Last week, the Department of Health and Human Services (“HHS”) released new materials for covered entities to use to comply with Section 1557, the nondiscrimination provision of the Affordable Care Act. Section 1557 strengthens protections for populations that have been most vulnerable to discrimination in the health care setting by stating that individuals cannot be subject to discrimination based on race, color, national origin, sex, age, or disability.

Continue Reading New Materials Help Covered Entities Comply with Nondiscrimination Rules

In recent years, applications for orphan drug designations have flooded into FDA at a rapid pace, and this year appears to be no exception. Orphan drug applications received by FDA rose by approximately 30% over the previous year in 2009, 2010, 2013, and 2014, with 467 applications submitted in 2014.  FDA reports that the number of orphan drug applications received so far in 2016 indicate that the total number will represent another 30% increase over the 472 applications received in 2015.  These robust numbers show that pharmaceutical companies are treating orphan drugs – or drugs and biologics used to treat rare diseases – as a significant part of their pipelines, which makes sense given the lower cost of development due to the incentives offered by the Orphan Drug Act and implemented in FDA’s Orphan Drug Program. Continue Reading FDA Adjustment to Orphan Drug Review May Indicate Increased Scrutiny of Designations

Dionne Lomax named Vice Chair of Publications for the AHLA Antitrust Practice Group.

Dionne is a Member in the firm’s Antitrust and Health Law practices and is based in the Washington, DC office. She provides counsel and representation on health care–related mergers and acquisitions, international mergers, joint ventures, other commercial arrangements, antitrust investigations, and other antitrust matters. Her experience also includes serving as a trial attorney at the DOJ Antitrust Division Health Care Task Force Section.

The AHLA Antitrust Practice Group addresses enforcement activity and competition policy that affect all areas of the health care industry.

Connect with Dionne on Twitter and LinkedIn.

 

On July 14, 2016, the U.S. Food and Drug Administration (the “FDA”) released draft guidance on the codevelopment of therapeutic products (such as pharmaceuticals) and companion tests that are used to determine if the therapeutic products will be safe and effective.

The codevelopment of therapeutic products and companion tests, known as in vitro companion diagnostic devices (“IVD companion diagnostics”), is not new. In 1998, the FDA approved both the cancer drug Herceptin along with an IVD companion diagnostic called HercepTest. HercepTest measures the expression of human epidural growth factor receptor 2  (HER-2) in breast cancer tissue. Some breast cancer cells have too many copies of the HER-2 gene, which can lead to an overproduction of proteins that cause cell growth. Herceptin works by attaching itself to the HER-2 receptor, thereby reducing the overproduction of these proteins.  However, only 25 to 30% of those with breast cancer overexpress the HER-2 gene. As an IVD companion diagnostic, HercepTest allows physicians to determine whether their patients overexpress the HER-2 gene and would benefit from Herceptin.  Continue Reading FDA Releases Draft Guidance on Codevelopment of Therapeutic Products and Screening Tests

Health care providers and other HIPAA-regulated entities should take note of the story on our companion blog, Employment Matters, regarding the augmented reality video game craze Pokémon Go.  For those unfamiliar with the most downloaded smartphone video game ever, it involves players chasing adorable computer-generated characters that randomly appear in the player’s immediate surroundings.  How could something as delightful as Pikachu present a security risk?  When the game is played in camera mode, the player records the Pokémon character, as well as the player’s surroundings – think computer monitors, whiteboards, patients, providers, procedure suites . . .

As with all HIPAA security risks, the best approach is to learn about the risk and take proactive steps to mitigate harm.  A great place to start is to read the Mintz Levin overview of Pokémon Go in the Workplace.

In our Israel Connect Summer 2016 edition we summarized the FDA’s post-market surveillance data programs, including the NEST program designed to consolidate and analyze real-world device data once a device is legally commercialized.  In late June I had an opportunity to sit down with a medical device industry veteran, and one with a uniquely international perspective, and we discussed in detail the practical impact of the planned NEST program.

Bethany Hills (“BH”): Oded Kraft (“OK”), you’ve been involved in the medical device industry, both with established industry giants and also with small, nimble start-ups, for nearly two decades.  What do you think about the FDA NEST program?

OK: It’s great to see the FDA taking the NEST path. Companies, even if informally, make use of data resulting from on-going use of the products when monitoring complaints, assessing competition, reviewing third party publications, and addressing issues found in-house. This is especially true for companies marketing in the EU.

BH: So since companies are already seeking out and utilizing this data, the FDA NEST program only has a positive impact?

OK: I do wonder whether the reliance on Post-marketing surveillance data would really reduce the burden of collecting data prior to launching like has been promoted as a benefit of NEST. After all, it is the FDA’s stated role to ensure the safety and effectiveness of the cleared/approved products before commercialization. And in addition, there is the question of whether the agency would force companies to recall products from the market should the post-market surveillance data reveal issues. I am not advocating that we should leave unsafe products in the market, however, reducing pre-market burden by collection of post market data, without looking at the entire clearance/approval approach would leave the companies with no choice but to keep on running the same pre market studies, regardless of the promises within the NEST program. What company will want to take the financial and brand risk of a recall post-launch if those issues can be addressed in the clearance or approval process?

BH: Interesting.  The potential for FDA to swing the pendulum to post-market enforcement is important.  Certainly our clients are always pushing for a quicker path to market and the NEST program seems to be promising that.

OK: But companies today, especially startups and smaller growth stag companies, plan a limited availability period when launching to limit financial and brand risk exposure. Yes, NEST could become another tool for companies’ managements and boards to manage the go to market timing vs. post market risk.  Yet, another side of this decision is the strategic path of the company itself. It is not unusual for startups to acquire an FDA approval/clearance in order to gain the interest of a corporate partner for an M&A or investment opportunity. The startups would typically want to accelerate the FDA process, meaning the NEST post market surveillance options to reduce pre-market data requirements would be very attractive.  But risk averting corporate partners or investors may prefer to either resolve the risk ahead of time, devalue the company if the risk is not sufficiently resolved, or establish milestones for post-market surveillance that could be burdensome or delay corporate growth. Not a pleasant decision, but nevertheless, an important tools in the hands of startups.

BH: I agree with the concerns corporate partners and investors might have about the uncertain nature created by a shift to heavier reliance on post-market data and enforcement.  We’ve talked about the main post-market risk area–off-label use and promotion–as another risk area that could be impacted by as policy shift where FDA highly values post-market data.

OK: Yes, there could be an additional upside here. If a device company could rely on the NEST data to expand intended use and indications post launch, then the NEST approach would bring real value. It would also bring the official labeled use (cleared or approved through the pre-market process) to par with real life experience and use. In a world revolving around consumer technologies launching a new product every other day, and leveraging social media to share best known methods, it’s time for the healthcare industry, FDA included, to join the club.

BH: Thanks Oded! We certainly have a lot to follow with the evolving NEST program and the practical impact on our device clients.

Oded Kraft Biography:  Oded is the VP of Product Development at Kornit Digtal, leading a team of over 100 professionals developing digital printing solutions for the textile market. Previously, Oded served in an executive business role with Roche Diabetes Care, Germany, leading the 10 year product portfolio and strategic roadmap (business worth of over $600M), and VP Products at Medingo, a medical devices company, acquired by Roche GmBH in

2010 for $180M. Throughout this time, Oded has been working with several startups in various capacities, integrating technology with business goals. Prior to joining Medingo, Oded worked at GE Healthcare Nuclear Medicine division as a Global Segment Leader, and before that, in various R&D positions with GE Healthcare, the IDF, and 5 years with a DoD company in the US.  Oded holds an MBA and a BSc in Electrical Engineering from Technion-Israel Institute of Technology.  Oded is not affiliated with Mintz Levin and all opinions expressed are his own.

On July 11, 1969, the United States accomplished the almost unthinkable –two men walking on the moon. Conjuring images of that moon landing, President Obama moved forward the “Cancer Moonshot” program at his January 2016 State of Union Address. Vice President Joe Biden—who recently lost his 46 year old son to brain cancer— was named as the program’s “Mission Control.”  To combat such a complex and variable disease—for which the cure is unknown and where treatments vary significantly—in the aggressive way envisioned by the Cancer Moonshot program requires a restructuring of the FDA.  The current FDA administrative structure does not organize around a particular disease, but rather product categories (i.e. drug, device, food).

Establishing a cross-sectional Oncology Center of Excellence (OCE) would theoretically increase the retention and recruitment of professional FDA personnel with disease- specific expertise, streamline drug and device review processes, and enhance outreach activities to patient groups. Rather than have individual FDA centers review oncology products and treatments in an uncoordinated way, the centralized OCE, would seek to coordinate and improve the process across the FDA.

Significant steps must be taken to realize the benefits of the OCE. The temporary director, Dr. Richard Pazdur, recently proposed the first steps to complete the task.  He recommended cross-center monthly meetings to discuss central oncology issues and advances. Initially, Pazdur seeks to build a system for cross- disciplinary review staff, provide external outreach to diverse stakeholders, and ensure current administrative efficiency for review of significant cancer products.

Congress is also taking an interest in reorganizing the FDA. H.R. 5414, the FDA Cross-Center Collaboration Act of 2016, would establish Intercenter Institutes within the FDA to focus on specific diseases and coordinate activities between the agency’s drug, device, and biologic centers. Specifically, these Institutes would be tasked with coordinating activities, applicable to their specific disease areas, with the Center for Drug Evaluation and Research, Center for Biologics Evaluation and Research, and Center for Devices and Radiological Health. In order to establish such Institutes, HHS would have to provide for a public comment period on the proposed Institute.   A bipartisan Senate bill, S. 2700, also included language on Intercenter Institutes when it advanced out of committee in March.

Although Cancer Moonshot efforts within FDA are, pardon the pun, just taking off, we can already anticipate a number of challenges to creating the OCE and hurdles that may arise for product approvals within OCE. First, the FDA is in the midst of a massive administrative reorganization called Program Alignment, underway since 2014 that created the Office of Regulatory Affairs—a product based and vertically integrated inspection program—and the Offices of Manufacture and Pharmaceutical Quality. However, this reorganization is focused mainly on post- market compliance; thus it does not provide much framework for the lofty Cancer Moonshot goals focused on new treatments and cures. Second, an October 2015 independent report titled “Combination Product Review Intercenter Consult Process Study” identified key issues with the fully implemented office of Combination Products that could be very instructive to the FDA in developing the OCE or other Intercenter Institutes:

  • Different Application Types and Timelines
  • Separate Review and Tracking System in each Center
  • Unclear communication channels between Centers
  • Lacked Resources

While we don’t expect much to happen with the implementation of these initiatives in these final months of the Presidential election year, we are carefully monitoring all reorganization programs within the FDA so we can better identify opportunities and anticipate roadblocks for clients.

On July 12, 2016, HHS’s Office for Civil Rights (OCR) distributed an e-mail discussing recent developments in Phase II of its HIPAA audit program.

For those looking to catch up on the Phase II audits, we provided readers with an overview of the audits back in March. In April, we discussed the HIPAA Audit Protocol that OCR is using to conduct the Phase II audits.  And in May, we alerted readers to the notifications that OCR was e-mailing to covered entities in an effort to verify their contact information.

In its latest e-mail, OCR confirms that notification letters were delivered on Monday, July 11, 2016, to 167 health plans, health care providers and health care clearinghouses notifying them of their inclusion in the desk audit portion of the audit program. The desk audits will examine the selected entities’ compliance with HIPAA’s Privacy, Security, and Breach Notification Rules by examining certain documentation that the entities are required to maintain under HIPAA. OCR provides the following table setting forth the subject matter of the documentation review:

HIPAA Desk AuditNotably, the three areas covered under the Privacy Rule relate to how patients are made aware of their rights under HIPAA and how they can access their own medical records.  The desk audit does not focus on policies related to uses and disclosure of PHI.  This emphasis dovetails with OCR recent efforts to educate patients and providers about patient access rights (which we previously covered here).

Entities have 10 business days, until July 22, 2016, to respond to the document requests.

OCR separately notes that desk audits of business associates will be occurring this fall. We will continue to follow developments in the Phase II audit program and bring you updates and analysis as they occurs.

Last week, the Centers for Medicare and Medicaid Services (CMS) released its proposed rule for the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System for 2017. CMS proposed several new policies in the rule, including the implementation of Section 603 of the Bipartisan Budget Act of 2015 (BBA). Section 603 requires certain items or services provided by off-campus outpatient departments or “provider-based departments” (PBDs) to no longer be paid under OPPS but rather under the “applicable payment system.” The proposed rule provides only limited exceptions to this requirement, much to hospitals’ dismay.

Continue Reading CMS Releases Proposed Outpatient Payment System Rule for 2017, Leaving Hospitals Unhappy

Earlier this month, the Court of Appeals for the D.C. Circuit issued its decision in Central United Life Insurance Co., v. Burwell, striking down a Department of Health and Human Services (HHS) rule prohibiting the sale and marketing of “fixed indemnity” plans to consumers who did not otherwise have minimum essential coverage. While at first pass the case focuses on a small set of insurance policies, this decision could have broader implications on the individual market and further threaten the sustainability of the risk pools.

This case focused on “fixed indemnity” policies, which are insurance products that pay out a fixed amount for each medical event, regardless of the actual cost of the service (e.g., the policy pays $100 per physician visit). Fixed indemnity policies are considered “excepted benefits” under the Public Health Service Act (PHSA), so long as (i) they are “provided under a spate policy, certificate, or contract of insurance,” and (ii) “are offered as independent non-coordinated benefits.” The Affordable Care Act (ACA) explicitly excluded excepted benefits from minimum essential coverage. Continue Reading D.C. Circuit Strikes a Potential Blow to the Affordable Care Act