[Note, this is Part 2 in an ongoing series of posts exploring substantive aspects of the Consolidated Appropriations Act, 2023 (P.L. 117-328) (referred to hereafter as 2023 CAA). Part 1, available here, covered changes in Medicare payment rates.]
Buried in the “Miscellaneous” chapter of Subtitle F (“Cross-Cutting Provisions”) of the Food and Drug Administration Title (Title III) of the 2023 CAA is Section 3630, a provision without a short title called “Facilitating exchange of product information prior to approval.”
This provision was originally proposed as the Pre-approval Information Exchange Act (or PIE Act) in March 2022 and was included in the House version of the Food and Drug Administration user fee legislation before being dropped from that legislation along with almost all other policy riders in a deal to get the FDA User Fee program approved before it expired.
But the same language was included in the 2023 CAA that was signed into law on Dec. 29, 2022. And again, while it was not directly entitled as such in the law, it is the PIE Act and that is how this post will refer to it. So, exactly what is the PIE Act and what does it do? Before assuming there is “PIE” for everyone, read more for important content on the boundaries of this law, and remaining challenges for companies seeking to exchange information under this statutory authority.
Pre-approval information exchange (a.k.a. “PIE”)
According to a press release from his office, Rep. Bill Guthrie (R.-KY) introduced the original bill “to help patients gain access to treatments and medical devices more quickly.” The law aims to do this by providing clarity – with the weight of the Food Drug and Cosmetic Act (FDCA) – that drug and device firms may provide a limited and caveated subset of health care economic information (HCEI) to payors, formularies and “other similar entit[ies]” (collectively payors) before the drug or device has gained marketing authorization (“clearance” or “approval”) from the FDA.
Patient access to treatments and medical devices requires the availability of appropriate coverage and reimbursement, and communicating HCEI to payors is a critical step for drug and device firms that want to have their products promptly adopted into drug formularies or incorporated into coverage policies. It is also important to the payors, since those entities often make payment decisions for drugs and devices months in advance of when the claims start processing.
The FDA approval and clearance processes for new drugs and devices or for new uses for existing drugs and devices can be arduous in the aim of assuring safety and effectiveness benchmarks are cleared. But, once that hurdle has been surmounted, the companies then have to convince a whole host of payors to accept their products onto their formularies or payment lists. To help mitigate the time that it will take from FDA clearance or approval to appropriate coverage and reimbursement (which for many patients is when they realistically will have access to the product), the industry has been pushing for the FDA to allow the sharing of certain information, such as clinical studies, peer-reviewed research, and HCEI with the payors to show the economic benefit that could result from the use of the drug or device for the proposed indicated use under evaluation by the FDA.
A central tenet of FDA’s application of the FDCA is that companies are prohibited from “promoting” unapproved products and unapproved uses of approved products. Of course there have been extensive battles over how truthful and non-misleading speech will be treated against this backdrop, and there is a high potential for disagreement between companies and government about what constitutes “promotion.” For the life sciences industry, the stakes of being deemed to have violated the FDCA are quite high, with potential for criminal exposure under the FDCA and quasi-punitive civil exposure under the False Claims Act in some circumstances.
Although manufacturers may aim to share robust data, with the goal of reducing barriers to patient access, by navigating these discussions with payors and formularies, certain exchanges of information could be viewed by FDA as “off label” promotion or promotion of an unapproved product, and as “misbranding” (essentially, violative labeling or promotion) under Section 502 of the FDCA (21 U.S.C. § 352).
In 2018 the FDA issued a highly touted guidance document which addressed two main topics: (1) a revision to the FDAMA 114 language regarding HCEI, which under the 21st Century Cures Act was extended slightly to information provided to a payor that “relates to” (rather than “directly relates to”) approved uses for drugs provided it is supported by “Competent and Reliable Scientific Evidence”; and the extension via guidance of the same principles to devices; and (2) recognition of a more limited subset of information about uncleared or unapproved products which FDA indicated through guidance it would allow to be shared with a “payor” audience.
Although the guidance was highly touted, it left many in the industry still feeling vulnerable given the lack of a statutory basis, specifically in relation to unapproved products and uses for drug and device companies, and across the board (HCEI related to an approved use and information about unapproved products and uses) for device companies. With the passage of the PIE Act, much of the enhanced clarity from the guidance is now enshrined in the law. In our view, however, there are still key areas related to the intended “payor” audience that will continue to present challenges to the industry in interpretation and application.
What’s Being Served For Unapproved Products and Uses? “Product Information”
As included in the 2023 CAA, the PIE Act adds a new section (gg) to Section 502 of the FDCA that specifically exempts from misbranding the exchange of “truthful and not misleading product information” for both investigational drugs and devices and investigational uses of already approved or cleared drugs and devices, to a “payor, formulary committee, or other similar entity with knowledge and expertise . . . .” (we’ll come back to this description in its totality shortly).
In order for product information to be considered to be truthful and not misleading, it must be presented to payors with the appropriate background and context such that it permits informed decision making.
The statute specifically sets out categories of information that are considered to be “product information[.]” These include:
- information describing the drug or device (such as drug class, device description, and features);
- information about the indication or indications being investigated;
- the anticipated timeline for a possible approval, clearance, marketing authorization, or licensure;
- drug or device pricing information;
- patient utilization projections;
- product-related programs or services; and
- factual presentations of results from studies that do not characterize or make conclusions regarding safety or efficacy.
The statute also sets forth clear requirements for the product information to be considered exchangeable under the law. Product information that qualifies under the PIE Act should include:
- a clear statement on the lack of approval, clearance, marketing authorization, or license and that the safety and effectiveness has not been established;
- stage of development information, including: the status of any studies; how the studies relate to the overall plan for the development; and whether a submission has been made to FDA for approval or clearance;
- full descriptions of the material aspects of study design, methodology and results for any study the results of which are being presented as facts, including any limitations related to that study’s design, methodology and results;
- where applicable, a prominent statement disclosing the indications that the drug or device has been cleared or approved for and a copy of the most recent label.
- updated information, if previously communicated information becomes materially outdated as a result of significant changes or as a result of new information regarding the product or its review status
Finally, the statute also details that product information should not include information that represents that an unapproved or uncleared product or use has been approved or cleared or that the product is safe or effective for the studied use.
Who’s at the Table?
The statute incorporates language directly from the FDA’s preceding guidance and defines the approved audience or recipient of PIE as “a payor, formulary committee, or other similar entity with knowledge and expertise in the area of health care economic analysis carrying out its responsibilities for the selection of drugs or devices for coverage or reimbursement.” And while it may be clear that an audience falls squarely within the definition of a “payor” or “formulary committee,” the challenge often lies in defining the “other” category.
For example, integrated provider and payers (wonderfully called, “payviders”) are likely candidates, provided the individual recipients are those involved in the “selection of drugs or devices for coverage or reimbursement” and not general procurement, but what about the development and negotiation of value-based care or outcomes-based payment arrangements? The line between coverage and reimbursement responsibilities and traditional commercial sale agreements may not always be clear.
What does this mean?
Because the provisions of the PIE Act have now been codified, drug and device firms in some clear-cut cases have additional assurance that they may deliver “truthful and not misleading product information” to payors prior to approval or clearance by the FDA without undue fear of significant enforcement action.
From experience, however, we do not expect this statute to fully resolve the questions around PIE or completely remove FDA discretion from the equation.
Given that the guidance document from FDA predated the legislation but was considered by the original sponsor of the legislation, it remains an important piece of the puzzle to follow until the FDA issues further guidance based on this law.
We still expect to see potential for different views on whether specific content is “truthful and not misleading,” whether specific audiences are “similar” to payors, and who within a drug or device firm is well-suited to engage in these conversations.
Reed Smith will continue to follow developments with regard to the PIE Act and its impact on best practices and risk mitigation for payor communications. If you have questions on this topic, please reach out to the health care lawyers at Reed Smith LLP