Life Science Compliance Update

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33 posts from August 2016

August 31, 2016

FDA and CMS Call for Nationwide Changes

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Recently, CMS Administrator Andy Slavitt and FDA Commissioner Dr. Robert Califf wrote a joint letter to Gary Beatty, Chair of the Accredited Standards Committee X12 (ASC X12), asking that the organization add unique device identifiers (UDIs) for implantable medical devices on claims form. They argue that such a move would improve post-market surveillance and provide for better value-based reimbursement based on device performance.

Manufacturers and distributors are currently implementing UDIs and electronic health records (EHRs) are being tweaked to permit providers to record UDIs, but insurance claims forms have been the holdout. Some industry representatives believe that the changes to insurance claims forms would be costly because the technology to support the changes is not there.

The joint letter addresses the group that sets standards for sharing data gathered and used by the insurance – and other – industries. ASC X12 will release the next version of the insurance claims form for public comment in December 2016. That template is set to be released in 2021. The next update is not scheduled for another ten years.

Slavitt and Califf note that UDIs in claims forms have cost benefits because they would be able to help providers and payers calculate and compare total spending and outcomes and provide better data to track manufacturer rebates owed to the payer or provider. They acknowledge that including UDI will be a complex process and will require a change in workflow and systems for providers and billing companies, but that they are committed to a plan that minimizes impact on state Medicaid agencies, health plans, small physician practices and rural hospitals.

The day after the sending letter, Andy Slavitt tweeted, reiterating his stance:

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Health and Human Services (HHS) supports the idea “if sufficient funding and resources are provided to make the necessary Medicare claims processing system changes.”

Previously, CMS pushed back against adding UDIs to claims forms because of technical hurdles and high costs involving in overhauling the form. In Spring 2015, former Medicare Administrator Marilyn Tavenner noted that putting the UDI into electronic health records or device registries kept by companies should be sufficient to promote safety.

CMS’ Office of Inspector General stated that UDIs could save the agency money and offer valuable insights into population health. Other proponents of UDIs say they could more quickly identify dangerous devices, some of which (under the current system) have not been flagged until they hurt patients.

The letter also reflects the FDA’s current push to improve device evaluation and surveillance, as outlined in an editorial co-written by Dr. Califf.  Califf notes that a “key dilemma for device regulation is how to ensure timely access while also providing evidence to guide safe and appropriate use.” Presently, when a device receives approval for the United States market, “residual uncertainty about benefit and risk is typically addressed through postmarket evaluation,” as premarket studies do not typically reflect how a device will be used in practice.

However, Califf goes on to note, “current approaches to postmarket evaluation have limitations. Even though the FDA can require device makers to perform postmarket studies, patients have few incentives to enroll in a study once a device is marketed, and many FDA-mandated postmarket studies for devices have been delayed, scaled back, or never finished.”

Califf also seems frustrated that reporting of adverse events and device malfunctions depends on clinicians identifying and reporting a possible association, and therefore, it is likely that underreporting is common.

Califf calls for a “strategic approach to linking and using clinically based data sources, such as registries, electronic health records (EHRs), and claims data,” which could potentially “reduce the burdens of obtaining appropriate evidence across the life cycle of a device.” He believes that by “leveraging clinical data and applying advanced analytics and flexible regulatory approaches tailored to the unique data needs and innovation cycles of specific device types, a more comprehensive and accurate framework could be created for assessing the risks and benefits of devices.”

Misleading Survival Data Leads to FCA Liability in Recent Genentech Case

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The DOJ and FDA are starting to back off prosecuting cases involving just off-label claims, after making several unsuccessful attempts. However, the recent Genentech settlement may illuminate a path to success for the DOJ utilizing the False Claims Act. This article outlines the Genentech case, why it is different from other off-label cases, and what compliance officers can do to prevent their company from experiencing the same fate.

The Department of Justice (DOJ) recently announced that pharmaceutical companies Genentech and OSI Pharmaceuticals, LLC, will pay $67 million to resolve allegations that they made misleading statements about the effectiveness of the drug Tarceva to treat lung cancer. Genentech and OSI worked together to co- promote Tarceva.

 Read Full Article in the August 2016 Issue of Life Science Compliance Update

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August 30, 2016

Novartis Execs Indicted in South Korea

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Six executives from the South Korean unit of Novartis have been indicted by prosecutors for paying rebates to doctors in return for prescribing the company’s drugs to patients. The prosecutorial sweep also included twenty-eight other individuals, including fifteen doctors and six medical publishers.

Included in the count of six was Novartis Korea chief Moon Hak-sun for an allegedly illegal sales effort that saw the doctors at general hospitals receive 2.59 billion won (roughly $2.3 million) in payments in either cash or through arrangements with the medical publications via conference appearances and fees for articles. The prosecution claims that such activities were conducted from January 2011 through early 2016.

The South Korean health regulators and prosecutors have been working together for the past few years in a joint effort to prevent foreign and domestic firms alike from paying rebates on drug sales since passing a drug anti-rebate law in 2013.

This particular case started was launched by the Seoul Western District Prosecutors’ Office and was acknowledged by a local Novartis unit, issuing a statement saying it does not “tolerate misconduct and we are already implementing a remediation plan in Korea based on the findings from our own investigation.” Novartis notes that internal investigations have uncovered some unfair trade practices, but that such activities were not conducted with the knowledge of executives. Paul Barrett, an official from Novartis International, stated that the company “could provide no other details on the case before the trial proceedings.”

Novartis did not identify any of the other five executives charged and did not provide any contact information for Moon or his attorney. None of the other twenty-eight individuals have been arrested.

The case initially came to light in February 2016 with announcements that investigators were examining whether the company and its executives systematically encouraged the practices, a suggestion Novartis rejects.

Other Asia Trouble for Novartis

These indictments follow other troubles Novartis has faced in Asia this year. In March, the company agreed to pay $25 million to settle a Securities and Exchange Commission (SEC) investigation into bribery allegations in China that included travel and other inducements to boost prescriptions of its drugs in the country. Novartis improperly recorded the payments as travel and entertainment, conferences, lecture fees, marketing events, educational seminars, and medical studies.

The SEC Order specifically referenced, “[I]n 2011, two sales representatives submitted fake receipts for approximately $8,100 as part of their employee expense reimbursement requests, which were approved by a regional sales manager. The

proceeds were used to entertain and provide gifts to [health care professionals].”

The $25 million payout amounted to disgorgement in the amount of $21.5 million, $1.5 million in prejudgment interest, and a $2 million penalty.

The SEC settled the case through an internal administrative order and did not go to court.

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