Life Science Compliance Update

January 15, 2018

A Compliance New Year’s Resolution – Assess the Company’s Culture

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The topic of ‘company culture’ is certainly not new, but it continually emerges as a hot topic within regulatory circles. An organization’s culture is recognized to exert a powerful influence on how a company and its people conduct business. Although there is an inherent understanding that by continually enhancing company culture, ethical aspects of the organization will follow suit, why isn’t culture reviewed with the same rigor and principles that are required for compliance programs? This article will discuss the importance to evaluate an organization’s culture of compliance, and will introduce some considerations on how this can be done.

At the start of every New Year, we hear people discussing, exchanging, making and breaking New Year’s resolutions. Why should the company compliance program be any different? Frankly, we do not think it should. Therefore, for 2018, we propose that assessing the company’s culture top the compliance New Year’s resolution list.

Here are a couple of reasons why culture assessment should top the list.

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January 09, 2018

HHS OIG Releases Report on Potential Drug Misclassifications

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A report recently released by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) found that manufacturers may have misclassified as many as 885 drugs in the Medicaid rebate program in 2016. In September 2016, Congress asked OIG to evaluate the accuracy of manufacturer-reported drug classification data in the Medicaid rebate program, and the extent to which CMS oversees drug classification data submitted by manufacturers. In response to the congressional request, this study evaluates drug classification data submitted to the Medicaid rebate program and CMS’s policies and procedures to ensure appropriate oversight of this data. This report is the result of that request.

Although this number of misclassifications only accounts for three percent of the approximately 30,000 drugs within the program, ten misclassified drugs could have resulted in up to $1.3 billion lost in base and inflation-adjusted rebates for Medicaid over the last four years. The highest total reimbursement came in 2016 from these drugs. Congress had originally asked the OIG to look into drug misclassifications within the Medicaid rebate program due to outcry over rising EpiPen prices and the way Mylan had classified the drug and device as a generic under the program since 1997.

The Centers for Medicare & Medicaid Services (CMS) does not have the legal authority to require manufacturers to change their classification, and therefore must ask manufacturers to change their own data when they determine it may be incorrect, though CMS does work with the manufacturers to assist them in correcting the errors. Additionally, CMS does not track or maintain a central database of potential errors or their resolutions and investigators had no way to determine which drugs CMS had identified as potentially-misclassified or what steps were taken to address the potential errors in data. By classifying their drug as a generic, manufacturers are able to obtain a lower base rebate and are not subject to penalties if their drug’s price increases faster than inflation.

CMS routinely seeks to identify potential misclassifications and takes action when they are identified. To identify potential misclassifications, CMS compares Medicaid drug classifications reported by manufacturers to FDA data on a quarterly basis. If CMS identifies any errors in manufacturer-reported data, CMS stated that it typically contacts the manufacturer to request that the manufacturer correct the reported information. CMS may terminate a manufacturer from participation in the Medicaid rebate program for good cause. 8 If a manufacturer does not correct errors in reported data, CMS could potentially determine that the manufacturer is subject to termination for good cause.

A majority of the identified misclassifications were labeled as Generics under Medicaid, yet classified as brand-name drugs by the United States Food and Drug Administration (FDA). The report found that fifty-four manufacturers may have potential misclassifications, but it was four companies alone that were responsible for more than 50% of the errors in classification.

In conclusion, the report recommended that CMS (1) follow up with manufacturers associated with potentially-misclassified drugs identified in this report to determine whether current classifications are correct, (2) improve its Drug Data Reporting for Medicaid System to minimize inconsistent data submissions and track potential classification errors for follow up, and (3) pursue a means to compel manufacturers to correct inaccurate classification data reported to the Medicaid rebate program. CMS concurred with all three recommendations.

December 27, 2017

OPDP Letters Remain on Decline

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The Office of Prescription Drug Promotion (OPDP) is known for monitoring company communications about medical products and when it considers those communications to be outside of regulatory parameters, issuing a letter warning the company of such promotion. For relatively minor violations, OPDP issues an Untitled Letter; for more serious violations, OPDP will issue a Warning Letter. 

As can be seen in the below graph, in the late 1990s, OPDP was issuing over 100 Warning and/or Untitled Letters annually. Since that time, there have been peaks and valleys when it comes to the number of Letters issued. Nothing compares to the recent years of 2014 through present, though. In 2014, OPDP issued ten Letters; in 2015, nine Letters; and in 2016, eleven Letters.

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For 2017, though, there have only been three letters issued: two Warning Letters and one Untitled Letter. Interestingly, last year followed a similar path up to this point. Very few Letters were issued through October 2016, and then during the last two months of the year, issued more Letters than it had all year. Therefore, it is hard to predict that we will see another year of single-digit Letters issued by OPDP, but it may be possible.

This seeming lack of enforcement from OPDP is important to industry because the letters provide insight into the way the Food and Drug Administration (FDA) is currently thinking about developments in communication. This helps to fill in the gaps between guidances and can help when today’s communications environment is fast pace and quickly-changing.

The trickle of visible enforcement raises questions as to why there has there been a drop in enforcement activity and whether the drop represents a shift in emphasis or new policy? 

This year, Amherst Pharmaceuticals, LLC and Magna Pharmaceuticals, Inc., received a Warning Letter on November 14, 2017, regarding Zolpimist and the way it was advertised online and at an exhibit booth. OPDP took issue with false or misleading claims about the risks associated with, and the efficacy of, the drug. OPDP also noted that the materials were not submitted at either the time of initial dissemination or publication as is required under the Code of Federal Regulations.

Cipher Pharmaceuticals, Inc., received a Warning Letter for CONZIP in August 2017 for its professional detail aid being “false or misleading because it omits important risk information associated with the use of ConZip” within the FD&C Act.

Orexigen Therapeutics, Inc., received 2017s only Untitled Letter for CONTRAVE in May 2017 for a television ad that made false or misleading representations about the risks and side effects associated with Contrave.

It is possible that this drop in Letters shows that the FDA is shifting its focus in enforcement to areas where there is greater risk, as there have been several Letters issued about violations that leave some wondering what the element of risk involved is.

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