In this episode of the Diagnosing Health Care Podcast: The Centers for Medicare & Medicaid Services (“CMS”) and the Office of Inspector General (“OIG”) of the Department of Health and Human Services have at last published their long-awaited companion final rules advancing value-based care. The rules present significant changes to the regulatory framework of
In this episode of the Diagnosing Health Care Podcast, dive into the Biden Administration’s first 100 days in office and the potential executive orders, regulations, and new legislation with noteworthy health care policy implications.
On Tuesday, September 1, 2020, the Drug Enforcement Agency (“DEA”) proposed 2021 aggregate production quotas (APQs) for controlled substances in schedules I and II of the Controlled Substances Act (“CSA”) and an Assessment of Annual Needs (“AAN”) for the List I Chemicals pseudoephedrine, ephedrine, and phenylpropanolamine. This marks the second year that DEA has issued APQs pursuant to Congress’s changes to the CSA via the SUPPORT Act. After assessing the diversion rates for the five covered controlled substances, DEA reduced the quotas for four: oxycodone, hydrocodone, hydromorphone and fentanyl.
DEA recently increased the APQ to allow for the additional manufacture of certain controlled substances in response to the COVID-19 pandemic and the need to provide greater access to these medications for patients on ventilator treatment. According to DEA, that increased demand has been factored into the proposed APQs for 2021.
Comments are due by October 1, 2020. Because DEA’s APQs determine the amount of quota DEA can allocate to individual manufacturers in 2021, adversely impacted parties should file comments soon.
Background on APQs
The CSA requires the establishment of aggregate production quotas for schedule I and II controlled substances, and an assessment of annual needs for the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. These aggregate quotas limit the quantities of these substances to be manufactured – and with respect to the listed chemicals, imported – in the United States in a calendar year, to provide for the estimated medical, scientific, research, and industrial needs of the United States, for lawful export requirements, and for the establishment and maintenance of reserve stocks.
Changes in Setting APQs Under The SUPPORT Act
The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (“SUPPORT Act”) signed into law October 24, 2018, provided significant changes to the process for setting APQs. First, under the CSA, aggregate production quotas are established in terms of quantities of each basic class of controlled substance, and not in terms of individual pharmaceutical dosage forms prepared from or containing such a controlled substance. However, the SUPPORT Act provides an exception to that general rule by giving the DEA the authority to establish quotas in terms of pharmaceutical dosage forms if the agency determines that doing so will assist in avoiding the overproduction, shortages, or diversion of a controlled substance.
Additionally, the SUPPORT Act changed the way the DEA establishes APQs with respect to five “covered controlled substances”: fentanyl, oxycodone, hydrocodone, oxymorphone, and hydromorphone. Under the SUPPORT Act, when setting the APQ for any of the “covered controlled substances,” DEA must estimate the amount of diversion. The SUPPORT Act requires DEA to make appropriate quota reductions “as determined by the [DEA] from the quota the [DEA] would have otherwise established had such diversion not been considered.” Furthermore, when estimating the amount of diversion, the DEA must consider reliable “rates of overdose deaths and abuse and overall public health impact related to the covered controlled substance in the United States,” and may take into consideration other sources of information the DEA determines reliable.
In accordance with this mandate under the SUPPORT Act, in setting the proposed APQs for 2021 DEA requested information from various agencies within the Department of Health and Human Services (“HHS”), including the U.S. Food and Drug Administration (“FDA”), Centers for Disease Control and Prevention (“CDC”), and the Centers for Medicare and Medicaid Services (“CMS”), regarding overdose deaths, overprescribing, and the public health impact of covered controlled substances. DEA also solicited information from each state’s Prescription Drug Monitoring Program (“PDMP”), and any additional analysis of prescription data that would assist DEA in estimating diversion of covered controlled substances.
After soliciting input from these sources, DEA extracted data on drug theft and loss from its internal databases and seizure data by law enforcement nationwide. DEA then calculated the estimated amount of diversion by multiplying the strength of the active pharmaceutical ingredient (“API”) listed for each finished dosage form by the total amount of units reported to estimate the metric weight in kilograms of the controlled substance being diverted.
Earlier this summer, Ethan P. Davis, Principal Deputy Assistant Attorney General for the Civil Division of the U.S. Department of Justice (DOJ) delivered remarks addressing DOJ’s top priorities for enforcement actions related to COVID-19 and indicating that DOJ plans to “vigorously pursue fraud and other illegal activity.” As discussed below, Davis’s remarks not only highlighted principles that will guide enforcement efforts of the Civil Fraud Section under the False Claims Act (FCA) and of the Consumer Protection Branch (CPB) under the Food, Drug, and Cosmetic Act (FDCA) and the Controlled Substances Act (CSA) in response to the COVID-19 public health emergency (PHE), they also provide an indication of how DOJ might approach enforcement over the next few years.
DOJ’S KEY CONSIDERATIONS & ENFORCEMENT STRATEGY FOR COVID-19
Davis highlighted two key principles that would drive DOJ’s COVID-related enforcement efforts: the energetic use of “every enforcement tool available to prevent wrongdoers from exploiting the COVID-19 crisis” and a respect of the private sector’s critical role in ending the pandemic and restarting the economy. Under that framework, DOJ plans to pursue fraud and other illegal activity under the FCA, which Davis characterizes as “one of the most effective weapons in [DOJ’s] arsenal.”
However, as DOJ pursues FCA cases, it will also seek to affirmatively dismiss qui tam claims that DOJ finds meritless or that interfere with agency policy and programs. DOJ also plans to collect certain information from qui tam relators regarding third-party litigation funders during relator interviews. DOJ’s emphasis on qui tam cases—cases brought under the FCA by relators or whistleblowers—for COVID-related enforcement highlights the impact such matters have on DOJ’s enforcement agenda.
- DOJ will consider dismissing cases that involve regulatory overreach and are not otherwise in the interest of the United States.
Although Davis emphasized that the majority of qui tam cases would be allowed to proceed, in order to “weed out” cases that lack merit or that DOJ believes should not proceed, DOJ will consider dismissing cases that “involve regulatory overreach or are otherwise not in the interest of the United States.” This is consistent with the principles reflected in the 2018 Granston Memo that instructed DOJ attorneys to consider “whether the government’s interests are served” when considering whether cases should proceed and listed considerations for seeking alternative grounds for dismissal of FCA cases. Davis gave examples throughout his speech of actions DOJ might consider dismissing:
- Cases based on immaterial or inadvertent mistakes, such as technical mistakes with paperwork
- Cases based on honest misunderstandings of rules, terms, and conditions
- Cases based on alleged deviations from non-binding guidance documents
- Cases against entities that reasonably attempted to comply with guidance and “in good faith took advantage of the regulatory flexibilities granted by federal agencies in the time of crisis.”
DOJ litigators have been advised to inform relators of the possibility of dismissal. Additionally, qui tam suits based on behaviors temporarily permitted during the COVID-19 pandemic, particularly in circumstances in which agencies exercised discretion to waive or not enforce certain requirements, might
“fail as a matter of law for lack of materiality and knowledge.”
- DOJ will now include a series of questions during relator interviews to identify third-party litigation funders.
During each relator interview, DOJ has instructed line attorneys to ask a series of questions to identify whether the relator or their counsel has a third-party litigation funding agreement, which is an agreement in which a third party—such as a commercial lender or a hedge fund—finances the cost of litigation in return for a portion of recoveries. Under the new policy detailed in Davis’s speech, if a third-party funder is disclosed, DOJ will ask for the following:
- the identity of the third-party litigation funder,
- information regarding whether information of the allegations has been shared with the third party,
- whether the relator or their counsel has a written agreement with the third party, and
- whether the agreement between the relator or their counsel and the third party includes terms that entitles the third-party funder to exercise direct or indirect control over the relator’s litigation or settlement decisions.
Relators must inform DOJ of changes as the case proceeds through the course of litigation. While Davis characterizes these changes as a “purely information-gathering exercise for the purpose of studying the issues,” the questions are in furtherance of DOJ’s ongoing efforts to uncover the potential negative impacts third-party litigation financing may have in qui tam actions.  The questions Davis referenced in his remarks reflect DOJ’s concerns with third-party litigation funding as expressed by Deputy Associate Attorney General Stephen Cox in a January 2020 speech. Davis emphasized that DOJ particularly sought to evaluate the extent to which third-party litigation funders were behind qui tam cases DOJ investigates, litigates, and monitors; the extent of information sharing with third-party funders; and the amount of control third-party funders exercised over the litigation and settlement decisions. While the Litigation Funding Transparency Act of 2019 has remained inactive since its introduction in February 2019 by Senator Grassley and the 2018 proposal by the U.S. Court’s Advisory Committee on Civil Rights’ Multidistrict Litigation Subcommittee to require disclosure of third-party litigation funding remains under consideration, DOJ’s plans to include this line of questioning potentially signals DOJ’s intention to take more concrete and significant steps to address third-party litigation funding in the future.
On July 20, 2020, the United States Food and Drug Administration (FDA) announced a six-month extension of its enforcement discretion policy for certain regenerative medicine products requiring pre-market review due to the COVID-19 pandemic. Included in a final guidance document entitled, “Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation…
On March 17, 2020, the Office for Civil Rights’ (“OCR”) announced that—for the duration of the COVID-19 emergency—it would exercise enforcement discretion and waive any potential penalties for HIPAA violations relating to health care providers’ use of “everyday communications technologies” in the provision of services via telehealth (the “HIPAA Waiver”). This move has resulted in a drastic increase in the number of telehealth encounters. The HIPAA Waiver has enabled many providers to immediately leverage these technologies to render services via telehealth for the first time, without the need to expend significant resources to quickly ramp up a HIPAA-compliant telehealth platform. A summary of the HIPAA Waiver can be found in a recent blog post. While the HIPAA Waiver applies only temporarily, it is likely that the increased reliance on telehealth evidenced over the past three months is here to stay.
The COVID-19 pandemic’s impact on the regulatory landscape of telehealth was the topic of a June 17, 2020 hearing before the Senate Health, Education, Labor & Pensions Committee. As Chairman Lamar Alexander acknowledged during his opening statement, the health care sector and government “have been forced to cram 10 years’ worth of telehealth experience into just the past three months.” Indeed, this “cramming” has resulted in thirty-one temporary changes to telehealth policy at the federal level. Of these temporary changes, Chairman Alexander included the OCR enforcement discretion / HIPAA waiver as one of the three changes he considers most important. However, of the three changes the Chairman views as most important, he declined to include the enforcement discretion in the temporary changes he believes should be made permanent, and instead called upon his colleagues to consider whether to extend the HIPAA waiver.
The FDA has issued the Temporary Policy on Prescription Drug Marketing Act Requirements for Distribution of Drug Samples During the COVID-19 Public Health Emergency. The Prescription Drug Marketing Act of 1987 (PDMA) describes manufacturers’ drug sample storage, handling, and recordkeeping obligations as well as the written request and receipt requirements for prescribers.
Many manufacturers utilize their field sales representatives to deliver drug samples directly to, and collect written receipts from, prescribers at prescriber offices during sales calls. The COVID-19 crisis has disrupted field sales representatives’ ability to have face to face visits with prescribers, preventing them from delivering samples and collecting required receipts. In addition, as a result of the crisis, many prescribers are providing telehealth services from their homes, impacting prescribers’ ability to receive, store and distribute samples at their offices.…
Continue Reading FDA PDMA Guidance in Response to COVID-19 Pandemic
The CARES Act, passed by Congress and signed into law on March 27, 2020, provides $100 billion for the Public Health and Social Services Emergency Fund (“Relief Fund”) to support eligible health care providers. Less than a month later, Congress passed the Payroll Protection Program and Health Care Act, providing an additional $75 billion to the Relief Fund, raising the total funds available to $175 billion. As of the end of April 2020, the Department of Health and Human Services (“HHS”) released to providers two tranches of Relief Funds totaling $50 billion. HHS disbursed the first $30 billion tranche (“Tranche 1”) between April 10 and April 17, 2020. Currently, HHS is disbursing the second $20 billion tranche (“Tranche 2”). Because these are grant funds – not loans – repayment is not required. What HHS requires is that the Recipients attest to and follow the Relief Fund’s Terms and Conditions. Before we turn to the Terms and Conditions, it is important to understand HHS’ Relief Fund disbursement process.
Relief Fund Disbursement Process
HHS disbursed the Tranche 1 Relief Funds as well as some of the Tranche 2 Relief Funds directly to providers participating in Medicare Part A and Part B. (“the Recipients”). Other Recipients must apply for the Relief Funds through the HHS’ on-line portal. No matter how the Recipient received the funds, either through direct payments or through the on-line application, all Recipients must attest to HHS’ published Terms and Conditions through the HHS on-line portal within 45 days after receiving the Relief Funds. Each tranche requires a separate attestation. If the Recipient retains the funds for at least 30 days without contacting HHS regarding the funds’ remittance, HHS deems the Recipient to have accepted the Terms and Conditions discussed below. There are two important considerations in determining whether to accept these funds:
- The Terms and Conditions for Tranche 2 Relief Funds differ in several respects from the Terms and Conditions for the Tranche 1 Relief Funds; and
- The Terms and Conditions listed provisions are not exhaustive and Recipients must also comply “with any other relevant applicable statutes and regulations”.
On April 21, 2020, the Drug Enforcement Administration (DEA) published a Request for Information (“RFI”) that reopened the comment period for an interim final rule that was published March 31, 2010 (75 FR 16236) (the “2010 IFR” or the “IFR”). The IFR is being revisited in response to the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) mandate for the DEA to update the requirements for the biometric component of multifactor authentication with respect to electronic prescriptions of controlled substances. Prior to the 2010 IFR, the only way that controlled substances could be prescribed was in writing, on paper with a wet signature. The IFR was the first time that an electronic alternative was made available for prescribing controlled substances and the DEA leveraged the technologies that were available at the time to ensure that electronic prescribing applications could not be misused to divert controlled substances.
To that end, the DEA fashioned their regulations to include measures that ensure that the prescriber verifies that they are who they said they are and that they are authorized and have the appropriate credentials to prescribe the medications that are being ordered. In other words, in order for a prescriber to be granted access to the technologies that would create, sign and transmit prescriptions for controlled substances electronically, they have to be appropriately authenticated and credentialed. In addition to requiring identity proofing and logical access controls that relied on multi-factor authentication, credentialing had to be conducted by federally approved credential service providers (CSPs) or by certification authorities (CAs). The IFR also included requirements for audit trails, security event reporting and provisions that governed the signing and transmission of electronic prescriptions to ensure that there was a process to address and resolve transmission failures.
While the IFR contemplated using biometrics to identify and authenticate prescribers, those technologies were still developing and evolving in 2010. Recently, under the SUPPORT Act, Congress required the DEA to update its regulations to identify the biometric component of the multi-factor authentication used to identity proof prescribers. The DEA is looking to the health care provider community who are currently using e-prescribing applications to share their experiences, offer suggestions and recommend new approaches that will encourage broad adoption for e-prescribing for controlled substances while still meeting the DEA’s objectives of ensuring the security and accountability necessary to identify fraud and prevent diversion.
Recently, the Defense Health Agency (DHA) announced a rewrite of the TRICARE Autism Care Demonstration (ACD) program that encompasses “significant changes to the ACD.” It will move the ACD from the current Applied Behavior Analysis (ABA)-centric model to one focused on the beneficiary and family. Without specific details, the DHA states these comprehensive changes will provide an opportunity to improve support to beneficiaries and their families by:
- Providing more information about Autism Spectrum Disorder (ASD) and potential services;
- Linking beneficiaries to the right care at the right time; and
- Increasing services to eligible family members – especially parents.