Life Science Compliance Update

October 21, 2015

FDA Removes Pacira Warning Letter in Midst of Free Speech Suit


We have previously written about Pacira Pharmaceuticals, Inc. and their constitutional challenge against the Food and Drug Administration, which alleges that the FDA has placed unconstitutional restrictions on Pacira’s commercial speech. Pacira filed suit to establish its right to provide truthful and non-misleading information to doctors about its anesthetic product, Exparel.

The case goes back to September 2014, when the FDA sent a warning letter accusing Pacira of promoting the anesthetic Exparel for unapproved uses and overstating the drugs effectiveness. The FDA concluded their letter by warning Pacira of potential criminal liability if the alleged misconduct continued.

After Pacira’s initial receipt of the letter, they sent out corrective statements on Exparel, but eventually filed suit, “asserting that the FDA has silenced its speech in violation of the First Amendment; enforced vague policies in violation of the Fifth Amendment; and abruptly changed Exparel’s approved labeling in violation of the Administrative Procedure Act.” The FDA had initially approved Exparel in 2011 for general use and backtracked three years later in the warning letter when they asserted that Exparel was approved only for two specific surgeries studied in clinical trials.

Pacira’s lawsuit against the FDA follows two others: one brought by Amarin Pharma Inc., a First Amendment case involving off-label promotion of omega-3 drug Vascepa; and one brought by the United States against Alfred Caronia, an employee of Orphan Medical, Inc.

The Caronia ruling was the first of its kind in recent years, stating that a pharmaceutical sales representative’s off-label promotion of a drug was constitutionally protected speech. The majority concluded, “simply that the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.”

In the Amarin case, a New York federal judge ruled that Amarin had a constitutional right to make truthful and nonmisleading statements about off-label uses of omega-3 drug Vascepa. U.S. District Judge Paul A. Engelmayer granted Amarin’s motion for a preliminary injunction, arguing that the preliminary injunction will “eliminate the chill on Amarin’s First Amendment rights” and based his opinion largely on the Caronia case, stating that “the court’s considered and firm view is that ... the FDA may not bring such an action based on truthful promotional speech alone, consistent with the First Amendment.”

Many in the industry have been watching the Pacira lawsuit to see if another federal court will rule in favor of free speech, or go against the grain and rule to suppress the free speech.

In a strange turn of events, the FDA recently quietly unpublished their warning letter that objected to the promotional practices of Pacira. When questioned about the unpublication of the letter, an FDA spokeswoman declined to comment, citing the ongoing litigation between the FDA and Pacira.

The removal of a warning letter is an extremely rare occurrence, as stated by Scott S. Liebman, a Loeb & Loeb LLP partner, who is not involved in the Pacira case. “It is unusual for FDA to take a letter down after posting it. FDA began posting letters in 1997, and I’m not aware of any others that have been unpublished after the fact.”

It is not clear why or when the letter was taken down by the FDA, but some speculate it may be connected with an unpublicized development in the case, such as possible settlement talks.

Pacria Warning Letter - FDA

October 14, 2015

PharMerica to pay $9.25M in Dept. of Justice settlement


The Louisville, Kentucky-based PharMerica, the nation's second-largest nursing home pharmacy, agreed on October 7 to pay $9.25 million to settle allegations it took kickbacks in exchange for promoting a specific drug to nursing home patients. Judge Joseph Anderson Jr. of the U.S. District Court for the District of South Carolina was confident enough in preliminary terms to dismiss the lawsuit without prejudice in mid-August, after the sides had reported a settlement. 

This settlement comes on the heels of a $31 million dollar settlement earlier this year. That settlement, made in May, was a resolution to a lawsuit filed by the United States that alleged PharMerica violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription and violated the False Claims Act by submitting false claims to Medicare. According to that complaint, PharMerica’s actions enabled nursing home staff to order narcotics, and enable pharmacists to dispense them, without confirming that a physician had made a medical judgment as to whether the narcotics were necessary and should be administered to the resident.

The government alleged that PharMerica's consultant pharmacists recommended nursing home physicians prescribe Depakote, an anti-epileptic medication made by Abbott Laboratories, in exchange for kickbacks from the drugmaker. The government alleged the kickbacks took the form of rebates, educational grants and other financial support.  Abbott already agreed in 2012 to pay $1.5 billion to settle the related allegations against it—the second-largest settlement by a drug company at the time.  

PharMerica was accused of defrauding Medicare, Medicaid the other federal health care programs by accepting the Abbott Laboratories’ kickbacks and filing false reimbursement claims from 2001 through 2008.The lawsuits were originally brought by two whistle-blowers, former Abbott employees Richard Spetter and Meredith McCoyd. The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. According to the 2007 complaint, filed in federal court in Roanoke, Va., Abbott Labs promoted its drug Depakote for medical uses other than those approved by the Food and Drug Administration. Depakote had been approved to treat epileptic seizures and manic episodes and prevent migraine headaches. The suit claimed that PharMerica went along with Abbott Labs’ program of giving the drug to dementia patients who had become agitated or aggressive.                

Under the False Claims Act, whistle-blowers are entitled to a portion of any money the government is able to recover in such cases.  McCoyd will receive $1 million from the settlement. Also, $2.5 million of the settlement will go toward Medicaid program claims by states that choose to participate in the settlement.  The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees. 

U.S. Attorney Anthony P. Giorno said the PharMerica settlement should serve as a reminder to pharmaceutical companies and their clients that their activities are being monitored. “We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs," Giorno said.  Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of health-care professionals for their daily care," said Deputy Assistant Attorney General Benjamin C. Mizer, head of the U.S. Justice Department's Civil Division. "Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs."

September 24, 2015

How Are Pharma Reps Dealing With The Changing Healthcare Landscape?


A recent article honed in on how regulations and market forces facing the pharmaceutical industry affect the way sales representatives interact with physicians and other healthcare providers. Published in, the article lays out certain evolutions to the life sciences industries, which have occurred in just the last few years that have caused major changes for pharmaceutical sales reps.

First, the article examines the Physician Payments Sunshine Act’s role in making doctors less likely to see sales reps. The Sunshine Act (or Open Payments) was enacted as part of the Affordable Care Act and requires pharmaceutical manufacturers to publicly report any payments they make to physicians or teaching hospitals—this could include lunch, speaker fees, consulting payments, etc. The article quotes a 2014 survey of 3,000 U.S. physicians conducted by Quantia and Capgemini that found about 40 percent of physicians never see a pharma sales rep. Further, 80 percent said their organizations have policies in place that restrict their contact with industry reps.

The article notes that in light of the face-to-face restrictions, the pharma sales model needs to go digital; a process the author states is “already underway.” Pharmaceutical executives reported in a 2013 survey that “one in four direct sales force interactions migrated to digital interactions with doctors, providers, payers, and patients.”

Further, the Quantia and Capgemini survey found that 76 percent of physicians surveyed preferred to receive information about new drugs, products, and indications digitally. (See their complete study here)

The article also looks at a general shift in how providers view the value of what pharmaceutical companies can offer. The Quantia and Capgemini survey found that,
“while providers aren’t interested in promotional educational seminars, 83 percent would like to see more pharma-sponsored accredited CME events,” the author writes. “In addition, 83 percent want more provider-focused information about disease states, while 77 percent want more detailed product information written for prescribers.” Providers “don’t have time to listen to a sales pitch, but they will make time for educational opportunities,” the article notes.

The shift from individual physicians practices to health systems is another large change facing healthcare delivery, and thus sales reps looking to meet with doctors. More and more physicians are moving to health systems and accountable care organizations (ACOs); the article states that as of 2014, 57 percent of all doctors were employed by a health system. However, even more significant “70 percent of newer physicians who had earned their medical degrees in the last 10 years worked for health systems.”

This is clearly a trend and has a large effect on sales reps. “As a result of the new health system landscape, physicians have less decision-making power,” the article states. “The Quantia survey found that 70 percent of physicians who belong to a health care system are restricted in their prescribing behaviors. They don’t control the formularies of their organizations and must follow tight guidelines when it comes to prescribing.”

“This means interactions between pharma reps and physicians carry less weight,” the article concludes. “To be effective, pharma sales reps will need to find other channels to communicate value.”

Executive Vice President at Quantia, Dan Malloy summed his company's survey up:

There is a perfect storm occurring in healthcare as more physicians are being employed by health systems and thereby less accessible to pharmaceutical reps, more constrained in their prescribing behaviors, and increasingly beholden to performance metrics. Yet the survey findings indicate that despite this increasingly consolidated environment, physicians overwhelmingly believe that pharmaceutical companies willing to adapt their physician engagement strategies have the potential to add real value to their organized networks.

Introducing physician engagement strategies such as credible online communities and digital content sharing gives pharmaceutical firms the opportunity to promote the latest, critical drug information to these organized physicians while aligning with the performance objectives of the health systems in which they work—a  true push/pull approach that will drive success for all constituents.


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