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The United States Department of Health and Human Services, Office of the Inspector General ("OIG") posted an advisory opinion (Advisory Opinion No. 07-17) last week that addressed whether an individual excluded from federal health care programs who owns the intellectual property to certain technology may legally license the technology to an "unrelated" third party. 

I have often heard OIG officials indicate that they consider their ability to exclude providers from federal health care programs to be their greatest weapon to combat fraud and abuse.  This advisory opinion, perhaps even more than others, addresses how far-reaching this power in fact is--that is, whether the exclusion applies to intellectual property licensed to a third party company in which the excluded individual bears no relation, has no ownership interest, and would receive no remuneration in exchange, and whether ownership of the third party company by the excluded individual's children would have an impact on the analysis.

In the case before the OIG, the requestor pled guilty to a misdemeanor under Section 1128(b)(a)(2) of the Social Security Act, was sentenced to three years probation, fined $2,000,000 and excluded from participation for a mandatory five year period.  The requestor owned the intellectual property rights to an invention and proposed to license the technology to a company formed and wholly owned by the requestor's three children.

The OIG noted that federal health care programs will not pay for items or services furnished directly or indirectly by excluded providers.  The indirect furnishing of such items means that an excluded provider sells items to a distributor who ultimately sells the items to providers that bill federal health care programs for their costs. 

The OIG concluded that the requestor's relationship was attenuated because the requestor would have no ownership interest in the new company and would receive no payments made by federal health care programs for the items provided to program beneficiaries. 

Interestingly, the OIG could have extended its power of exclusion to cover both an excluded individual's children and the license of technology, but the OIG declined to do so.  The OIG called the new company and distributors "intervening entities" that apparently cause a break in the chain.  The OIG also commented on the fact that the requestor's children would own the new company, but decided that the filial relationship does not pose a substantial risk because the parties certified that funds would not flow to the requestor.

 

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Late last week, the Food and Drug Administration ("FDA") issued an alert warning against the consumption of certain products originating in China.  The FDA warned that products packaged and distributed by Shangai Distributor, Inc. of Coamo, Puerto for treatment of erectile dysfunction including RicoSuper Shangai, Strong Testis, Shangai Ultra, Shangai Ultra X, Lady Shangai, and Shangai Regular, also marketed as Shangai Chaojimengnan, contain undeclared active ingredients of FDA-approved prescription drugs and therefore are illegal.  The alert further informs the public that "FDA may take further regulatory actions to protect consumers from these illegal products," but provides no insight as to the nature of these additional regulatory actions.

For additional reading on this alert, see Viagra Ingredient in Chinese Supplements published by the Washington Post.

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In comparison to the Food and Drug Administration, "OIG investigators can more appropriately handle sensitive internal employee misconduct inquiries because OIG investigators are entirely independent of the programs and officials being investigated," wrote Daniel Levinson, Inspector General of the United States Department of Health and Human Services to Andrew C. von Eschenbach,  Commissioner, Food and Drug Administration, on September 6.  Further slapping the Commissioner on the wrist, the letter boldly declares to von Eschenbach the Inpector General's intention to terminate the Memorandum of Understanding between the two parties negotiated in 1998.  The letter states, "Increased congressional and media scrutiny regarding allegations of potential criminal violations of Federal conflict-of-interest statutes and regulations involving FDA and other officials in the Department has resulted in OIG's devoting increased attention and resources to ethics issues.  As a result, OIG investigators and attorneys have developed significant expertise in handling these complex cases."  

Commissioner von Eschenbach was unwilling to accept Levinson's decision without offering a carefully crafted reply.  Though von Eschenbach is willing to discuss implementation of the decision, he felt the need to put the Memorandum of Understanding "in historical perspective and to correct some of the misleading impressions your note to me may create to readers who are not familiar with the facts."

November 30 became the effective date of the change.  In a press release, Senator Chuck Grassley noted, “Cutting the tie is good for the public. It strengthens the role of the Inspector General. And in our system, the Inspectors General are vitally important independent watchdogs within the federal bureaucracy.”

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On October 4, the United States Food and Drug Administration announced that it will hold a meeting on November 14, 2007 at the National Transportation Safety Board Conference Center from 8:00 to 5:00 to review the creation of a new category of drugs--"behind the counter" drugs.  Currently, drugs are divided into two classes, including over-the-counter drugs, or non-prescription drugs, and prescription drugs.  Access to the drugs in this new class would be available without a prescription, but only after a pharmacist intervenes and offers approval.  Supporters argue that the behind the counter classification will benefit patients without health insurance who otherwise would not have access to drugs they need.

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The U.S. Food and Drug Administration ("FDA") has published a final rule establishing regulations for dietary supplements that require current good manufacturing practices (cGMP).  According to the FDA's press release, the "rule ensures that dietary supplements are produced in a quality manner, do not contain contaminants or impurities, and are accurately labeled."  Speaking of the new rule, Commissioner Andrew von Eschenbach, M.D. stated, "This rule helps to ensure the quality of dietary supplements so that consumers can be confident that the products they purchase contain what is on the label."  Commissioner von Eschenbach further noted that, at year end, the FDA will require reporting of adverse events involving these products.

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The 2006 report issued by the Institute of Medicine entitled The Future of Drug Safety: Promoting and Protecting the Health of the Public recommended that Congress create a committee to review the FDA's communication of the safety and efficacy of drugs and other medical products.  In reponse, on Monday, the FDA announced the creation of the Risk Communication Advisory Committee. 

In the press release, acting deputy commissioner for policy Randall Lutter, Ph.D, stated, “Communicating the risks and benefits associated with FDA-regulated products is essential to help consumers and health care professionals make informed decisions.  The Risk Communication Advisory Committee will bring together a broad range of experts and views to help improve FDA’s communication of the science-based information about product risks and benefits that the public needs to make informed decisions.”

The FDA has charged this new committee with taking action to

• help FDA better understand the communication needs and priorities of the general public;
• advise FDA on the development of strategic plans to communicate product risks and benefits; and
• make recommendations to FDA on what current research suggests about crafting risk and benefit messages, as well as how to most effectively communicate specific product information to vulnerable audiences.

 

 

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Most recent news releases discussing the reputation of the FDA have failed to combine the words FDA, integrity and accountability.  Instead, many news stories have included words that convey the opposite message, including, for example, the words deficiencies and "culture of approval."  But alas, for critics, at least, it appears that the barrage of negative media spin and congressional testimony has grabbed the attention of FDA Commissioner Andrew von Eschenbach, forcing him to issue a response.

Seemingly  to combat recent allegations, von Eschenbach announced the creation of the FDA Office of Integrity and Accountability at PhRMA's board meeting held on March 15.  According to FDA News, von Eschenbach stated at the meeting that the mission of the new office will be to ensure that the FDA is "scientific in perspective" and brings "precision to regulations."  The deputy commissioner of policy will oversee the office. 

Indeed, given the steady attacks launched against the FDA, such an office seems to be necessary, appropriate and perhaps, at least according to critics, even overdue.  Whether the new office will actually achieve its mission and calm the criticism, however, remains to be seen.

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The FDA has recently published a guidance document entitled "Drug Safety Information--FDA's Communication to the Public" that discusses the procedure by which the FDA disseminates drug safety information.   The FDA noted that it has been taking a more comprehensive approach to reporting drug safety information to the public and may make safety announcements even before the FDA has decided to take regulatory action.    The FDA acknowledged, however, that "[t]here will always be some tension between the goal of having people informed about potentially important information as early as possible and the goal of having that information thoroughly substantiated."  To address this tension, the FDA will consider multiple factors when determining whether to make information available, including the following:

(1)  Reliability of data;

(2)  Magnitude of the risk;

(3)  Seriousness of the event relative to the disease being treated;

(4)  Plausibility of a causal relationship between the use of a drug and the adverse event;

(5)  Extent of patient exposure;

(6)  Potential to prevent or mitigate the risk in the patient population;

(7)  Effect on clinical practice; and

(8)  Disproportionate impact on particular populations.

The FDA qualified the guidance document by stating that the FDA reserves the right to modify its current approach and to amend the guidance document in the future.

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The Healthcare Update News Service has made available a speech given by former FDA Commissioner Jane Henney, M.D.  The speech is entitled "Reflections of a Former FDA Commissioner" and was given at the Second Annual FDA Regulatory and Compliance Symposium--Managing Risks: From Pipeline to Patient held in August 2006 at Harvard. 

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If you have an employee who isn't performing, would you expand the scope of the employee's duties?Apparently, some of our lawmakers would.  

Last week, the House Subcommittee on Oversight and Investigations held a hearing to discuss the many deficiencies of the FDA's drug review process.  At the hearing, David Ross, a ten year employee of the agency, stated that the FDA manifests a "culture of approval to get a drug product on the market as soon as possible."  He further referenced a drug that made its way to market despite evidence of fraud, liver damage and death.  While the transcript of the hearing is not yet available, you can listen to the testimony by visiting the Subcommittee's web site.   

At the same time, another group of lawmakers introduced legislation that would provide the FDA with the authority to regulate tobacco.  Among other things, as reported by the Kaiser Family Foundation, the legislation would allow the FDA to regulate the "sale, distribution and promotion of tobacco products."  In a Los Angeles Times article, Representative Henry A. Waxman is quoted as saying, "This bill is long overdue, and this is the year, I believe, that regulation of tobacco by the Food and Drug Administration is going to become law."

As highlighted in the Subcommittee's hearings, many believe that the FDA has ineffectively regulated drugs and devices.  Can the FDA handle this new mandate of tobacco regulation if it gains the force of the law?

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On February 13, the House Subcommittee on Oversight and Investigations will hold a hearing to investigate the deficiencies in the FDA's review process.  Among others, the list of witnesses includes the following:  (1) Senator Chuck Grassley (R-Iowa); (2) former FDA medical team leader in the CDER's Division of Anti-Effective Products David Ross; (3) John Powers, former lead medical officer for the Antimicrobial Drug Development and Resistance Initiatives; and (4) Steven E. Nissen, chairman of the Cleveland Clinic's Department of Cardiovascular Medicine.  In the past, Grassley has accused the FDA of withholding evidence of improprieties, and Ross has insisted that the FDA discourages dissent, shuns transparency and pressures reviewers.

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As part of a reinforced commitment to drug safety, the FDA announced last week that it signed a memorandum of understanding with the Veterans Health Administration to share information about drugs, biologics and medical devices regulated by the FDA.  According to the FDA, the "goals of the collaboration are to explore ways to enhance postmarket medical product safety data collection and risk communication through more robust interagency activities.  It will promote efficient use of tools and expertise for medical product risk identification, validation and analysis [and] will help build infrastructure and processes that meet the common needs for evaluating the safety, efficacy, and use of medical products."

As pointed out by Mark S. Senak, author of the hit blog "Eye on FDA," however, this new collaboration "is perhaps most noteworthy because one would have assumed that this was going on all along." 

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Last week, the FDA responded to the Institute of Medicine's 2006 report entitled "The Future of Drug Safety:  Promoting and Protecting the Health of the Public."  In the FDA's press release, the FDA noted plans to increase drug safety by taking actions in support of the following (as taken directly from the press release):

• Strengthening the science that supports the FDA's medical product safety system at every stage of the product life cycle from pre-market testing and development through post-market surveillance and risk management;
  
  
  • FDA initiatives include developing new scientific approaches to detecting, understanding, predicting, and preventing adverse events, developing and incorporating new quantitative tools in the assessment of benefit and risk, and conducting a pilot program to review the safety profiles of certain newly approved drugs on a regularly scheduled basis.

• Improving communication and information flow among all stakeholders engaged in promoting the safe use of medical products; and

• FDA initiatives include the establishment of an advisory committee to provide input to improve the agency's risk communication policies and practices, conducting a comprehensive review of current public communication tools and developing a comprehensive risk communication strategic plan.

• Improving operations and management to ensure implementation of the review, analysis, consultation, and communication processes needed to strengthen the U.S. drug safety system.

• FDA initiatives include engaging external management consultants to help the Center for Drug Evaluation and Research (CDER) develop a comprehensive strategy for improving CDER's organizational culture, and making specific organizational and management changes to increase communications among review and safety staff.

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Star Ledger Joins Bandwagon Criticizing the FDA

Today, the Star Ledger joined FDA critics when it released an article claiming that the FDA "fails to measure drug risks."  The article criticized the FDA's current approach to monitoring drugs, which relies upon drug manufacturers to report serious adverse events to the FDA within 15 days of learning about the events.  The article quoted Curt Furberg, a member of the drug safety and risk management advisory committee at the FDA and a Wake Forest University professor, who stated, "Fundamentally, it is a 1950s-era approach . . . . There is enormous underreporting of adverse events, which leads to delays in detecting problems, and many of the types of adverse events reported are not really relevant."  Furberg reports that only approximately 10% of serious adverse events actually get reported to the FDA.  The article also quoted FDA Deputy Commissioner Scott Gottlieb, who stated, "We need to do more to actively collect information, and not just rely on passive databases that report information sometimes months--and maybe years--after actual events have occurred."

Though the Institute of Medicine called for stronger enforcement powers for the FDA, new labeling requirements, advertising limits and further clinical trials after market approval, it still seems as though there is still no clear plan of action to address the FDA's deficiencies.

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The Office of the Inspector General ("OIG") of the United States Department of Health and Human Services has reported that the Food and Drug Administration's ("FDA") National Drug Code Directory (the "Directory") contains thousands of errors. The OIG's inspection uncovered that over 9,000 prescription drugs are missing from the Directory and the Directory included almost 35,000 drugs that are no longer on the market or are listed in error. The OIG attributes these errors, at least in part, to the FDA's failure to include drugs reported by drug companies and the failure of many drug companies to submit the requisite FDA reporting forms.

The Directory assists the FDA with implementing compliance programs and health initiatives. For example, the FDA references the Directory when it recalls drugs and undertakes bioterrorism efforts. The OIG recommends several measures that the FDA should take to improve its process, including implementing a mechanism to uncover errors and omissions and penalizing drug companies that fail to report and update their information. To view the OIG's report, visit http://oig.hhs.gov/oei/reports/oei-06-05-00060.pdf

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