersey and Pennsylvania, I was struck by a series of ads on satellite radio for “quick dissolve” versions of some very popular prescription medicines. Having previously worked for branded and generic manufacturers, I have some knowledge of the time, expense and effort involved in securing approval for a new drug. In listening to the ads, however, I realized that I don’t know what the rules are for compounding pharmacies. Do they have an approval process similar to what generic manufacturers go through in submitting an ANDA? Are they exempt from this process because they are simply modifying an approved, branded product? Or, am I correct to question the legitimacy of the products being advertised?

To find out, I began by performing an internet search for “compounding pharmacies.” The first site that came up was the very official-looking “IACP – International Academy of Compounding Pharmacists” site.[i] According to the site, IACP’s mission is ‘to promote and advance personalized medical solutions’ for people whose healthcare needs cannot be met by off-the-shelf medications. The site explains that “trained, licensed pharmacists… work with physicians, nurse practitioners and veterinarians to create customized medication solutions.” That sounds good, but doesn’t tell me much about the rules under which the compounding pharmacies operate.

Continuing my search, I found a site for the Pharmacy Compounding Accreditation Board.[ii] This site provided more information about the legal basis and boundaries for compounding pharmacies. Apparently, compounding activities fall under the regulation and oversight of state boards of pharmacy. Compounding may be conducted for use in physician offices or in anticipation of routine prescription orders. Quantities, in the later case, are limited to “reasonable quantities,” though that is not defined on the PCAB site. Compounding activities may not duplicate commercially available products, but may modify existing products by changing the strength, delivery mechanism or dosage form, or by removing dyes. While this provided some general guidelines, it did not answer the question of the regulatory basis for compounding activities.

Next, I turned to the US Pharmacopeia (USP) site, where I found a white paper[iii] describing “non-governmental and governmental approaches to provide compounding standards and conformity assessment to these standards.” From this, I learned that the question of whether compounded drug products constitute “new drugs,” subject to all of the corresponding regulations, remains unanswered, as does the legality of advertising compounded drugs, though the most recent rulings on the matter leave the door open for advertising these products. The site confirms that the practice of compounding is regulated by state boards of pharmacy. USP notes that while this has translated into considerable variance in regulations, NABP has provided template language for use in developing rules.

Turning finally to the FDA website, I confirmed that the FDA typically defers to states in the regulation of compounding activities. However, the FDA retains the authority to proceed without the states. The FDA has identified factors triggering federal enforcement as “instances where pharmacists are:

• Compounding drug products that have been pulled from the market because they were found to be unsafe or ineffective.
• Compounding drugs that are essentially copies of a commercially available drug product.
• Compounding drugs in advance of receiving prescriptions, except in very limited quantities relating to the amounts of drugs previously compounded based on valid prescriptions.
• Compounding finished drugs from bulk active ingredients that aren't components of FDA-approved drugs, without an FDA-sanctioned, investigational new-drug application.
• Receiving, storing, or using drug substances without first obtaining written assurance from the supplier that each lot of the drug substance has been made in an FDA-registered facility.
• Failing to conform to applicable state law regulating the practice of pharmacy.”[iv]

While the organizations discussed above have laid down a few do's and don'ts for pharmaceutical compounding, the practice still remains largely regulated by state boards of pharmacy. For more information, please check out the following sources.

Sources:
[i] http://www.iacprx.org/site/PageServer?pagename=home_page
[ii] http://www.pcab.info/
[iii] http://www.usp.org/pdf/EN/members/goodMedicine.pdf
[iv]http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm107836.htm, see “Red Flags”

FDA Raises Debar

By Aimee Hummel, CIS Compliance Manager
aimeehummel@cis-partners.com

On August 8, 2009, the FDA announced that they are revamping their disbarment and disqualification procedures. This decision was made after the FDA’s internal review concluded that it needed to act quicker to ensure the safety of clinical trial participants. Their procedures are also being enhanced to ensure the safety and effectiveness of the medical products marketed to the American public.

Before this, members of Congress had claimed that the FDA has been slow to remove individuals from the drug development process and have not adequately used its debarment and disqualification authorities, which caused major concern. The changes made include increased staffing and centralized organization. They also have designated an administrative law judge as a presiding officer and have assigned the good clinical practice program to oversee the disqualification process. The FDA believes these changes will result in more rapid, transparent and consistent actions. [3]

For those not familiar with this process, the FDA has the authority to disqualify researchers from conducting clinical testing on new drugs and devices when they have repeatedly or deliberately broken the rules. These rules are intended to protect study participants and the general public. Under the FDA’s statutory debarment authority, they may also ban, or “debar” individuals and companies convicted of certain felonies or misdemeanors related to drug products. “Once individuals have been subjected to “debarment,” they may no longer work for anyone with an approved or pending drug product application at FDA. Debarred companies may no longer submit abbreviated drug applications.” [2]

FDA began disqualifying clinical investigators in the early 1960’s and have since disqualified approximately 190 clinical investigations. From 2006 to present, FDA initiated 21 disqualification actions. Since FDA received its debarment authority in 1992, it has debarred 75 individuals convicted of crimes related to drug products. Until this year, the agency had averaged two or three debarment proceedings per year, over the past decade. Since October 2008, however, FDA has formally initiated debarment proceedings against five individuals, and debarred two others.[2]

Since the new changes have been made, the number of debarment actions has risen considerably, and the time taken to resolve both disqualification and debarment actions has reduced significantly. Among the improvements, FDA has also made sure that all participants in testing and development have access to the necessary debarment and disqualification information. Thia information will also ensure that sponsors of clinical studies do not use individuals who may have been disqualified or debarred. Disqualification and Debarment information is available on the FDA website, where you can view all pending and completed disqualification proceedings and all completed debarment proceedings; they are working on doing the same for pending debarment proceedings.

By increasing transparency and enhancing their systems, the FDA will continue to increase the level of protection of the public health. [1]

Information on pending and completed disqualifications can be found at: www.fda.gov/ICECI/EnforcementActions/DisqualifiedRestrictedAssuranceList/ucm131681.htm

Information on completed debarment action can be found at: http://www.fda.gov/AboutFDA/CentersOffices/CDER/ucm090279.htm

Sources:
1 http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm176040.htm
2 http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm176043.htm
3 http://www.outsourcing-pharma.com/content/view/print/255930

Is Vermont Trying to get Manufacturers to Just Stop Detailing and Sampling Altogether?

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

Notice of Public Hearing on Advisability of Requiring Disclosure of Free Samples
of Prescribed Products given to Vermont Health Care Providers

• Date of hearing: October 27, 2009 ‐‐ 9:30am to 11:30am
• Location: Pavilion Office Building, Third Floor, 109 State St., Montpelier VT
• Sponsored by the Vermont Attorney General and the Commission on Health Care Reform

At the end of this month, the Attorney General of Vermont will be holding a public hearing to determine if the state will modify section 4632 of Title 18 (Health Statute) to require manufacturers to disclosure information about providing free samples of prescribed product to health care providers. The Attorney General is due to report the findings to the House Committee on Health Care and the Senate Committees on Finance and on Health and Welfare no later than December 15, 2009. To give a frame of reference as to why Vermont is interested in investigating this area, Section 4632 is contained in Chapter 91, entitled, Prescription Drug Cost Containment. The thought process seems to be that if Vermont can collect information on samples in addition to the information the State already collects regarding the cost of marketing prescribed products, it may provide a way to keep the cost down.

The goals of the hearing are to gather information about the current system of distribution of free samples of pharmaceuticals, biologics and medical devices to Vermont prescribers, and to hear the opinion of those in the health care system as to the advisability of requiring disclosure.

The Attorney General is encouraging those who testify to address the following questions:

1. How are free samples distributed to Vermont prescribers now? By office visits or mail and upon request only, or through scheduled or unscheduled visits?

2. What records do the manufacturers keep of the distribution of free samples? What records do the recipients keep? If any of those records are reported to a governmental agency, what is reported to which agency on what timeframe?

3. What is the approximate volume and value of free samples being distributed in Vermont?

4. Would disclosure of the distribution of free samples have a significant impact on the willingness of providers to accept those samples? Would it make a difference if
disclosure were only to the Attorney General, and not to the public?

5. What is your opinion on whether the distribution of free samples should be disclosed to the Attorney General’s Office? What is your opinion on whether such disclosures should be released to the public?

While the intent and goals of the hearing are understood, and the answers to the questions during the testimony may prove to be helpful, the Attorney General should spend some time investigating at least two additional areas:

1. The number of manufacturers who have chosen to eliminate Vermont prescribers from their detailing targets.

2. The method health providers use to track drug samples once they take possession of them.

Many pharmaceutical manufacturers have chosen to eliminate Vermont territories after weighing the requirements and determining that the effort to comply was not worth the reward. The State may very well be doing its prescribers and citizens a disservice if they make it even more difficult to market prescription products to health care providers. Marketing prescription products has gotten a bad rap over the years and is often perceived as sales representatives running around dumping samples and pushing the provider to prescribe their product. In fact, both medical device and drug representatives can help a practitioner stay informed of new studies, products, and better treatments through detailing and sampling. Manufacturers may just find it harder to justify in Vermont.

The industry as a whole recognizes the regulations of the Prescription Drug Marketing Act (PDMA), and documents the distribution of drugs to practitioners. The intent of the law is to protect the public from adulterated, contaminated and diverted drugs. The only problem is that all of the storage and documentation requirements end once the drug is left with the practitioner. At the very least, storage requirements should be enforced until the public receives the samples. It is probably a whole other argument, but if the idea is to protect the public from the cost of prescription products, there should be some concern for the safety of the product as well.

The Vermont Attorney General would do well to listen carefully to the industry at these public hearing and carefully explore the pros and cons of any additional regulations. Even though there are only a handful of other states that have similar requirements, the industry is beyond frustrated by regulations passed by those that don’t fully understand our business. Vermont may not have to worry about any manufacturers if they aren’t careful.

With regard to the hearings:
Interested persons are encouraged to participate in the public hearing noticed above. Those wishing to testify in person or by phone must send an email to: prescribedproducts@atg.state.vt.us by October 23, 2009. A preliminary witness list with approximate times of testimony will be posted on the Attorney General’s website, http://www.atg.state.vt.us/ by October 26. Those who do not sign up in advance will be able to testify if time permits. Those who wish to submit proprietary information on a confidential basis may do so by mailing such information, marked “Confidential,” to: Wendy Morgan, Office of the Attorney General, 109 State St., Montpelier VT 05609, no later than November 6, 2009.

The hearing will be taped and posted on the Attorney General’s website. Questions in advance of the hearing should be directed to: prescribedproducts@atg.state.vt.us.

Source:
http://www.atg.state.vt.us/assets/files/Free%20Samples%20Public%20Hearing.pdf

Mergers, Acquisitions and Compliance, Oh My!

By: Sabrina Skari, CIS Business Development Manager
sabrinaskari@cis-partners.com

You can look anywhere in the media to find news reports about the numerous buyouts occurring in the pharmaceutical industry. There is the mega-merger between Pfizer, Inc. and Wyeth Pharmaceuticals (Pfizer purchased Wyeth for $68.103 billion, this is the 3rd largest deal in pharmaceutical industry history [1]), the acquisition of Schering-Plough by Merck, Ltd and the fact that Roche purchased Genentech… just to name a few. The leadership teams of these buying entities have a specific goal in mind: to create broad, diversified product portfolios that appeal to as many markets as possible. However, where red tape and bureaucracy are involved, matters are bound to get complicated. So while everyone in pharma questions what these mergers mean for the industry in the long-term, it is also important to ask what these mergers mean for compliance risk!

There is a phrase that defines the need to examine these types of issues: “compliance due diligence.” This refers to the process by which an organization aims to ensure it is aware of any compliance related issues it may inherit in the acquisition of a product or of another company [2]. A company should perform an appropriate level of due diligence, and identified issues that could result in compliance or financial risks can be integrated into the agreement between the companies, including the accountabilities and costs associated with addressing identified issues.

A few key areas to pay attention to include:

• Government program compliance, and integrity of statutory pricing calculations
• Accuracy in Class of Trade Assignment
• BaseAMP impact (where an acquiring company inherits the Base AMP of a product, and any future CPIU Penalties
• Systems used for Medicaid Claims processing, and ability to integrate in historical claims
• Commercial Compliance, such as Grant Activity and Sampling, and assumptions on Bona Fide Fees for Service

As noted, the impact of these areas is highly dependent upon whether the entire company is being acquired or whether it is onlyNDCs that have been purchased. Generally speaking, when acquiring a company, the buyer inherits all historical compliance risks, whereas in acquiring a product, issues like integration of sales data and Base AMP impact can be the main concern.

In some cases, just showing that you are working on the creation of a unified compliance strategy may minimize the risk of fines. This is helpful because the process may be a time-consuming one. There are various areas that need to be examined when two companies become one. If each entity has a sales force, there is a need for one comprehensive field guide and sales and marketing policy. Any changes to this type of documentation would also require updated training for all sales personnel, which in some cases could mean tens of thousands of people. The customer master codes would need to be reviewed to check for consistent integration and assignment between the two respective organizations. Finally, every single policy and procedure would need to be reviewed and consolidated.

With all of this said, this type of integration among companies is a “worst case scenario” for the amount of work that may need to be done. According to Jim Edwards on the BNET blog, it is possible that these mergers could result in companies that “look a bit like Johnson and Johnson: a collection of relatively small units working autonomously [3].” This doesn’t necessarily mean that there is a right or wrong way to operate. It just implies that an increased level of autonomy among divisions provides a basis for fewer required changes.

Until these mergers are finalized no one can know what the end result will be. Only one thing is for sure- compliance risks affect everyone, big and small. Regardless of how well established a company may or may not be, everyone needs to be cognizant of their respective compliance risks and do everything in their power to mitigate these threats.

SOURCES:
[1] Pharmaceutical Executive, March 2009
[2] http://hcca-info.org/content/navigationmenu/aboutHCCA/PressReleases/duedil.pdf
[3] http://industry.bnet.com/pharma/1000996/post-merger-pfizer-wyeth-might-be-structured-like-jj/?tag=content;col1

The Year of the Pig Flu

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

Hello, my name is Jordan and I am a hypochondriac. When the first case of Swine Flu (H1N1) was announced I was sure I had it too. I began involuntarily coughing every time I heard about another incident. As I sit here writing this blog with an 8 oz bottle of waterless hand sanitizer by my side, I remain free from Swine Flu, yet still take every precaution. I was initially unaware of what Swine Flu really was when it first started to spread. Everyone has one of those friends who is commonly known as the “over exaggerator.” You know, the guy that tells the most ridiculous and ludicrous stories, which don’t hold the slightest bit of truth to them, but he explains the stories in such a way as to make them believable (if you do not have a friend like this, chances are, you are this person). Unfortunately, this was the source I received my initial information from regarding the Swine Flu. Long story short, I was under the impression that the virus was spreading through meat, animals, humans, parents, in-laws (which I figured already), etc. I was told that the virus was immediately fatal and I was strongly recommended to stay away from livestock. I was also told that it was in my best interest not to finish the rest of my pulled pork sandwich which I was eating during this conversation (fiction- added for dramatic effect). If you surround yourself with friends like this, you can see how you may become a hypochondriac too (give me a call to hear the anthrax story).

Since the virus is still spreading, it is important for people to know what the H1N1 virus actually is, and what the FDA is doing to help prevent and treat it. “Pandemic Influenza A,” “H1N1 flu,” or “Swine Flu,” is a virus that was originally known only to infect pigs. However, the current outbreak of Swine Flu has mutated in such a way that has allowed the virus to be hosted by humans[i] . The only way to get the virus is from other humans, not from pigs (the animals). The symptoms correlate with the seasonal flu; cough, sore throat, chills, etc. While the H1N1 virus may not be as bad as I originally anticipated, the World Health Organization still considers it a “Global Emergency.”

Similar to the seasonal flu virus, the severity of hospitalizations caused by the H1N1 virus varies greatly from mild cases to fatalities[ii]. The FDA said it initiated the emergency-use authorizations in response to requests from the U.S. Centers for Disease Control and Prevention for the use of certain Relenza and Tamiflu antiviral products, and for the rRT-PCR Swine Flu Panel diagnostic test[iii]. It appears that the virus is being found mostly within teens and young adults; however it is most severe in young children, seniors, and those with prior respiratory complications.

The epidemic may not mean lightning-quick spontaneous internal combustion. It may not spread through your pets, or through your favorite midnight snack (bacon). However, the virus has proven to be problematic and, although I’m trying to keep this blog ‘light’ to keep your attention, it is no laughing matter; the Massachusetts Department of Public Health alone announced over 20,000 reported cases of Swine Flu since the virus first appeared five months ago[iv]. It is unnecessary to be a hypochondriac but it is necessary to take precautionary steps to prevent the disease from spreading. The best way to prevent the disease is to wash your hands and to refrain from touching your face and mouth.

Sources:
[i] "Swine Flu." WebMd.com. Web. 1 Oct. 2009. http://www.webmd.com/cold-and-flu/flu-guide/swine-flu-faq-1?page=7
[ii] "Swine Flu." WebMd.com. Web. 1 Oct. 2009. http://www.webmd.com/cold-and-flu/flu-guide/swine-flu-faq-1?page=7
[iii] "FDA Issues Emergency Swine Flu Orders." UPI.com. Science News, 28 Apr. 2009. Web. 1 Oct. 2009. http://www.upi.com/Science_News/2009/04/28/FDA-issues-emergency-swine-flu-orders/UPI-80371240925627/
[iv] Smith, Stephen. "Swine Flu has infected 20,000 in Mass., More Cases Expected." Boston.com. WhiteCoatNotes, 30 Sept. 2009. Web. 1 Oct. 2009. http://www.boston.com/news/health/blog/2009/09/swine_flu_has_i.html

The Recession and The Biotechnology Industry: Where Do We Go From Here?

By: Jon Dellaquila, CIS Compliance Manager
jondellaquila@cis-partners.com

During the Federal Reserves’ August meeting, the organization indicated that economic activity in the United States is beginning to level out; signifying what they believe may be the beginning of the end of the economic recession in the United States.[1] As the country exits from the greatest financial crisis since the Great Depression, many industries will be faced with significant economic challenges. In particular, the Biotechnology industry finds itself in a unique situation. During the booming markets of the 90’s when Biotechnology was identified as the next great provider of blockbuster therapeutics, financing from capital markets was readily available. During a seven-year stretch from 1991-1998, equity markets invested approximately $34 billion in the Biotechnology industry.[2] The Dow Jones Industrial Average (DJIA) nearly tripled during this time and many were reaping the benefits of their investments. The DJIA peaked on October 9, 2007 at 14,164 only to see it close at 7,062 on February 27, 2009 – just one and half years later.[3] As the dust settles from this dramatic event, the Biotechnology industry is now evaluating creative solutions in order to ensure they can continue to provide innovative therapeutics.

On average, one out of every five-thousand potential drug candidates makes it to the market. Based on a 2005 evaluation, companies spend approximately $1.2-1.3 billion and 10-15 years throughout the development of a single drug.2 Although this industry has the potential to be very profitable, this result does not come without significant financial investments. Since the recession, the number of potential investors has decreased and loans have become harder to obtain. Without this funding, companies with promising therapeutics do not have the means to further develop their drugs. Facing the prospect of dwindling financial resources, smaller companies are being forced to shut their doors or hope that Big Pharma may come to the rescue. As this situation has created some uneasiness amongst the Biotechnology industry, it has also presented some of the most lucrative opportunities for companies sitting on large sums of cash. It is fair to assume that in the coming months as the country begins to pull itself up from the doldrums of the recession, large companies such as Pfizer, Johnson & Johnson and Merck will begin to acquire smaller biotech companies in order to further diversify and support their pipelines.

In the early to mid 90’s it appeared as though the Biotechnology industry had the potential to rival the size of the pharmaceutical industry. After all, some of the most promising advances in therapeutics over the last 20 years have been discovered by Biotechnology companies. The global recession has suddenly turned the once promising rival to Big Pharma into potentially its next great asset. Due to the high costs associated with the production of biologics compared to pharmaceutical compounds, this may turn out to be a blessing in disguise. Most Biotechnology companies struggle to deliver products to market because they are cash strapped. By teaming up with the cash rich pharmaceutical industry, one can only hope that many promising therapeutics in the early stages of development finally get the funding they need to be developed into life changing therapeutics.

Sources:
[1] Andrews EL. Fed Views Recession as Near an End. New York Times. August 12, 2009.
http://www.nytimes.com/2009/08/13/business/economy/13fed.html. Accessed on 11 Sep 2009.
[2] Guertin PA. The Biotechnology Industry: What’s next?. Biotech J. 2009, 4; 1124-1131.
[3] http://www.the-privateer.com/chart/dow-long.html. Accessed on 11 Sep 2009

Pharmaceutical Market Expected to Get a Little Smaller

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

With the market rebounding in many areas what is in store for the pharmaceutical industry?

Researchers from Business Monitoring International are predicting a contraction within the pharmaceutical market. The drop will supposedly be around -0.35 percent within the time frame of 2008 – 2013 (1). According to the report, “The contraction is small as we believe that the healthcare reform will allow wider access to medical services due to mandatory insurance cover.”(1)A reason behind this drop would be what researchers are calling the “patent cliff”, in the year 2011. A patent cliff is when a pharmaceutical patent is set to expire (1).

This year alone, over 100 products are set to expire; luckily most are not substantial. All of the products dropping from patent protection will open up the brand drugs to the generic drug market (2). Another problem seems to be that manufacturers are launching fewer products, and are therefore not making up for the patents are expiring.

Another reason behind the drop in the pharmaceutical market is due to in large part the additional growth of cheaper generic drugs. This will cause the generic drug market should expect a growth in sales, as well as, the new healthcare reform.

The contraction of the market is expected to yield a value of $302 billion (1).

Sources:
1. http://www.fiercepharma.com/story/what-we-talk-about-when-we-talk-patent-cliff/2009-01-22
2. http://www.marketresearch.com/product/display.asp?productid=2404162
3. http://www.marketresearch.com/product/display.asp?productid=2404162

Chocolate Smokes?!?!?

By: Beth Kline, CIS Project Manager
bethkline@cis-partners.com

As of September 22, 2009, it is now illegal to sell many candy and fruit flavored tobacco products anywhere in the United States.

I have never smoked a cigarette in my life, except when my Dad forced me to smoke an entire one right in front of him at the age of 12. What a smart man! I have never touched another cigarette again nor have I had any desire to. Since I don’t smoke and pay no attention to cigarette commercials or marketing, it was surprising to me to hear that flavored cigarettes exist and are being marketed with a bent toward kids. WHAT?!? Flavors such as vanilla, orange, chocolate and cherry – definite kid favorites – are incorporated into tobacco products, making these products that much more appealing to children.

This is really ingenious of the tobacco industry – if they can hide the DISGUSTING flavor of the tobacco and get kids hooked on its addictive properties – this is potential guaranteed revenue over many lifetimes. In 2004, 17-year-old smokers were more than three times as likely as those over the age of 25 to smoke flavored cigarettes, and they viewed flavored cigarettes as safer. (1)

Smoking is the leading cause of preventable death in the United States. An important way to reduce the death and disease caused by smoking is to prevent children and adolescents from starting to smoke. (2) Fortunately, the FDA now has the new authority to take a stand against these products in the U.S. HOORAY! This is great news and hopefully will save many young people from a lifetime of battling not only a terrible habit, but potential healthcare issues that could lead to a much shorter life.

Sources:
(1) http://www.nytimes.com/2009/09/23/health/policy/23fda.html
(2) http://www.fda.gov/TobaccoProducts/GuidanceComplianceRegulatoryInformation/FlavoredTobacco/ucm183199.htm
(3) http://www.fda.gov/TobaccoProducts/GuidanceComplianceRegulatoryInformation/FlavoredTobacco/default.htm