Life Science Compliance Update

December 08, 2016

21st Century Bill Headed to President Obama’s Desk

President-obama-desk

Nearly three years after its initial introduction, the 21st Century Cures Act has finally passed both houses of the Congress, and is expected to be signed by President Obama relatively quickly. This bill represents one of the few truly bipartisan efforts undertaken by this Congress.

We have previously written about some of the items included (and excluded) in the bill. The bill gives the health institutes the authority to finance high-risk, high-reward research using special procurement procedures, as opposed to more conventional grants and contracts. It also requires the agency’s director to establish “Eureka prize” competitions to advance biomedical research and improve treatments for serious illnesses. The bill also creates a new assistant secretary for mental health and substance use, to be appointed by the president, thereby raising the status of mental health issues throughout the country.

Further, the bill directs federal agencies to step up their enforcement of laws that require equal insurance coverage for mental and physical illnesses. Federal laws and rules requiring mental health parity have been adopted with bipartisan support over the last twenty years, but a White House task force recently found that compliance with those laws has been lagging.

Political Reactions

The bill includes $500 million a year to help states prevent opioid misuse and get better treatment for addicts. "These additional resources are particularly critical in rural areas, where rates of opioid misuse and overdose are high, access to treatment is limited, and patients who seek treatment are often met with waitlists that can mean the difference between life and death," said Agriculture Secretary Tom Vilsack.

In a statement made by President Obama shortly after passage of the bill, “We are now one step closer to ending cancer as we know it, unlocking cures for diseases like Alzheimer’s, and helping people seeking treatment for opioid addiction finally get the help they need.”

Obama also noted, “This is a reminder of what we can do when we look out for one another. Like Joe Biden and so many other Americans, I’ve lost people I love deeply to cancer. I’ve heard often from those whose loved ones are suffering from Alzheimer’s, addiction and other debilitating diseases. Their heartbreak is real, and so we have a responsibility to respond with real solutions. This bill will make a big difference, and I look forward to signing it as soon as it reaches my desk.”

Senator Susan Collins (R-ME) stated, “I doubt that there is a family in America who will not be touched by this important legislation.” Representative Steve Cohen (D-TN) was also pleased with the passage, saying, “I don’t think there is enough money that we can put into the N.I.H., because it is important and affects all Americans independent of political party, race, sexual orientation – you name it.”

Medical and Industry Reactions

"The remarkable bipartisan, bicameral support for the 21st Century Cures Act proves that congressional lawmakers are serious about the need for scientific research, effective care-delivery, and the removal of barriers to scientific progress," said Dr. Daniel Hayes, president of the American Society of Clinical Oncology.

"This legislation will improve the lives and health of countless Americans," said American Psychological Association President Susan McDaniel. "It will increase access to effective, evidence-based care, particularly for those with serious mental illness."

In a Statement from Sharad Lakhanpal, MBBS, MD; President of the American College of Rheumatology, he noted,  "While we are pleased that the 21st Century Cures Act will infuse additional, much-needed funding to the NIH to support medical research across the healthcare spectrum, we also know that more can and should be done to help Americans who are disproportionately impacted by arthritis and other rheumatic diseases. Today, arthritis is the leading cause of disability among U.S. veterans and the second most common reason for medical discharge from the U.S. Army. One in three veterans is diagnosed with arthritis, compared with one in five members of the general U.S. population.

As Congressional leaders turn their attention to budget appropriations for the upcoming fiscal year, we urge them to prioritize the creation of a dedicated $20 million arthritis research program at the Department of Defense so that we can better meet the care needs of the thousands of active duty and veteran members of our Armed Forces who live with arthritis.”

Conclusion

Once the bill is signed by President Obama, it will be up to the Food and Drug Administration (FDA) to implement many portions of the law, which could take years. Funding may be immediate, but the actions the FDA and other federal agencies are responsible for may still be quite a bit away. We will all have to stay tuned as this bill, and its effects, continue to progress.

November 17, 2016

Leahy, Wyden Send Letter to DOJ Regarding DEA Enforcement Actions

Law-enforcement-surveillance-camera-protects-property-and-people

Recently, the ranking members of the Judiciary and Finance Committees, Senators Patrick Leahy and Ron Wyden, respectively, raised concerns about Department of Justice (DOJ) oversight of opioid distributors. In a letter sent to Attorney General Loretta Lynch, the senators raised concerns about the "startling decrease in enforcement activity" reported by the Washington Post.

According to the Senators, “by 2020, public and private spending on substance abuse disorder treatment is expected to reach $42.1 billion, compared to $24.3 billion in 2009. Medicare and Medicaid are expected to account for a third of this spending.” The senators noted that they “appreciate and commend the Justice Department for working together with drug manufacturers, distributors, pharmacies, and others, where feasible, to safeguard the supply chain for prescription opioids.” The senators believe that “rigorous enforcement, timely-brought cases, and meaningful penalties are also essential to ensure every part of the pharmaceutical supply chain adheres to the law.”

The senators requested Attorney General Lynch to explain: the drop in enforcement actions sought against large distributors; the standards that the DEA uses to decide whether to pursue enforcement action; DEA settlements with certain distributors; and whether the Ensuring Patient Access and Effective Drug Enforcement Act affected the diversion control division’s ability to seek enforcement actions against distributors.

The Washington Post Report

According to the Washington Post, the DEA began to relax its enforcement efforts after lobbyists hired by Cardinal Health and CVS raised concerns. The number of civil case filings against distributors, manufacturers and doctors dropped from 131 in 2011 to 40 in 2014, even as the opioid epidemic began to worsen. Leahy and Wyden are asking DOJ to explain its policy change, explain its settlement with Cardinal Health and more.

The Washington Post article also notes that the slowdown started when DEA attorneys started requiring higher standards of proof to move enforcement actions forward. Previously, investigators had to show they had a “preponderance of evidence” to pursue enforcement action. But in 2012, Clifford Lee Reeves II, took over the role of supervising enforcement actions under the initiative and started requiring investigators to demonstrate that they had evidence “beyond a reasonable doubt” to pursue action.

According to Barbara Heath, a retired DEA program manager, “It got to the point where they wanted the same evidence as criminal prosecutions. It was very difficult to prove intent.” Jim Geldhof, a retired DEA supervisor, has similar concerns, saying, “There were a lot of roadblocks all the time. Everything was an issue.”

DEA and DOJ Respond

The Senators requested Attorney General Lynch respond to their questions by November 28, 2016.

According to Acting DEA Administrator Chuck Rosenberg, “The pharmaceutical industry has a vital role on the front lines of preventing drug misuse … across [the United States], as do we, and we plan to work closely with them.”

The DOJ has said that the drop in enforcement action taken under the effort reflected a shift from targeting the “ubiquitous pill mills” towards a “small group” of companies, pharmacists, and providers that continue to violate regulations. Peter Carr, spokesperson for the DOJ, also said that investigators are increasingly using criminal procedures over administrative hearings to force violators to surrender their licenses. He also added, “although these reasons largely account for the decline in administrative case filings, the department remains committed to eliminating the problem of opioid [misuse].”

Rosenberg also reminded everyone that the DEA “combat[s] the opioid crisis in many ways: criminally, civilly, administratively, and through robust demand reduction efforts. We implemented new case intake and training procedures for our administrative cases, increased the number of enforcement teams focused on criminal and civil investigations, restarted a successful drug take back program, and improve outreach to – and education efforts with – our registrant community.

May 16, 2016

Willis-Knighton Antitrust Suit Allowed to Proceed

Consolidation is happening in insurers and health systems throughout the country. A recent legal case in Louisiana sheds some light on where the judiciary may be going with this. In July of last year, the Biomedical Research Foundation Shreveport (BRFHH) and Vantage Health Plan (Vantage) filed an antitrust lawsuit against Willis-Knighton Health System, alleging that Willis-Knighton was unfairly taking away doctors and, in turn, their privately insured patients. The case alleged that the Willis-Knighton Medical Center was "unlawfully stripping plaintiff UH-Shreveport of its commercially insured business," with the plan to eventually entirely take over UH-Shreveport, which would effectively give Willis-Knighton a "complete monopoly" in the relevant market. Such a monopoly would "substantially increase health care costs, reduce health care quality, and seriously harm insurers, employers, and consumers."

According to the plaintiffs, Willis Knighton's share of hospital admissions in Shreveport and surrounding area is around 60% overall, and approximately 75% among commercially insured patients.

Vantage was concerned (and asserted alone) that some of Willis-Knighton's prior acquisitions, physician referral practices, and non-compete employment contracts, violated section 2 of the Sherman Act (prohibits monopolization and attempted monopolization) and section 7 of the Clayton Act (prohibits anticompetitive acquisitions and mergers).

Willis-Knighton has not only vehemently denied the allegations contained in the complaint, but also filed a Motion to Dismiss. Willis-Knighton argued that Vantage did not allege a "cognizable theory of anticompetitive conduct," which is required to establish a section 2 claim; that Vantage did not establish antitrust injury, a "threshold requirement for a plaintiff in any antitrust claim;" and that the behavior Vantage complains of is so vague that it cannot support a "plausible, non-speculative claim."

On March 31, 2016, Judge Elizabeth C. Foote determined that Vantage did plead anticompetitive conduct in its complaint since several competitors of Willis-Knighton were acquired by Willis-Knighton, thereby lessening the competition and increasing Willis-Knighton's market share in the relevant market. Since Judge Foote found that Vantage did plead anticompetitive conduct in their complaint, she denied Willis-Knighton's motion to dismiss for failure to plead anticompetitive conduct. However, the idea that Willis-Knighton acquired physicians from competitors, resulting in the weakening of those competitors, did not rise to the level of Section 2 liability because the complaint did not allege that Willis-Knighton hired the physicians to deny them to any of its competitors. Judge Foote also found that Willis-Knighton presented a rational business purpose in hiring the additional physicians and related non-compete agreements: to be able to treat more patients.

Willis-Knighton also argued that all of Vantage's claims should be dismissed due to lack of specificity as required under court precedent. However, the district court found that Vantage did allege facts that were sufficient enough to provide the necessary causal links between Willis-Knighton's actions and the alleged future harm. The court also found that reference to Willis-Knighton's current high market shares in the complaint provided enough of a basis to make past monopoly power plausible.

The district court found that Vantage's allegation that it was injured by Willis-Knighton refusing to contract with it does not actually constitute an antitrust injury.

However, Judge Foote allowed the case to proceed on the grounds that Vantage suffered an injury insofar as Willis-Knighton demanded exorbitant reimbursement rates. However, while this portion of the claim survived being dismissed, Vantage must prove later on that Willis-Knighton increased prices as a result of its anticompetitive acts, in order to prove an actual antitrust injury.

This case, and the recent permission from the court for progression, show that the recent trend in health plan provider consolidation may wind up slowing down, even if only temporarily while this case blows over.

 

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