On October 10, 2018, President Donald Trump signed into law the “Know the Lowest Price Act” and the “Patients’ Right to Know Drug Prices Act,” which aim to improve consumer access to drug price information by banning gag clauses. The Trump administration previously announced its intention to enact this legislation in its May 2018 Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs and will likely point to these new federal laws as affirmation of its commitment to drug pricing reform that favors patients and consumers.

These bills—one of which applies to Medicare and the other to commercial insurance plans—ban “gag order” clauses in contracts between pharmacies and pharmacy benefit managers (“PBMs”) that are designed to prevent pharmacists from disclosing to a patient at the pharmacy point of sale whether or not a drug’s cash price would be lower than the patient’s cost-sharing burden under his or her insurance plan. Pharmacies that had violated contractual gag orders have traditionally risked losing their network contracts with PBMs or faced other sanctions. Under these new federal laws, pharmacists are not required to disclose information about lower costs but cannot be contractually obligated to keep quiet regarding possible patient cost savings. The bill affecting Medicare beneficiaries will go into effect on January 1, 2020, while the bill banning “gag order” clauses for commercial insurance contracts took effect immediately upon signing by President Trump.

These new federal bans on pharmacy gag clauses represent a significant reform at the federal level and a victory for pharmacy interests, which have long decried these clauses as unfairly intruding into pharmacy practice. This federal reform has broad bipartisan support, as reflected by the Senate’s passage of the bills by a resounding vote of 98-2. Thus, in contrast to some of the other proposed reforms in the Trump administration’s Blueprint, including PBM fiduciary duties and restrictions on manufacturer rebates, the gag clause issue represents “low-hanging fruit” for the administration’s efforts at drug pricing reform.

While these new federal laws will ensure and promote transparency between pharmacists and patients and the potentially improved disclosure of pricing information, it is unclear whether these new federal laws will dramatically reduce costs for consumers. Some industry observers have questioned whether PBMs still routinely impose “gag order” clauses in pharmacy agreements and the extent to which they are actually enforced by the PBM and adhered to by a pharmacy. In a statement to CNN,[1] Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, said that “gag order” clauses are “very much an outlier.” Likewise, a spokesman for Express Scripts, the nation’s largest PBM, expressed support for the ban and noted that Express Scripts does not engage in this “anti-consumer practice.”[2] Additionally, many states already had passed their own laws banning “gag order” clauses in the past two years, meaning that many PBMs operating across state lines already had begun to reduce their use of gag orders in order to comply with these state laws.[3] Further, the legislation does not directly regulate the actual pricing of prescription drugs.

These new federal laws will provide the Trump administration and members of Congress with an important talking point during these 2018 midterm elections. In the meantime, industry observers are closely monitoring other developments relating to the Blueprint and whether additional, and perhaps more controversial, reforms will be implemented in the near future.

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[1] Vazquez, Maegan, Trump signs bills aimed at increasing drug price transparency, CNN (Oct. 10, 2018) https://www.cnn.com/2018/10/10/politics/drug-prices-legislation-signed-into-law-donald-trump/index.html.

[2] Firozi, Paulina, The Health 202: ‘Gag clauses’ mean you might be paying more for prescription drugs than you need to, Wash. Post (July 5, 2018) https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2018/07/05/the-health-202-gag-clauses-mean-you-might-be-paying-more-for-prescription-drugs-than-you-need-to/5b3a36ca1b326b3348addc4a/?noredirect=on&utm_term=.f724b985ae49.

[3] See, e.g., Me. Rev. Stat. Ann. tit. 24-a, § 4317(13); Va. Code Ann. § 38.2-3464.

On October 2, 2018, FDA Commissioner Scott Gottlieb released a statement announcing new agency actions to further deter “gaming” of the generic drug approval process through the use of citizen petitions.  Among these actions, the most significant was the issuance of a revised draft guidance on citizen petitions subject to Section 505(q) of the Federal Food, Drug, and Cosmetic Act (“FDCA”), published on the same day.  The stated goal of this revision was to create a more efficient approach to 505(q) petitions and to allow the Agency to focus reviewer resources on scientific reviews.

For years, FDA has been addressing allegations that companies have been using the citizen petition process to delay competitor approval, thereby “gaming” the system, while also balancing the value of individuals exercising their First Amendment rights through the citizen petition process.  In 2007, Section 505(q) was added to the FDCA through the FDA Amendments Act (“FDAAA”).  This new statutory provision provided that FDA shall not delay the approval of a pending abbreviated new drug application (“ANDA”) or 505(b)(2) application as a result of a citizen petition (pursuant to 21 CFR 10.30) or a petition for stay of action (pursuant to 21 CFR 10.35), unless the Agency determines that a delay is necessary to protect public health.  Section 505(q) also requires FDA to take final agency action on a petition “not later than 150 days after the date on which the petition is submitted.”  In 2014, FDA issued a guidance document describing the Agency’s interpretation of Section 505(q) and the process by which it determines whether the section applies to a particular petition.

The revised draft guidance document that was released last week includes much of the same information contained in the 2014 guidance.  However, it also includes substantially more detail and clarification on how the Agency makes a determination that a petition would delay an ANDA or 505(b)(2) application.  For example, the revised guidance states that one criterion in finding a delay is that the ANDA or 505(b)(2) applicant has less than 150 days left on a pending review.  The draft guidance also explains that FDA will apply a “but for” test in evaluating whether a delay is caused, essentially asking, “Would the application be ready for approval but for the issues raised by the petition?”

The revised draft guidance also provides a number of factors that FDA will consider in making a determination that a petition was filed with the primary purpose of delaying approval.  These include factors such as whether the petition was submitted close in time to the expiration of a patent or exclusivity period, or whether the petition raises the same or substantially similar issues as a prior petition to which FDA has already responded.  FDA will also consider whether the petitioner took an unreasonable amount of time in filing the petition based on when the relevant information relied upon in the petition became known (or should have become known).  A full list of the factors can be found on page 16 of the guidance.

If FDA makes the determination that a petition has been submitted with the primary purpose of delaying an application, it will then decide whether the petition can be summarily denied pursuant to Section 505(q)(1)(E).  In addition, if the Agency makes such a determination, it intends to refer the matter to the Federal Trade Commission and notify Congress in its annual report. Such an FDA determination could potentially have serious consequences as it may support causes of action related to unfair competition under the Federal Trade Commission Act, Lanham Act, and various state laws, which can carry substantial penalties.

On October 16, 2018 the Department of Health and Human Services Office for Civil Rights (“OCR”) and the Office of the National Coordinator for Health Information Technology (“ONC”) announced an update to their previously provided Security Risk Assessment Tool.  According to ONC and OCR, the “tool is designed to help healthcare providers conduct a security risk assessment” as required under the HIPAA Security Rule.  ONC states that the updated tool includes additional features such as:

  • Enhanced user interface
  • Modular workflow
  • Custom assessment logic
  • Progress tracker
  • Threats & vulnerabilities rating
  • Detailed reports
  • Business associate and asset tracking
  • Overall improvement of the user experience

As with prior tools, the ONC/OCR tool includes a broad disclaimer noting that use of the tool “does not guarantee compliance with federal, state or local laws”.  Indeed, ONC and OCR encourage providers to “seek expert advice when evaluating the use of the tool.”

Ultimately, while the tool may provide a useful resource for small physician groups, larger organizations are more likely to need what is rapidly becoming the industry standard of having a security risk assessment/risk analysis performed by an outside third party, and ensuring additional assessments (such as penetration testing of the systems) are a part of that full risk assessment for the organization.

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If your organization has any questions or needs assistance with a privacy and security related issue, please reach out to members of our Privacy and Security Group: Patricia Wagner, Alaap Shah, Brian CesarattoAdam Forman, or Wenxi Li.

The FDA issued a new Draft Guidance today to ensure medical devices – an increasing potential target for hackers – are better protected from unauthorized digital access.

According to the FDA’s draft guidance issued today, “Cybersecurity incidents have rendered medical devices and hospital networks inoperable, disrupting the delivery of patient care across healthcare facilities in the US and globally. Such cyberattacks and exploits can delay diagnoses and/or treatment and may lead to patient harm.”

Under the proposed draft guidance manufacturers will be required to better protect their devices in a more uniform manner as prescribed by the FDA. The new pre-market submission proposals are designed to help guide the industry in designing these digital safety mechanisms from the beginning of product design and development.

The New Guidance covers Premarket Notification (510(k)) submissions (including Traditional, Special, and Abbreviated); De Novo requests; Premarket Approval Applications (PMAs); Product Development Protocols (PDPs) that contain software (including firmware) or programmable logic; as well as software that is a medical device.

While manufacturers are required under Quality System Regulations to establish and maintain procedures for validating the devices design including software validation and risk analysis, FDA is recommending validation include design controls to ensure medical device cybersecurity and maintain medical device safety and effectiveness. Including these design controls may make it easier for FDA to “find your device meets its applicable statutory standard for premarket review.”

The recommendations in the newly released Draft Guidance describe using a more risk-based approach to the design and development of appropriate cybersecurity protections. The FDA wants manufacturers to design programs to follow their devices throughout the device lifecycle, monitor new and potential threats, and issue cybersecurity updates to thwart new attempts at unauthorized digital access of the devices.

Because devices that connect to the internet or wirelessly to other devices pose a new and larger threat to cybersecurity, the FDA is requiring a Cybersecurity Bill of Materials be included in the manufacturers filing to identify key components and accessories that could render the device vulnerable to “hacking”. The FDA is creating a new Tier 1 level of standards for these devices to ensure greater security than Tier 2 devices (those that are not wirelessly or internet connected).

Design controls should include appropriate authorization such as ID’s, passwords, time limited sessions with auto logout, layered authorization (i.e. patient, healthcare professional, technician) should now be used in the design of these devices. Authentication and authorization of critical safety commands will be considered in new submissions. In addition, proper labeling to warn patients and providers of the cyber security risks involved in these devices is essential.

For an updated list of FDA recognized consensus standards the Agency recommends that you refer to the FDA Recognized Consensus Standards Database.

 

 

 

On September 28, 2018, the U.S. Food and Drug Administration (FDA) released two draft guidances for industry. The purpose, according to FDA Commissioner Scott Gottlieb, M.D., is to modernize the approach to clinical trial design in efforts to (1) make clinical trials more efficient while maintaining patient safety and (2) increase the amount of information concerning product safety and benefits. The two draft guidances are entitled: “Master Protocols – Efficient Clinical Trial Design Strategies to Expedite Development of Cancer Drugs and Biologics” and “Adaptive Designs for Clinical Trials of Drug and Biologics.” This is the second of the two-part blog series describing the updates to the agency’s recommended approach to incorporating master protocols in clinical trials of new drugs and biological products for the treatment of cancer. The first of the two-part blog series described FDA’s recommended considerations to “adaptive designs” used in clinical trials.

In brief, the “Master Protocols Guidance” provides FDA recommendations to sponsors that desire the opportunity to run several related oncology studies concurrently under a master protocol, defined as “a protocol designed with multiple substudies, which may have different objectives and involves coordinated efforts to evaluate one or more investigational drugs in one or more disease subtypes within the overall trial structure.” This would give sponsors the ability to expand the reach of their oncology clinical studies to observe safety and efficacy in multiple subtype populations, disease subtypes, drug combinations and/or dosages.  Master protocols may be utilized to provide data for exploratory purposes or to support a marketing application.

Running an oncology clinical trial with a master protocol potentially benefits the sponsor by allowing the sponsor to concurrently evaluate multiple studies that may have different objectives, thus potentially saving time and costs as compared to running separate clinical trials. However, FDA also acknowledges that a master protocol may introduce challenges that, if not properly addressed, can increase risk to study subjects or delay the development of the product. Therefore, FDA released this guidance to provide recommendations to sponsors that are considering incorporating a master protocol into their clinical trial design to help them avoid unnecessary delay in the IND review process.

In the Master Protocol Guidance, FDA describes two types of master protocol designs: (1) the “basket trial” design and (2) the “umbrella trial” design. The basket trial is designed to test a single investigational oncology drug or drug combination in different populations (e.g., disease subtypes, biomarkers, demographic characteristics, etc.). FDA states that each substudy within a basket trial should include specific objectives, the scientific rationale for inclusion of each population, and a detailed statistical analysis plan that includes sample size justification and stopping rules for futility. In contrast, the umbrella trial is usually designed to evaluate multiple investigational oncology drugs administered as single drugs or as drug combinations in a single disease population. FDA reminds sponsors that appropriate dosages should be established for each investigational drug in Phase 2 studies prior to evaluation of the drug in a master protocol. Because umbrella trials can be used to compare the activity of investigational drug(s) in randomized controlled studies with a common control arm, FDA strongly recommends that the control arm be the standard of care (SOC) for the target population, noting that the SOC may change over time as newer treatments are adopted.

Additionally, FDA provides specific design considerations that sponsors are strongly recommended to address in their master protocols:

  • If sponsors are investigating a novel combination of two or more investigational drugs, the master protocol should summarize available safety, pharmacology, and preliminary efficacy data for each investigational drug; the biological rationale for use of the drugs in combination instead of individually; and evidence, if any, the interaction of the drugs when used together.
  • If sponsors are investigating drugs that target multiple biomarkers, the master protocol should include a prespecified plan for allocating patients who are potentially eligible for more than one substudy.
  • If sponsors seek to potentially add, expand, or discontinue treatment arms, sponsors should ensure that the master protocol and its associated statistical analysis plan (SAP) describe the conditions that would result in making such adaptations.
  • If sponsors anticipate utilizing the results from one or more of the substudies in support of a marketing application, the master protocol should describe and provide the charter for an independent radiologic review committee to perform blinded tumor-based assessments, a charter for an independent data monitoring committee (IDMC) to monitor efficacy results and safety results or alternatively an independent safety assessment committee (ISAC). The charter should authorize these committees to conduct prespecified and ad hoc assessments of efficacy, safety, and futility and recommend protocol modifications or other appropriate actions (i.e., adjusting sample size; discontinuing the substudy based on futility or substantial evidence of efficacy).
  • If sponsors are utilizing master protocols to evaluate biomarker-defined populations, the master protocol should explain why the use of the biomarker is appropriate and also include a validated in vitro diagnostic (IVD) test.

According to the Master Protocol Guidance, each sponsor will need to submit each master protocol as a new IND. When submitting an IND with a master protocol, the sponsor should consider the following:

  • The master protocol should be the only trial conducted under the IND;
  • The master protocol should be submitted to either CDER or CBER for review of the primary indication(s). If more than one indication is being investigated, the IND should be submitted to the most appropriate clinical review division within the Office of Hematology and Oncology Products in CDER or CBER, taking into account the population to be studied.
  • In addition to the elements required to be included in an IND submission under 21 CFR Part 312, the master protocol should include:
    • A detailed description of the trial design as text and as a visual illustration;
    • Procedures for sample acquisition, handling, and testing of biomarkers, if appropriate;
    • Identification of all substudies;
    • A description of all committee groups responsible for patient safety monitoring;
    • A description of the plan for submitting interim safety and efficacy results; and
    • The proposed informed consent document.

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As mentioned above, incorporating master protocols into a clinical development program may have advantages, as these studies may reduce burdens associated with conducting separate studies and increase product speed to market.  If these benefits are realized, the end result may be improved patient access to therapeutic oncology interventions and lower costs of drugs through reduced development costs and greater competition.  However, concurrent evaluation of multiple oncology drugs and/or disease populations within a single trial is complex. Therefore, it is important that the trials are well-designed and well-conducted to ensure research subject safety and obtain quality clinical study data in support of drug or biological product approval. This guidance provides a glimpse of FDA’s approach to modernizing product development. Sponsors and stakeholders with an interest in developing their products under a master protocol are strongly encouraged to review this guidance and submit comments to FDA by November 30, 2018.

Two draft guidances issued together late last month seek to increase both clinical trial efficiency and the amount of information that is available about a drug’s safety and benefits.  The two draft guidances address, respectively, adaptive designs and master protocols.  This blog post discusses FDA’s recommendations for adaptive designs; master protocols will be addressed in a subsequent blog post.

An adaptive design is a “clinical trial design that allows for prospectively planned modifications to one or more aspects of the design based on the accumulating data from subjects in the trial.”  The ability to make changes to a study in progress allows investigators to take into account new information that was not known when the study began.  According to FDA, adaptive designs can both provide a greater chance to detect a true drug effect and reduce the number of patients exposed to ineffective investigational treatments (since effectiveness will be more easily detected earlier in the trial).  Because adaptive designs allow for greater flexibility, they also may be more acceptable to those conducting and those participating in clinical trials. For sponsors in particular, adaptive designs can potentially both save time and reduce costs.  Adaptive design can also have ethical advantages by facilitating early termination of trials once it becomes clear that a trial is unlikely to demonstrate effectiveness, thereby minimizing risk to participants.

At the same time, the draft guidance recognizes that adaptive designs increase the risk of “Type I” (false positive) errors, i.e., concluding that a drug has a beneficial effect when it does not.  To mitigate this risk, the draft guidance recommends sponsors employ methods to determine appropriate statistical thresholds for interim and final analysis to ensure that the overall Type I error is controlled at 2.5 percent.  Similarly, the draft guidance acknowledges the risk of bias that can result from early unblinding of a study, and recommends limitations on who may access such data to mitigate this risk.

A key element of adaptive design is pre-specification (i.e., planning in advance), including pre-specification of the number and timing of interim analyses, what statistical methods will be used to interpret the interim data, and how the study design will be changed depending on the results of such analyses.  Failure to pre-specify can result in the introduction of bias and thereby put the quality and integrity of study data at risk. Therefore, FDA strongly recommends that prespecified protocols are included in the clinical study design to ensure that access to comparative interim results are limited to individuals with relevant expertise who are independent from personnel involved in conducting or managing the trial.

Because adaptive designs introduce certain added complexities, FDA recommends that sponsors provide additional information when submitting a protocol for FDA review, including a detailed description of the monitoring and adaptation plan, information on who will be responsible for implementing the adaptive design, pre-specification of the statistical methods to be used, and a comprehensive written data access plan to maintain data integrity and quality.

The new adaptive designs draft guidance supersedes an earlier draft guidance issued in 2010.  At that time, adaptive designs were in their infancy, and proponents of adaptive designs viewed FDA’s initial guidance as a first step in considering how best to integrate them into clinical trials to support FDA regulated products and recommended that FDA guidance evolve in response to greater experience with the use of different adaptive study designs.  The new draft guidance reflects such evolution in FDA’s thinking; for example, in acknowledging the potential adverse impact arising from Type I error and in eliminating confusing categorization of “well understood” and “not well understood” adaptive design methods in favor of a more focused assessment of factors, such as unblinding, that can increase risk of bias.

FDA encourages sponsors to consider and discuss prospective design options with FDA.  Clinical trial sponsors and other stakeholders may want to consider the potential impact of the new guidance on their approach to clinical trials, and to submit comments to the FDA.  The deadline for submitting comments is November 30, 2018.

The American Clinical Laboratory Association (“ACLA”) challenged the final rules promulgated by the Department for Health and Human Services (“HHS”) pertaining to how the Medicare Clinical Laboratory Fee Schedule (“CLFS”) payment rates are established for laboratory services (Am. Clinical Lab. Ass’n v. Azar, No. 17-2645 ABJ, 2018 U.S. Dist. LEXIS 161639, 2018 WL 4539681 (D.D.C. Sept. 21, 2018)). The U.S. District Court of the District of Columbia granted HHS’ motion for summary judgment to dismiss the complaint after concluding that the court lacked subject matter jurisdiction to hear the case. This is a significant set-back for the laboratory industry that has been fighting against the reductions in Medicare reimbursement under the new payment methodology, but it is not the end of the road.

In accordance with Section 216 of Protecting Access to Medicare Act of 2014 (“PAMA”), beginning January 1, 2018 the Medicare CLFS payment rate was established using a volume-weighted median of private payor rates for laboratory services as reported by applicable laboratories. What laboratories met the definition of an “applicable laboratory” and whether HHS had the authority to redefine the term was at the center of the challenge by the ACLA.

In December 2017, ACLA filed a lawsuit arguing that in the final rule HHS redefined the term “applicable laboratory” from the plain text of the statute and in doing so excluded almost 90% of hospital laboratories which reduced private-payment data reported and in turn resulted in lower CLFS payment rates. HHS argued that the terms “laboratory” and “revenue” relevant to determining an “applicable laboratory” were ambiguous and regardless PAMA includes a statutory bar to judicial review.

While ACLA presented multiple claims and arguments, the court focused on the threshold question: whether PAMA bars judicial review of HHS’ authority in “establishment of payment amounts under this section [of PAMA].” The court concluded that the statute did not permit judicial review; relying heavily on Florida Health, a D.C. Circuit case (Fla. Health Scis., Ctr., Inc. v. Sec’y of HHS, 830 F.3d 515 (D.C. Cir. 2016)). In Florida Health, the D.C. Circuit found that the statute gave HHS the power to make the choice as to what data should be used to calculate payment for hospitals’ uncompensated patient care. The reasoning in Florida Health is sound as it relates to the statutory authority granted under at issue in that case. Florida Health, however, seems to be easily distinguishable from the case brought by ACLA because, as the court itself recognized, “Florida Health did not involve a rule about how the Secretary would obtain the data needed … like this case does.” That is, Congress already defined under PAMA what data to be reported and who should report that data. In doing so, we believe the court conflated the breadth of the judicial review bar under PAMA and failed to differentiate between challenging the validity of HSS’ decisions made in the rulemaking process and contesting how and what data must be received and processed as per statutory procedure.

Here, ACLA argued that HHS overstepped its authority by redefining a clear statutory term; however, this was essentially ignored by the court by using the statutory judicial bar as a red-herring and conveniently limiting its analysis. Even though the court acknowledged that ACLA’s arguments “raise important questions,” the court refused to answer those very questions upon its determination that it could not hear the case. The court’s failure to address these issues likely gives ACLA grounds for appeal.

ACLA’s statement, released in response to the decision, reports that the association is exploring further legal options. The statement expresses concern that the decision “sets a harmful precedent that allows agencies to circumvent Congress’ express directions at the expense of patient care.” The association also urged Congress to take immediate action to resolve the issues raised in the lawsuit; specifically, the impact the reduction in Medicare CLFS payment rates will have on the laboratory industry. In the meantime, ACLA must seriously and carefully consider filing an appeal to request their central arguments be addressed and prepare to show the D.C. Circuit how this case can easily be distinguished from Florida Health and the underlying notion of judicial deference for an agency’s implementation of a complex statute.

Of course, even if successful, the ACLA must still address the other jurisdictional issues raised by HHS, such as whether ACLA had standing to bring suit on behalf of its members and if injury to labs or impact on Medicare rates had been proven.

 

Sydney Reed, a Law Clerk (not admitted to the practice of law) in the firm’s Houston office, contributed significantly to the preparation of this post.

The Department of Justice (DOJ) announced this week that it has entered into a settlement agreement with Davita Medical Holdings (Davita) for $270 million dollars to resolve certain False Claims Act liability related to Medicare Advantage risk adjustment payments.

As the settlement agreement describes, Davita acquired HealthCare Partners (HCP), a large California based independent physician association in 2012. HCP, subsequently Davita Medical Group (or Davita), operated as a medical service organization (MSO) who contracted with Medicare Advantage Organizations (MAOs) to provide services and manage the care of its beneficiaries. Davita would provide beneficiary diagnostic information to its MAOs which would be used by the Centers for Medicare and Medicaid (CMS) to calculate the MAO’s risk adjusted capitated payments under the program’s risk adjustment payment methodology. Payments would then be made by MAOs to DaVita under the terms of its risk sharing arrangements.

The settlement resolved allegations raised in the qui tam action filed in District Court for the Central District of California, United States ex rel. Swoben v. Secure Horizons, et al., by James Swoben, a former employee of a MAO that contracted with HCP. Swoben alleged that HCP hired coding companies to perform “one-way” retrospective reviews of member records, whereby the MAO would submit additional diagnosis codes to CMS but not validate previously submitted codes.

The settlement further resolves allegations related to incorrect coding guidance, unsupported but un-retraced codes identified during audits, in-home assessments, incorrect diagnosis mapping to appropriate ICD-9 codes in its electronic medical record, and acute condition codes in the primary care setting.  In its press release, the DOJ emphasized that the failure by Davita to delete unsupported or undocumented diagnosis codes caused the MAOs to retain payments from CMS that they were otherwise not entitled.

Importantly, Davita as downstream provider to MAOs, did not directly submit claims to the Centers for Medicare and Medicaid. Accordingly, this settlement is extremely significant to downstream entities such as MSOs, IPAs, physician practices and risk adjustment vendors who can themselves potentially be subject to “causes to be submitted” and other theories under the FCA.

Epstein Becker Green’s Jason Christ, Teresa Mason and Tom Hutchinson served as counsel and advisor to the Member Representative of the former owners of HCP. Epstein Becker Green was actively involved in co-defending this matter.

On September 20, 2018, the U.S. Food and Drug Administration (“FDA”) released draft guidance “Civil Money Penalties Relating to the ClinicalTrials.gov Data Bank” (“Guidance”). The purpose of this Guidance is to explain FDA’s protocol in (1) determining how the centers will identify whether responsible parties failed to comply with submission and certification requirements to the ClinicalTrials.gov or submitted false or misleading documents to the data banks and (2) deciding when, why, and what civil monetary penalties will be assessed against the responsible parties or submitters. The new guidance seeks to address requirements of responsible parties involved in the performance of clinical research and submission of applications for marketing authorizations to register their trial, submit clinical results information and make certain certifications regarding their compliance with these requirements.  In order to mitigate their risk of civil money penalties in accordance with this guidance,  sponsors and researchers should (1) have policies and procedures that ensure correct clinical trial information is submitted to the ClinicalTrials.gov data bank, (2) have policies and procedures that ensure routine monitoring for missing or inaccurate clinical trial information in the data bank, (3) make timely submissions of the required information, and (4) remain responsive to any inquiries by FDA concerning clinical trial data and/or certifications to FDA.

Background

Under section 801 of the Food and Drug Administration Amendments Act of 2008 (the “FDAAA”), which amended section 402(j) of the Public Health Service Act (42 U.S.C. 282(j)(5)(B)), responsible parties engaged in certain clinical research activities are required to submit registration and results information to the ClinicalTrials.gov data bank. Additionally, submitters of certain applications and other items to FDA regarding drug, biological, and medical device products are required to certify to FDA that all requirements of section 402(j) have been met. Similarly, the FDAAA amended section 301(jj) of the Food Drug and Cosmetics Act (the “FD&C Act”) to prohibit: (1) the failure of submitting or knowingly submitting a false certification to FDA, (2) the failure to submit required clinical trial information, and (3) submitting false or misleading clinical trial information to the ClinicalTrials.gov data bank. Further, the FDAAA amended section 303(f)(3) of the FD&C Act, authorizing FDA to assess civil monetary penalties against the person committing the prohibited acts.

Identifying Noncompliant Responsible Parties and Submitters

In this Guidance, FDA states its intention to utilize evidence collected during FDA’s Bioresearch Monitoring Program (“BIMO”) inspections to assess compliance with registration and results reporting requirements as described in Form FDA 2438 – Chapter 48 – Bioresearch Monitoring (Apr. 19, 2017). FDA also intends to identify violations as a result of complaints received by the Agency, which may entail reviewing public and non-public information, including, but not limited to information submitted to the ClinicalTrials.gov data bank and to FDA.

It is in the best interest of sponsors, researchers, and other parties subject to an obligation to submit clinical trial registration, information, results, and/or certifications to FDA to have policies and procedures in place to ensure correct information is submitted to ClinicalTrials.gov data bank. Policies and procedures should also include periodic review of the data bank to monitor for any missing or inaccurate clinical trial information. Developing and implementing these policies and procedures will mitigate the risk of enforcement for noncompliance with registration and clinical trial results reporting requirements, as outlined in the Guidance.

Determining When to Seek Civil Monetary Penalties

Under Guidance, FDA intends to provide the responsible parties with an opportunity to remedy any prohibited acts under section 301(jj) of the FD&C Act and corresponding regulations (42 CFR Part 11) before initiating an action to recover penalties. Pursuant to the procedures detailed in the Guidance, when FDA determines that when submissions are not timely filed or inaccurate, FDA will generally send the responsible party or submitter a Preliminary Notice of Noncompliance Letter describing the potential violation. The responsible party or submitter will have thirty (30) calendar days to remedy the violation. Should FDA conduct further review and find further or continued noncompliance with the applicable clinical trial requirements, the agency will then issue a Notice of Noncompliance, giving the responsible party or submitter another thirty (30) days to remedy noncompliance after receipt of the notice.

It is in the best interest of sponsors and researchers to promptly respond to any FDA inquiries and notices concerning registration, clinical trial information or certification issues related to the ClinicalTrials.org data bank. Failure to comply within the thirty (30) days of receipt of Notice of Noncompliance will result in FDA escalating regulatory action, including civil monetary penalties, of up to $10,000 for all violations adjudicated in a single proceeding.  Additional penalties of up to $10,000 each day may be included if the violation continues and if said violation is not corrected within thirty (30) days following notification. FDA may also pursue injunction and/or criminal prosecution.

In determining monetary penalties, the FDA will evaluate the circumstances, nature, extent, and gravity of the violation(s) with respect to the individual.  Other factors will include the violator’s ability to continue conducting business, any prior history of such violations, and the degree of culpability in the matter.

Responding To Civil Monetary Penalties by FDA

If FDA seeks civil monetary penalties, according to 21 CFR Part 17, the responsible party or submitter has the opportunity to either: (1) pay the penalty prescribed in the complaint or (2) file an Answer, contesting the allegations either in part or in whole, within thirty (30) days of date of service.

Should the responsible party or submitter contest the allegations by submitting an Answer, generally settlement discussions with FDA are entered into, providing the responsible party or submitter to present mitigating evidence to FDA for purposes of reducing the penalty amount. If a settlement is not reached before a decision on appeal, a presiding officer will make an initial decision, followed by the usual administrative appeal process (e.g., Department of Health and Human Services Departmental Appeal Board and then the U.S. Court of Appeals for the District of Columbia or any other circuit in which the responsible party or submitter resides or conducts business), should either party appeal the initial decision.

 

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A recent BMJ article, “Compliance with requirement to report results on the EU Clinical Trials Register: cohort study and web resource,” reported that for approximately half of the clinical trials, the responsible person did not report results on the EU register while a 2015 New England Journal of Medicine article, “Compliance with Results Reporting at ClinicalTrials.gov,” reported that approximately 20% of industry trials did not report results when required to do so, and 50% of NIH-sponsored research went unreported. While the registration, reporting, certification requirements, and the penalties for noncompliance are not new, FDA’s release of this Guidance should be taken as a signal to sponsors and researchers of its plan to enforce those requirements more rigorously. Therefore, sponsors and researchers should take this opportunity to evaluate the sufficiency of their policies and procedures for compliance with registration and reporting requirements and audit their submissions to ensure they are up-to-date.  Comments are due by November 20, 2018.

Please join Epstein Becker Green attorneys for a fall webinar series—via five 45-minute sessions—that will address how proactive compliance initiatives are critical to a platform’s operations, expansion efforts, and eventual monetization upon exit.

Immediate Post-Closing Operational Fixes
When:  October 2, 2018 at 12:00pm – 12:45pm
People:  John Eriksen, Josh Freemire, Gary Herschman, and Marc Mandelman
Location:  Webinar (ET)

Add-On Diligence Strategy
When:  October 9, 2018 at 12:00pm – 12:45pm
People:  Josh Freemire, Anjana Patel, David Weiss
Location:  Webinar (ET)

Proactive Employment Compliance
When:  October 16, 2018 at 12:00pm – 12:45pm
People:  Denise Dadika, Paul DeCamp, Peter Steinmeyer
Location:  Webinar (ET)

Proactive Health Care Regulatory Compliance
When:  October 23, 2018 at 12:00pm – 12:45pm
People:  John Eriksen, Josh Freemire, Kevin Ryan
Location:  Webinar (ET)

Employee Benefits and Executive Compensation Compliance and Planning
When:  October 30, 2018 at 12:00pm – 12:45pm
People:  Christopher McMican, Kevin Ryan, Peter Steinmeyer
Location:  Webinar (ET)

Registration is complimentary click here.

If you have questions regarding this event, please contact David Stone.