Policy and Medicine

State of the Union, Bio Pharmaceutical Jobs and Innovation

Tonight, President Obama is set to make his State of the Union Address.  Many have speculated that with the United States Supreme Court set to determine the constitutionality of the Patient Protection and Affordable Care Act (PPACA) in late March, Obama should use his Address to defend health care reform and to highlight some of the benefits that have already been achieved.  Consequently, a recent article from the National Journal discussed a few of the issues dealing with health care reform that President Obama should address. 

First, Doug Peddicord Executive Director of the Association of Clinical Research Organizations, noted that the President “should absolutely defend this accomplishment (health care reform) in his speech and use this chance to make a pitch in front of the SCOTUS.”  He said that the President should remind people that because of PPACA, “no one will be rejected for health insurance, even if they have, what the insurance industry liked to call ‘pre-existing conditions.’”   

He noted how health care reform is “making healthcare more accessible and affordable through insurance exchanges and accountable care organizations (ACOs) that ensure physicians are working together to provide patients quality care and not worrying about how many tests they should run.”  Peddicord also noted how PPACA closes the so-called ‘donut hole’ under Medicare Part D to lower the cost of prescriptions for seniors. 

Despite these important initiatives, Peddicord recognized that the ACA is not perfect.  Specfically, he asserted that, he would “work with anyone, Republican or Democrat, to make sure this landmark legislation doesn’t stifle job creation and innovation.”  In particular, he noted that Section 6002, better known as the Physician Payment Sunshine Act, deserves specific scrutiny.” 

He noted how the Sunshine Act was “not part of my original health care reform proposal and, ironically, it was slipped into the health reform bill without full and thoughtful consideration.”  He quoted the proposed regulations that were issued a few weeks ago to demonstrate the ridiculousness of the legislation:

“For example, if once during the calendar year, a sales representative from an applicable manufacturer brings $25 worth of bagels and coffee to a solo physician's office for a morning meeting, regardless of the number of individuals who partake, the per covered recipient cost is $25. Since this falls above the $10 minimum threshold for reporting a payment or other transfer of value…this meal must be reported. However, if the practice group includes five physicians, then the per-covered recipient cost is $5 (regardless of whether all five physicians actually consumed any of the food provided), so the payment would not need to be reported.” 

Based on this provision and his other analysis, Peddicord correctly recognized that the Sunshine Act “does nothing to increase access to care or improve outcomes – two things that inspired me to work so hard on health reform. Rather, it’s indicative of the government overreach that has left so many Americans frustrated. We should not – and, if I have anything to do with it, we will not – have government bureaucrats counting bagels!” 

In addition to Peddicord’s comments, John Castellani President and CEO of the Pharmaceutical Researchers and Manucatrers of America (PhRMA) offered his advice about what President Obama should speak about in his State of the Union Speech.  He maintained that Obama should talk about jobs and the economy. 

Castellani noted that, “the biopharmaceutical sector is particularly interested” in what Obama will propose to create more jobs and fix the economy, since innovative industries such as the life sciences industry are job-creators and tremendous contributors to our nation’s economic growth. 

He noted how, “innovation and economic growth go hand-in-hand.”  For this reason, it is his hope that the President also spends significant time talking about the value of innovation.  The PhRMA President said the companies “are very interested in hearing specific policy proposals on how we can ensure that America remains the world-leader in innovation, particularly medical innovation.”  

He asserted that, President Obama should use this “opportunity to propose ideas that will foster medical innovation in the long-term rather than focusing on short-term policies that do not encourage, and in some cases may detract from, future medical progress.”  Additionally, he maintained that , “at a time when our economy is still fragile, it is essential that government and industry work together to help create jobs and improve the economic outlook – and a sound innovation agenda is critical to meet these important goals.” 

Accordingly, he laid out “Four inter-connected policy pillars that he believes are important to sustain the economic and scientific eco-system, advance medical innovation and protect U.S.-based biopharmaceutical jobs are the following: 

1. A regulatory framework to spur innovation – meaning a predictable, consistent and robust regulatory system supported by the best, experienced regulators using the latest, best science;
2. A thriving public/private scientific ecosystem – meaning better collaboration and cooperation;
3. A business environment that embraces biomedical progress – meaning an understanding that the science, while potentially amazing, is difficult, the investment costs high and the rewards are uncertain;
4. A healthcare system that better recognizes the value of medicines – meaning innovative medicines contribute both to improving patient health and can help control short- and long-term healthcare costs. 

Ultimately, as we all watch the State of the Union speech tonight, hundreds of millions of Americans will begin to see and wonder how the President, almost two years later, will defend his health care reform bill and how he will ensure that Americans realize the goals and promises the landmark legislation hoped to achieve. 

IRS Releases Proposed ACA Fee Structure for Pharmaceutical Medical Device Manufactures

 
With implementation of the new device tax two years away, the Internal Revenue Service (IRS) is trying to determine which devices are exempt from the 2.3 percent excise tax. The tax, part of the Patient Protection and Affordable Care Act, will apply to most devices sold after Dec. 31, 2012. However, the statute exempts some devices, such as “eyeglasses, contact lenses, hearing aids, or ‘any other medical device determined by the Treasury Secretary to be of a type which is generally purchased by the general public at retail for individual use.”

Last month, the IRS provided guidance on the annual fee imposed on covered entities engaged in the business of manufacturing or importing branded prescription drugs. The guidance is divided into three parts:

-       Part I describes a proposed methodology for calculating the tax

-       Part II describes how the IRS will use this proposed methodology to provide each covered entity with a preliminary 2011 fee calculation. The IRS and Treasury Department intend that a covered entity’s preliminary fee calculation for 2011 will serve as a basis for comments by the covered entity on the proposed methodology. 

-       Part III solicits public comments on all aspects of the notice.

Proposed Methodology for Calculating the Fee     

An applicable fee amount for each year, beginning with 2011, will be allocated among covered entities with aggregate branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs, including Medicare and Medicaid (CMS), Department of Defense (DOD), and Veterans Affairs (VA) (collectively, the Agencies).  

The applicable fee amount is allocated among the covered entities using a formula based on sales to the Programs. The sales data is to be provided by the Agencies. There are two years relevant to the calculation of the fee – the calendar year in which the fee must be paid (fee year) and the calendar year of the branded prescription drug sales, which will be used to determine the amount of the fee (sales year). 

The IRS and Treasury Department are proposing to use the second calendar year preceding the fee year as the sales year for purposes of calculating the section

fee. The annual fee for each covered entity is calculated by determining the ratio of (i) the covered entity’s branded prescription drug sales taken into account during the preceding calendar year to (ii) the aggregate branded prescription drug sales taken into account for all covered entities during the same year, and applying this ratio to the applicable amount as specified in the statute. 

“Sales taken into account” means sales exclusive of certain orphan drugs. The calculation of the fee in any given year is based on branded prescription drug sales in the immediately preceding calendar year.

The IRS and Treasury Department have determined that CMS is not expected to have complete data on branded prescription drug sales for the calendar year immediately preceding the fee year within the time frame necessary to administer the fee. Accordingly, the IRS and Treasury Department will calculate the fee based on the branded prescription drug sales data provided by the Agencies for the second calendar year preceding the fee year.  

Fee calculation

After receiving data from the Agencies and information from the covered entities, the IRS will calculate each covered entity’s branded prescription drug sales for each

Program. A covered entity’s branded prescription drug sales taken into account the sum of the covered entity’s branded prescription drug sales for all Programs

reduced by the appropriate percentages. The IRS will then calculate the aggregate branded prescription drug sales of all covered entities, which is the sum of all the covered entities branded prescription drug sales. 

To determine each covered entity’s fee, the IRS will divide each covered entity’s

branded prescription drug sales by the aggregate branded prescription drug sales of all covered entities and multiply that fraction by the applicable amount for the appropriate year.

The IRS will use this proposed methodology to provide each covered entity with a preliminary 2011 fee calculation.  The notification of the preliminary fee calculation will include the following: (1) the covered entity’s fee; (2) the covered entity’s branded prescription drug sales for each Program; (3) the covered entity’s branded prescription drug sales taken into account after application of section 9008(a)(2); and (4) the aggregate branded prescription drug sales taken into account for all covered entities.

To facilitate the preliminary 2011 fee calculation, companies must submit information described in the guidance to the IRS by January 20, 2011. The IRS will use the data and the sales data provided by the Agencies to calculate the preliminary fee and will send to each covered entity notification of its preliminary fee calculation by May 2, 2011. The IRS will send the final fee calculation to each covered entity by August 15, 2011.

The IRS and Treasury Department request comments on the procedures described above. The deadline for submission of comments is June 2, 2011. 

Written comments should be submitted to: Internal Revenue Service, CC:PA:LPD:PR(Notice 2010-71), Room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. 

Comments may be transmitted electronically via the following e-mail address:

Notice.Comments@irscounsel.treas.gov. Include “Notice 2010-71” in the subject line of any electronic communications.  

President to Improve Regulation and Regulatory Review to Spark Innovation

 
In the State of the Union along with a commentary published in the Wall Street Journal last week, President Obama laid out his proposal “Toward a 21st-Century Regulatory System.” He explained that although America’s free market has been the source of “dazzling ideas and path-breaking products” for two centuries, sometimes the rules that America has in place to preserve the freedom of commerce and to protect the public have “gotten out of balance, placing unreasonable burdens on business.”

As a result, President Obama asserted that these “burdens have stifled innovation and have had a chilling effect on growth and jobs.” To address the weaknesses and problems associated with the federal regulatory system, President Obama last week signed an Executive Order entitled “Improving Regulation and Regulatory Review.”

The order requires that federal agencies ensure that regulations protect public safety, health, and environment while promoting economic growth. The Executive Order also requires a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive.

President Obama explained that the purpose of the executive order is to create a regulatory system that seeks more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs, both quantitative and qualitative. This means writing rules with more input from experts, businesses, and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. And it means making sure the government does more of its work online to ensure that regulations are accessible, consistent, written in plain language, and easy to understand, just like companies are doing.

Executive Order

Specifically, the Order requires that each agency must, among other things: 

·         Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs;

·         Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations;

·         Select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

·         To the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and

·         Identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information for the public to choose from

In addition, the Executive Order requires that agencies adopt regulations through a process that involves public participation. This means that regulations must be based on the open exchange of information and perspectives among State, local, and tribal officials, experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole.

To promote that open exchange, the order requires that each agency afford the public a meaningful opportunity to comment through the Internet on any proposed regulation, with a comment period that should generally be at least 60 days. Each agency must also provide, for both proposed and final rules, timely online access to the rulemaking docket on regulations.gov, including relevant scientific and technical findings, in an open format that can be easily searched and downloaded. For proposed rules, this will include an opportunity for public comment on all pertinent parts of the rulemaking docket, including relevant scientific and technical findings.

Before issuing a notice of proposed rulemaking, each agency must seek the views of those who are likely to be affected, including those who are likely to benefit from and those who are potentially subject to such rulemaking.

With respect to sectors and industries facing a significant number of regulatory requirements, the order requires greater coordination across agencies by developing regulatory actions that promote coordination, simplification, innovation and harmonization. 

In addition, the order requires that agencies identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. These approaches include warnings, appropriate default rules, and disclosure requirements as well as provision of information to the public in a form that is clear and intelligible. 

To facilitate the periodic review of existing significant regulations, agencies must consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned. Such retrospective analyses, including supporting data, will be released online whenever possible.

Consequently, the order requires that within 120 days, agencies must develop and submit to the Office of Information and Regulatory Affairs a preliminary plan that explains how the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives.

Discussion

The Executive Order signed by President Obama last week continues to demonstrate his administrations concern about the slowing pace of technology, business, jobs and the economy. In fact, the Administration is so concerned “about the slowing pace of new drugs coming out of the pharmaceutical industry that officials decided to start a billion-dollar government drug development center to help create medicines.”

As the New York Times reported last week, the new center, to be called the National Center for Advancing Translational Sciences, “will do as much research as it needs to do so that it can attract drug company investment.” This center could hold significant promise for pharmaceutical companies who have been unable to find enough new drugs that they are “paring back research.”

For example, “promising discoveries in illnesses like depression and Parkinson’s that once would have led to clinical trials are instead going unexplored because companies have neither the will nor the resources to undertake the effort.” Moreover, the drug industry’s research productivity has been declining for 15 years, “and it certainly doesn’t show any signs of turning upward,” said Dr. Francis S. Collins, Director of the National Institutes of Health (NIH).

The new drug center’s funding will initially be small, which could pose serious questions given that the costs of bringing a single drug to market can exceed $1 billion. Under the current plan, “more than $700 million in research projects already under way at various institutes and centers would be brought together at the new center.” In addition, “hope that the prospect of finding new drugs will lure Congress into increasing the center’s financing well beyond $1 billion.”

However, as Republicans plan to cut out provisions of the Affordable Care Act (ACA) or at least strip many of the legislations funding provisions, the likelihood of increased funding is minimal. Aware of this, Dr. Collins “has hinted that he might take money from other parts of the institute to fund the new center.”

While NIH typically has found chemicals that affect enzymes and might lead to the development of a drug or a cure, the Times reports that in some cases, the center may actually perform animal tests to ensure that the chemicals are safe and even start human trials to see if they work. According to Dr. Collins, the hope is that “any project that reaches the point of commercial appeal would be moved out of the academic support line and into the private sector.”

Although the success of the center remains uncertain, Department of Health and Human Services (HHS) Secretary, Kathleen Sebelius, sent a letter to Congress on Jan. 14 outlining the plan to open the new drug center by October. For the plan to go into effect by October, the administration “plans to downgrade the National Center for Research Resources, in part by giving some of its functions to the new drug center.”

Some are questioning the ability of the federal government to create drugs, something it has never done in the past. Others are concerned with wasting money on trying to find drugs for diseases that the medical field does not fully understand presently (i.e. mental disorders). Nevertheless, proponents of the center say it “could inspire universities to train a new generation of investigators who could straddle the divide between academia and industry. “

Conclusion

As President Obama correctly recognized, “vibrant entrepreneurialism is the key to America’s continued global leadership and the success of our people.” While the public’s input will certainly help shape the process—as it recently did with the Food and Drug Administration’s 510(k) recommendations—there is no mention about the amount of resources, staff and funding that will be necessary to achieve such a broad change to the regulatory system. As agencies begin to prepare their preliminary plans, it will be critical that the public and stakeholders, especially in healthcare, emphasize the importance of creating a regulatory system that truly promotes efficiency, collaboration, and innovation.

Over the past several months, numerous reports have indicated that America is losing its technological and scientific edge on other developing economies largely because of our unpredictable and arbitrary regulatory system. If America is to continue its lead in the world in medicine and science, our federal agencies must work with stakeholders in the health care industry to insure a well-balanced approach to collaboration and innovation. 

Just as President Obama stated, America can no longer survive in a regulatory system that has created unreasonable burdens that have stifled innovation and hurt jobs.

National Prevention, Health Promotion and Public Health Council: Draft Recommendations Call for Comment

 
On June 10, 2010, the President signed an Executive Order creating the National Prevention, Health Promotion, and Public Health Council. On June 25, 2010, the Council ratified its first status report during a teleconference, and submitted its Annual Status Report  on July 1, 2010. 

An important component of the Affordable Care Act, the National Prevention, Health Promotion, and Public Health Council (National Prevention Council) brings together seventeen federal departments and agencies to plan and coordinate prevention efforts across the government and the nation through the development of the National Prevention and Health Promotion Strategy (National Prevention Strategy). 

Additionally, to provide guidance to the National Prevention Council, the President will establish an Advisory Group on prevention, health promotion, and integrative and public health composed of no more than 25 non-federal members. It is anticipated that the Advisory Group will be announced early in 2011. 

Members of the National Prevention Council include Department of Health and Human Services Secretary Kathleen Sebelius, Department of Veterans Affairs Secretary Eric Shinseki, and a number of other Secretaries and directors. The National Prevention Council, chaired by Surgeon General Regina Benjamin, is charged with providing coordination and leadership at the federal level and among all executive departments and agencies with respect to prevention, wellness and health promotion practices.

The Council is also responsible for making recommendations—with continual public input—to the President and the Congress concerning the nation’s most pressing health issues and on changes to federal policy that will promote health and achieve public health goals, including reducing tobacco use, sedentary behavior, and poor nutrition

Consequently, with input from the public and interested stakeholders, the National Prevention Council is charged with developing a National Prevention and Health Promotion Strategy (National Prevention Strategy) by March 23, 2011. The National Prevention Strategy seeks to shift the nation from a focus on sickness and disease to one based on wellness and prevention. It will present a vision, goals, recommendations and action items that public, private, nonprofit organizations and individuals can take to reduce preventable death, disease and disability in the United States.

The National Prevention Strategy brings together the many sectors that affect the health of Americans, including transportation, education, housing, and health. Implementation of the National Prevention Strategy must include the participation, coordination, leadership, and commitment of all parts of society, including public and private partners, in order to successfully improve the health of Americans.

A Draft Framework to guide the development of the National Prevention Strategy was made available for public comment from October 1 – December 5, 2010. Guided by this public input, the National Prevention Council has now developed a preliminary set of Draft Recommendations- overarching priorities with a focus on communities - that will greatly improve health and wellness in the United States. They have been posted online for public comment. Comments will be accepted until January 13, 2011.

The final National Prevention Strategy will also include specific actions that the federal government and others in the public, private, and non-profit sectors can take to achieve these priority Recommendations.  

The Recommendations and Action Items in the final National Prevention Strategy will be based on evidence-based interventions. It will also reflect the importance of tracking progress to ensure accountability. As National Prevention Council members and Designees receive public input, they will continue to refine the content and plan to release the final National Prevention Strategy in 2011.

National Prevention Strategy

Currently, chronic diseases and conditions account for at least 7 of every 10 deaths in the United States and for more than 75% percent of medical care expenditures. Many of these conditions are preventable. The National Prevention Strategy is designed to bring a focus on the prevention of disease and promotion of wellness to the forefront of efforts that will help lead to longer, healthier, and more productive lives for all Americans.

The National Prevention Strategy will also be aligned with the national health objectives set forth in Healthy People 2020, the First Lady’s Let’s Move! Campaign to combat the epidemic of childhood obesity, the National HIV/AIDS Strategy, the Department of Transportation’s Sustainable Communities, the Office of the National Drug Control Policy’s 2010 National Drug Control Strategy, and many others.

Additionally, four cross-cutting strategic directions, each containing specific recommendations, form the foundation for the National Prevention Strategy.

Healthy Physical, Social and Economic Environments: Create healthy physical, social and economic environments that encompass safe and healthy neighborhoods, worksites, schools, homes and public and green space. These environments should address physical (air, water, land, buildings and other structures) and economic (availably, affordability, fair market, opportunity) factors and social norms that promote health.

Eliminate Health Disparities: Eliminate health disparities experienced by populations (e.g., based on  race/ethnicity, gender, disability status, sexual orientation, socio-economic status, geography) in order to achieve  health equity. These disparities are exacerbated by poverty and inequities in employment, education, housing and others.

Prevention and Public Health Capacity: Build prevention capacity that supports state, Tribal, local, and Territorial efforts to promote health, prevent disability and disease and ensure preparedness for natural and man-made threats and emergencies.

Quality Clinical Preventive Services: Increase use of the most effective and highest impact/priority  evidence-based clinical preventive services and medications, such as the preventive use of aspirin; screening and  treatment for high blood pressure and cholesterol; cancer screening; screening and treatment for HIV, chronic viral  hepatitis, and STDs; and immunizations, among others.

These strategic directions are important in their own right and are applicable to each of the six targeted strategic directions, which include recommendations for:

• Tobacco-free living
• Reducing alcohol and drug abuse
• Healthy eating
• Active Living
• Injury-free living, and
• Mental and emotional wellbeing

Public comments on the Draft Recommendations can be submitted here until January 13, 2011.

 

FTC and Congress on Do Not Track Internet Proposed Rules

 

Last month, the outgoing House Committee on Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection held a hearing entitled “Do-Not-Track Legislation:  Is Now the Right Time?” According to a briefing memo released by the Subcommittee, the purpose of the hearing was to examine the feasibility of establishing a mechanism that provides Internet users a simple and universal method to opt-out from having their online activity tracked by data-gathering firms (a.k.a. a “Do Not Track List”). 

Background

When individuals use the internet, details about their lives including age, gender, race zip code, income, marital status, health concerns, recent purchases, and other details that can be collected and packaged into profiles. As a result, a data-gathering industry with an increasing hunger for this information has grown, and over the past several years has sold this information so that companies can target consumers based on their tastes, needs, and even perceived desirability. What policymakers and some consumers are concerned about is that “many Americans don’t know that the details of their online lives are being gobbled up and used in this way, much less how to stop it in the event that such collection offends their expectations of privacy.”

Information about Internet users’ activity is instantaneously sold each day for the purpose of targeting ads to particular consumers (so-called “behaviorally targeted ads”). Spending on behaviorally targeted ads reached $925 million in 2009, and that figure is expected to reach $1.125 billion by the end of 2010. By 2014, spending on behaviorally targeted ads is projected to more than double to $2.6 billion.

In addition, those in the business of selling behaviorally targeted ads can generally command more for those ads than non-targeted ads. In 2009, advertising networks on average charged $1.98 per thousand displays of an untargeted ad, while they charged on average $4.12 per thousand displays of a behaviorally targeted ad.

However, the revenue that is generated by this type of advertising helps finance the free content that many Internet users have come to expect. In fact, “more than half of ad network revenue goes to publishers who host the [targeted] ads.” As a result, industry proponents have argued that regulation of this industry to protect consumers’ privacy could reduce the availability of free content on the Internet and the proliferation of more unwanted and irrelevant ads.

Current Laws and Regulations

No federal law specifically governs the online advertising industry or the practice of tracking internet consumers to deliver behaviorally target ads. Nor are there any federal laws that comprehensively govern the collection, use, and dissemination of consumer information across the board.  

Specific federal laws, however, do address certain categories of personal information or specific entities. For example, the Fair Credit Reporting Act (FCRA) governs consumer report information. Title V of the Gramm-Leach-Bliley Act addresses the sharing of certain nonpublic personally identifiable information by financial institutions, and rules promulgated pursuant to the Health Insurance Portability and Accountability Act apply to the privacy of medical records.

In addition, the FTC may bring actions for unfair or deceptive acts or practices under the FTC Act, which includes the authority to bring actions related to a company’s information collection and use.

Industry Regulations

While no specific law governs online advertising or internet consumer tracking, last October a coalition of media and marketing trade associations launched a self-regulatory program for the behavioral advertising industry. The voluntary initiative began by encouraging companies that track Internet users to display on or near behaviorally targeted ads a clickable “Advertising Option Icon.” Once fully implemented, the  icon will signal to Internet users that an ad was served based online tracking and provide an  avenue for consumers to get more information about the company’s data practices and to opt-out  from receiving behaviorally targeted ads served by some or all participating companies.

The program is based on the seven Self-Regulatory Principles for Online Behavioral Advertising that correspond with tenets proposed by the FTC in February 2009, and also address public education and industry accountability issues raised by the Commission.

Do Not Track

Despite the advertising industry’s attempt to regulate online advertising and tracking noted above, the FTC last month published a preliminary draft for protecting consumer privacy. According to their press release, the report proposes a framework to balance the privacy interests of consumers with innovation that relies on consumer information to develop beneficial new products and services. The proposed report also suggests implementation of a “Do Not Track” mechanism – likely a persistent setting on consumers’ browsers – so consumers can choose whether to allow the collection of data regarding their online searching and browsing activities. Among specific suggestions, the FTC staff recommended that:

Companies adopt a “privacy by design” approach by building privacy protections into their everyday business practice, including reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy.

Consumers should be presented with simplified choice about collection and sharing of their data at the time and in the context in which they are making decisions. These would include a “Do Not Track” option.

Marketers should adopt measures to improve transparency of information practices, including consideration of standardized notices that allow the public to compare information practices of competing companies.

Consumers should have “reasonable access” to the data that companies maintain about them, particularly for non-consumer entities such as data brokers.

Stakeholders should undertake a broad effort to educate consumers about commercial data practices and the choices available to them.

FTC Chairman John Leibowitz noted in his prepared comments that the report “lays a foundation for industry innovation – while protecting consumers and their privacy.” In his statement, Mr. Leibowtiz asserted that “despite some good actors, self-regulation of privacy has not worked adequately and is not working adequately for Americans consumers.” As a result, he acknowledged that the FTC “will take action against companies that cross the line with consumer data and violate consumers’ privacy.” Additionally, his comments echoed the recommendations noted above. Specifically, Mr. Leibowitz asserted that companies should collect and retain data only if they have a legitimate business need.

He also specifically acknowledged the need for a Do Not Track mechanism with respect to third-party ads. For the FTC Chairman, the most “practical method would likely involve the placement of a persistent setting on the consumer’s browser, signaling the consumer’s choices about whether or not to be tracked.” He acknowledged that “Microsoft, Google, Mozilla, Apple and a coalition of other companies have already experimented with this method, and such an option would “serve as an easy, one-stop shop for consumers to express their choices, rather than on a company-by-company or industry-by-industry basis.”

In response to FTC’s preliminary report, Nancy Hill, President-CEO of the American Association of Advertising Agencies (4A’s) noted in a press release that there is “little understanding in the report of how complex a task it is to point such a vast, diverse and rapidly changing ecosystem in the same self-regulatory direction.” Ms. Hill pointed to the Self-Regulatory Program for Online Behavioral Advertising, devised by industry, through two years of hard work, and noted that it is just now becoming operational. She asserted that the “new system will provide a very strong case for self-regulation and consumer protection as the roll-out becomes 100% functional.”

Ms. Hill’s concerns were echoed by Dick O’Brien, head of the 4A’s Washington office, who noted that “At its worst, the FTC report could be read as an effort by regulators to push Congress into enacting stringent new laws that would restrict marketers’ interaction with consumers.” The press release acknowledged that the will provide reaction to the report to the FTC during the “comment period” which ends on January 31.

4A’s and other marketing groups are preparing responses to the FTC report, which can be submitted here and are due January 31, 2011. While O’Brien agreed that “online marketing must provide transparent, simple and consumer-friendly options,” he noted that groups “will be meeting with Members of Congress to let them know what the industry is doing already and what the new industry efforts will mean to consumers.”

Subcommittee Hearing

The growing awareness about the pervasiveness and invasiveness of online tracking noted above has sparked renewed interest in creating a Do Not Track mechanism by privacy advocates. In light of all the recent developments and changes, outgoing Subcommittee Chairman Bobby Rush (D-IL) discussed at last month’s hearing HR 5777, the Best Practices Act, which he introduced back in July of 2010. The purpose of the bill is to foster transparency about the commercial use of personal information and provide consumers with choice about the collection, use, and disclosure of such information. The bill applies to both the online and offline contexts.

Although the bill outlines specific protections for consumers and gives the FTC certain responsibilities for reporting and enforcement, HR 5777 does not include a provision to establish a mechanism that provides consumers a simple and universal method to opt-out from having their online activity collected and used by the tracking industry. Privacy advocates first proposed a version of such a “Do Not Track List” in 2007.

Congressman Rush noted in his opening statement that through such a mechanism, consumers could advise would-be trackers unambiguously and persistently that they do not wish to be followed by digital snoopers and spies across web sites and their various fixed and mobile computing devices. Mr. Rush made comparisons of the Do-Not-Track Legislation to the Do-Not-Call Registry that the FTC had successfully implemented several years ago. Accordingly, Mr. Rush then went on to hear testimony from:

Daniel J. Weitzner, Associate Administrator for the Office of Policy Analysis and Development, Department of Commerce, National Telecommunications and Information Administration, Department of Commerce

David Vladeck, Director, Bureau of Consumer Protection, Federal Trade Commission

Susan Grant, Director of Consumer Protection, Consumer Federation of America

Joe Pasqua, Vice President of Research, Symantec Corporation

Joan Gillman, Executive Vice President and President, Media Sales, Time Warner Cable

Eben Moglen, Ph.D., Legal Advisor, Diaspora*, Professor of Law, Columbia University, Founding Director, Software Freedom Law Center

Daniel Castro, Senior Analyst, Information Technology and Innovation Foundation

Conclusion

With the comment period closing at the end of this month and with several consumer groups having already filing a complaint with the FTC over online marketing and behavioral advertising, Congress will likely have to address this issue during its new session. However, with Republicans in control of the House, it remains uncertain whether any legislation will move forward to create the Do Not Track mechanism necessary to carry out the recommendations in the FTC report.

The use of the internet is growing exponentially each day, and consumers are finding valuable information about healthcare, mental health, financial help, education, nutrition, and numerous other resources. Accordingly, as policymakers consider comments from consumer groups on both sides of the argument, Congress and the FTC should ensure that the proposed regulations do not create obstacles for consumers to learn about products and get valuable information because online advertising and marketing is an extremely important tool for both consumers and companies.

To submit comments:

https://ftcpublic.commentworks.com/ftc/consumerprivacyreport/

Washington Legal Foundation: Navigating Industry Targeted Enforcement of the Foreign Corrupt Services Act

 
The Washington Legal Foundation (WLF) recently published a working paper entitled, “Taking Your Medicine: Navigating Industry-Targeted Enforcement of the Foreign Corrupt Practices Act.”

Established to address cutting-edge legal issues, the WLF Legal Studies Division produces and distributes substantive, credible publications targeted at educating policy makers, the media, and other key legal policy outlets. The Division deals almost exclusively with legal policy questions as they relate to the principles of free enterprise.

Background

Over the past several years, the pharmaceutical and medical device industries have been establishing research and development facilities, clinical trial programs, and related strategic partnerships outside of the U.S. As WLF notes, “their efforts are designed to accelerate the development of new drugs, devices, treatments, and techniques,” which is extremely beneficial to patients and physicians. Companies are also pursuing such ventures across American borders to open a door to relatively untapped—and potentially lucrative—emerging markets such as India, China, and Brazil.

These efforts toward globalized product and market development have positioned the companies involved for tremendous growth over the next several decades. However, the nature of these “international activities also involve a variety of significant risks that require careful consideration and close oversight.” As a result, WLF put together this working paper to discuss recent developments in the U.S. and international anti-corruption enforcement efforts that have occured over the past year.

Foreign Corrupt Practices Act (FCPA)

The Foreign Corrupt Practices Act of 1977 (FCPA), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to or bribe foreign government officials to assist in obtaining or retaining business. In other words, FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business.

WLF traces the growing interest in FCPA to November 12, 2009, when Assistant Attorney General and Department of Justice (DOJ) Criminal Division Chief Lanny A. Breuer took the stage to present the keynote address at the Tenth Annual Pharmaceutical Regulatory and Compliance Congress in Washington, D.C. In his speech, Breur described an aggressive FCPA enforcement agenda focused on the pharmaceutical and medical device companies, in the months and years ahead.

The anti-bribery provisions of the FCPA make it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. This means that paying, offering, promising to pay (or authorizing to pay or offer) money or anything of value is prohibited. FCPA also carries penalties for any publicly-held company that maintains inaccurate books and records or inadequate internal accounting controls (the accounting and record-keeping or “books-and-records” provisions).

The Department of Justice (DOJ) is responsible for all criminal enforcement and for civil enforcement of the anti-bribery provisions with respect to domestic concerns and foreign companies and nationals, and the Securities and Exchange Commission (SEC) handles other matters.

The FCPA potentially applies to any individual, firm, officer, director, employee, or agent of a firm and any stockholder acting on behalf of a firm. Individuals and firms may also be penalized if they order, authorize, or assist someone else to violate the anti-bribery provisions or if they conspire to violate those provisions. A U.S. company or national may be held liable for a corrupt payment authorized by employees or agents operating entirely outside the United States, using money from foreign bank accounts, and without any involvement by personnel located within the United States.

The offer or promise of a corrupt payment can constitute a violation of the statute. This means that a corrupt payment does not actually have to take place for a company to be liable under FCPA. The FCPA prohibits any corrupt payment intended to influence any act or decision of a foreign official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a foreign official to use his or her influence improperly to affect or influence any act or decision.

Developments in FCPA

WLF explained that “Breuer’s speech was an unusual event” because federal law enforcement “rarely singles out a specific industry for FCPA scrutiny in a public forum.” His remarks indicate that a substantial portion of law enforcement attention and resources are now focused on the pharmaceutical and medical device industries.

For example, he noted how one third of U.S. pharmaceutical companies’ sales, upwards of $100 billion, are generated outside the United States “where health systems are regulated, operated and financed by government entities to a significantly greater degree than in the United States.” What makes this arrangement unique is that “it is entirely possible, under certain circumstances and in certain countries, that nearly every aspect of the approval, manufacture, import, export, pricing, sale and marketing of a drug product in a foreign country will involve a ‘foreign official’ within the meaning of the FCPA.” This means that the FCPA has a broad mandate to go after companies in foreign countries.

Breuer also explained in his speech how in many of these countries healthcare and government are inextricably intertwined, and when combined with “fierce industry competition,” this environment poses a significant risk of corruption. As a result, he noted that the DOJ has decided to become “intensely focused on rooting out foreign bribery in [the pharmaceutical and medical device] industry.”

A series of other comments were made in the months after his initial speech, indicating increasing the size of DOJ’s enforcement section, and taking new measures to combat bribery and white-collar crime. Another development was that DOJ began announcing it would target individuals, specifically high-level executives of companies for violations under FCPA.

Risk Areas for Industry

After one significant case, WLF noted that officers and directors of pharmaceutical and device companies “are now faced with the prospect of regulatory and law enforcement scrutiny of their leadership, even in situations where they lack knowledge of or involvement in activities several layers of management below them.”

Additionally, under the FCPA, companies and individuals can face liability indirectly based on the actions of third parties, even if they did not know or approve of those activities. If, for example, enough unresolved “red flags” surface in the course of dealing with a third party, or there are other reasons for the company to have known that a third party was involved in the provision of improper inducements to foreign officials designed to result in some benefit for the company, the company can be charged with the knowledge of that conduct and be held liable for it.

This risk, according to WLF, highlights the care that drug and device companies, and their officers and directors, must take in handling key aspects of their non-U.S. activities, including their affiliations with third-party clinical research organizations (CROs), due diligence regarding those and other third party partners and representatives, and relationships with government affiliated or state-run academic and healthcare facilities.

Another trend that companies should be aware of is the expanding cooperation between U.S. and non-U.S. law enforcement in the anticorruption context. A cross-border law enforcement cooperation and information sharing is working in anticorruption cases is only growing, placing companies within reach of a wider and wider enforcement net. This is evidenced by the fact that several pharmaceutical and medical device companies both large and small have confirmed that they have received subpoenas and/or letters from the DOJ and SEC putting them on notice that they are under investigation for the development, sale, licensing, and marketing of their products in foreign countries.

Payments: Anything of Value

One of the significant challenges posed by the increased attention and enforcement under the FCPA are the provisions dealing with bribery and kickbacks, or other improper inducements provided in order to drive a company’s drug and device sales. According to recent press reports, the DOJ and SEC letters noted above have identified several types of activities under investigation in this area, including bribery to induce drug purchases by doctors employed by the government; commissions passed through sales agents who visit doctors; payments to hospitals to secure approval for drug purchases; and payments to officials to secure regulatory approvals.

As the WLF explained, while these instances may appear straightforward, FCPA liability can be triggered by provision of “any thing of value” in exchange for an improper action by the recipient of the benefit. There is no de minimis exception, and “any thing of value” is interpreted literally by U.S. law enforcement.

This can raise particularly difficult questions with regard to the pharmaceutical and medical device industries, where meals and small gifts have been an integral and accepted part of product marketing and sales. Although those practices have been limited domestically in recent years following scrutiny of issues such as off-label marketing, under the low threshold of the FCPA, seemingly benign day-to-day sales and marketing activities could result in costly law enforcement attention when they occur overseas.

Even charitable contributions have resulted in FCPA liability, when the contributions were linked to a foreign official with the ability to influence business opportunities for the donor.

Other Concerns/Risks

WLF noted that companies must also have oversight with respect to clinical trials, given that such a significant amount of research and studies are being conducted internationally. DOJ is reportedly investigating whether drug companies conducting clinical trials outside the United States may be offering improper inducements to influence the outcomes of those trials, either directly or through third parties.

There is also concern that medical ghosting involving a foreign doctor or scientist working in a state-run healthcare system could violate the FCPA because ghosting involves benefits conferred by the company on the “author” (publication credit), in exchange for a benefit to the company (an independent article in a medical journal supporting use of their product).

Recommendations and Conclusions

As a result of the increased enforcement and attention regarding the FCPA, WLF noted that “any business focusing on or with a physical presence in emerging markets, or actively engaged with third party partners or representatives in those markets, faces a day-to-day battle to address anti-corruption-related risks. Moreover, these risks extend not just to companies setting up facilities or other operations in country, but also to those entering the market to sell their products, and even to those looking to license new technologies developed in recently established foreign incubators.

To address these challenges, and those posed by an intertwined government and health care system, WLF recommended that companies approach these areas “with the expectation that even the slightest appearance of impropriety may draw significant law enforcement scrutiny.”

In the end, Breuer counseled potential targets of FCPA scrutiny to ensure they have a “rigorous FCPA compliance policy that is faithfully enforced,” to “seriously consider voluntarily disclosing” violations that are discovered, and to quickly remediate the source of any violations. He noted that failure to take these steps can result in substantial negative consequences including significant criminal fines and possible exclusion from Medicare and Medicaid. Fines and penalties can range from $10,000 to $500,000, and can result in debarment from federal health care programs. Meaning that companies cannot sell their products to programs such as Medicare, Medicaid, and Veterans.

Accordingly, WLF noted that meeting the “DOJ’s compliance mandate is neither simple nor inexpensive, but is critical for pharmaceutical and medical device companies hoping to avoid, or at least successfully weather, corruption-related scrutiny from U.S. or non-U.S. law enforcement.

HHS Launches Healthy People 2020 – Health Goals for the Next Decade

 

In 1979, the U.S. Department of Health and Human Services (HHS) began a process to improve the health of Americans through a project known as Healthy People: The Surgeon General’s Report on Health Promotion and Disease Prevention, which provided national goals for reducing premature deaths and preserving independence for older adults. 

In 1980, another report, Promoting Health/Preventing Disease: Objectives for the Nation, set forth 226 targeted health objectives for the Nation to achieve over the next 10 years.  Healthy People 2000: National Health Promotion and Disease Prevention Objectives, released in 1990, identified health improvement goals and objectives to be reached by the year 2000. The Healthy People 2010 initiative, released in 2000, continued in this tradition as an instrument to improve health for the first decade of the 21st century.

Healthy People 2010 looked at the scientific advances that took place over the past 20 years in preventive medicine, disease surveillance, vaccine and therapeutic development, and information technology. It also looked at the changing demographics of the U.S., the changes that have taken place in health care, and the growing impact of global forces on our national health status. A number of scientific experts from federal agencies provided input into the initiative and over 11,000 comments from the public were considered. The outcome of Healthy People 2010 was 467 objectives in 28 focus areas, providing an “encyclopedic compilation of health improvement opportunities for the next decade.”

The major goals of each of these programs have been to increase the quality and years of healthy life (i.e. growing elderly population) and to eliminate health disparities (i.e. more diverse population).

Healthy People 2020

Earlier this month, HHS announced Healthy People 2020, the nation’s new 10-year goals and objectives for health promotion and disease prevention. HHS acknowledged that the Healthy People initiative “in just the last decade, has either progressed toward or met 71 percent of its Healthy People targets.”  

The 2020 initiative includes a number of new topic areas including: Adolescent Health, Blood Disorders and Blood Safety, Dementias, including Alzheimer’s Disease, and several others.

Additionally, the new initiative includes “myHealthyPeople,” a new challenge for technology application developers. This challenge encourages developers to create easy-to-use applications for professionals who are working with the new national health objectives and state- and community-level health data. The idea is that “myHealthyPeople‟ apps challenge will help spur innovative approaches to information technology that will help communities track their progress using Healthy People objectives and targets as well as develop an agenda for health improvement.”

Mission

The mission of Healthy People 2020 strives to identify nationwide health improvement priorities. It also looks to increase public awareness and understanding of the determinants of health, disease, and disability and the opportunities for progress. Additionally, it strives to:

•  Provide measurable objectives and goals that are applicable at the national, State, and local levels.
• Engage multiple sectors to take actions to strengthen policies and improve practices that are driven by the best available evidence and knowledge; and
• Identify critical research, evaluation, and data collection needs.

Overarching Goals

The overarching goals of the new initiative are to:

• Attain high-quality, longer lives free of preventable disease, disability, injury, and premature death.
• Achieve health equity, eliminate disparities, and improve the health of all groups.
• Create social and physical environments that promote good health for all; and
• Promote quality of life, healthy development, and healthy behaviors across all life stages.

Collaboration

The goals set by Healthy People 2020 hold promise for the future of health care, especially in light of health care reform. However, with 30 million people soon to be enrolled in America’s health care system, our country will face significant obstacles dealing with diverse populations, more elderly patients, and a wide variety of untreated or chronic conditions.

To overcome these challenges and to meet the goals set by Healthy People 2020, we will need to encourage and promote strong communication and partnerships between multiple stakeholders. As HHS recognized, for the past three decades, Healthy People has established benchmarks and monitored progress over time in order to “encourage collaborations across sectors, guide individuals toward making informed health decisions, and measure the impact of prevention activities.”

Since the mission of Healthy People 2020 is to “engage multiple sectors to take actions to strengthen policies and improve practices that are driven by the best available evidence and knowledge,” policymakers should not put forth obstacles that will make this engagement difficult. Federal agencies and health experts need to communicate with multiple sectors to help identify critical research, evaluation, and data collection needs.

Conclusion

The success that Americans have experienced in health care and the progress in medicine thus far is largely a result of industry-physician collaboration and government/industry funded research. Accordingly, while health care reform is being implemented and institutions, agencies, and academic medical centers consider new policies, these stakeholders should consider policies that will enhance the collaboration of government, academia, and industry to continue encouraging collaborations across sectors that will help our country meet the goals set by Healthy People 2020.

Recent proposals from academic medical centers, institutions, and agencies have threatened the ability of the private sector to work with the government or academia. In light of initiatives such as Healthy People 2020, which recognize the need to engage multiple sectors, these parties should seriously reconsider the limitations they have placed on their faculty and staff, and other counterproductive measures. Leaving out stakeholders such as industry and cutting off communication between the private sector and government or academia will make achieving the mission of Healthy People 2020 difficult, and could end up hurting Americans instead of helping them.

Whitehouse Reports Progress on Recovery Act and Innovation

 
This week, Vice President Joe Biden announced the release of a report regarding the impact the Recovery Act has had on Innovation in the U.S. In discussing the significant achievements thus far, Biden acknowledged that the Recovery Act’s “$100 billion investment in innovation is not only transforming the economy and creating new jobs, but helping accelerate significant advances in science and technology that cut costs for consumers, save lives and help keep America competitive in the 21st century economy.”

 He also recognized that although the government has provided this initial amount of funding to “plant the seeds of innovation, its private companies and the nation’s top researchers that are helping them grow, launching entire new industries, transforming our economy and creating hundreds of thousands of new jobs in the process.”

Francis S. Collins, M.D., Ph.D., NIH Director, recognized that "the Recovery Act funding is not only producing thousands of jobs in the biomedical research community, it is also helping speed important medical discoveries that will benefit the health of Americans nationwide."

One of the major roles this funding has played for health care funding is helping to bring down the cost of a personal human genome map to under $1,000 in five years. The report announced that with the help of the Recovery Act, the National Institutes of Health are on track to slash the cost of DNA sequencing to $1,000 per genome – fifty times cheaper than what is currently possible. The significance of bringing down these costs is important because:

• With a more affordable price tag, DNA information could become a routine part of medical care.  Just like a simple blood test, an inexpensive whole-genome DNA scan could help health care providers in the future choose effective, personalized treatments.       
• Scientists have believed that being able to map and compare human genomes could unlock cures and insights into some of the most debilitating diseases existing today, while also creating many new skilled jobs in the process.
• Seven projects funded by the Recovery Act are attempting to drive down the cost of human genome sequencing, each with a different technological strategy.   
• Ultimately, success in this endeavor will mean that the promises of treatment offered by this science will not only be available to the super wealthy, but will be available to tens of millions of Americans in every corner of the country.

With the success thus far of funding for innovation, the Obama administration must continue its commitment to medical innovation by working with medical device and pharmaceutical companies to make sure incentives and regulations encourage more research and development, instead of chilling research and collaboration.

In the end, while it is important to make progress through innovation in various areas, the President must put more attention on medical innovation in order to carry out health care reform. This will mean dedicating the funding and resources to the proper health agencies, and establishing policies that encourage partnerships with industry to help develop and create new technologies that will treat millions of Americans and continue to make our country a healthier place to live.

Electronic Medical Records and Final Meaningful Use Regulations

 
A significant part of health care reform and the stimulus package from last year included funding and incentives for hospitals and doctors’ offices to digitize their medical practices and procedures.

Specifically, the stimulus package included up to $27 billion for those incentives, which will be given out by the Centers for Medicare and Medicaid (CMS) in three waves.

Consequently, the final regulations — all 864 pages of them –on what will constitute “meaningful use” of electronic medical records were issued. According to an analysis by the Wall Street Journal, the changes included make it easier for hospitals and doctors to qualify next year for the first round of incentive payments for adopting electronic medical records (EMRs).

The final requirements issued are what providers will have to meet — demonstrating what the government considers “meaningful use” of e-records — in order to qualify for the first round of incentives in 2011-12.

Accordingly, to help explain the final regulations, David Blumenthal, national coordinator for health IT at HHS, and Marilyn Tavenner, principal deputy administrator of CMS, published a summary in the New England Journal of Medicine (NEJM).

In particular, the final regulations make it so that rather than having to meet 23 or 25 different objectives (for hospitals and doctors respectively), providers will now have to meet just 14 or 15 “core” requirements dealing with EMR basics, such as being able to enter patient data and use a computer-based system to record medical orders.

In addition, hospitals and doctors then can pick an additional five objectives from a menu of ten options. Those include incorporating some lab tests results into records and providing a summary of care record for patients transferring to another facility.

The final requirements also relax some of the required levels of achievement for those objectives — for example, doctors’ offices now have to transmit 40% of prescriptions electronically to meet that requirement, not 75%.

In response to the final regulations, the Wall Street Journal reported a number of reactions from different health care organizations.

The American Hospital Association (AHA) said that “even the looser requirements may make it tough for hospitals to qualify.” As a result, they criticized the individual hospital requirement, and said that “the rule requires hospitals to immediately use Computerized Provider Order Entry (CPOE),” which it calls complicated, costly and time-consuming.

Next, although the Association of American Medical Colleges (AAMC) praised relaxation of some of the requirements, it “remained concerned” that “it may be unrealistic for some teaching hospitals and faculty physicians” to meet the requirements in two years. AAMC also said in their statement that the group “hoped that eligibility would be determined by hospital systems, not individual hospitals. (Each hospital in a multi-hospital system must qualify on its own to receive incentives.)”

On the industry side, Leigh Burchell, director of government relations for Allscripts, a health IT company, told WSJ that the shift from a mandated list of at least 23 requirements to a more flexible approach is the “most momentous” change from the draft version. She further added that the reporting requirements for things not captured in an EHR have eased, making things “much more user friendly” for providers. She also pointed out that the role of ER personnel in meeting the requirements has also been clarified, for the better.

Kern Medical Center CEO Paul Hensler, told WSJ that he was “pleasantly surprised” by the more flexible approach because it really lets each hospital customize its approach according to its needs and abilities.” He hoped that the changes will help hospitals with the capital to invest to focus on and implement a smaller set of requirements in order to qualify for incentives.

Mitch Morris, a national leader of health IT for Deloitte Consulting noted in an e-mail that he was surprised that there’s no word yet on when the third stage of requirements will be announced.

Charlie Jarvis, vice president of healthcare services and government relations for NextGen, a medical software company, told WSJ that the looser requirements will “help the provider community adapt more quickly,” but that some levels of compliance were still kept pretty high, at the 80% level. He also noted that it may be tough for some clients to be ready to go for the next set of requirements if they aren’t released until late next year.

Reid Conant, an emergency physician for the Tri-City Medical Center in Oceanside, Calif., wishes “there had been a requirement that detailed physician notes be part of a patient’s electronic medical records.” He believed this requirement to be necessary because without a physician narrative, he fears the records will “be reduced to point-and-click documents” that don’t distinguish between patients.

In the end, although the requirements may have been changed in some respects from the original draft, there are still a tremendous number of issues that have not been addressed adequately, and most likely will not be brought up until EHRs are put into use. Some of the difficult tasks that providers and physicians will face include privacy issues, compatibility, staffing, resources and time to successfully implement the “meaningful use” of EHRs. While the incentives create a good motivation for providers to begin adopting HIT, and the use of EHRs is promising for data sharing, implementation and results from the effective use of EHRs is a different outcome altogether.

For now, providers and physicians must continue an open dialogue with HHS regarding issues and concerns surrounding the meaningful use of EHRs so that patient care is not sacrificed for entering notes into a computer screen.

Donald Berwick Gains Recess Appointment at CMS – Clock Ticks Down Until January 2011

President Obama chose to make Donald Berwick, MD a recess appointment as Centers for Medicare and Medicaid Services (CMS) administrator, bi-passing senate confirmation.  It is an unusual move in that Senate is still waiting on answers to questions from Dr. Berwick in order to schedule a confirmation hearing.   Also the senate is only on recess for less than two weeks and there is nothing the Republicans can do to stop the nomination from going through which makes it hard to imagine why the President is making such a move. 

As a recess appointment, his position will only be good for a little over six months until the new congress is sworn in next January.   It is highly unlikely that Dr. Berwick will confirmed, the Senate hates it when you bypass the rules.

Dr. Berwick is very controversial and a believer in single payer system with calls to “blow up” the healthcare system all over the internet.  

Though he has had a distinguished career it will be interesting to see what he can actually get done in six months.  It is disconcerting that the president has waited until now to make the appointment; if he wanted real change he should have appointed Dr. Berwick in the recess last Fourth of July.  In the mean time there is not much that can be done in six months at such a large agency.