Life Science Compliance Update

April 17, 2017

Maryland Sends Bill to Governor on Drug Prices

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The Maryland House recently passed a bill – House Bill 631 – with the goal of “prohibiting a manufacturer or wholesale distributor from engaging in price gouging in the sale of an essential off-patent or generic drug.”

Under the legislation, the Maryland Medical Assistance Program is instructed to notify Maryland Attorney General if a generic drug’s price spikes by 50% or more in one year, or if its price increases while there are three (or less) companies making the prescription. Once the Attorney General Receives that notice, he or she is able to request a report from manufacturers, detailing production costs, rationale for the price hike, and efforts made to expand access.

If the Attorney General determines that the company violated the pricing law, he or she can request that a local circuit court force it to roll back the price and return money to consumers. That court can also impose a fine of up to $10,000.00 for each violation under the law.

Chester Davis, Jr., President and CEO of the Association for Affordable Medicines, has issued a statement asking for a veto of the bill, stating, “it is threatening the savings patients and taxpayers receive from affordable generic drugs.” He further notes, “in 2015 generic drugs delivered $227 billion in savings to the U.S. healthcare system, and $1.6 trillion in savings over the last decade. For that same calendar year, generic drugs comprised 89% of all prescriptions written in the United States, but accounted for only 27% of total prescription drug costs.”

Davis expresses concern about unintended consequences, “While the desire to take action against bad actors in the industry is understandable, what has been utterly lost in the debate over prescription drug costs in Maryland this session is the law of unintended consequences; namely, that by giving the Attorney General this unbounded and unprecedented level of authority to control pricing in a competitive free market, generic companies will be exposed to a level of risk in Maryland that will require them to evaluate whether they want to continue to market affordable medicines within the state.”

The current Maryland Attorney General, Brian Frosh, applauded the legislation. In a statement released by his office, he stated that the legislation gives Maryland a “necessary tool to combat unjustified and extreme price increases for medicines that have long been on the market and that are essential to our health and well-being.”

Maryland Governor Larry Hogan has not yet signed the bill.

Other State Actions

In New York, Governor Andrew Cuomo has proposed the idea of creating a board to control the costs of drug by allowing that board to determine a “fair price.” This idea has been introduced several times before the Legislature, each time soundly defeated.

Last year, California voters turned down a ballot initiative that would have limited industry’s power to create their own pricing. Now, industry is preparing for a fight in Nevada. A state senator recently introduced a measure to control prices on certain drugs, and the industry is enlisting lobbyists for the fight, according to the publication.

At the national level, President Donald Trump has repeatedly pledged to lower costs through increasing “competition,” while Congress considers proposals for drug importation and Medicare price negotiations. Rep. Elijah Cummings, an influential congressman from Maryland, has been involved in those talks and met with Trump to share his importation proposal earlier this year.

March 29, 2017

Chicago Releases Draft Rules on Industry Representative Licensure

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In a city where crime rates are sky-high and illegal drugs are easily picked up on the street, on November 16, 2016, the City of Chicago passed an ordinance that, effective July 1, 2017, requires pharmaceutical sales representatives to become licensed before they can promote prescription drugs to health care providers within city limits. 

Mayor Rahm Emanuel states that the new licensing requirement is part of a larger series of efforts by the city to combat heroin and opioid addiction. However, the law will impose significant new burdens on any pharmaceutical manufacturer with sales representatives who call on health care providers in Chicago.

The draft rules for this ordinance were released on March 17, 2017.

These recently-released draft rules provide additional detail regarding the licensure requirements as well as other associated education and disclosure requirements with which pharmaceutical representatives will be expected to comply beginning in July of this year.

To obtain their initial licensure as a pharmaceutical representative, applicants must complete an online course, for which proof of completion must be submitted. The cost of the initial license will run each representative $750. Then, to maintain the license, representatives must complete a minimum of five hours of continuing professional education every year thereafter. 

Approved providers for continuing professional education can be found on the city’s website. Making this burden even more onerous, continuing education provided by pharmaceutical manufacturers to their employees will not be accepted as fulfilling the requirement, unless the manufacturer previously applied for, and received, approval. A licensed representative who does not meet these continuing education requirements may face substantial penalties, including suspension or revocation of the license, inclusion in a public list of representatives whose licenses have been revoked, and/or a fine between $1,000 and $3,000 per day of violation.

In addition to the professional education requirement, pharmaceutical representatives will also be required to track and report certain sales information on an annual basis or upon request by the Commissioner of Public Health. This information must include: a list of the health care professionals who were contacted, the location and duration of each contact, the pharmaceuticals that were promoted, and whether product samples or any other compensation was offered in exchange for the contact.

For applicants who receive initial licensure, the time period for the data that must be collected and reported shall cover an 11-month period, starting on the first day of licensure and exactly ending one month before its expiration. For representatives with a renewed license, the data shall cover a 12-month period that will begin one month before the license renewal and will end one more before its expiration.  If the Commissioner of Public Health requests the information at any other time, the request will designate the time period the submission must cover, and it will be due within 30 days of the request.

A pharmaceutical representative who is found to have violated any provision of the Ordinance or these rules will be subject to suspension or revocation of licensure and/or a fine of $1,000 to $3,000 per day of violation. Inexplicably, once a license is revoked, it cannot be reinstated for a period of two years from the date of revocation.

These new requirements will place a significant burden on pharmaceutical manufacturers and their sales representatives who work in Chicago. Late last year, in an attempt to prevent the ordinance from going into effect, a coalition of sixteen pharmaceutical companies, along with organizations such as the Illinois Chamber of Commerce, the Illinois Manufacturer’s Association, the Epilepsy Foundation of Greater Chicago, and the Pharmaceutical Research and Manufacturers of America, wrote a letter to the City Council of Chicago expressing its concerns. The group noted, “[t]hese proposed reporting requirements are unnecessary and duplicating, creating an unnecessary tax on one of the most important sectors of our economy.”

The public is invited to submit any comments it may have on the proposed rules by April 2, 2017. readers are encouraged to send in comments, especially those local to the Chicago area to submit their comments about these regulations. The pharmaceutical industry is one of the most regulated industries in the country as it is.  The FDA requires reps to distribute REMS information on drugs that their company provides.  It is not clear how tracking the office visits and amount of time spent with healthcare providers by pharmaceutical reps is in the public interest.

March 27, 2017

Arizona Enacts Law: Pharmaceutical Companies to Legally Communicate Off-Label Treatment to Medical Professionals

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As many of our readers know all too well, pharmaceutical companies are not permitted to discuss off-label, legal, alternative uses for an approved drug with physicians and other healthcare professionals as regulated by the FDA. However, a bill in Arizona, HB 2382 that passed unanimously (The Free Speech in Medicine Act) has changed that in Arizona. On March 21, 2017, Governor Doug Ducey signed the bill into law, lifting the aforementioned off-label promotion restriction and allowing drug companies to communicate with doctors and other healthcare providers about safe and effective alternative uses for approved prescription drugs.

The law, effective in ninety days, safeguards the free speech rights of pharmaceutical industry members to share truthful research and information about FDA-approved medicines.

“Curbing the exchange of information about off-label treatments by those with the most knowledge about the drug’s uses, risks, and side effects not only prevents patients from receiving the best possible care; it violates the constitutional right to free speech,” said Christina Sandefur, the executive vice president of the Goldwater Institute, and author of the model language upon which HB 2382 is based.

The Goldwater Institute has campaigned for “Right to Try” laws and the Free Speech in Medicine Act follows on the heels of the campaign, with thirty-three states adopting “Right to Try” laws.

“With HB 2382, Arizona is leading the way in protecting free speech in medicine. When doctors are fully informed about the lawful treatment options available to them, they can best serve their patients’ individual needs,” said Sandefur.

Roughly twenty percent of written prescriptions are “off-label,” meaning that the medicine is FDA-approved, but is prescribed for a use or dosage different from the FDA-approval. While doctors can already legally prescribe off-label, federal law prohibits pharmaceutical companies from sharing information about off-label uses with doctors. As a result, doctors and patients may be unaware of alternative treatment options lawfully available them.

The off-label use of cancer drugs is even more common than typical prescriptions. A recent study found that among the ten most prescribed cancer drugs in 2010, approximately thirty percent were prescribed off-label. Even with those facts and statistics, pharmaceutical companies face criminal penalties (and have been prosecuted) for communicating information about lawful off-label uses for approved treatments to doctors and other healthcare professionals. 

HB 2382 is a relatively modest reform. It only protects the sharing of information that is “not misleading, not contrary to fact, and consistent with generally accepted scientific principles;” and it only applies to communication between pharmaceutical manufacturers and licensed healthcare professionals. The bill does not permit pharmaceutical manufacturers to advertise off-label uses directly to the public.

Since Arizona enacted this protection for industry, it is likely to expand options in doctors’ toolkits, enhance patient autonomy, and increase access to healthcare. It will be interesting to see if any other states will follow suit and implement similar laws.   We will watch carefully to see if this law, which aligns with several recent legal cases, prompts the FDA to finally adjusts their guidance on off-label communications.

The Goldwater Institute is pursuing other healthcare policies, all in an attempt to remove barriers that prevent healthcare professionals from providing the care they are trained to give.

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