When drugmakers lie to doctors about a drug’s safety or effectiveness, health plans pay more for substandard care, and patients suffer.

Case in point — the recent guilty plea and $1.5 billion settlement for illegal promotion of the drug Depakote revealed how Abbott Labs misled doctors for nearly a decade. They went to great lengths, profiling doctors, training their salespeople, and inappropriately funding and influencing Continuing Medical Education to get doctors to prescribe Depakote for unapproved treatment of seniors with dementia. Why? Because such off-label promotion instantly expands a drug’s market, and thus the drugmaker’s potential profits.

Unfortunately, class action lawsuits on behalf of consumers and health plans challenging such illegal marketing have met significant legal hurdles, and have been dismissed. This leaves consumers and private market health plans paying billions because of this fraud, while millions of patients receive inappropriate treatment, and are unnecessarily put at risk of side effects, which are often serious.

But progress is being made by State Attorneys-General and the Department of Justice bringing legal challenges under false claim laws. As a result, six of the biggest drugmakers have admitted or pled guilty to illegal promotion of unapproved uses of drugs since 2004. These investigations, most often initiated by whistleblowers, have led to the largest fines in U.S. history, and billions will be recovered this year alone.

But while all these enforcement actions are a welcome development, a recent jury verdict in a trial by the State of Arkansas may become a game-changer in the fight to stop the illegal marketing or promotion of drug products.

This past April, Arkansas Attorney-General Dustin McDaniel won a staggering verdict against Johnson & Johnson for their illegal promotion of the off-label uses of the antipsychotic drug Risperdal. In a trial before a jury, the state won $1.19 billion (yes, that’s ‘b’ ) in fines for violations of the state Medicaid anti-fraud law.

A hefty billion-dollar fine like this from one state sends a very big message — drug companies can no longer pursue profits by scoffing at the laws designed to protect safety-net health plans and the patients they serve.

Even more encouraging is the fact that most of the $1.19 billion in fines will go to the State Medicaid fund, which is looking at a $400 million budget shortfall next year.

What could be better than a deterrent that also helps stabilize funding for a state’s Medicaid plan during these tough economic times? Well, the only thing that could make this victory even better would be for Arkansas’ Medicaid program to earmark some of these recovered funds to correct the misinformation spread by Johnson & Johnson. Setting aside even a small amount of funds to allow trained independent medical professionals to go out into the field and teach doctors about the appropriate and effective alternatives to the unapproved uses of Risperdal will help prevent any ongoing inappropriate use of Risperdal, improving the quality of patient care and protect patients from being harmed by the significant side effects of the drug, like weight gain and diabetes. (See more about such education programs here.)

As we have seen in drug pricing (here and here) and universal coverage, the States often take the lead in on innovative ways to protect consumers. Based on this successful prosecution by the Arkansas Attorney-General, it wouldn’t be a bad idea for the remaining States to beef up their anti-fraud laws and enforcement staff, and go after the drug industry.

– Wells Wilkinson
Director, Prescription Access Litigation
Staff Attorney, Community Catalyst

The guilty plea and $1.5 billion settlement by Abbott to resolve their illegal off-label promotion of Depakote revealed a saga of extensive industry abuses and influence peddling that put millions of vulnerable seniors at risk. Abbott’s extensive promotion of the unapproved uses of the anti-convulsant drug Depakote to treat both seniors with dementia and to treat children is shocking. But it is even more alarming that this not the first major drugmaker to plead guilty to illegal marketing tactics that have targeted this exceptionally vulnerable population of seniors.

Many may recall that Eli Lilly was caught illegally promoting the unapproved, or “off-label” use of the antipsychotic drug Zyprexa to treat seniors with dementia, despite their internal studies showing that the risk of death from this drug increased in elderly patients.

Marketing these drugs to nursing homes for use on patients who ‘act up’ or are unruly has been a lucrative strategy for drugmakers. In response, we applaud the Department of Justice and the State Attorneys-General for their increasingly aggressive litigation to penalize these dangerous and unconscionable marketing practices.

But unfortunately for the millions of seniors who may be given Depakote or Zyprexa today or in the near future, the record-breaking $1.4 and $1.5 billion settlements respectively may not translate into improved care, unless further action is taken.

We urge Medicare and Medicaid officials at the federal and state level to move quickly to develop and implement safeguards, such as prior approvals or mandatory second opinions, that could be put in place to protect these vulnerable seniors from any unwarranted or inappropriate use of the drug Depakote to treat their dementia.

Looking forward, it’s time that all off-label settlements by the DOJ or the states include a requirement that the drugmaker pay to correct the misinformation that off-label marketing creates – i.e. that a drug is safer or more effective than it really is. Using lawsuits to fund corrective educational campaigns has a long history, both in public and private sector litigation. (See description here.)

To help stop the inappropriate and potentially harmful overuse of Depakote, Zyprexa, or Risperdal from continuing, doctors should be retrained to undo the misinformation campaigns by Abbott, Eli Lilly, and Johnson and Johnson. Several states, including Pennsylvania and New York have implemented “academic detailing” programs that send independent medical experts, usually nurse practitioners and pharmacists, to provide doctors with the truth about how effective drugs are from an objective, evidence-based perspective. Many state programs specifically address mental health drugs such as Zyprexa and Depakote. Indeed, one of the first of these education programs designed by Dr. Jerry Avorn, who spearheaded the concept in the 1990’s, recommended that a little tender loving care by nursing home staff could reduce the inappropriate use of sedatives, common at that time. A similar conclusion was reached by some nursing homes profiled in an  inspiring Boston Globe article addressing the overuse of Depakote.

– Wells Wilkinson,
Director, Prescription Access Litigation
Staff Attorney, Community Catalyst

This blog was also posted on Health Policy Hub.

Drug safety is now as American as apple pie, based on the 96-1 vote the Senate took to reauthorize the Prescription Drug User Fee Act (PDUFA). Few things pass through Congress with such overwhelming support, and we are heartened that Senators came together to pass this “must-pass” legislation.

Millions of Americans rely on medications every day, from people with chronic illness, to seniors, to anyone who takes a pill for allergies or a headache. As a member of the Alliance for a Safe Drug Supply, Community Catalyst has advocated for solutions to this critical issue. Assuming the House will also pass similar legislation and we’ll have a new law soon, one piece of the complicated health care puzzle will have been made safer. How do you spell relief? P-D-U-F-A.

Truly, the bill marks a momentous occasion for consumers. Today, roughly 80 percent of ingredients used in U.S. medicines are made overseas, and there has been a historic disparity between the number of inspections conducted at U.S.-based plants and foreign plants. Under the new bill, the fees paid by name-brand and generic drug manufacturers will allow more frequent inspection of foreign manufacturing sites that produce drugs imported into the United States, addressing a critical gap in supply chain safety. As Pharmalot notes, 12.7 percent of capsule makers in China were recently found to be making unsafe capsules. While it is unclear whether those particular capsules were being introduced to the international supply chain, as Ed Silverman so eloquently puts it, “the episode underscores the larger concern that some Chinese companies that are intertwined in the pharmaceutical supply chain operate as if China is a modern-day version of the Wild West.” Of course, there’s also been a drumbeat of recalls and egregious safety problems in U.S. plants—but we only know about them due to more inspections here in the U.S. Now we’ll have parity in foreign inspections, too.

The PDUFA bill also marks the first time the generic drug industry will be contributing to the FDA’s inspection and oversight funds, pitching in nearly $1.6 billion over the next five years. We view this commitment from generic pharmaceutical producers as a notable contribution to ensuring the safety of the effective, affordable generics that we all rely on today.

In addition, the bill requires pharmaceutical companies to track each batch of drug products along the supply chain, from the factory to the pharmacy or hospital. This has been a long-sought after consumer protection, given that “track and trace” systems can be utilized to ensure counterfeit drugs are not introduced into the supply chain. Prescription drug counterfeiting is one of the most lucrative crimes in the world, and the infamous heparin contamination is believed to have been economically-motivated. And although it is relatively rare in the United States, there are far too many instances of intentionally-adulterated or counterfeit medications having breached the supply chain and been consumed by Americans, and we need to put an end to it.

One more piece of good news is the updated system to proactively address drug shortages. According to the Pew Health Group, more than 200 drugs went through periods of shortages in 2011. The bill puts in place an early warning system that manufacturers must inform FDA in advance of discontinuing manufacture of any drug. Hopefully, patients receiving cancer treatment will soon be able to cross one thing off their list of worries.

The bill was not perfect, however. Patients would greatly benefit from the earliest possible access to generic drugs when brand name patents end, so we were disappointed that the “pay-for-delay” amendment was defeated. Additionally, there are grave concerns about medical device safety, and we are disappointed that the Senate did not authorize medical device user fees to be used to evaluate the safety of devices in the market, despite the many recalls of dangerous devices in the past few years.

While there is room for improvement, we applaud the FDA, the Senate, and drug manufacturing companies for working together to pass this legislation, and eagerly await the House to follow suit.

 – Anna Dunbar-Hester, Program Coordinator and Policy Analyst

The Affordable Care Act created some desperately needed means to start controlling ever-rising health care costs. Many — like preventive care or delivery reforms — will take some time to realize savings. In contrast, new anti-fraud efforts look to be paying off right away, in amounts much bigger than expected.

The health reform law provided $350 million over ten years to increase anti-fraud investigation and enforcement resources for the Department of Justice (DOJ) and State Attorneys-General. The goal? Saving $6.4 billion over the next decade. Given that some estimate that fraud and waste cost as much as $60 billion a year, or $600 billion over a decade, saving one percent of that amount seems a pretty modest impact.

But wait! New estimates project that current or pending settlements of drug fraud litigation by the DOJ and the Attorneys-General will top $8 billion in FY2012 alone, according to the group Taxpayers Against Fraud. (See their list below.) This is not the culmination of hundreds of lawsuits; it’s just the eight biggest. So it looks like this anti-fraud effort under the ACA will meet and then surpass this ten-year goal in less than two years!

To be fair, some of these fraud investigations were undoubtedly underway before the increased funding for anti-fraud efforts reached the DOJ and State Attorneys-General offices. But there is little doubt that providing these over-worked regulators with increased resources was a big help in increasing enforcement. DOJ probably has fewer lawyers working on all their pending drug fraud cases than some of the biggest drugmakers hire to defend in just one lawsuit. But despite these disparities, the results show that very modest government investment in fighting fraud, coupled with hard work by government lawyers and whistleblowers, can pay off big.

For example, earlier this week drugmaker Abbott Labs in Chicago settled a civil and criminal investigation of their illegal promotion of the anti-convulsant drug Depakote as an unapproved treatment of dementia in seniors, and of various conditions in children. Abbott pleaded guilty to promoting these unapproved, or ‘off-label’ uses of Depakote, and agreed to pay $1.6 billion – one of the biggest settlements for the illegal promotion of a single drug.

There could be a couple hundred pending whistle-blower lawsuits that are filed under seal and being investigated now by the federal or state regulators. These pending lawsuits may add up to billions of dollars of additional settlements.

Some critics have warned that even billion-dollar fines are an inadequate deterrent when a drug company can profit far more on illegal sales of a drug.

For instance, the $1.2 billion record-breaking settlement with Eli Lilly in 2009 for illegal promotion of their antipsychotic drug Zeprexa was less than 5 percent of Lilly’s gross sales. Yet eight months later, DOJ shattered this record with an even bigger $2.3 billion settlement with Pfizer, which amounted to 14 percent of their gross sales of eight illegally marketed drugs.

Similarly, this month’s $1.6 billion Depakote settlement is nearly 12 percent of the drug’s $13.8 billion in gross sales revenue from 1998 to 2008. Furthermore, DOJ is pioneering two mechanisms to deter future illegal conduct by Abbott, along with this hefty fine.

First, the Depakote settlement places Abbott on probation and imposes a corporate compliance and monitoring program, for five years. If Abbott violates the compliance agreement or significantly violates the law, the government can exclude Abbott, and all their drug products, from federal health care programs. That would cost Abbott billions in lost sales on numerous drugs.

The settlement also aims to hold Abbott’s corporate leadership accountable. Abbott’s CEO must personally certify compliance and the board of directors must review and report on compliance each year. If the CEO or board is lax in these duties, they could be excluded from their positions at Abbott. And if they intentionally lie to the government to cover up any misconduct, they could face personal criminal liability under the federal False Statements Statute.

Sadly, Abbott’s illegal promotion of ineffective and dangerous uses of Depakote has both harmed and put at risk what is arguably the most vulnerable patient population – seniors suffering from dementia, who live away from their families in nursing homes. Undoubtedly millions of seniors were and continue to be given Depakote inappropriately as a result of Abbott’s illegal promotional campaign.

More to come on (1) actions that Medicare and Medicaid can take to address the continuing effects on patients of illegal promotions of off-label use of drugs and (2) how the Arkansas AG fought prescription drug fraud, winning huge fines to plug the state’s Medicaid budget deficit. This blog was also posted on Health Policy Hub.

– Wells Wilkinson, Director, Prescription Access Litigation
Staff Attorney, Community Catalyst

Projected Drug Fraud Settlements in FY 2012

Two weeks ago, Senators Herb Kohl (D-WI) and Chuck Grassley (R-IA), the original authors of the Physician Payments Sunshine Act (PPSA), called on the Centers for Medicare and Medicaid Services (CMS) to adopt rules to implement these transparency provisions in the Affordable Care Act (ACA) by June. CMS is currently considering more than 300 sets of public comments submitted in February on the agency’s proposed regulations. Hundreds of groups across all sectors in the health care system submitted recommendations, and now CMS is charged with issuing the final rules and setting a date for industry to begin tracking their payments to doctors and teaching hospitals. The statute requires that manufacturers of drugs, devices, biologics, or medical supplies, or their subsidiaries that sell product s in the United States, report to CMS most payments made to physicians and teaching hospitals, and that this information be disclosed on a public website by CMS.

Like the Senators, we campaigned for these important transparency provisions because we want to shed light on the full range of financial interactions between manufacturers of drug or device products, and the doctors or teaching hospitals. These interactions can undermine good prescribing, patient trust in doctors and affordable care. While we agree that some financial relationships between industry and doctors may not be problematic, or may even be appropriate, transparency will allow the public and policymakers to determine if they are or are not, once we can see all the facts.

The process for implementation of this important law has been complex process. Detailed regulations or “rules” must be promulgated, and CMS’s Office for Program Integrity was charged with writing these regulations by October 1, 2011, so that manufacturers could begin collecting data January 1, 2012. Unfortunately the October 1 deadline was missed, but CMS did issue a 22 page draft rule on December 16, 2011. CMS provided a thorough 94 page description of the rule, and asked stakeholders to comment on as many as 90 issues raised in the draft rules. Seventeen different stakeholder sectors responded with more than 300 sets of comments. Now we await the CMS decisions on the shape of the final rule, so that manufacturers can begin collecting the data.

The array of comments submitted showed consensus in some areas and sharp disagreement in others. To better understand what CMS is now wrestling with, our colleagues at The Pew Charitable Trusts analyzed all the submissions and summarized them by sector, along several important dimensions. Here are some of the results.

Clearly define “Nature of Payment” Categories
There was near universal consensus among all sectors that the “nature” of reported payments be clearly described under the 14 categories listed in the statute (e.g. gifts, consulting fees, education, research etc.). This point was made by consumer and beneficiary advocates; drug and device manufacturers; physician societies; universities and teaching hospitals; states and medical boards; healthcare providers; health IT companies; MedPac (the independent Congressional agency concerned with Medicare); and ACRE (Association of Clinical Researchers and Educators).

However, we opposed the CMS proposal to simply allow industry to use “dictionary definitions” for these terms because dictionary definitions are vague, overlapping, or contradictory, which would cause inconsistency and confusion in the reported information. Community Catalyst, Pew, and 14 other consumer groups and beneficiary advocates all recommended that they be clearly defined by CMS rules so that they would be non-overlapping and clear to the public. Along with Pew, we even proposed a set of detailed definitions for consideration by CMS.

Ensuring that the public website is user-friendly
CMS is required to disclose industry payments on a public, searchable website, where the information is easily aggregated and downloadable. Most consumer advocates urged CMS to make the website as consumer-friendly and easy to understand and navigate as possible. And some advocates urged CMS to ensure the data is usable for states and researchers. Health IT groups, the National Business Group on Health and the Association of Health Care Journalists also supported these concepts. Several sectors urged CMS to seek input from the public in the design of the website and to add information that would allow the public to better understand the reporting categories and their significance.

MedPac, the federal agency charged with helping to keep Medicare sustainable, urged CMS to assess if the annual aggregate amount of payments subject to delayed disclosure could be disclosed, in order “to help policymakers assess whether rules for delayed publication should be adjusted” to a shorter period. Under the statute, delayed public disclosure of up to four years is allowed for certain research payments, to protect the proprietary interests of industry. Both MedPac and Community Catalyst were also concerned that delayed disclosure could be overly broad, especially if applied to investigations on new uses of products. Delayed disclosure in this area could hide inappropriate payments to prescribers that facilitate unapproved “off- label” uses of drugs.

The big controversy: third party payments and Continuing Medical Education
One of the major areas of disagreement in the comments submitted concerns industry reporting of payments to doctors through third parties, especially CME related payments. Not surprising, since the statute and the CMS rules plug an important potential transparency loophole, by requiring reporting of most payments to doctors through third parties. We’ll address that controversy in an upcoming Postscript.

–Marcia Hams, Director of Prescription Access and Quality
–Wells Wilkinson, Director, Prescription Access Litigation Project

Yesterday, the American Medical Student Association (AMSA) released their 2011-2012 PharmFree Scorecard, now in its fifth iteration. The Scorecard evaluates conflict-of-interest policies at the 152 medical schools in the U.S. and Puerto Rico, as well as a number of affiliated academic medical centers. With growing consumer and government scrutiny of the relationships between doctors and pharmaceutical companies (see, e.g., ProPublica’s series Dollars for Docs and the Physician Payment Sunshine Act), the Scorecard takes a unique look at how well professional standards are being introduced to the next generation of doctors. We don’t doubt the importance of education about pharmaceutical interventions and treatments, but it is also important to learn to question the veracity of information presented at industry-funded events, and understand the pharmaceutical marketing machine before a doctor begins her practice.

The Scorecard assesses policies that seek to reduce drug industry influence on the educational and clinical environment in which physicians do their training—including bans or limits on industry provision of gifts, meals speaker’s bureaus and samples; on industry influence on medical education and drug purchases by hospitals; on drug reps’ access to clinical areas; and, disclosure of industry relationships. This year’s grades demonstrate that medical schools are taking important measures to control the interaction between students or faculty and the pharmaceutical industry. Twenty-eight schools received an A (28 percent), 74 schools received a B (49 percent), 15 schools received a C (10 percent), and 13 schools received a D (9 percent). That leaves 9 schools with an F, and 15 “In Progress” schools. Despite progress overall, challenges remain, especially with policies on disclosure of financial ties with industry, samples, and access by sales representatives.

There are 102 schools with As or Bs (two-thirds!), up from 79 in 2010 and 45 in 2009. Four schools significantly improved their scores and went from F grades last year to B grades – gold star! These schools are University of Texas Health Center at Houston, University of South Carolina, Howard University, and Morehouse School of Medicine. Five other schools improved by two letter grades or more: Eastern Virginia Medical School, University of Arizona College of Medicine, Midwestern University – AZCOM Arizona College of Osteopathic Medicine and CCOM (Chicago), University at Buffalo, and OU-COM Ohio University – College of Osteopathic Medicine. And although other schools made this particular improvement, it is nice to see that Harvard Medical School has improved from a B to an A. (Recall that in 2008 they started with a great big F.) Kudos to the leadership (and student activists) who helped Harvard institute some of the strongest policies in the country, including a ban on speakers’ bureaus and a strong gift, disclosure and samples policy.

“It’s gratifying to see the improvement of medical school grades on the AMSA scorecard. This reflects the importance that medical schools are placing on the highest principles of professionalism. The policies that medical schools adopt set the tone for the culture of the institution that instills the values of professionalism in the medical students, residents, and fellows who train there.”

Stephen R. Smith, M.D., M.P.H.
Professor Emeritus and Former Associate Dean for Medical Education
Warren Alpert Medical School of Brown University

We’ve come a long way since Brennan, Rothman and company published their seminal article in 2006 on conflicts of interest in academic medical centers and their impact on medical professionalism. To put those recommendations into practice, the Prescription Project was launched in 2007 at Community Catalyst, funded by Pew Charitable Trusts. In 2008, The Association of Academic Medical Centers (AAMC) stepped up with strong standards. For the last five years the AMSA Scorecard has served to keep everyone’s feet to the fire—while measuring steady progress and pointing to barriers that must still be overcome.

To look up any school and see all the details on what’s behind each grade, please visit http://www.amsascorecard.org/

Community Catalyst, AMSA, Pew Charitable Trusts and the National Physicians Alliance have now begun a new three year collaboration, The Partnership to Advance Conflict-Free Medical Education to address these issues at medical schools and AMCs. The initiative is made possible by a grant from the state Attorney General Consumer and Prescriber Education Grant Program, which is funded by the multi-state settlement of consumer fraud claims regarding the marketing of the prescription drug Neurontin.

–  Anna Dunbar-Hester,  Program Coordinator
Prescription Access & Quality

The American Medical Student Association (AMSA) will be releasing its fifth PharmFree Scorecard on Thursday, March 8. The PharmFree Scorecard measures how well academic medical institutions are doing at providing an educational (not promotional) environment in which medical students receive their education, by instituting policies to manage potential conflicts with the pharmaceutical industry.

The PharmFree Scorecard evaluates all 152 allopathic and osteopathic medical colleges in the United States and Puerto Rico. It measures 11 metrics, including curriculum, pharmaceutical sales rep access to students, and four metrics on gifts and industry relationships.

PostScript has been covering the Scorecard for four years now, and we are excited to analyze the latest results when they come out on Thursday. To get ready, we took a trip down memory lane:

• In 2008, only 7 schools received an A, and 14 received a B (out of 150 schools). 60 schools received an F.
• In 2009, 45 institutions received an A or B, and one-fifth of the schools improved their policies over the year before.
• In 2010, 78 schools received an A or B, representing one half of all medical schools. 19 schools were still receiving Fs, but that means 41 fewer failing schools than just two years prior.

We hope the race to the top continues!

The updated scorecard will be posted on Thursday at http://www.amsascorecard.org/.  If you’d like to be among the first to hear the results, you are welcome to join the press conference at 11am EST (8am PST) on Thursday:

Toll Free Access Number: 
(559) 726-1000
Participant Passcode:  161471#

Location:  
Hyatt Regency Houston
1200 Louisiana Street, Houston, Texas
Press must check in at AMSA registration desk

– Anna Dunbar-Hester, Policy Analyst

This blog post was made possible by a grant from the state Attorney General Consumer and Prescriber Education Grant Program which is funded by the multi-state settlement of consumer fraud claims regarding the marketing of the prescription drug Neurontin.

Community Catalyst and 18 other consumer, patient safety and labor groups weighed in last week in support of (with important “friendly amendments”) draft regulations issued by the Centers for Medicare and Medicaid Services (CMS) requiring that the drug, biologics and medical device industries publicly report all payments to physicians and teaching hospitals. See here and here. As a result, all of these industry payments will be displayed on a publicly available website, where the information can be viewed by patients, or downloaded and studied.

Over 300 organizations submitted comments on these “sunshine” provisions of the health reform law. That’s a surprising number of comments, given that the provision doesn’t affect a patient’s right to benefits, or set up a new program or regulate insurance. The provision simply requires transparency in virtually all drug and device industry payments to physicians and to the teaching hospitals that train doctors or host biomedical research. Such transparency is critical for patients and the health care system, because it can expose industry marketing that undermines good prescribing, trust in doctors and affordable care. As Senator Chuck Grassley, who long championed the bill with Senator Herb Kohl, said in 2009, “Transparency fosters accountability, and the public has a right to know about financial relationships. Patients rely on their doctors’ advice. Taxpayers spend billions every year on prescription drugs and medical devices through Medicare and Medicaid. They also fund tens of billions of dollars of medical research each year, and the doctors conducting that research have a big influence on the practice of medicine.”

This transparency program was slated to go into effect on January 1 of this year, but the Department of Health and Human Services and CMS have been behind on issuing the rules. All 18 consumer and labor groups urged that this transparency be started as soon as possible after the final rule is issued. There’s no legitimate reason to delay further, because the nation’s biggest drug makers have already been reporting their payments as a result of federal investigations or settlements of possible illegal kick-backs paid to doctors. And nearly all of these manufacturers have been reporting these payments to the States of Vermont, Minnesota and Massachusetts, under state transparency laws.

The proposed rules address many complicated issues. For instance, how any payment to a doctor is labeled, as a ‘gift’ or ‘consulting fee’ or a payment for ‘research,’ etc. We urged CMS to adopt clear-cut, non-overlapping definitions to ensure that all the information is accurate, understandable to the public, and not open to manipulation. We also applauded a number of CMS proposals to improve the public’s ability to understand what payments are for, such as separating ‘lump sum’ payments into smaller units. This will help prevent industry from trying to bury inappropriate payments for lavish meals or travel to fancy resorts within a larger payment for ‘education’ or ‘research.’

We also applauded CMS efforts to prevent loopholes, by including all drug and device manufacturers, regardless of whether their products are manufactured overseas, and by including payments made to doctors through third parties, where appropriate. Plugging these potential large loopholes is essential to real transparency.

Under the statute, research payments must be reported but can be delayed for four years to protect industry from competition during product development. However, we urged CMS to narrow the definitions so that payments related to research on new uses (such as ‘off-label’ uses) of drugs, biologicals and invasive implanted devises are not delayed. Numerous federal investigations and prosecutions have exposed the illegal promotion of unapproved, or ‘off-label,’ uses of drugs and devices, fostered in part by inappropriate industry ties to physicians. This has resulted in widespread harm to consumers. For instance, the illegal ‘off-label’ promotion of the epilepsy drug Neurontin resulted in 90 percent of its prescriptions being for unapproved uses. Promotion of unproven medical devices is also increasingly a problem. As a result, we asked CMS to require that payments related to ‘research’ on products that are actively being prescribed not be subject to any delay.

Finally, CMS proposed to require CEOs to personally attest to the accuracy of their company reports. We heartily agree with this requirement—accountability should be the bottom line for any company that produces the drugs that patients ingest or the devices implanted in a patient’s body.

– Marcia Hams, Director of Prescription Access and Quality, Community Catalyst
– Wells Wilkinson, Staff Attorney, Community Catalyst

For more see this post.

Gifts, big and small, can have an impact on how we feel and what we do. We all know it. When your co-worker unexpectedly gives you a holiday box of chocolates, you feel guilty and petty about snubbing him because he stole your stapler.

And no one knows more about using gifts to win people’s hearts than the drug industry. In what may be a surprise to many patients, the majority of doctors accept some kind of payment, gift, drug samples, meal, or other gift from the drug industry. These range from the free lunches delivered to their hard-working office staff, to hundreds of thousands of dollars in consulting or speaking fees. A 2009 survey found that 84 percent of doctors had some interaction with a drug company that involved payment, gifts, travel, consultancy or speaking fees, drug samples, or other reimbursements or payments.

While some exchanges, like samples or legitimate research are generally appropriate, other relationships are problematic. And some of these relationships have landed drug companies in hot water, leading to over seven billion dollars in settlements with the federal government over the last four years. For instance, Allegan, the manufacturer of Botox, created phony advisory boards “to reward hundreds of [the drug’]s top injectors,” according to a federal prosecution settled for $600M in 2010. How did 200 of these physicians ‘advise’ Allergan? By flying an oceanfront resort in Newport Beach, California in 2005 and 2006, and getting paid $1,500 to listen to presentations on unapproved, off-label uses of Botox. But Allergan is not alone. Forest labs paid doctors $1,000 for letting a salesman follow them around all day, while prompting the doctor to prescribe Forest’s anti-depressants Celexa and Lexapro. A Forest subsidiary pleaded guilty to one felony and two misdemeanors, and Forest paid the feds a $313 million settlement. Other examples  abound.

So last week,  the Centers for Medicare and Medicaid Services (CMS) gave patients, consumers, and others a different kind of gift – strong draft regulations on public disclosure and transparency of drug and device industry payments and gifts to doctors to implement the Physician Payments Sunshine Law, the ground-breaking transparency law passed in 2010 as part of the Affordable Care Act. This law will allow anyone to see when and how much their doctor is being paid or given gifts by the drug companies.

The scope of what drug companies must report – any “payment or transfer of value” – is  very broad, and will include nearly anything that has any value: a coffee mug, pens, dinner at a nice restaurant, or a big consulting contract. But the law allows for a number of exceptions: drug samples, educational materials for patients, and small items under $10 in value, so long as the total value in a calendar year doesn’t add up to more than $100.

But when a drug maker doesn’t make a payment directly and the money goes through a third party, to a doctor or hospital, what happens? 

Under the law, the payment is not reported if the drug manufacturer is unaware of the identity of the doctor or teaching hospital that receives the payment made indirectly via a third party. This is potentially a significant loophole that could encourage pharma to simply farm-out their gift-giving to marketing firms, etc. and attempt to sidestep the public transparency purpose of the law.

The good news is CMS wants to narrow this loophole as much as possible, and has proposed a strong standard to prevent the loophole from undermining the law. The draft rule has defined being “unaware” of a doctor’s identity to be when the manufacturer does not actually “know . . . the identity of the covered recipient,” so long as the manufacturer has not tried to act in “deliberate ignorance”  or “reckless disregard” of learning the identity doctors or hospitals that received payments from them via a third party. So a drug company cannot simply turn a blind eye to where their funds are being distributed by third parties.

CMS has further advised that if the names of the recipients are ‘publicly available,’ then the manufacturer is deemed to know the identity and must report these payments. Similarly, if an “agent” of the manufacturer, such as a staff member, employee, or paid consultant knows these identities, then the manufacturer must report.

How might this work? Well, if Pfizer paid a medical education company to pay for the travel and registration costs for all the cardiologists at a state university medical school, Pfizer would need to report these payments. Similarly, if Merck paid an event planner a lump sum that was intended to cover the travel costs of all the doctors presenting at a professional conference, Merck would need to report these transfers of value because the identities of these doctors would be publicly available, or would likely be easily available to conference attendees,

A recent blog by Daniel Carlat looks at how this will affect disclosure of industry payments to continuing medical education companies that then pay doctors to speak.

While there are a lot of details that must be worked out, CMS is setting the stage for broad transparency to bring the financial relationships to light. This is a nice year-end gift for patients, consumers, health plans, and advocates who are eager to know about and better understand the relationship that drugmakers have with their doctors and hospitals.

Wells Wilkinson, Director, Prescription Access Litigation project

Last week Community Catalyst and six California-based senior and consumer groups wrote to the California delegation of the U.S. House in support of a federal system to track the authenticity of prescription drugs.

The letter expressed support for the leadership of Reps. Bilbray (R-CA) and Matheson (D-UT) in sponsoring the Safeguarding America’s Pharmaceuticals Act of 2011 (H.R. 3026). The bill would protect patients from counterfeit and diverted drug products by establishing an FDA mandated national drug identification and tracking system. The letter was signed by the Gray Panthers (statewide and Berkeley-East Bay), the California Alliance of Retired Americans (CARA), Congress of California Seniors, CALPIRG, and CA Citizens for Health Freedom, as well as Community Catalyst.

Prescription drug counterfeiting has become one of the most lucrative crimes in the world. As such, there is no reason not to use modern technology to track the distribution of our vital medications and ensuring that the drug distribution system is secure. The network of businesses that move drugs from manufacturer to the patient is extremely complex, creating opportunities for highly profitable schemes to move stolen or counterfeit drugs into legitimate channels of distribution—and then to patients. These illicit products can be degraded, clinically dangerous, or ineffective, putting patients at risk. For example:

• Cancer and transplant patients were exposed to counterfeit Epogen and generic Procrit in 2002. Criminals netted a profit of $46M and more than 90,000 vials may have reached patients. This was exposed when some patients suffered painful side effects.
• Cancer, cholesterol and other drugs were bought from Medicaid patients on the streets of New York and resold to a wholesaler and then to pharmacies. Two men were convicted in 2008 for the $6.8M scheme.
• Thieves stole 129,000 bottles of insulin in 2009. Stored under unknown conditions, the temperature sensitive drug was sold back to pharmacies and ultimately to diabetics.
• Counterfeit Lipitor™ from Central America was illegally imported and sold into U.S. distribution in 2003.

Drug products move between large wholesalers, smaller wholesalers, large chain drugs stores or small pharmacies. While smaller wholesalers are required to maintain drug ‘pedigrees’ (paper or electronic transaction histories) under federal law, the larger “authorized distributors” of manufacturers are exempt. We need a uniform track and trace system to verify the history of all drugs, throughout each of the distribution channels.

This is of special significance to the state of California, which took the lead on the “pedigree” issue in 2004, when it passed legislation spearheaded by the Board of Pharmacy, CA senior groups and Health System Pharmacists. But the implementation of a state tracking and authentication system was delayed until 2015-17 by subsequent legislation, in order to allow the federal government to create one uniform national system.

Since then, 28 other states have also passed some form of drug pedigree law, but varying provisions make industry compliance complicated and open to abuse. Comprehensive federal legislation like the Safeguarding America’s Pharmaceuticals Act of 2011 (H.R. 3026) would ensure consistency, as well as meet the California legislature’s deadline and goals.

H.R. 3026 would:

• Require manufacturers to place a unique identification number on each package of drugs (the smallest salable unit) bought and sold in the United States.
• Establish an electronic tracking system to allow companies to verify the authenticity of the drugs they buy and sell, and requiring every entity that receives a drug during distribution to perform such authentication.
• Strengthen national guidelines for state wholesaler licensure standards.

Eight years ago, Cesar Arias, a pharmacist and drug inspector for the state of Florida, told congressional investigators:

“No patient in the nation can know with 100 percent certainty that the drugs they are getting are what they are purported to be — or if they are, that they have not been in the trunk of someone’s car, or sitting in a hot warehouse or a crack house in South Florida .”

It is well past time to heed his warning.

– Marcia Hams, Prescription Access and Quality &
Wells Wilkinson, Prescription Access Litigation