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26 posts from June 2012

June 27, 2012

House Committee on Oversight and Government Reform Report: FDA’s Contribution to the Drug Shortage Crisis

Drug Shortagesw
The issue of drug shortages has been at the forefront over the past several months and earlier this year, FDA issued Guidance to industry regarding notification of drug shortages.  The number of drug shortages has been rising steadily over the last five years, nearly tripling from 61 in 2005 to 178 in 2010.  In 2011, FDA tracked over 250 drug shortages. The drugs in shortage are mostly generic injectable medications, many of which have been on the market for decades. 

A new report from the House Committee on Oversight and Government Reform documents a critical shortage of generic injectable medications that has occurred following enforcement activity by the Food and Drug Administration (FDA) at companies and facilities where the drugs are made.   

Chairman Darrell Issa (R-CA) said the Committee has learned that FDA regulatory activity has effectively shut down 30% of the total manufacturing capacity at four of the country’s largest producers of generic injectable medications.  In response to FDA action, companies that produce generic injectable drugs have taken their manufacturing off-line simultaneous to other generic competitors doing the same.  Of the 219 drugs listed on the American Society of Health System Pharmacists (ASHSP) shortage list as of February 21, 2012, at least 128 – 58% of the drugs on the shortage list – were produced by at least one facility undergoing FDA remediation.  

The report is the result of an ongoing examination conducted by The Committee.  It found that since 2010 when the shortage crisis began, Commissioner Margaret Hamburg and the agency have failed to ensure that ongoing enforcement is conducted in a manner that does not create unnecessary shortages or have unintended consequences.  

“Among shuttered manufacturing lines that occurred over the two previous years, the Committee's review did not find any instances where the shutdown was associated with reports of drugs harming consumers," Chairman Issa said. 

"It is also important to note that the overall damage inflicted by the FDA's decisions to shutter manufacturing lines may extend well beyond the current drug shortage crisis.  This shortage of injectable generic drugs is only the most visible result thus far of FDA enhanced enforcement action," Chairman Issa added. 

"This shortage appears to be a direct result of over aggressive and excessive regulatory action.  Addressing this shortage requires a common sense regulatory approach that considers market conditions and the overall impact,” Chairman Issa said.  “These drugs can save lives and keep people who need them living healthy lives.  The FDA is failing to ensure the availability of quality products.” 


An article from Forbes attributed drug shortages to the “aggressive” FDA that Commissioner Hamburg runs.  In 2010, Hamburg’s officials issued 673 warning letters to drugmakers and other companies: a 42 percent increase from 2009.  In 2011, the agency issued 1,720 warning letters: a further increase of 156 percent. This aggressive pace led four of America’s five largest manufacturers of generic injectable drugs—Hospira, Teva, Bedford, and Sandoz—to “simultaneously take significant production off-line in order to deal with FDA warnings.  As a result, their production of generic injectables declined by 30 percent, contributing to a massive shortage.”

“Pharmaceutical companies, despite running available production lines around the clock, are now forced to decide which drugs to continue producing and which to stop producing, and whether to cease production temporarily or permanently,” Issa writes.

Scott Gottlieb, a former deputy commissioner of the FDA, testified to Issa’s committee that the FDA went overboard in its enforcement.  “Instead of calling for targeted fixes of troubled plants, the agency has often required manufacturers to undertake costly, general upgrades to facilities. As a result, in 2010…regulatory actions taken by the FDA to address these problems were involved in 42 percent of the drug shortages.” 

Issa’s investigators found that a big part of the problem was that the FDA’s inspectors were not required to consider the broader effects of their actions. “According to sources with inside information about FDA’s operations, there is a disconnect between the FDA field force, the inspectors who work out of the agency’s district offices, and scientists and other career individuals at FDA headquarters who work on review and compliance functions,” Issa writes. “According to the Committee’s sources, FDA’s field force does not believe that it is within the scope of their authority to worry about the implications of their actions, even if it means a manufacturer closing a facility or removing manufacturing lines from production.” 

FDA released a statement in response to the House Report, which noted that preventing “drug shortages is a top priority for the” agency.  FDA pointed out that more than 150 shortages have been prevented since the Executive Order and the agency has prevented more than 50 shortages so far in 2012 due to early notification from manufacturers, which is voluntary.
FDA also pointed to a report from the U.S. Government Accountability Office, which states that “the drug shortages we reviewed in detail were generally caused by manufacturing problems and exacerbated by multiple difficulties” and that “FDA is constrained in its ability to protect public health from drug shortages.  Specifically, FDA is constrained by its lack of authority to require manufacturers to provide the agency and the public with information about shortages, or require that manufacturers take certain actions to prevent, alleviate, or resolve shortages.” 

Cost Pressures Also Lead to Drug Shortages 

The Forbes article also explained how drug shortages are caused by brand name drugs becoming generics.  As drugs go off patent, “the price of a typical generic drug goes down dramatically: around 90 percent after one year.  In many cases, it literally becomes cheaper to pay for cancer chemotherapy than to buy a bottle of Coke.”  Injectable drugs, however, require special manufacturing costs.  “Injectable drugs often need to be lyophilized,” or freeze-dried, “which is extraordinarily expensive—the machine costs around $100 million.”  “It’s a big capital expenditure.”  On top of that, companies had to deal with the blizzard of new FDA enforcement actions.  As a result, drugs become so cheap that companies cannot make a profit on them and therefore, stop making them, which leads to a drug shortage.  

One company told Issa’s committee that of the two dozen or so cancer drugs they make, approximately three quarters are sold at a loss. “The Medicare Modernization Act (MMA) and other government pricing policies have had unintended consequences affecting our ability to make a reasonable profit margin, not only for our oncology products but also for certain other products.”  Because cancer disproportionately affects old people, it’s cancer drugs where the MMA effect is most pronounced. 


Although President Obama issued an executive order aimed at “reducing prescription drug shortages” last October, the emphasis was only on early warning of shortages.  Similarly, the recently passed Prescription Drug User Fee Act “legislation contains some language regarding drug shortages, but again the emphasis is on early warning of shortages, and speeding up FDA reviews, rather than on the real problems: excessive regulatory interference, and Medicare’s price controls.” 

As a result, the report recommends that Congress be given new oversight when FDA issues a warning letter, “especially when that warning letter would impact the supply of generic injectable drugs.”

June 26, 2012

FDA User Fee Acts: Congress Drops Limits on Conflict of Interest Wavers

FDA Advisory Committee
Over the past year, Congress has been extremely busy putting together User Fee Act legislation that will reauthorize the Prescription Drug User Fee Act (PDUFA) and the Medical Device User Fee Act (MDUFA).  Throughout negotiations, several pieces of legislation were proposed regarding conflict of interest waivers and Advisory Committees at the Food and Drug Administration (FDA).  There has been concern from various stakeholders about vacancies on such committees and the effect this may have on slowing drug approval.  

Consequently, the reconciled User Fee Act legislation—known as the Food and Drug Administration Safety and Innovation Act (FDASIA)—includes a provision that would loosen the requirement for the number of waivers FDA could grant to individuals who could serve on FDA Advisory panels.  The bill already passed the House and awaits a final vote by the Senate. 

As reported by Pharmalot, the FDA is currently permitted to issue a set number of waivers to individuals who the agency would like to serve on a panel, but have a conflict.  The number of waivers depends on how many meetings and members participate in a given year. The cap is on the actual percent of members granted waivers.  For fiscal year 2012, the cap is 11.5 percent, according to the FDA.  Under the new provision, FDA officials will be allowed to grant as many waivers as they want. 

This amendment should be passed because it will ensure that patients get lifesaving medicines in a timely manner.  Moreover, concerns that such a provision will lead to conflicts of interest or bias are misplaced.  In fact, evidence from a 2006 article in the Journal of the American Medical Association (JAMA) reported that the meeting-level analysis did not show a statistically significant relationship between conflict rates (“index conflict,” “competitor conflict,” or “any conflict”) and voting patterns. 

In other words, the researchers tested for a relationship not between conflict of interest and yes votes on a drug but between conflicts of interest and votes for the interest of a pharmaceutical company.  Moreover, the research indicated that in all 3 conflict categories, the exclusion of advisory committee members and voting consultants with conflicts would have produced margins less favorable to the index drug in the majority of meetings, but this would not have changed whether the majority favored or opposed the drug.  

To verify this, FDA contracted with Eastern Research Group, Inc. (ERG) in both 2007 and 2009 to assess the relationship between expertise and financial conflicts of interest of FDA advisory committee members.  ERG continued the Lurie JAMA study cited above and extended it beyond December 2004 through the first quarter of 2008 (analyzing advisory committee meetings).  The 2007 report had several important findings that support the recent FDASIA's amendment to remove strict conflict of interest requirements for Advisory Committees.  

ERG conducted four meeting-level and two individual level analyses to assess the relationship between financial interests and voting patterns.  ERG found that the expanded dataset produced meeting-level results similar to Lurie’s findings.  Specifically, ERG found no statistically significant relationship between conflict rates and voting outcomes (α=0.05) when considering financial ties with: the product sponsor (“index conflict”), a competitor of the sponsor (“competitor conflict”), or the product sponsor or a competitor or both (“any conflict”).  ERG also found individual-level results similar in direction to Lurie’s findings.  Overall, ERG found no evidence to suggest that having a financial conflict-of-interest tends to increase votes in favor of that interest 

In addition, the report found that it would be difficult to find alternative experts because they would also require waivers and creating “conflict-free advisory panels” would create a “substantial additional burden on the cost and timeliness of advisory committee operations.”  The report also found that FDA might “not always be able to match the specialized expertise of some existing advisory committees.”  Ultimately, FDA suggests that Lurie’s results provide “further evidence against the charge that the financial interests of voters taint committee votes” 


Advisory committees play an important role in FDA’s mandate to promote and protect the public health by allowing the agency to engage independent, technical experts from a variety of disciplines.  The committees are often comprised primarily of individuals working in academia; but also may have representation from private practices, professional and patient groups, regulated industry, and other government agencies. 

In circumstances where FDA staff seeks additional input because of such things as emerging research, the complexity of a new technology, or conflicting scientific data, FDA may turn to outside experts to provide important insights that would help inform our decision-making.  FDA often asks “these experts to advise them on a range of scientific questions – including whether the safety of a drug is properly characterized for patients or if a new device would provide meaningful benefit for patients.”  

While “FDA ultimately makes the final decision on all regulatory activities,” advisory committee experts, “which include patients, provide invaluable insights to the agency on how the broader public will approach a particular product or issue.”  

Before each meeting, FDA screens all advisory committee members who are special government employees or regular government employees for potential financial conflicts of interest.  FDA asks the members to report to the agency any past and all current involvement or relationships with the products, companies, and issues related to the meeting.  Members are required to report all current financial interests that could be affected by the outcome of the advisory committee proceedings and any FDA decision based on the committee’s recommendations.  For example, this might include stocks and investments and consulting arrangements.   In addition, they report involvements that might present an appearance of a conflict, to the best of their knowledge.  

Conflicts of Interest 

Section 1142 of FDASIA would amend Section 712 of the Federal Food, Drug and Cosmetic Act (FFDCA) by requiring the Secretary of Health and Human Services to 

  1. develop and implement strategies on effective outreach to potential members of advisory committees at universities, colleges, other academic research centers, professional and medical societies, and patient and consumer groups;
  2. seek input from professional medical and scientific societies to determine the most effective informational and recruitment activities;
  3. at least every 180 days, request referrals for potential members of advisory committees from a variety of stakeholders, including—
    1. product developers, patient groups, and disease advocacy organizations; and
    2. relevant (I) professional societies;II) medical societies; III) academic organizations; and (IV) governmental organizations; and
    3. take into account the levels of activity (including the numbers of annual meetings) and the numbers of vacancies of the advisory committees. 

The recruitment activities may include—A) advertising the process for becoming an advisory committee member at medical and scientific society conferences; (B) making widely available, including by using existing electronic communications channels, the contact information for the FDA point of contact regarding advisory committee nominations; and (C) developing a method through which an entity receiving funding from the National Institutes of Health, the Agency for Healthcare Research and Quality, the Centers for Disease Control and Prevention, or the Veterans Health Administration can identify a person whom FDA can contact regarding the nomination of individuals to serve on advisory committees.

As soon as practicable, but not later than 15 days prior to a meeting of an advisory committee, the Secretary must disclose on FDA’s website (A) the type, nature, and magnitude of the financial interests of the advisory committee member to which such determination or certification applies; and (B) the reasons of the Secretary for such determination or certification, including, as appropriate, the public health interest in having the expertise of the member with respect to the particular matter before the advisory committee. 

In the case of a financial interest that becomes known to the Secretary less than 30 days prior to a meeting of an advisory committee, the Secretary must disclose on FDA’s website, the information described in subparagraphs (A) and (B) of paragraph (1) as soon as practicable after the Secretary makes such determination or certification, but in no case later than the date of such meeting. 

Not later than February 1st of each year, the Secretary must submit to the Committee on Appropriations and the Committee on Health, Education, Labor, and Pensions (HELP) of the Senate, and the Committee on Appropriations and the Committee on Energy and Commerce of the House of Representatives, a report that describes—with respect to the fiscal year that ended on September 30 of the previous year,

  •  the number of persons nominated for participation at meetings for each advisory committee,
  • the number of persons so nominated, and willing to serve,
  • the number of vacancies on each advisory committee, and
  • the number of persons contacted for service as members on each advisory committee meeting for each advisory committee who did not participate because of the potential for such participation to constitute a disqualifying financial interest. 

Second, the report must describe the number of persons contacted for services as members for each advisory committee meeting for each advisory committee who did not participate because of reasons other than the potential for such participation to constitute a disqualifying financial interest.  Third, the report must describe the number of members attending meetings for each advisory committee.  Finally, the report must describe the aggregate number of disclosures and the percentage of individuals to whom such disclosures did not apply who served on such committee.  Not later than 30 days after submitting any report, the Secretary must make the available to the public. 

The Secretary must also review guidance of FDA with respect to advisory committees regarding disclosure of conflicts of interest and update such guidance as necessary to ensure that FDA receives appropriate access to needed scientific expertise.  The Secretary must issue guidance that describes how the Secretary reviews the financial interests and involvement of advisory committee members that are disclosed but that the Secretary determines not to meet the definition of a disqualifying interest under. 

Ultimately, this amendment is common sense and will likely be included in the final bill.  There is no reason why patients should have to wait longer for their medicines or companies face delays in approval because FDA is having trouble filling seats on panels.  This is especially true considering a JAMA study several years ago revealed that FDA advisory committees. 

The number of qualified individuals and experts who work with industry will always be high, and as a result, it will always be difficult for FDA to fill these spots.  Accordingly, this legislation will ensure that committees are full and that the proper firewalls are in place to protect the balance of such committees to ensure patients get lifesaving medicines as fast as possible.  If the legislation is passed, it will certainly be interesting to see whether there is an increase in approval time for certain drugs, but as the 2006 JAMA study demonstrated, increased conflicts are unlikely. 

June 25, 2012

Affordable Care Act Supreme Court Count Down – Regardless of the Outcome the Culture Has Changed

Medical Teams

By noon eastern this Thursday, June 28th, the Supreme Court of the United States will decide the constitutionality of the Patient Protection and Affordable Care Act (ACA).    This will not be the last time that this issue will be decided or challenged, as some type of health care reform is inevitable and Congress is committed to stop funding of a myriad of elements included in the law.   

The choices for the court are complex but also quite simple:  

  • Uphold whole the Law
  • Repeal the whole law
  • Repeal the individual mandate to buy insurance, or parts that are affected by the individual mandate
  • Repeal the Medicaid expansion 

Each of these options has its own sets of complexities.   

If the whole law is upheld, it will still be challenged by Congress, funding could be thwarted, and the law still changed dramatically.    Many states are nowhere near where they need to be on establishing the insurance exchanges.  Moreover, the costs associated with implementing this law are very expensive and will require significant participation and agreement from many parties. 

If the whole law is repealed then the issue of healthcare reform again comes to the front and center of the political debate.  Many of the programs could come to an abrupt halt or at least discontinued once the current funding runs out.  Both Romney and Obama will likely spend significant resources during the presidential campaign to defend the law or offer new ideas and solutions depending on the Court’s outcome.  While the economy and jobs will still likely be the key issue for voters, health care reform is extremely important for certain demographics such as the elderly, 18-26 year olds, women, and individuals with chronic and rare diseases.  

Repeal of only the individual mandate will cause all sorts of troubles for the law itself.  Many of the assumptions to pay for the popular elements of the ACA, such as insurance for dependent children until they are 26, guaranteed issue of insurance for those with preexisting conditions, and the elimination of coverage limits economics, were based on the mandate.   If the mandate is struck, it is uncertain how these pieces could remain as well.  Also, there will have to be some sort of special master assigned by the Court to determine what stays and what goes in the law as it relates to or depends on the individual mandate. 

Repealing Medicaid Expansion is the least likely scenario, but if the Court does, where will these 18 million patients fall into the system?   Will they now be forced to purchase insurance if the individual mandate is upheld?   These are still unanswered questions. 

Changes are Here to Stay 

Even if the ACA is repealed, there has been culture change in medicine and health care at the top, which is likely to stay within our health care system for years to come. 

Employers and payers, both private and public, are demanding that we find ways to reduce the overall cost of medicine.   Health care reform demands more coordinated and patient-centered care, with an emphasis on quality and accountability.  Greater scrutiny to payments will become more and more prevalent and will include the cost for all parts of the system.  New mechanisms to fight fraud, waste and abuse in federal health care programs likely will remain untouched by the Court’s decision, and the emphasis by the Department of Justice and the Inspector General of the Department of Health and Human Services on these areas will remain firm.  

As stakeholders in the health care system move forward, organizations will have to evaluate whether their services are providing value to patients.  In fact, some of the changes to the way we think about paying for healthcare, providing quality care, and coordination of care are upon us quicker than the private sector would have adopted them. 

Private and public payers are committed to prevent cost increases once and for all.  Hospitals, health care providers, and manufacturers are now focused on improving care at reduced costs.   The concept of coordinated care is now being driven by patient centered medical homes and accountable care organizations.   These models are here to stay and will continue to expand regardless of the outcome of the Supreme Court decision on the Affordable Care Act.  For example, “There are now something like 50-plus ACOs in Medicare alone,” said Dr. Mark McClellan, who ran Medicare under President George W. Bush.  “There are probably 250 nationwide — not just public but private.  No question the Medicare legislation on this issue has led to more adoption of these payment reforms.” 

Regardless of the outcome, the health care reform debate has changed the way we think of healthcare, and some of those changes are here to stay.


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