Life Science Compliance Update

September 25, 2017

FDA Guidances Being Issued Slower than Expected


We found an interesting Regulatory Focus story on the lack of FDA guidance documents since the start of President Trump’s tenure in office. FDA announced it intended to release more than 100 draft guidances in 2017 but has not been close to that amount. Recent guidances, to illustrate, can be found at the following link.

Unclear reason

Regulatory Focus speculates it could possibly be related to President Trump’s Executive Order aiming to reduce regulatory activity. Or, before Commissioner Gottlieb was confirmed, it may have been the lack of a top official at the agency. The answer from the administration is particularly interesting. Regulatory Focus wrote:

“The answers remain unclear. FDA referred Focus questions on the matter to the White House, which referred Focus to the Department of Health and Human Services and the Office of Management and Budget, which did not respond to questions.”

Some industries are patiently waiting for more FDA guidances, for example, on the Food Safety Modernization Act. However, we have seen guidances issued in several areas released in the month of August:

Identifying Trading Partners Under the Drug Supply Chain Security Act Guidance for Industry - Draft Guidance - 08/18/17

Expiration Dating of Unit-Dose Repackaged Solid Oral Dosage Form Drug Products - Final Guidance - 08/08/17

CMC Postapproval Manufacturing Changes for Specified Biological Products To Be Documented in Annual Reports - Draft Guidance -08/08/17

Child-Resistant Packaging Statements in Drug Product Labeling Guidance for Industry - Draft Guidance - 08/02/17

Antibacterial Therapies for Patients With an Unmet Medical Need for the Treatment of Serious Bacterial Diseases - Final Guidance -08/01/17

We will continue to monitor the trends of FDA guidance documents in the coming months as Commissioner Gottlieb continues to build his staff and direct the future of the agency.

As Regulatory Focus reported, Rachel Sachs, an associate professor of law at Washington University in St. Louis, is quoted as saying: “I think they're waiting for Gottlieb to set his priorities, and they'll move forward then. The other thing I'll say is that they've been busy behind the scenes on things like the -UFAs [user fee agreements], so I wouldn't be surprised if a lot of time has gone into that.”

Fresenius to the U.S. Government: When It Comes to the FCA, You Snooze You Lose


In a nearly decade long lawsuit involving the dialysis company Fresenius, and allegations that the company violated the False Claims Act by conducting and then billing the government for medically unnecessary hepatitis B tests, Fresenius is now seeking to challenge that the government is time-barred because the government took too long to intervene in this case. Although the Court has yet to decide the challenge by Fresenius, the outcome of that decision will likely have a significant impact on future government decisions to intervene in False Claim Act cases.

Everyone who has ever been involved with a government investigation or case knows that time somehow runs differently in those situations. Investigations take a long time to bear fruit and when they do, securing indictments and trial dates take even more time. However, even with that perspective, the case of United States ex rel. Christopher Drennen v. Fresenius Medical Care Holdings is one for the record books, and it is still not over.

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September 22, 2017

Accountable Care Organizations Under Magnifying Glass


Calling into question whether value-based care will ever truly work, a recent report casts dark news for ACOs. As reported, nearly half of physicians participating in the Medicare Shared Savings Program (MSSP) ACO in 2015 did not know if they could receive shared savings or faced downside risk, according to a study. Even as there are flaws with fee-for-service, there are legitimate questions being raised about the feasibility of implementing value-based health projects, as evident in this latest MSSP study.


The survey was conducted between September 2014 and April 2015 and asked more than 1,400 doctors participating in Pioneer, MSSP, and Advance Payment Model ACOs about their programs' incentive structure and effectiveness, among other topics.

The survey found many doctors participating in each model were not aware how their respective incentive structures worked. Specifically:

  • 5 percent of Advance Payment participants did not know if they or their practice faced downside risk and 16.1 percent said they did face downside risk;
  • 5 percent of MSSP participants did not know if they or their practice faced downside risk and 20.6 percent said they did face downside risk; and
  • 7 percent of Pioneer participants said they did not know if they or their practice faced downside risk and 19.8 percent inaccurately said they did not face downside risk.

Additionally, the survey found that similar proportions of physicians did not know whether they were eligible for shared savings in their respective programs. Specifically:

  • 9 percent of Advance Payment physicians said they were not sure whether they or their practice were eligible for shared savings;
  • 5 percent of MSSP participants said they were not sure whether they or their practice were eligible for shared savings; and
  • 2 percent of Pioneer participants said they were not sure whether they or their practice were eligible for shared savings.

The survey also found that many doctors were unsure of which of their patients were attributable to an ACO. Specifically, 42.7 percent of MSSP, 21.4 percent of Advance Payment, and 34 percent of Pioneer physicians did not know which of their patients were attributable to an ACO.

Will Value-based Payment Actually Work?

This question is raised in a recent MedPage Today article on the subject. During a panel discussion, one member raised concerns about the current push to pay for the value of services rather than the volume of services under MACRA. Under MACRA, for example, the push could have unintended consequences for the healthcare system, with the influx of APMs resulting in "a thousand flowers blooming," borrowing an expression from former Chinese leader Mao Zedong. Such an approach -- having one model for a single aspect of one specialty -- might only increase fragmentation in the healthcare system.

Additionally, some have been critical of recent changes to MACRA that slow the “on ramp” for physicians to participate. They argue it creates an incentive not to get on board with value-based programs in Medicare. However, with so many physicians unaware of MACRA, and the complexity of the law, it seems reasonable that CMS would take a slower approach in the implementation of the law.

The Point of Value-Based Pricing

Raised in a recent athenahealth article by Paul Levy, the former CEO of Beth Israel Deaconess Medical Center from 2002-2011 and author of “Goal Play! Leadership Lessons from the Soccer Field,” a key element of President Obama's healthcare policy was a push for "value-based pricing," using the authority of the Centers for Medicare and Medicaid Services to experiment with pricing incentives to reduce overuse in clinical care. Private insurers were likewise encouraged to pursue this direction.

The status quo in the U.S. for years has been “fee-for-service" pricing, in which doctors and hospitals were paid for piecework. Believing that the persistent rise in healthcare costs in the United States was driven by overuse resulting from this financial incentive, some policy analysts decided that doctors and hospitals should be given a countervailing financial incentive to reduce certain kinds of diagnostic tests and to avoid medically unnecessary procedures.

The predominant form of value-based pricing to emerge from this policy assumption was the so-called “global payment." Medicare or private insurers would give each health system (now called an accountable care organization or ACO) an annual number of dollars per year per patient, based on the risk profile of that system's population. If the health system could treat the patient for less money, it would keep the surplus. If its spending exceeded that budget, it would suffer a loss.

In essence, the plan consisted of CMS and private insurers trying to transfer the actuarial risk of patient care to providers, counting on the new financial incentive to change behavior.

Good Intentions but Rough Outcomes

Levy’s analysis continues by pointing out if the premise of global payments is that doctors are economically rational creatures who will respond to financial incentives, then the financial incentives have to be substantial, immediate, and transparent to be effective. Under a global payment regime, however, the incentives are minor, delayed, and fuzzy. Even those doctors who might want to be good corporate citizens will find themselves inexorably pushed to play “X," and thereby will undermine the hoped-for results.

Thus global payment regimes are hoisted on the petard of their own underlying assumption: The rationality of the participants. In the case of CMS, the global payment plan was doomed for other reasons. For one thing, early versions had no downside: While there was the potential to garner surpluses, health systems were protected against losses. Further, under federal law, Medicare patients are mobile: They have no obligation to stick with one health system if they feel they can get more of what they want from another.


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