Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

On May 8, 2013, the House Energy and Commerce Subcommittee on Health approved by voice vote H.R. 1407, legislation to reauthorize and combine the Animal Drug User Fee Act and the Animal Generic Drug User Fee Act. TheEnergy and Commerce Committee also recently held hearings on: the Administration’s HHS budget proposal; the Center for Consumer Information and Insurance Oversight and implementation of the ACA; the lack of transparency and consumer driven market forces in U.S. health care system; and the impact of HIPAA on patient care and public safety. The House Ways and Means Health Subcommittee held a hearing on Medicare physician payment reform, and the Senate Finance Committee has scheduled a May 14 hearing on this topic.  Other Senate panels also recently held hearings on health policy issues, including: a HELP Committee hearing on "Successful Primary Care Programs: Creating the Workforce We Need"’ a Homeland Security Committee hearing on “Oversight and Business Practices of Durable Medical Equipment Companies”; and a Special Committee on Aging hearing on "The National Plan to Address Alzheimer's Disease: Are We On Track to 2025?"

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CMS has posted the draft February 2013 FULs and Draft February 2013 Three-Month Rolling Average FULs. CMS will continue to accept comments on the draft average manufacturer price-based FULs and the draft three-month rolling average FULs, along with the methodologies used to calculate them.

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This post was written by Kevin Madagan and Debra McCurdy.

Key members of the Senate Health, Education, Labor, and Pensions Committee have released a bipartisan draft legislative proposal intended to improve drug distribution security. The legislation addresses, among other things: lot-level product tracing requirements for “downstream” pharmaceutical supply chain members (drug manufacturers, repackagers, wholesale distributors, and dispensers); a requirement that manufacturers serialize prescription drugs at the unit level; national licensure standards for wholesale distributors and third-party logistics providers; a requirement that members of the supply chain only transact with registered or licensed entities; and preemption of state product tracing requirements, including paper or electronic pedigree systems. The lawmakers will accept comments on the draft legislation until April 26, 2013. In a related development, the House Energy and Commerce Subcommittee on Health has scheduled an April 25 hearing on "Securing Our Nation's Prescription Drug Supply Chain,” which will focus on a House companion version of the draft “track and trace” legislation intended to secure pharmaceutical distribution. 

Update:  On May 8, 2013, the House Energy and Commerce Health Subcommittee approved by voice vote an amended version of its “track and trace” legislation intended to secure pharmaceutical distribution.

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CMS has released a letter providing operational and technical guidance for issuers seeking to offer Qualified Health Plans (QHPs) on Federally-facilitated and State Partnership Exchanges. The letter addresses, among other things, the QHP certification process; QHP performance and oversight; enrollment and premium payment; and consumer support. There is also an appendix with additional guidance on Essential Health Benefit Prescription Drug Coverage, Actuarial Value, and Cost Sharing.

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A new OIG report, “Part B Payments for Drugs Infused through Durable Medical Equipment,” calls for changes in the Medicare reimbursement methodology for Part B infusion drugs administered in conjunction with DME in light of potentially inaccurate pricing. By way of background, DME infusion drugs are reimbursed at 95% of the drug’s average wholesale price (AWP) in effect on October 1, 2003, compared to 106% of the average sales price (ASP) for most Part B drugs. Based on a comparison of actual Medicare reimbursement and the amount that would have been paid under the ASP methodology for each DME infusion drug from 2005 to 2011, the OIG found that payment exceeded ASPs by 54%-122% annually. On the other hand, reimbursement for up to one-third of DME infusion drugs were below the ASP, indicating that in some cases Medicare may underpay for these drugs. On the whole, the OIG estimates that Medicare spending on DME infusion drugs would have been cut by 44% ($334 million) between 2005 and 2011 if payment had been based on ASP. The OIG recommends that CMS either (1) seek legislation requiring DME infusion drug payment to be based on ASP, or (2) include DME infusion drugs in the next round of the DMEPOS competitive bidding program. CMS was noncommittal on legislative changes, but said it would include ME infusion drugs in the next round of competitive bidding (CMS has not yet provided other details on future expansion of competitive bidding). 

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This post was written by Jennifer Pike.

In recent weeks, the Food and Drug Administration (FDA) has issued a number of new draft and final guidance documents on a range of issues, including financial disclosure by clinical investigators, medical device recalls, prescription drug labeling, and medical devices for pediatric uses. Highlights include the following:

• Financial Disclosure by Clinical Investigators. This final guidance assists in interpreting and complying with regulations governing financial disclosure by clinical investigators. It provides FDA’s responses to the most frequently-asked questions regarding financial disclosure by clinical investigators.
• Distinguishing Medical Device Recalls from Product Enhancements: Reporting Requirements. This draft guidance clarifies when a potential change to a device is a medical device recall, distinguishes those instances from product enhancements, and identifies the reporting requirements for both recalls and product enhancements.
• Labeling for Human Prescription Drug and Biological Products: Implementing the PLR Content and Format Requirements. This final guidance is intended to assist applicants in complying with the content and format requirements of labeling for human prescription drug and biological products under the Physician Labeling Rule (PLR). It provides recommendations for applicants developing labeling for new prescription drugs and revising labeling for already approved prescription drugs.  
• Providing Information about Pediatric Uses of Medical Devices under Section 515A of the Federal Food, Drug, and Cosmetic Act (FFDCA). This draft guidance describes how to compile and submit the readily-available pediatric use information required under the FFDCA.

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On February 15, 2013, CMS released a proposed rule implementing the ACA’s medical loss ratio (MLR) requirements for Medicare Advantage (MA) and prescription drug (Part C and Part D) plans. Under these provisions, which are intended to limit plan spending on marketing, overhead, and profit, MA organizations and Part D plan sponsors will be required to report their MLR, reflecting the percentage of contract revenue spent on clinical services, prescription drugs, quality improving activities, and direct benefits to beneficiaries in the form of reduced Part B premiums. CMS has generally aligned the Medicare MLR rules with commercial MLR regulations that went into effect January 1, 2011.  Plan sponsors that do not have an MLR of at least 85% will be subject to payment remittance; if a plan sponsor fails to meet MLR requirements for more than 3 consecutive years, it also will be subject to enrollment sanctions and, after 5 consecutive years, to contract termination. CMS expects the first year of MLR reporting to occur in 2015 for the 2014 contract year. Comments on the proposed rule will be accepted for 60 days. The official version of the proposed rule will be published in the Federal Register on February 22, 2013.

CMS also has released the 2014 Advance Notice and draft Call Letter, which detail updates to payment methodologies, other policies, and program operations for MA organizations and Part D drug plan sponsors. CMS notes that for the first time in the Part D program’s history, the costs of beneficiary coverage are falling, with 2014 defined standard Part D prescription drug benefit having lower co-payments and deductible than in 2013. CMS also is proposing a number of policy changes for 2014, including requiring Part D plan retail and mail pharmacies to obtain patient consent to deliver a prescription, new or refill, prior to each delivery. In addition, CMS proposes to require that Part D sponsors place beneficiary-level prior authorization requirements on certain categories of drugs which may be covered under the hospice or end stage renal disease (ESRD) benefits, so as to ensure that these drugs are appropriately payable under Part D before the prescriptions are filled.  Comments will be accepted until March 1, 2013.  The final 2014 Rate Announcement and Call Letter will be published on April 1, 2013.

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CMS is holding series of meetings in May and June 2013 to discuss preliminary determinations for applications for new Healthcare Common Procedure Coding System (HCPCS) codes for the 2014 update. The following are the 2013 public meeting dates:

• May 8 and 9, 2013 -- Drugs/Biologicals/Radiopharmaceuticals/Radiologic Imaging Agents
• May 29, 2013 -- Supplies and Other
• June 4, 2013 -- Durable Medical Equipment and Accessories & Orthotics and Prosthetics

Draft agendas, including a summary of each request and CMS’s preliminary decision, are expected to be posted on the HCPCS web site at least 4 weeks before each meeting.

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This post was written by Elizabeth Carder-Thompson, Katie C. Pawlitz, and Nancy E. Bonifant.

The Centers for Medicare & Medicaid Services (CMS) released late today its final rule implementing the physician payment transparency provisions of the Patient Protection and Affordable Care Act (Section 6002), commonly referred to as the "Physician Payments Sunshine Act." Among other things, the Act requires drug, device, biological or medical supply manufacturers to report payments or other transfers of value to physicians and other covered recipients. In addition, the Act requires manufacturers and group purchasing organizations (GPOs) to report certain information regarding ownership or investment interests held by a physician in the manufacturer or GPO.

The official version of the final rule, titled “Transparency Reports and Reporting of Physician Ownership of Investment Interests” (the “Final Rule”), will be published in the Federal Register on February 8, 2013. A proposed rule was previously published in the Federal Register on December 19, 2011, for which CMS received over 300 comments from a wide range of stakeholders.

The Final Rule provides important guidance to manufacturers and GPOs regarding the Physician Payments Sunshine Act, resolves several questions remaining after publication of the Proposed Rule, and raises some new ones. Notably, CMS has announced that manufacturers and GPOs will not be required to collect required information until August 1, 2013. Manufacturers and GPOs will be required to report the data for August through December of 2013 to CMS by March 31, 2014 and CMS will release the data publicly by September 30, 2014. 

We are in the process of conducting a full review of the lengthy Final Rule and will release shortly a Client Alert providing a detailed analysis of the Rule. In the meantime, please contact Elizabeth Carder-Thompson (202-414-9213), Katie C. Pawlitz (202-414-9233), Nancy E. Bonifant (202-414-9353) or any other member of the Reed Smith Health Care Group with whom you work, if you would like additional information or if you have any questions. 

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On January 22, 2013, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule designed to provide states with additional flexibility in administering their Medicaid, Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) Exchange programs. Among many other things, the rule would enhance the ability of states to coordinate eligibility determinations, appeals processes, beneficiary notifications, and other related administrative procedures for these health programs. The proposed rule also would give states more options with regard to benefits, through policies on the use of benchmark and benchmark-equivalent plans (now known as Alternative Benefit Plans) for newly-eligible low-income adults, and the relationship between Alternative Benefit Plans and Essential Health Benefits under the ACA. In addition, CMS proposes a series of changes to Medicaid premium and cost-sharing requirements to enhance state flexibility, including updating maximum allowable cost-sharing levels and consolidating and streamlining all Medicaid premium and cost sharing rules. The proposed rule also would allow states to establish higher cost sharing for non-preferred drugs and for non-emergency use of emergency departments. The rule also addresses a number of other related policies, including: streamlining eligibility categories; simplifying the citizenship documentation process; and establishing procedures for Exchanges to verify access to employer-sponsored coverage. Note that while the proposed rule states that comments are due February 13, 2013, CMS subsequently issued a correction notice extending the comment period until February 21, 2013.

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This post was written by Jennifer Pike.

FDA has issued a final rule on the current good manufacturing practice (CGMP) requirements applicable to combination products. The rule clarifies which CGMP requirements apply when drugs, devices, and biological products are combined to create combination products. For certain types of combination products the application of CGMP requirements is straightforward – the constituent parts of a combination product are each subject only to the CGMP requirements applicable to that type of constituent part if the parts are manufactured and marketed separately. In other words, where parts of a combination product are separately manufactured and marketed, they remain separate for the purposes of applying CGMP regulations. The application of CGMP requirements to “single-entity” and “co-packaged” combination products is more complex. Thus, the final rule also sets forth a transparent and streamlined regulatory framework for manufacturers to use when demonstrating compliance with CGMP requirements for such products. Specifically, manufacturers may demonstrate compliance with CGMPs for “single-entity” and “co-packaged” combination products in one of two ways: (1) by demonstrating compliance with the specifics of all CGMP requirements applicable to each of the constituent parts included in the combination product; or (2) if the combination product contains both a drug and a device, demonstrating compliance with either drug CGMPs or quality system regulations for devices, in addition to other requirements set forth in the final rule. “Single-entity” combination products are products comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single-entity. “Co-packaged” combination products are two or more separate products packaged together in a single package or as a unit and comprised two regulated components. The rule becomes effective on July 22, 2013.

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This post was written by Jennifer Pike.

The FDA has announced the generic drug active pharmaceutical ingredient (API) and finished dosage form (FDF) facility user fee rates for fiscal year 2013. The API facility fee is owed by each person that owns a facility which produces, or which is pending review to produce, one or more APIs identified, or intended to be identified, in at least one generic drug submission that is pending or approved or in a Type II API master file referenced in such generic drug submission. The API facility fee for 2013 for domestic facilities is $26,458, while the API facility fee for foreign facilities is $41,458. The FDF facility fee is owed by each person that owns a facility which is identified or is intended to be identified, in at least one generic drug submission that is pending or approved, to produce one or more finished dosage forms of the human generic drug. The FDF facility fee for 2013 for domestic facilities is $175,389, and the FDF facility fee for foreign facilities is $190,389. Both API and FDF fees are due on March 4, 2013. FDA is authorized to collect these fees, among others, under the Generic Drug User Fee Amendments of 2012.

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This post was written by Jennifer Pike.

FDA has issued a new draft guidance document entitled “Submissions for Postapproval Modifications to a Combination Product Approved Under a BLA, NDA, or PMA.” The document provides guidance to industry and FDA staff on the underlying principles to determine the type of marketing submission that may be required for postapproval changes to a combination product that is approved under one marketing application (i.e., a biologics licensing application, a new drug application, or a premarket approval application). FDA regulations describe requirements related to postmarket submissions for changes to stand-alone products, but do not expressly address submissions for changes to combination products. The guidance intends to clarify and provide consistency with regard to the latter. Specifically, the document provides tables that may be helpful in determining what type of submission to use for a postmarket change to a constituent part of a combination product where the regulatory identity of the modified constituent part differs from the application type under which the combination product is approved. Comments on the draft guidance should be submitted, in writing or electronically, at www.regulations.gov by April 22, 2013.

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On January 8, 2013, the Obama Administration published its latest semiannual regulatory agenda, outlining planned regulatory initiatives in a number of policy areas. The Federal Register version of the agenda includes only a portion of the regulations in the pipeline, however; the full agenda has been posted on the Office of Management and Budget (OMB) web site. Major Department of Health and Human Services (HHS) regulations are highlighted after the jump.

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On January 31, 2013, CMS is hosting a call on its National Partnership to Improve Dementia Care in Nursing Homes. The partnership is focused on improving dementia care through the use of individualized, person-centered care approaches, which CMS hopes will reduce the use of unnecessary antipsychotic medications in nursing homes and eventually other care settings. The CMS call will provide information on the goals of the national partnership, quality measures, and ongoing outreach efforts. The target audience for the call includes consumer and advocacy groups, nursing home providers, surveyors, prescribers, professional associations, and other interested stakeholders.  Registration is required to participate in the call.

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Prior to the 112th Congress adjourning, the House and Senate voted to approve H.R. 1845, which is designed to increase access to intravenous immune globin (IVIG) and reform Medicare Secondary Payer (MSP) program rules, and President Obama signed the bill into law on January 10, 2013. First, H.R. 1845 requires the HHS Secretary to implement a demonstration project to evaluate the benefits of providing Medicare Part B payment for items and services needed for the in-home administration of IVIG for the treatment of primary immune deficiency diseases. Second, H.R. 1845 makes a series of revisions to MSP rules that formerly were included in H.R. 1063, the Strengthening Medicare and Repaying Taxpayers (SMART) Act. Among other things, the law requires Medicare to provide settling parties with conditional information about the total costs of medical bills when the parties announce a settlement is near; the intention of this provision is to prevent settlements from collapsing because parties cannot determine how much they owe Medicare. The law also directs the HHS Secretary to promulgate regulations establishing a right of appeal for final payment amounts; prohibits the Secretary from seeking payment of claims that are less that the cost of recouping such payment (the applicable threshold will be determined by the Secretary); makes discretionary the current mandatory civil monetary penalty for an applicable plan’s noncompliance; requires the Secretary to promulgate regulations establishing safe harbors from the MSP reporting requirements; and establishes a 3-year statute of limitations for the MSP program. 

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CMS has posted the September 2012 draft average manufacturer price (AMP)-based Medicaid federal upper limit (FUL) files, along with updated three-month rolling average FUL file consisting of the weighted average of the current and two previous monthly draft AMP-based FULs. CMS continues to accept comments on the monthly and three-month rolling average draft AMP-based FULs and the methodologies used to calculate them.

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The D.C. Circuit recently upheld a Department of Defense (DOD) rule that will require drug manufacturers to provide partial refunds on certain prescription drugs, dating back to 2008. The rule that was the subject of the case imposes a cap on the retail price of drugs and requires manufacturers to refund the difference between the retail price and the discounted rate of the drug benefits the DOD provides through TRICARE.

Please click here for a more detailed analysis on our sister blog, Global Regulatory Enforcement Law Blog.

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This post was written by Jennifer Pike.

On January 2, 2013, the FDA issued three final guidance documents related to drug and medical device submissions. The first guidance, Acceptance and Filing Reviews for Premarket Approval Applications, is intended to clarify the criteria for accepting and filing a premarket approval application (PMA) to assure the consistency of FDA’s acceptance and filing decisions. The guidance is applicable to original PMAs and PMA panel-track supplements reviewed by the Center for Devices and Radiological Health (CDRH) and the Center for Biologics Evaluation and Research (CBER). The second guidance, eCopy Program for Medical Devices Submissions, explains the new electronic copy (eCopy) Program for medical devices submissions, provides the standards for a valid eCopy, and identifies the submission types that must include an eCopy in accordance with such standards for the submission to be processed and accepted for review by FDA. The final guidance, Refuse to Accept Policy for 510(k)s, explains the procedures and criteria FDA intends to use in determining whether a 510(k) submission is administratively complete. The guidance is applicable to 510(k)s reviewed by CDRH and CBER.Comments regarding the guidances may be submitted at any time.

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This post was written by Jennifer Pike.

The FDA released draft guidance on January 3, 2013 entitled Providing Regulatory Submissions in Electronic Format – Certain Human Pharmaceutical Product Applications and Related Submissions Using eCTD Specifications. The guidance is being issued in accordance with the Food and Drug Administration Safety and Innovation Act, which amended to Federal Food, Drug, and Cosmetic Act to require that certain regulatory submissions be submitted in electronic format. The guidance describes how FDA plans to implement this requirement. According to the guidance, requirements for electronic submission will be phased in on the following schedule: (1) 24 months after publication of the final version of this draft guidance, the requirements will apply to new drug application (NDA), abbreviated new drug application (ANDA), and biologics license application (BLA) submissions, and (2) 36 months after publication of the final guidance, the requirements will apply to investigational new drug application (IND) submissions. Comments will be accepted until March 4, 2013. A second draft guidance document, Providing Submissions in Electronic Format – Summary Level Clinical Site Data for CDER’s Inspection Planning, is intended to assist applicants in the voluntary submission of a clinical dataset that describes and summarizes the characteristics and outcomes of clinical investigations at the individual study site level. Such datasets facilitate the use of a risk-based approach to timely identification of clinical investigator sites for onsite inspection by FDA during the review of marketing applications. The guidance describes a recommended electronic format for the datasets to be submitted voluntarily in NDA, BLA, and NDA and BLA supplemental applications submitted to CDER. Comments may be submitted to www.regulations.gov by February 19, 2013.

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