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Monday Morning Recap: The Week (3.31.14-4.6.14) in Drug & Device Law & Policy

Posted Apr 07 2014 12:00am
1. This week the New York Times published the seventh part   of Elisabeth Rosenthal’s gripping series Paying Till It Hurts, this one on the increasingly-costly drugs and devices relied on by Type I diabetics.

2. At The Atlantic, Clara Ritger summarizes “[a] new report from the Centers for Disease Control and Prevention find[ing] that states don’t offer many of the Health and Human Services Department’s recommended [tobacco cessation] treatments, and the services they do cover come with co-pays, limits on the duration of use, and other barriers to access for Medicaid patients.” Ritger explains that “[a]lthough more states increased the number of [tobacco cessation] treatments covered between 2008 and 2014, more states also added barriers to accessing those treatments. That trend can be attributed, in part, to the Affordable Care Act’s requirement that state Medicaid programs cover all FDA-approved tobacco cessation medications by January 2014. Not all states used to offer that benefit, so as some added it, they also added it with restrictions.”

3. The Philadelphia Inquirer ran a story about a campaign by Hooman Noorchashm, a cardiothoracic surgeon, and his wife, Amy Reed, an anesthesiologist, to end the use of electric tissue-cutting morcellators in gynecologic surgery. ”Power morcellation, introduced in 1993, enables tissue removal through tiny abdominal incisions, but in rare cases it can also spread a hidden uterine cancer called leiomyosarcoma. Reed, a mother of six, has become the poster woman for that awful scenario. During a minimally invasive hysterectomy in October at Brigham and Women’s Hospital in Boston, the morcellator hurled uterine tumor fragments that were implanted in her abdominal cavity. She now has stage-four leiomyosarcoma, and the hospital acknowledges the procedure likely worsened her prognosis.”

4. Sachin Jain, Michael Rosenblatt, and Jon Duke published a piece in JAMA about a partnership between the Indiana University School of Medicine’s Regenstrief Institute and Merck to conduct research on electronic clinical data from the Indiana Network for Patient Care (INPC), a health information exchange. The authors write: “Neither industry nor academia can navigate this terrain alonenor should they. Working together, governments, health plans, academic delivery systems, electronic medical record vendors, and private sector companies have the potential to analyze data to improve care and enhance the sophistication of this research.” That said, “[r]igorous controls on how the data are used and by whom, careful and considered alignment of interests, and focused investments in long-term capability-building are important starting points for this new and expanding frontier of collaboration.”

5. Finally, at the FCPA Professor Mike Koehler discusses the Foreign Corrupt Practices Act in light of the Supreme Court’s recent campaign finance decision, McCutcheon v. FEC.  He writes: “In the end, the double standard between the meaning of corruption as it relates to ‘foreign officials’ vs. U.S. ‘officials’ matters as it undermines the legitimacy and moral authority on which the U.S. government acts.”

1. This week the Supreme Court held oral argument in two companion cases, Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius, challenging the Affordable Care Act’s mandate that insurance plans include coverage for contraceptive drugs and devices. SCOTUSblog provided two recaps of the oral argument, here and here , and rounded-up commentary all week long, here , here , and here .  The Conglomerate hosted a symposium on the cases, which can be accessed here , and Margaux Hall discussed it in a post at Bill of Health and Slate, here .  Hall’s post calls attention to the fact that these cases have arisen because of the “virtually unfettered freedom” employers have to set employees’ health coverage, a theme John Jacobi addressed  here at Health Reform Watch.

2. The controversy over the painkiller Zohydro, which we previously referenced  here , heated up last week when Governor Deval Patrick of Massachusetts declared a public health emergency and banned the drug’s sale, “until determined that adequate measures are in place to safeguard against the potential for diversion, overdose and misuse.”

3. On March 21st, the Food and Drug Administration issued a proposed rule making changes to the ways that medical devices are classified.  Last week, Allyson Mullen provided a helpful summary at FDA Law Blog, here , and Elizabeth Bierman, Phoebe Mounts, and Michele Buenafe of Morgan Lewis discussed the proposal here .

4. The Employee Benefit Research Institute (EBRI) reported the results of a study it conducted on the effect of a high-deductible health plan with a health savings account on the generic drug dispensing rate (GDR).  GDR, which equals the number of generic prescriptions filled divided by the total number of prescriptions filled, is “a metric routinely used by pharmacy benefit managers (PBMs) to assess plan design effectiveness.”  The EBRI’s study found that while the plan increased the GDR, it only did so because it depressed overall medication utilization.  The study’s authors, Paul Fronstin and Christopher Roebuck, write that “plan designs that raise patient cost-sharing for prescription drugs would seem to be counter-productive, particularly in light of the results presented in this analysis. Instead, value-based insurance designs (VBID) that reduce or eliminate prescription-drug copays in order to bolster adherence may be a more effective and efficient strategy[.]“

5. Finally, on Monday of last week, the New York Times published a fascinating interview with Ricardo E. Dolmetsch, a biochemist who ”has pioneered a major shift in autism research, largely putting aside behavioral questions to focus on cell biology and biochemistry.” Dolmetsch did most of his work at Stanford University but has recently ”taken a leave to join Novartis, where his mission is to organize an international team to develop autism therapies.”  He explains: ““Pharmaceutical companies have financial and organizational resources permitting you to do things you might not be able to do as an academic. I really want to find a drug.”

coleman_carl_lg2 Nursing homes commonly include arbitration agreements in their admissions materials. These agreements require residents to bring any disputes against the facility to a professional arbitrator, as opposed to a court. Many that arbitration disadvantages nursing home residents, particularly in malpractice cases, and that their use in the admissions process takes advantage of a vulnerable population. Nonetheless, efforts to challenge such agreements have failed in light of the Supreme Court’s decision in , which held that the federal Arbitration Act (FAA) preempts state laws that “prohibit[] outright the arbitration of a particular type of claim.” Following Concepcion, the Supreme Court a decision by the West Virginia Supreme Court that had found that nursing home arbitration agreements are inherently unconscionable, concluding that “a categorical rule prohibiting arbitration of a particular type of claim … is contrary to the terms and coverage of the FAA.”

Yet, as demonstrated by the South Carolina Supreme Court’s recent decision in , there is still one situation in which nursing home arbitration agreements are open to challenge: when the agreements are signed by a third party appointed to make health care decisions for the patient by operation of law.

Coleman involved a wrongful death suit brought by the surviving sister of a nursing home resident who had been admitted to the facility after already having lost decision-making capacity. The resident’s sister – the plaintiff in the wrongful death lawsuit – signed the admissions forms based on the authority granted to her under South Carolina’s Adult Health Care Consent Act. One of the forms the sister signed was an arbitration agreement.

Denying the nursing home’s motion to compel arbitration, the court concluded that the arbitration agreement was not valid because it exceeded the scope of the sister’s authority under the Adult Health Care Consent Act. According to the Court, the statute specifically limited surrogates’ authority to making health care decisions and associated financial arrangements. Because an agreement to arbitrate was not a health care or related financial decision, it exceeded the scope of the sister’s authority.

The dissent argued that the majority’s decision conflicted with Concepcion because it had the effect of treating a specific type of arbitration agreement – i.e., one entered into by a surrogate decision-maker – as inherently unenforceable. In response, the majority asserted that it was simply recognizing the legislature’s intent to limit the scope of surrogates’ decision-making authority to narrowly defined areas. It other words, the rationale for the majority’s decision was not that arbitration agreements entered into by surrogates are unenforceable because they are specifically disfavored; instead, it was that surrogates may not enter into any agreements that do not directly deal with “health care decisions” or the associated financial costs.

Of course, the majority’s narrow interpretation of the Adult Health Care Consent Act is not the only possible way to read the statute. If the surrogate has the authority to consent to an individual’s admission to a facility, it does not seem like much of a stretch to conclude that this authority implicitly includes all decisions reasonably related to the admission – including those related to how any subsequent disputes with the facility will be resolved. It is true that, in this case, the arbitration agreement was a “separate” document that “concerned neither health care nor payment,” but it could just as easily have been included as a term in the underlying contract for admission. It seems hyper-technical to say that the surrogate’s authority to consent to arbitration depends on whether the agreement is contained in the admissions agreement itself as opposed to a stand-alone document.

Yet, even if the court could have interpreted the scope of the surrogate’s authority more broadly, its decision remains consistent with Concepcion because it does not amount to “a categorical rule prohibiting arbitration of a particular type of claim.” Instead, the court was simply applying the general legal rule that arbitration agreements, like any agreements, must be entered into by an individual with the legal capacity to contract. At least in South Carolina, this means that nursing homes can no longer rely on arbitration agreements for residents who are admitted based on surrogate consent.

“The Sentinel Project is designed to create a ‘feedback loop’ between healthcare providers and patients, on the one hand, and insurance plans, government regulators, and the public, on the other,” stated Professor John V. Jacobi, Dorothea Dix Chair of Health Law & Policy and faculty director of the Seton Hall Law Center for Health & Pharmaceutical Law & Policy, who serves as the Project leader.

To date, much of the media focus surrounding the ACA has been on issues and challenges related to enrolling people in health insurance plans. “The ACA’s benefits are achieved not upon enrollment, but upon the connection of enrolled consumers with necessary health benefits,” Professor Jacobi said. He concluded, “It would be a Pyrrhic victory to enroll millions of consumers and fail to connect them to quality care.”

1. Last week brought news that the Arkansas Supreme Court vacated a widely-reported $1.2 billion judgment against Johnson & Johnson, holding that Arkansas’ Medicaid fraud statute applies to health care facilities, not drug or device makers.  The New York Times quotes plaintiffs’ lawyer Thomas M. Melsheimer as follows: ’There’s a big question about whether off-label marketing cases are on life support,’ Mr. Melsheimer said, adding that many state laws were primarily designed to police the actions of health care providers like doctors, not necessarily drug companies. ‘If you’re trying to shoehorn off-label claims into a fraud case or a consumer-protection case, that can be really challenging,’ he said. ‘And in Arkansas, it ended up being fatal.’”

2. At Bloomberg Makiko Kitamura reports that GlaxoSmithKline “plans to hire a range of people with medical backgrounds, including doctors and scientists with expertise in specific disease areas” to give promotional talks to doctors.  The news follows GSK’s announcement last December “that it will stop paying [external] doctors for giving speeches and attending medical meetings by early 2016.”  Kitamura writes: ”The corporate ties and a lack of reputation among practicing colleagues may hamper the Glaxo representatives’ sway with physicians, said Erik Gordon , professor at the University of Michigan ’s School of Law and Ross School of Business. ‘Doctors aren’t influenced by just any other doctor,’ Gordon said by e-mail. ‘They are influenced by doctors who are sufficiently well known, respected, and seen as key opinion leaders real experts with lots of experience with patients.’”

3. This week brought news that additional executions, this time in Oklahoma, have been delayed as a result of efforts on the part of pharmaceutical manufacturers and compounding pharmacies to ensure that their products are not used to put people to death. At The Colorado Independent, Katie Fretland reports on a January 2011 email in which ”[i]n response to a request from Texas for advice on how to deal with the scarcity of the lethal injection drug sodium thiopental, … [an Oklahoma Assistant Attorney General] quipped … that Oklahoma might cooperate in exchange for much sought-after 50-yard-line tickets to the Red River Rivalry, a football game between the University of Oklahoma and the University of Texas.”

4.  The Buffalo News ran this scathing editorial by Phillip Zweig, the Executive Director of Physicians Against Drug Shortages, who blames the shortages on “the anticompetitive contracting practices, self-dealing and kickbacks of giant hospital group purchasing organizations, or GPOs.” Zweig writes: ”GPOs control buying for up to $300 billion annually in drugs, devices and supplies for some 5,000 acute care hospitals. Under their ‘pay-to-play’ scheme, these cartels award suppliers exclusive contracts in return for outrageous fees, thereby reducing the number of manufacturers to one or two for many drugs and crippling the ability of others to maintain quality. The result: shuttered plants and skyrocketing prices.”

5. Finally, at Hyman, Phelps & McNamara’s FDA Law Blog Kurt Karst crunches the numbers and concludes that 2013 ”was an across-the-board record breaking year for orphan drugs.”  Also at the FDA Law Blog, this teaser : “Later this week, we’ll be posting an FDA-related crossword puzzle written by Jeffrey N. Gibbs and Etan J. Yeshua as part of a celebration of Hyman, Phelps & McNamara, P.C.’s 34th anniversary earlier this month.  Be prepared!  While it may not be The New York Times Crossword Puzzle, it’s difficult!”

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