Life Science Compliance Update

July 25, 2016

Unlikely Bedfellows: SEC Penalties When Industry Fails to Disclose FDA Recommendations for Clinical Trials


In a unique case, the U.S. Securities and Exchange Commission (SEC) recently announced a significant settlement with AVEO Pharmaceuticals for failing to disclose publicly as part of its quarterly financial filings that the FDA had recommended a second round of clinical trials for kidney cancer drug, Tivozanib, as part of the drug approval process. This case represents a new chapter in SEC regulatory oversight involving the life sciences industry when there are omissions, failure to disclose, and other transparency issues involving a company’s SEC filings.

On March 29, 2016, the SEC publicly announced fraud charges against the Massachusetts-based biotech company Aveo and three of its former executives for misleading investors about the company’s efforts to obtain Food and Drug Administration (FDA) approval for its flagship developmental drug Tivozanib, which is intended to treat kidney cancer. 

Read Full Article in the July 2016 Issue of Life Science Compliance Update


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July 21, 2016

CMS Delays Hospital Ratings – No Stars Yet

The Centers for Medicare and Medicaid Services (CMS) postponed publication of its hospital ratings after numerous members of Congress objected to the rating system's possible unfairness. The publication may now be published this month, but could see delay if there is additional pressure from industry and/or Congress.

Originally, CMS had planned to release a new star ratings system on Hospital Compare on April 21. The current star ratings, which went live in April 2015, incorporate only patient experience scores, and the new overall star ratings intend to include quality measures such as readmissions, mortality, effectiveness of care and timeliness of care in addition to patient experience scores.

In its announcement to delay the publication, CMS said it developed its methodology in coordination with many stakeholders, but it would delay the overall star ratings release in response to "targeted concerns about specific calculations" and feedback from stakeholders. Congress is a major source of these concerns.

"Many prominent hospitals that are in the top echelon of other quality rating reports, and handle the most complex procedures and patients, will receive one or two stars (out of possible five), indicating that they have the poorest quality in comparison to other hospitals," lawmakers wrote to CMS Acting Administrator Andy Slavitt in an April 18 letter signed by 225 members of Congress.

The lawmakers' specific concerns included CMS' insufficient disclosure of its methodology and the possibility the rating system gives excessive weight to the "patient experience of care" category, as reported by patients, which accounts for 25 percent of a hospital's score, according to CMS's Quality Net website. The remaining criteria categories are outcome (40 percent), efficiency (25 percent), and clinical process of care (10 percent).

American Hospital Association president and CEO Rick Pollack hailed the delay as "a necessary step as hospitals and health systems work with CMS to improve the ratings for patients, and the AHA commends CMS for their decision. Health care consumers need reliable, factual information to make critical care decisions."

The American Hospital Association wrote to hospitals in a January 27 Quality Advisory report that of the 3,600 hospitals rated, 87 (2.4 percent) are expected to receive five stars and 858 (23.5 percent) to receive one or two stars.

Previously, CMS explained how it arrived at the 2016 star ratings in a report describing its methodology for calculating overall hospital quality.

The ratings, which measure hospitals on a five-star scale, took into consideration 113 measures of inpatient and outpatient quality, according to the report. The data are derived from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey.

CMS grouped quality measures in seven categories, weighted by importance. The categories and their weighting are: mortality (22 percent), safety of care (22 percent), readmissions (22 percent), patient experience (22 percent), effectiveness of care (4 percent), timeliness of care (4 percent) and efficient use of medical imaging (4 percent).

Additionally, as has been reported, last year CMS created a star rating to represent the views of patients in surveys. Two sets of researchers recently determined that hospitals with more stars in patient experience tended to have lower death and readmission rates.

Hospital Compare received 3.7 million unique page views last year, according to a paper published this in the journal Health Affairs. The author, analyst Steve Findlay, called the traffic "not at a level commensurate with [the] stature and potential" of the federal government's health care facility comparison sites.

July 12, 2016

EFPIA Transparency Begins

Europe has recently pulled the trigger on their version of our Sunshine Act. While it is true that, with the exception of Denmark, France, and Portugal, the requirement to disclose does not have the force of law, information on money paid to individuals will be available for public scrutiny for the first time in Europe.

However, with the exception of those three aforementioned countries, pharmaceutical companies that are responsible for collecting the information must get consent from each individual healthcare professional or organization before they can publish it.

This move comes after a strong push by the European Federation of Pharmaceutical Industries and Associations (EFPIA). EFPIA, which has many major pharmaceutical companies among its members, has issued a minimum standard for what is required for disclosure for its members.

However, such a requirement that most countries involved require consent of professionals and organizations will likely result in differences in the level of compliance from country to country, and maybe even organization to organization. According to Andrew Powrie-Smith, responsible for implementation at EFPIA, "[t]here are differences in culture, differences in privacy law – Germany for instance has very strong laws – there are different socio-economic conditions in different countries, so inevitably there will be variation."

It isn't just the variation in the level of consent from healthcare professionals and healthcare organizations, there will also be differences in the way information is published. For example, for some countries (i.e., the Netherlands and the United Kingdom), there is a central database, whereas in other countries the data will be accessible via the websites of individual pharmaceutical companies.

How Are the Countries Coping?

In the United Kingdom, the Association of British Pharmaceutical Industry (ABPI) turned on its centralized database on July 30, 2016, disclosing aggregate spending of £340.3million ($450 million) by over one hundred companies. Most of the payments (67%) involved payments for Research & Development. The other third of payments was for a range of commercial activities, with roughly half of that third going toward a range of service and consultancy fees. Event-related payments (i.e., travel and accommodation) and donations and grants to healthcare organizations.

In the UK, however, roughly one third of physicians featured in the new, public database refuse to be named and some companies have faced difficulties in getting healthcare providers to disclose their own details, outlining some of the difficulties that are likely to continue and plague the EFPIA transparency effort.

Kyriakos Mikellis, President of the Cyprus Association of Research and Development Pharmaceutical Companies (KEFEA), notes that his aim is "to boost the legitimate relationship and cooperation between pharmaceutical companies, healthcare professionals and healthcare organizations, boosting credibility through transparency and making it more comprehensible to patients and all relevant stakeholders."

In Switzerland, the organization responsible for the implementation of the EFPIA requirements is, the Swiss business association of chemistry, pharmaceuticals and biotechnology. The association coordinated with various pharmaceutical associations and drafted the Pharma Cooperation Code (PCC). The PCC was drafted in an attempt to regulate interactions between pharmaceutical companies, doctors, pharmacists, and other stakeholders, in Switzerland.

EFPIA Intent

According to Powrie-Smith, the goal is not to shame physicians, but instead to "make sure we do whatever we can to make the relationship as transparent as possible, to get consent and get the information in the public domain in a way the public can access it." He acknowledges the importance of cooperation between industry and health care professionals, but is hoping that this transparency effort will provide an understanding of why such coordination is crucial.


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