Life Science Compliance Update

February 22, 2017

Citizens Petition Challenges FDA’s Off-Label Rule


On February 8, 2017, three organizations called on the United States Food and Drug Administration (FDA) to overhaul a newly finalized regulation giving the agency wide latitude to police off-label promotion, saying it contains abrupt and unconstitutional policy changes. The three organizations include: Pharmaceutical Research and Manufacturers of America, the Biotechnology Innovation Organization, and the Medical Information Working Group (a coalition of pharmaceutical manufacturers).

The three organizations collectively represent essentially all major drugmakers, and the petition challenges a January 9, 2017, final rule issued by the FDA. The final rule revised the definition of “intended use” to include a new “totality of the evidence” standard that wasn’t in the proposed rule. The final rule caught the pharmaceutical and medical device industries off guard because the proposed rule simply deleted the knowledge-based labeling directive without hinting at a change to a totality-of-evidence standard.

The Citizens Petition

The three groups filed a citizens petition because they believe that the FDA violated the Administrative Procedure Act (APA) because stakeholders were not given fair notice of the revision and opportunity to comment. It also undercuts the FDA’s reasoning for implementing a totality-of-evidence standard, stating that such a standard is overly vague and not supported by relevant case law.

The petition states that, among the consequences resulting from the revised definitions, the open-ended, subjective totality of the evidence standard will result in: (1) increased False Claims Act (FCA) litigation because qui tam relators will be emboldened to use circumstantial evidence to allege that manufacturer communications caused the government to pay for off-label uses of medical products; and (2) a chilling of free speech about legitimate scientific data related to off-label uses of medical products.

According to Bloomberg, some attorneys agree with the three organizations that the FDA violated the APA when it made the change to the final rule.

Stay of Rule Requested

The industry groups said in the petition the FDA should indefinitely stay the final rule, reconsider it and use a final definition of “intended use” that is consistent with the proposed rule issued in 2015.

The final rule, published in the Jan. 7 Federal Register, also describes when a product made or derived from tobacco intended for human consumption will be subject to regulation as a drug, device or a combination drug/device product under the Federal Food, Drug and Cosmetic Act. The rule’s effective date was Feb. 8, but the FDA postponed it until March 21 in a Feb. 7 Federal Register notice.

The FDA has 180 days to respond to a citizen petition, but the agency can respond by saying it is still considering the issue, Bradley Merrill Thompson, a Washington-based attorney with Epstein Becker & Green PC, told Bloomberg BNA. Therefore, the deadline is not really that effective.

Totality of the Evidence

In the proposed rule, the FDA deleted from the “intended use” definition a provision that said if a manufacturer has knowledge that a drug or device is used for off-label conditions, the manufacturer is required to provide adequate labeling for that use. But in the final rule, the FDA replaced that provision with languages saying it would consider “the totality of the evidence” when deciding whether a company needs to provide labeling for an off-label use.

The petition said that under a totality of evidence standard, “everything may be considered to establish a product’s intended use. This standard would allow FDA to rely even on non-promotional scientific exchange as evidence of intended use” and could include clinical practice guidelines and a company’s response to unsolicited requests for information about off-label uses.

Anne K. Walsh, an attorney with Hyman, Phelps & McNamara PC in Washington, told Bloomberg BNA the totality of evidence standard “it’s clear to me that FDA tried to avoid the notice and comment requirements of the APA,” Walsh said. Walsh said the petitioner’s APA argument “is certainly strong enough that they could have filed directly with the court and challenged it on an APA basis.”

Deborah M. Shelton, a partner in the FDA Practice Group of McCarter & English in Washington, told Bloomberg BNA the FDA “is saying [in the final rule] it’s not the knowledge in and of itself that would inform the ‘intended use,’ but that could be part of the equation and could go into the totality of evidence.”

“The petitioners have a very strong argument that this is actually a change in position from the proposed rule. To do that in the final rule without providing an opportunity for comment, is arguably violative of the APA,” Shelton said. Shelton noted that she felt it makes sense for the FDA to stay the final rule.

Public Citizen’s Health Research Group Disagrees

Michael Carome, director of Public Citizen’s Health Research Group, told Bloomberg BNA Feb. 13 that he doesn’t think the FDA violated the APA in making the change in the final rule. “We don’t think there’s anything unique there that’s inconsistent with the existing regulation or what was proposed in 2015,” Carome said.

The proposed rule struck the last sentence of the definition of “intended use,” which said “that if a manufacturer knows that a drug or device is being used for off-label uses such knowledge would require the manufacturer to update the labeling for that use,” Carome said.

Valeant and Philidor Controversy Comes to a Head


Valeant Pharmaceuticals, Inc. has had quite the year - they have been under scrutiny since October 2015. However, in November 2016, one former Valeant executive and one former Philidor executive, were arrested and charged with criminal complaints. This article outlines those complaints, and the actions the individuals allegedly took to be criminally charged. 

It all started back in October 2015, when a short seller alleged that there was something inappropriate with the relationship between Valeant Pharmaceuticals and its closely linked specialty pharmacy, Philidor. Members of Wall Street – among others – thought that Valeant’s CEO Michael Pearson had a new plan: to create a drug company that focuses on distribution, and let someone else do the research. While controversial, the plan seemed to work for some time, as Valeant’s stock rose to an all-time high of $260.00 per share. What a difference a year makes. Now Valeant stock is trading around $14.00 per share.

Read the full article in the February 2017 issue of Life Science Compliance Update

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February 21, 2017

CMS Releases Report to Congress on CMMI


The Centers for Medicare and Medicaid Services (CMS) released a new report to Congress prepared by the CMS Innovation Center (CMMI) highlighting its achievements since its start in 2010 and laying out plans for implementation of future models. In conjunction with the report to Congress, Dr. Patrick Conway, Acting CMS Principal Deputy Administrator, published a blog post on the CMS website, highlighting the CMMI.

According to both the report and the blog post:

  • Over 30 new payment models have been launched over the past six years;
  • Investments in electronic medical records and a data and analytics infrastructure are sparking a new set of innovative companies;
  • The CMS Innovation Center’s portfolio of models has attracted participation from a broad array of health care providers, states, payers, and other partners. An estimated 18 million individuals, including CMS beneficiaries and individuals with private insurance included in multi-payer models, have been impacted by, have received care, or will soon be receiving care furnished by more than 207,000 health care providers participating in CMS Innovation Center payment and service delivery models and initiatives. These models are delivering care to people in every state across the nation;
  • Medicare exceeded – earlier than predicted – the goal to tie more than 30 percent of fee-for-service payments by the end of 2016 through alternative payment models to quality and cost metrics. Medicare is on pace to reach 50 percent by the end of 2018.

The future is also bright for CMMI, as there are several initiatives on the horizon, including:

  • The Medicare Diabetes Prevention Program expanded model, set to begin in 2018, will pay for services to prevent the onset of diabetes to all eligible Medicare beneficiaries, improving their health and that of the Medicare program both now and in the future. It is estimated that Medicare spent $42 billion in 2016 on fee-for-service, non-dual eligible, over age 65 beneficiaries with diabetes.
  • Three new payment models—the Acute Myocardial Infarction Model, the Coronary Artery Bypass Graft Model, and the Cardiac Rehabilitation Incentive Payment Model—will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation.
  • Through the Comprehensive Primary Care Plus Model, primary care doctors can care for their patients the way they think will deliver the best outcomes, and they’ll get paid for achieving results and improving care.
  • One new payment model—the Surgical Hip and Femur Fracture Treatment Model—will support clinicians in providing care to patients who undergo surgery after a hip or femur fracture beyond hip replacement. In addition, updates have been finalized to the Comprehensive Care for Joint Replacement Model, which began in April 2016.
  • The Accountable Health Communities Model, beginning in 2017, will test whether increased awareness of and access to services addressing health-related social needs will impact total health care costs and improve health and quality of care for Medicare and Medicaid beneficiaries in selected communities.
  • Thirty-eight states and territories are engaged in the State Innovation Models initiative where they are testing their own best ideas to improve health, quality of care, and lower costs. Additionally, Vermont and Maryland have entered into global payment arrangements to improve care for the whole state’s population.

CMMI has recently announced more than five new or re-opened opportunities for clinicians to join Advanced Alternative Payment Models. CMS expects 125,000 to 250,000 clinicians to be participating in Advanced Alternative Payment Models by 2018. CMMI and CMS will continue to develop new payment models, guided by the following core principles: Supporting innovative payment and service delivery models with strong potential to improve health care quality and lower costs; engaging with and listening to consumers, providers, and other stakeholders allowing for open and transparent dialogue, including through the appropriate use of notice-and-comment rulemaking and ombudsmen; and evaluating results based on appropriately scoped and sized demonstrations and advancing best practices based on their impact on quality and cost.


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