Life Science Compliance Update

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21 posts from November 2017

November 30, 2017

ACCME Introduces Guidance for CME Providers on MEDTECH, APACMed and China Codes

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Recently, MedTech Europe, the Advanced Medical Technology Association (AdvaMed), and the Asia Pacific Medical Technology Association (APACMed) introduced changes to their respective codes of conduct relating to professional development activities, including continuing medical education (CME). As such, the Accreditation Council for Continuing Medical Education (ACCME) has offered guidance for CME providers with respect to the changes.  

Starting in 2018, it is expected that the revised codes will require member manufacturers to discontinue making direct payments to clinicians to fund their attendance at professional development activities. However, the manufacturers may continue to support the engagement of physicians in professional development and CME activities through grants that are given to health systems and employers, and through grants to accredited CME providers.  

Following the longstanding procedure, organizations that are accredited in the ACCME system may accept financial support for their educational activities from commercial entities (I.e., device manufacturers) under the revised codes and maintain independence from industry by following ACCME's Standard 3: Appropriate Use of Commercial Support.  

Standard 3 can be met by an accredited organization following the below criteria when accepting funding from commercial interests: 

  • Make all decisions regarding the use of the support, independent of any company or companies; 
  • Have a signed written agreement with the company that includes the specific terms and conditions of the support; 
  • Use the funds only for the educational activity and to offset the cost of participation to the learners as a whole;  
  • Not pay for travel, lodging, honoraria, or personal expenses for any non-teacher or non-author participants of the supported educational activity; and 
  • Disclose to all learners the source (and if in-kind, the nature) of the commercial support.  

The revised codes and ACCME requirements can be aligned together by ensuring that funds received from companies by organizations accredited in the ACCME system are not used to pay for any travel, lodging, honoraria, or personal expenses for any non-teacher or non-author participants. This ensures the accredited organization does not act as an intermediary to establish a relationship between an ACCME-defined commercial interest and the learners in an accredited activity, as well as helping to ensure clinicians' prescribing or device usage patterns are not inappropriately influenced.  

If an international learner receives funding from his or her hospital or other commercial entity not affiliated with the ACCME-accredited organization to participate in the education, the accredited organization is not prohibited from accepting that learner's registration and participation in the education.  

In a press release announcing the changes and the ACCME guidance, ACCME applauded the change, "since they bring industry standards in closer alignment with those that have existed here in the United States since 1992, and in doing so support greater transparency and independence in global medical education. ACCME also noted that the standards and principles in the revised codes are aligned even with the ACCME's own Standards for Commercial Support, which have been internationally recognized as a benchmark for independent medical education and adopted by other healthcare continuing education accreditors throughout the world.  

November 29, 2017

Hospitals and Health Systems Sue CMS Over 340B Provisions

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Three hospital groups, along with three health systems, have filed suit against the Department of Health and Human Services (HHS) regarding the Centers for Medicare and Medicaid Services’ (CMS) recent regulation that made substantial cuts to hospitals for 340B drugs. The American Hospital Association, Association of American Medical Colleges, America’s Essential Hospitals, Eastern Maine Healthcare Systems, Henry Ford Health System, and Fletcher Hospital Inc. brought the suit, challenging the changes made to the 340B program that were included in the calendar year 2018 hospital outpatient system (OPPS) and ambulatory surgical center payment systems final rule that CMS released earlier this month. The 340B provisions of the final rule, including a 27 percent reduction in the reimbursement rate for hospitals for 340B drugs, are scheduled to take effect on January 1, 2018.

The lawsuit contends that while CMS has the statutory authority to “calculate” and “adjust” drug payment rates, it does not have statutory authority to reduce those rates by nearly 30 percent. The complaint also states that the 340B provisions of the final rule “undermine the 340B Program by depriving eligible hospitals of critical resources Congress intended to provide those hospitals through 340B discounts.” The groups also note that the cuts will undermine critical programs that provide health services to vulnerable and underserved populations.

On July 13, 2017, CMS issued its proposed rule on OPPS and Ambulatory Surgical Center payment systems for the Calendar Year 2018. In addition to updating the OPPS with 2018 rates, CMS proposed to change how Medicare pays certain hospitals for separately payable drugs purchased under the 340B Program. CMS justified this proposed change by stating that the new rate better recognizes “the significantly lower acquisition costs of such drugs incurred by a 340B hospital,” and that it “better represents the average acquisition cost for these drugs and biologicals.” On November 1, 2017, CMS issued the final version of the 340B Provisions of the OPPS rule, adopting the proposed rate of ASP minus 22.5% for drugs purchased under the 340B Program.

The plaintiffs believe that the 340B Provisions of the OPPS Rule also exceed the Secretary’s authority because they thoroughly undermine the 340B Program by depriving eligible hospitals of critical resources Congress intended to provide those hospitals through 340B discounts.

According to the complaint, the Plaintiffs have used the 340B Program to provide critical healthcare services to their communities, including to underserved patient populations in those communities. The Plaintiffs allege that they, and the populations they serve, would suffer significant and immediate harm from the negation of the cost-reimbursement differential through the 340B Provisions of the OPPS Rule.

The harm would come from the 340B provisions of the OPPS rule because it would deprive the hospitals “of millions of dollars of savings currently generated from the differential between Medicare reimbursements and 340B discounts.”

The hospitals have asked the court to either strike the changes in payment methodology for 340B drugs from the final rule and direct CMS to use the methodology used in calendar year 2017 or issue a preliminary injunction suspending the effective date of the changes until the lawsuit is concluded.

November 28, 2017

McCaskill Files Amendment to Eliminate Marketing Tax Deduction

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Senator Claire McCaskill of Missouri recently filed an amendment to the tax bill to eliminate the deduction for pharmaceutical marketing. While the likelihood of a Democrat-proposed amendment to a Republican-controlled bill passing is slim, it is still important to understand the action McCaskill has taken.

Simply because the bill is controlled by the Republicans, the Republican majority in the Senate is thin, meaning bipartisan support is likely needed in order for any tax reform to be done. It is likely that McCaskill introduced this amendment to raise the profile of the issue and to see if there is any bipartisan support for the issue. John McCain has shown interest in “punishing” the pharmaceutical industry for high prescription prices.

Neither the House nor Senate versions of the Tax Cut and Jobs Act of 2017 contain the oft-proposed reduction of the deductibility of all marketing costs for client expenses. This general provision circulated for months in the drafting stage and has been the subject of significant lobbying by the Coalition for Healthcare Communication and others. However, the pharma-only provision has been circulating for a while – since the debates on the Affordable Care Act.

The McCaskill provision is a double threat in the Senate because it offers a bipartisan way to ding the unpopular pharma industry and would raise money to help pay for other popular deductions. When last “scored” by budget officials, the pharma-only change raised an estimated $10 billion over 10 years. To raise that amount, the change would need to apply to all pharmaceutical marketing, including detailing and provision of samples.

McCaskill has been known to be less-than-friendly to the pharmaceutical industry through her ideas, talking points, and legislative proposals. This proposed amendment is the most recent action she has taken to show her disdain for industry.

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