Life Science Compliance Update

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24 posts from December 2015

December 30, 2015

Top Policy and Medicine Stories for 2015


At the end of each year, we attempt to give you an overview of what happened in previous year and give some spin on predictions for the coming year, much like an end-of-the-year family newsletter. For those who are a bit more nostalgic, here is a link to our 2014 story.

Perhaps the End of Off Label Lawsuits?

With the Amarin Injunction, Caronia standing for two years without any pushback from the government, and the recent settlement with Pacira, there seems to be a trend of the FDA pulling away from off-label citations. Perhaps this trend is a signal of the end of cases against manufacturers for off label promotion. At least one Assistant United States Attorney this year stated that off-label cases were "dead." This end of off-label suits can be a good thing, but now we should be on the lookout for more enforcement around the areas of kickbacks, pricing, and manufacturing.

Open Payments Year 2– Where Did All the Research Money Go

In late June, we saw the release of the first full year of data for the Open Payments program. What we saw – unsurprisingly – was that a vast majority of the funds companies spend go to research. What did surprise us, however, was that when we looked at the year over year data (last five months of 2013 compared to the last five months of 2014), research spending dropped 30% from 2014-2015, yet the number of payments remained virtually the same.

Many Settlements, but Not Many Big Ones

2015 seems to have been the year of settlements with the DOJ; however, while settlements were numerous, there were few "big" settlements. Sanofi, Novartis, Millennium Health, Amgen, Daiichi Sankyo and Pacira were some of the bigger ones. Other important cases included Warner Chilcott, PharMerica, and Purdue Pharma.

While we cannot be positive where the DOJ and other federal agencies will focus their energy on in the coming year, many of 2015's settlements focused on off-label promotions and False Claims Act allegations. As previously mentioned, off-label promotion cases are not likely to play as prominent a role going forward, but kickbacks and pricing are likely to be next year's "star" cases.

ICD 10 Lite

October 1 saw the implementation of ICD 10, a change in the coding practices for all providers. However, for the first year, CMS is allowing for some leniency by permitting physicians to still obtain payment if they bill with the incorrect ICD-10 code, as long as they used a valid code from the right family. Even still, there is a fair amount of angst from practitioners once CMS goes to enforcing the full coding rules.

If you have the time, it is still worth a read through the ICD-10 codes, as you never know when you are going to run into a lamppost and will have to bill under W22.02XD. My favorite ICD-10 Code is z56.3, "Stressful work schedule." We recommend everyone reading this give this code to your physician next time you need to use some of your sick days for a quick vacation...

Biosimilars Lite

In March, the FDA approved the first biosimilar under the BCPIA. Before reality set in, this approval in March was treated with full pomp and circumstance. First, Novartis (Sandoz) had to overcome the Patent Dance, an arcane process set up in the law where companies have to give away their IP to the reference product company in this case Amgen. Novartis (Sandoz) opted not to go through this and received relief from a judge to proceed in marketing their version of Filgrastim, Zarxio, which was launched in September.

The FDA has still not approved a second biosimilar and several of the current submitted applications for biosimilar approval have been either withdrawn or delayed. The FDA has also issued a draft guidance on biosimilar products. Look for more action around biosimilars in 2016, but this has been a slow start to say the least.

Maintenance of Certification Lite

After just about every living internal medicine physician protested in one way or another, the American Board of Internal Medicine (ABIM) backed off of their Maintenance of Certification (MOC) program. In a letter written by the ABIM CEO, he acknowledged, "we got it wrong." ABIM is now coordinating with the Accreditation Council for Continuing Medical Education (ACCME) on a system to have MOC approved content without the laborious approval process.

Doc Fix Really Happened

After fifteen or more years of constant struggle, the United States House and Senate worked together to pass a permanent fix to the SGR formula, which reduced payments to physicians by Medicare up to 25%. Starting in 2015 physicians received a .05% increase in their billings per year for several years. While Congress was working together, they combined three largely hated programs: Meaningful Use, Value Based Modifier, and Physician Quality Reimbursement System (PQRS), into one Merit-Based Incentive Payment System (MIPS), which will also penalize physicians by up to 10% of their Medicare reimbursement. In other bipartisanship actions, in late December congress passed a two year moratorium on the Affordable Care Act's onerous device tax.

Open Payments and CME – CMS Comes Around

CMS revised their FAQ's and Law and Policy Page on CME payments and Open Payments for 2016 to provide that only payments directed at specific physicians should be reported in 2016.  

21st Century Cures Not Yet

In a rare moment of bipartisanship in the United States House of Representatives, the 21st Century Cures bill overwhelmingly passed the House including the Burgess/Defazio bill "Encouraging Continuing Medical Education" to exempt educational materials and CME from Open Payments Reporting. This section of 21st Century Cures was supported by over one hundred associations and CME providers. Today, it lingers in the United States Senate but there is still hope that the bill is taken up before the end of summer.

ACCME Changes the Guard

This year the ACCME saw after twenty years of Murray Kopelow, MD at the helm as CEO. In his footsteps, ACCME appointed a new CEO, Graham McMahon, MD, MMSc. Dr. Kopelow saw the organization through significant changes including the Bridge to Quality, FDA Mandated REMS, International coordination and revisions of the Standards for Commercial Support. During the end of Dr. Kopelow's tenure, the CME economy finally stabilized. Dr. McMahon has already proven to be a strong advocate for Continuing Medical Education; we look forward to his further actions in helping to facilitate both content changes and technological changes in the way CME is accredited and delivered.

FDA and CMS also Change Guard

This year also saw new Commissioners at the Food and Drug Administration and the Centers for Medicare and Medicaid Services. Dr. Robert Califf originally joined the FDA in early 2015 from a thirty year career with Duke Medical and was nominated by President Obama as FDA Commissioner in late 2015. 

CMS Administrator Marilyn Tavenner left the agency in early 2015, and was succeeded by Andy Slavitt, the current CMS Acting Administrator. Prior to this post, Mr. Slavitt was the Principal Deputy Administrator of CMS since joining CMS on July 8, 2014. 

State Disclosure: Some Wins and Some Losses

States once again are garnering attention in the area of payment transparency. Connecticut is to begin collecting payment information for advanced practice Nurse Practitioners on July 1, 2017. The reporting of Nurse Practitioners payments from manufacturers in Connecticut came about because of one NP who was indicted for receiving kickbacks; this action has led to the introduction of a bill by United States Senators Blumenthal of Connecticut and Grassley of Iowa to expand the Physician Payment Sunshine act to NP's and PA's .

West Virginia repealed their reporting pharmaceutical advertising spending in that state.

Medical Journals Acknowledge Conflicts of Interest

In a stunning reversal, the New England Journal of Medicine ran a series of articles on the benefits of working with industry. This was a very well thought out series that should not be forgotten. Not to be outdone, the Journal of the American Medical Association (JAMA) published an article on the confluence of interest. This much-welcomed change is a huge reversal from several years ago when all of us who were working with industry were treated as criminals by medical journals.

Drug Prices, Drug Prices

All eyes in the 2016 elections will be focused on prescription drug prices. The political firestorm started when it was announced that Gilead was charging $80,000 for a treatment regiment to cure Hepatitis C. This spring, we saw state legislators from around the country attempting to pass "Price Transparency Laws." While those efforts failed, this summer's introduction to Martin Shkreli, a hedge fund manager masquerading as a pharmaceutical executive buying up old generic drugs and raising prices, reignited the flame. Look for all the candidates in 2016 to include prescription drug prices as part of their lexicon, beating up on "those evil pharma companies." Expect articles and reports coming out - both in favor and against - controlling pricing and direct negotiations. With at least two ballot initiatives in 2016 on drug price negotiation (Ohio and California), these issues are sure to become front and center.

2016 and Beyond

Look for 2016 to be dominated by the election of our next president. With that in mind, the continued demonization and the sanctification of the Affordable Care Act is expected to be front and center. The Administration may do some last minute unilateral moves, but for the most part, the healthcare economy will be in a "watch and see" mode. It is expected that there will be less expansion and fewer tough decisions made until the markets are sure of the direction we are heading.

December 29, 2015

FDA DSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised)

The Drug Supply Chain Security Act (DSCSA) requires most of the entities along the drug supply chain--from manufacturers to wholesale distributors to dispensers (primarily pharmacies)--to comply with new requirements regarding product tracing. The intent of the law is to enhance the FDA's ability to protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful by improving detection and removal of potentially dangerous drugs from the drug supply chain to protect U.S. consumers. The development of the system will be phased in with new requirements over a 10-year period. The DSCSA mandates that the FDA develop standards, guidance documents, pilot programs, and conduct public meetings, in addition to other efforts, to support efficient and effective implementation.

Starting in 2015, manufacturers, wholesale distributors, dispensers, and repackagers are required to provide the subsequent purchaser of certain prescription drugs with product tracing information. The trading partners are to obtain product tracing information and maintain the applicable information for at least six years following the date of the transaction.

The FDA had previously issued a Compliance Policy on July 6, 2015, which stated that the FDA did not intend to take action until November 1, 2015, against dispensers that accepted ownership of product without receiving the product tracing information, or dispensers who did not capture and maintain the product tracing information as required by law. This essentially gave dispensers a "free pass" and a bit more time to get their procedures in compliance with the law.

With the November 1 deadline rapidly approaching, last week, the FDA issued a new guidance, DSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised). The new guidance "addresses the readiness of dispensers in the pharmaceutical distribution supply chain to comply with the provisions in section 582 of the Federal Food, Drug, and Cosmetic Act ... related to the exchange of transaction information, transaction history, and transaction statements (product tracing information)."

This most recent guidance announced that the FDA will extend the previously issued Compliance Policy grace period from November 1, 2015 to March 1, 2016 because some dispensers have expressed that they needed additional time to comply with the law. The FDA does not intend to take action against dispensers who, prior to March 1, 2016, accept ownership of a product without receiving the product tracing information, under section 582(d)(1)(A)(i) of the FD&C Act. This compliance policy, however, does not extend to the requirements under section 582(b)(1), (c)(1), and (e)(1) that other trading partners (manufacturers, wholesale distributors, and repackagers) provide product tracing information to dispensers.

This new compliance policy also does not extend to transactions in which dispensers must provide the subsequent owner with product tracing information, including transaction history, as required by section 582(d)(1)(A)(ii).

As a result of the FDA not taking action against most dispensers who accept ownership of a product without a transaction history, transaction information, and transaction statement, the FDA does not intend to take action against dispensers who do not maintain the product tracing information for a minimum of six years as required under section 582(d)(1)(A)(iii).

However, the grace period was extended by only four months and it is uncertain if the FDA will continue to extend the grace period. Therefore, if a dispenser has not received product tracing information prior to, or at the time it takes ownership of a product, the FDA recommends that the dispenser work with the previous owner to receive this information to ensure complete compliance with the law.

It is important to note that this guidance does not change the current requirements for manufacturers, wholesale distributors, nor repackagers. This guidance only affects dispensers who do not need to provide a subsequent owner with product tracing information. All other dispensers, or manufacturers, wholesale distributors, and repackagers are still required to obtain and maintain tracing information as required under the FD&C Act.

December 28, 2015

CMS and HHS-OIG Release Stark Law Practice Waivers for ACO’s

The Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG) published a final rule that sets forth waivers of fraud and abuse laws applicable to the Medicare Shared Savings Program (MSSP). With this final rule, there are five applicable waivers from the covered fraud and abuse laws for MSSP ACOs: (1) ACO Pre-Participation Waiver); (2) ACO Participation Waiver); (3) Shared Servicing Distribution Waiver; (4) Patient Incentive Waiver; and (5) Compliance with Physician Self-Referral Law Waiver. This comes as CMS introduced other changes to the Stark Law in the 2016 Medicare Physician Fee Schedule.

The Waivers

The waivers provide MSSP ACOs and their participants with broad protection against specified fraud and abuse laws if all the conditions to the waivers are met. The ACO Pre-Participation Waiver, like the other waivers, applies to the Stark Law and the Anti-Kickback Statute, and this in particular applies to start-up arrangements for ACOs that anticipate participating in the MSSP. There are limitations, including on the duration of the waiver and the parties covered. The Participation Waiver applies broadly to ACO arrangements during the term of the ACO's participation agreement under the MSSP and for a limited period of time afterward. The Shared Service Distribution Waiver applies to distributions and uses of shared savings payments earned under the MSSP.

The Patient Incentive Waiver of the civil monetary penalties law provisions addressing inducements to Medicare beneficiaries and the Anti-Kickback Statute for medically related incentives offered by the ACO or participating providers under the MSSP to Medicare beneficiaries to encourage preventative care and treatment programs. Additionally, the Compliance with Physician Self-Referral Law Waiver applies to the Anti-Kickback Statute for ACO arrangements that would implicate the Stark Law and satisfies the requirements of an existing exception.

Other Aspects of Final Rule

The final rule continues waivers originally proposed but eliminates the waiver of the Gainsharing Civil Monetary Penalty Law and makes it illegal for hospitals to knowingly make payments directly or indirectly, to induce a physician to reduce or limit medically necessary services to Medicare or state program beneficiaries under the physician's direct care. The final rule also clarifies "home health supplier" are not eligible for waiver protection under the Pre-Participation Waiver, which generally applies to start-up arrangements. In the final rule, CMS states that a home health supplier is an entity that is primarily engaged in furnishing home health care services.

The final rule states that the waivers adequately protect beneficiaries and Federal health care programs, but that CMS and the OIG will continue to monitor ACOs and may consider additional rulemaking if needed. Both CMS and OIG remain committed to the MSSP and accountability measures for the cost and quality of health care. However, it also shows an interest in flexibility within the regulatory schemes created by these programs to promote some arrangements and activities.


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