Life Science Compliance Update

January 26, 2017

FDA Releases Draft Guidance on Manufacturer Communications with Payors, Formulary Committees, and Similar Entities

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In mid-January 2017, the United States Food and Drug Administration (FDA) released a guidance document, entitled Drug and Device Manufacturer Communications with Payors, Formulary Committees and Similar Entities – Questions and Answers,” explaining FDA’s current thinking regarding communications by medical product manufacturers, packers and distributors of health care economic information (HCEI) about approved prescription drugs to payors and formulary committees.  The draft guidance also provides answers to common questions about dissemination of information by firms regarding investigational drugs and devices to payors before FDA clearance or approval of those products.

HCEI is defined in the document as “any analysis (including the clinical data, inputs, clinical or other assumptions, methods, results, and other components underlying or compromising the analysis) that identifies, measures, or describes the economic consequences of the represented health outcomes, of the use of a drug.” HCEI pertains to the economic consequences related to the clinical outcomes of treating a disease (or specific aspect of a disease) or of preventing or diagnosing a disease. According to the FDA, HCEI may be presented in a variety of ways that can include, but are not limited to, an evidence dossier, a reprint of a publication from a peer-reviewed journal, a software package comprising a model with user manual, or a budget-impact model.

HCEI is not to be considered false or misleading if, among other things, it “relates to an [approved] indication.” To be considered related to an approved indication, HCEI analyses should relate to the disease or condition, manifestation of the disease or condition, or symptoms associated with the disease or condition in the patient population for which the drug is indicated in the FDA-approved labeling. Pages six through eight of the guidance have a table of HCEI analyses that relate to the approved indication.

In the guidance document, FDA defines “payors” as including payors, formulary committees, or other similar entities responsible for making drug selection, formulary management and/or coverage and reimbursement decisions regarding drugs and/or devices for health care organizations, including integrated health care delivery networks, hospitals and hospital systems.  In the guidance, FDA notes that if a firm disseminates HCEI about an approved drug consistent with the guidance, when finalized, FDA does not intent to consider such information false or misleading or as providing evidence of a new intended use.

In an accompanying Federal Register notice, FDA announced that it is reopening the comment period related to a previous public hearing concerning manufacturer communications regarding unapproved uses of approved or cleared medical products. This comment period will be reopened for 90 days, beginning January 19, 2017.

October 20, 2016

CMS Releases MA and Part D Landscape Information for 2017

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On September 22, 2016, the Centers for Medicare and Medicaid Services (CMS) announced information on premiums and costs for Medicare Advantage (MA) and stand-alone prescription drug plans (PDPs) for calendar year 2017.

CMS stated that 2017 Medicare Advantage premiums will “remain stable [and even decrease] and more enrollees will have access to higher quality plans while, for the seventh straight year, enrollment is projected to increase to a new all-time high.” For calendar year 2017, CMS has estimated that the average Medicare Advantage monthly premium will decrease by roughly $1.19 (about a 4% decrease), from $32.59 to $31.40. Approximately two-thirds of Medicare Advantage enrollees will experience no premium increase. 

CMS also reports that ninety-nine percent of Medicare beneficiaries will have access to a Medicare Advantage plan in 2017 and that more of those plans will offer additional supplemental benefits, such as dental, vision, and hearing benefits.

CMS is expecting an increase in enrollment, to 18.5 million enrollees next year, an increase of sixty percent since 2010. Enrollment in Medicare Advantage plans is projected to increase to thirty-two percent of all Medicare enrollees in 2017, an increase from just twenty-four percent in 2010.

It is estimated that average premiums for the Medicare Part D prescription drug program will also remain stable, saving beneficiaries billions on prescription drugs. In July 2016, CMS announced that the average premium for a basic Medicare prescription drug plan is projected to be $34 a month in 2017. Recent projections show that access to a prescription drug plan will remain strong in 2017, with 100% access to a plan in the individual market, and improved access to employer plans. The average number of Medicare Advantage plan choices per county is relatively unchanged from 2016, and access to supplemental benefits will continue to grow.

Andy Slavitt, CMS Acting Administrator, said “Medicare Advantage and the prescription drug benefit continue to be a great option for seniors and people living with disabilities. Medicare enrollees will continue to have access to predictable premiums and high quality care.”

It is estimated that due to the Affordable Care Act, Medicare beneficiaries are seeing reduced costs through: (1) savings on covered brand-name and generic prescription drugs and (2) access to certain preventive services with no co-pay or other cost sharing. More than 11 million seniors and people with disabilities have received savings and discounts in the coverage gap, since the enactment of the Affordable Care Act.

Open Enrollment for 2017 Medicare health and drug plans starts October 15, 2016, and ends on December 7, 2016.

Information on premiums and costs of 2017 Medicare health and drug plans can be found here.

A fact sheet on Medicare Advantage and Part D can be found here.

Information on Medicare Open Enrollment, including state-by-state fact sheets, can be found here.

State-by-state information on discounts in the “donut hole” can be found here.

State-by-state information on utilization of preventive services at no cost sharing to beneficiaries in Medicare can be found here.

February 19, 2016

2016 The Year of Pharmacy Enforcement

For some time now, both the U.S. Department of Justice ("DOJ") and the Drug Enforcement Administration ("DEA") have signaled their interest in pursuing audits and enforcement actions against pharmacies and pharmacists. With quality problems at compounding pharmacies and the debate around opioid addiction dominating headlines and the political race, this increased enforcement is no surprise. Four separate cases illustrate why we say 2016 is going to be the year of pharmacy enforcement.

Palisade Pharmacy

In December 2015, Palisade Pharmacy in Palisade, Colorado agreed to pay $60,000 in civil penalties to settle allegations by the U.S. Attorney's Office in Colorado that it violated various provisions of Controlled Substances Act (CSA) and the Combat Methamphetamine Epidemic Act of 2005 (CMEA).

Palisade allegedly committed 480 violations of the two (2) Acts including

  1. shipping controlled substances to unregistered locations;
  2. failing to verify addresses on DEA order forms to the corresponding addresses registered with the DEA;
  3. filling prescriptions for controlled substances despite missing required information on the face of the prescription;
  4. failing to maintain, record, and retain complete and accurate records relating to the distribution of controlled substances; and
  5. selling List I chemical products without a valid self-certification certificate.

In addition to paying the penalty, Palisade signed an administrative settlement agreement agreeing to enhanced reporting and training requirements, as well as a three-year surrender of its CMEA certification that allows it to sell List 1 chemicals. According to Barbra Roach, Special Agent in Charge of the Drug Enforcement Administration's Denver Field Division, "The diversion of pharmaceuticals and chemicals for illicit gain and profit is nothing more than drug trafficking. Those occupying positions of trust and responsibility, such as medical practitioners and pharmacists, have to be held accountable when they chose to operate illegally and threaten the safety of our communities."

Nashville Pharmacy Services

On January 5th, the U.S. Attorney's Office (USAO) for the Middle District of Tennessee announced that it had reached a settlement with Nashville Pharmacy Services, LLC. and its owner Kevin Hartman. The pharmacy, which specializes in HIV and AIDS-related medications, allegedly overbilled Medicare and TennCare for pharmacy services, and will now pay up to $7.8 million to make those allegations go away.  The whistleblower in this case, Marsha McCullough, was a former order entry technician who worked for Nashville Pharmacy Services.

According to the USAO, from February 2011 to May 2012, Nashville Pharmacy Services:

  • automatically refilled medications without a request from the beneficiary, their physician, or a person acting as the agent of the recipient, in violation of TennCare's contractual requirements;
  • routinely and improperly waived TennCare and Medicare co-payments without an individualized assessment of those beneficiaries' inability to pay;
  • improperly used pharmaceutical manufacturers' co-payment cards to pay the co-payments of individual Medicare recipients for thirteen Medicare beneficiaries;
  • billed Medicare and TennCare for certain medications after the dates of death of 15 beneficiaries with either Medicare or TennCare coverage; and
  • billed Medicare or TennCare for drugs that lacked a valid prescription from a licensed provider for 22 beneficiaries with either Medicare or TennCare coverage.

The case also shows the lengths the U.S. Government will go in prosecuting pharmacy allegations.  No less than four separate Government bodies were involved including:

  1. United States' Attorney's Office for the Middle District of Tennessee,
  2. Tennessee Attorney General's Office,
  3. U.S. Department of Health & Human Services Office of Inspector General and
  4. Tennessee Bureau of Investigation Medicaid Fraud Control Unit.

MedIV

Most recently, two Alabama pharmacists agreed to plead guilty in connection with the deaths of nine (9) patients.  The cases date back to 2011 and involve the compounding pharmacy Advanced Specialty Pharmacy doing business as MedIV. The pharmacy allegedly compounded drugs in unsanitary conditions sometimes leaving batches out overnight in open, unrefrigerated containers. The unsanitary conditions resulted in some of the products becoming contaminated with bacteria that later killed the nine patients.

The pharmacists are the former-pharmacist-in-charge of MedIV as well as its former president.  Each has agreed to plead guilty to two (2) misdemeanor counts under the Federal Food, Drug, and Cosmetic Act.  If the judge imposes the maximum penalty, both men face a maximum of two (2) years in prison and a fine of up to $500,000.

While individual criminal pleas are rare in food and drug cases, this case reinforces how important the U.S. Department of Justice ("DOJ") is about holding individuals accountable, and the increasing regulatory and enforcement focus on pharmacies.

CVS Pharmacy, Inc.

The USAO for the District of Maryland announced on February 12, 2016, that CVS had agreed to pay $8 million to resolve claims that some of its pharmacies in Maryland had violated the Controlled Substances Act (CSA). Specifically, the Government alleged that over a 4-year period from 2008 to 2012 some of the Maryland CVS pharmacies dispensed controlled substances, including oxycodone, fentanyl and hydrocodone, failed to comply with CSA requirements, including having a pharmacist ensure the prescriptions for controlled substances were issued for a legitimate medical purpose.

"Pharmacies that dispense controlled substances have a duty ensure that prescriptions they fill were issued for legitimate medical purposes," said U.S. Attorney for the District of Maryland Rod J. Rosenstein. "Doctors and pharmacists are the gatekeepers of the effort to prevent the abuse and diversion of pharmaceutical drugs for non-medical purposes."

Conclusion

The unfortunate thing is that in all four cases this was preventable.  In the Palisades, Nashville and CVI cases, the proper internal review and the establishment of SOPs, basic training, and monitoring were the need. In the case of MedIV, establishing a Quality Management System and following current Good Manufacturing Practices could have prevented needless tragedy.

Over the years, pharmacy compliance programs have been sorely neglected. Pharmacies and pharmacists need to take compliance seriously and take the necessary steps to establish or reinforce their programs -- before the Government comes calling, which seems more likely with each passing day.

by Dr. Seth Whitelaw, President & CEO of Whitelaw Compliance Group, LLC. and Editor, Life Science Compliance Update

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