Life-Science Panorama

A Journal for Industry Executives

Brought to you by

May 27th, 2010

Global Supply Chain Visibility and Security; Business Necessity, Regulatory Imperative

Axendia Launches Life Sciences Global Supply Chain Research Study

The globalization of manufacturing and supply of medical products has created unique and demanding challenges for the Life Sciences industry and the U.S. Food and Drug Administration alike.  In light of recent adverse events, Industry and regulators are preparing to take significant steps to secure the Global Supply Chain.

Axendia, Inc., today announced that it has launched a research study entitled, “Global Supply Chain Visibility and Security; Business Necessity, Regulatory Imperative”.   This research seeks to identify and analyze trends, requirements, and initiatives Life-Science companies are undertaking to gain deeper visibility and controls over Global Supply and Value Chains.

The study will focus on:

  • Assessing current and desired states of Life Science supply chains
  • Identifying key challenges facing global and outsourced ecosystems
  • Outlining innovative strategies and system to enable and guide this transformation
  • Provide a roadmap to achieve Global Supply Chain Visibility and Security

Axendia researchers will seek insight from industry leaders and regulators on innovative strategies and technologies, enabling supply chain visibility and security, risk mitigate, and increased business success.

The results of this study will be presented in a report detailing current and best practices in Global Supply Chain Visibility and Security in Life Sciences. The research report will include tables and charts supporting research findings. Axendia will conduct the study research, analysis and report, and retain full editorial control.

This research study is co-sponsored by leading companies active in the Life Sciences sector, including (in alphabetical order): Camstar Systems (www.camstar.com) and IBM (www.ibm.com). These companies are working to increase the understanding of processes and systems that support global visibility and transparency across the Life Sciences value chain.
Read the complete Press Release at:  http://www.prweb.com/releases/Axendia/LS-Global-Supply-Chain/prweb4055364.htm 

May 10th, 2010

A Conversation with The Johns Hopkins Hospital

Lowering the Cost of Healthcare from Inside Out

By Daniel R. Matlis

I recently had the opportunity to chat with Tom Lentz at The Johns Hopkins Hospital. Tom is Manager of IT and Finance for the Facilities Department at Hopkins.

During our discussion, I shared Axendia’s research and analysis on “Lowering the Cost of Healthcare from Inside Out”. We also discussed current pressures facing healthcare providers including the need to improve clinical outcomes and reduce costs, while ensuring compliance with a applicable regulations. In addition, the proliferation of Medical Technologies has created a new level of complexity and risks for Healthcare organizations.

To respond to these new challenges, healthcare providers are seeking ways to effectively manage a sophisticated mix of clinical, biomedical and facilities systems and equipment.

During our session, Tom discussed how The Johns Hopkins Hospital uses its Integrated Asset and Service Management system to:

  • Improve uptime to support patient care
  • Control costs for procurement, maintenance, labor and materials
  • Support regulatory compliance and reporting activities
  • Improve internal controls with automated workflows
  • Gain efficiencies by mobilizing asset management

You can participate in our conversation with Tom Lentz from The Johns Hopkins Health System, by attending our upcoming IBM / Axendia Webcast on May 18, 2010 at 9:00 AM PT / 12:00 PM ET.

To register visit: https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=201849&sessionid=1&key=76A9806CBA8B4D4E34E12787C2F454B3&partnerref=IBM02&sourcepage=register

This webcast is the second installment in our series “Lowering the cost of Healthcare from Inside Out”. You can view the inaugural webcast in this series on-demand, by visiting: http://LSP.axendia.com/2010/01/27/lowering-the-cost-of-healthcare-from-inside-out/

I hope you can join our discussion next week.

October 21st, 2009

Is Medical Device Interoperability Sufficient

By Rick Schrenker

Last month’s article in Life-Science Panorama entitled “Hospitals & Medical Device Manufacturers Address Interoperability with New Standard” discussed the emergence of standards and regulations around communications involving medical devices.  The article  offered what was to me a surprising claim:  “The use of these networked medical devices in a clinical context … will soon be subject to national or regional regulations [and] may not be marketed without evidence of interoperability, that is, they must not compromise the organization’s delivery of health care.” 

Having been involved with medical device interoperability standardization efforts for over a decade and watched approaches to the problem and players interested in it come and go as time went by, not much actually surprises me anymore.  But it’s quite a leap and a bit of a shock to go from “evidence of interoperability” to “[not compromising the] delivery of health care.”  Strictly speaking, interoperability is about the capability of devices to communicate with each other and make use of the shared data and nothing else.  Other properties will arguably play greater roles in assuring system integrity, e.g., reliability, usability, maintainability, availability, etc.  Interoperability is not synonymous with risk management, nor does it guarantee it. 

Still, I agree that draft standard IEC 80001 “Application of risk management to information technology (IT) networks incorporating medical devices” is expected to play a key role in assuring the system integrity necessary to realize the visions that interoperability is expected to enable.  But is IEC 80001 sufficient?

I pose the following to clinical engineers and biomedical equipment technicians: “What would make you comfortable with supporting a request to implement aspects of critical care device functionality on an IT network?” Would being told that the network had been designed and installed according to relevant process and standards be sufficient? Or … evidence that the result of application of the processes and standards addressed functional and non-functional requirements relevant to critical care.   How much evidence do you need to support an argument that worst case failure of an ICU monitoring system … could not place a patient, or hundreds of patients, at unacceptably increased risk?” [1]

It is notable that that the risk management principles of IEC 80001 are largely inherited from IEC 14971, a more general and process-based medical device risk management standard that has primarily been applied to stand alone devices and system from single manufacturers. 

Imagine the implications as medical devices increase their use of and dependence on networked resources, particularly in light of the rate of change and heterogeneity of clinical applications and systems implementations. This begs the question of whether anyone has examined, let alone established, the validity of extrapolating 20th-century medical technology development, assessment, and regulatory practices for the 21st-century healthcare system.” [2]

There is not enough space here to do justice to addressing the implications of the above, but for anyone interested I recommend the National Academies Press’ Software for Dependable Systems: Sufficient Evidence?, which argues:

“…the pursuit of dependability in software systems should focus on the construction and evaluation of evidence…software is guilty until proven innocent…This approach is…becoming standard in the world of systems safety, in which an explicit safety case…is  usually required… …a software system may not be declared “dependable” based
on the method by which it was constructed…Those claiming dependability for their software should therefore make available the details of their claims, criteria, and evidence…The willingness of a supplier to provide such data, and the clarity and integrity of the data that the supplier provides, will be a strong indication of its attitude to dependability”

In other words, for sufficiently complex technology, good process alone is insufficient to ensure safety and dependability.  So again I ask:  Granted that 80001 is necessary, but is it sufficient? 

1. R Schrenker, “Sufficient Evidence – Making the Case for Safety”, Biomedical Instrumentation and Technology, November – December 2008.
2. R Schrenker, “Learning from Failure – The Teachings of Petroski”, Biomedical Instrumentation and Technology, September – October 2007.

Rick Schrenker is the Systems Engineering Manager in the Massachusetts General Hospital Department of Biomedical Engineering.  Rick holds a BS and MS in electrical engineering from the Johns Hopkins University.  He has served in a number of clinical engineering roles over 30 years at Mass General and previously The Johns Hopkins Hospital.  In the medical device interoperability domain, Rick has primarily been involved with IEEE-related efforts and the MD PnP Program (http://mdpnp.org/Home_Page.php).  He serves as a co-chair of the AAMI/IT Information Technology Networks Incorporating Medical Devices Committee and is active in the CE IT Community (http://www.ceitcollaboration.org/).

The opinions expressed in this article are those of the author(s) and do not necessarily represent those of Life-Science Panorama, its editor or Axendia, Inc.

August 26th, 2009

Pfizer and FDA Share Perspectives on Supply Chain Security

FDA’s or Industry’s Responsibility?

By Daniel R. Matlis

 During my opening remarks at the 4th Annual Manufacturing Execution System in Life-Sciences Conference, I discussed FDA’s proposed budget increase of 166 Million Dollars and 346 FTEs toward Medical Product Supply Chain Safety and Security Oversight.

The globalization of manufacturing and supply of medical products has created unique and demanding challenges for industry and FDA alike.  Yet, according to a recent Axendia study on QMS trends in Life-Sciences, only 34% of respondents reported view global quality data in real time.

In the complex and ever-changing environment driven by globalization, license holders and regulators must seek out new approaches to ensure the safety of medical products.  

The Industry’s Role:

In his Keynote, Gerald Migliaccio, Pfizer’s Vice President of Quality, EHS and Agility - Pfizer Global Manufacturing, addressed Supply Chain Security from an industry perspective.

Supply chain security is the responsibility of all parties involved in procurement, sourcing, manufacturing, packaging and distribution of raw materials, intermediates and final product,” commented Mr. Migliaccio.  “Ultimately, the marketing authorization holder(industry) is responsible for assuring that all parties in the supply chain fulfill their responsibilities for delivering safe and effective medicines to customers” he added.

According to Mr. Migliaccio, strong supply chain security strategies benefits both patients and industry by:

  • Preventing Adulteration
  • Preventing and Detect Counterfeits
  • Preventing Product Diversion

These strategies should include the following key elements:

Supply Chain Security Measures:
  • Financial viability of business partners throughout supply chain
  • Ethical Business practices throughout supply chain
  • Physical security
  • Container/freight movement security
  • Personnel security

Supply Chain Quality Systems:

  • Supplier / contractor evaluation and selection
  • Supplier / contractor management and oversight
  • Supplier / contractor management of their supply chain

Counterfeit Prevention:

  • Overt measures
  • Covert and semi-covert measures
  • Forensic covert measures
  • Counterfeit Detection
  • Surveillance programs
  • Support for Law Enforcement agencies

Business Intelligence: 

  • Proactive analysis of pricing and supply trends to predict potential areas of criminal activity

Internal and External Collaborations:

  • Cross-functional collaboration between manufacturing, quality, security, logistics, marketing and others to drive Supply Chain Security efforts
  • Industry collaboration through PhRMA, EFPIA, ISPE, and industry coalitions, such as RX-360
  • Collaboration with suppliers, contract manufacturers, transporters and distributors
  • Collaboration with Law Enforcement and Regulatory Authorities

The Agency’s Role: 

For its part, the FDA plans to increase its oversight of the Supply Chain to ensure safety and security.  This will prevent harm to the public by achieving greater compliance with safety standards, detecting and correcting safety risks.

To this end, the FDA plans to “implement new approaches and conduct new activities to effectively regulate the supply chain.  The priorities proposed in this initiative will assure the safety and security of foreign and domestic sources of ingredients, components, and finished products at all points in the supply chain, including their eventual use by American consumers.  Supply Chain Safety and Security relies on risk-based prevention with a verification-focused approach to hold all segments of industry accountable for ensuring that their products meet U.S.
To meet these objectives:
  • FDA is proposing a budget increase of $166,433,000 and 346 FTEs to improve medical product Supply Chain Safety and Security.
  • FDA will increase medical product safety and security by enhancing oversight of entities in the supply chain.
  • FDA will use traditional and innovative mechanisms that include FDA inspections and field exams, integrated federal-state oversight, and greater access to inspection data and results acquired from trusted foreign regulatory authorities.
In my opinion, although industry and regulators have different roles in securing the Medical Product Supply Chain, we will all benefit through their efforts.
 
In Gerry Migliaccio’s words “while we have been very successful at advancing science and risk-based approaches to quality, all of our efforts can be rendered moot if we cannot secure the supply chain.

August 4th, 2009

Improve Healthcare Quality and Reduce Costs by Aligning Incentives

By Daniel R. Matlis

During the last Microsoft Health and Life-Science Conference, I had the privilege to participate in an enlightening discussion with stakeholders (or special interest groups, depending or the news network you watch) in Healthcare Reform.

The panel represented a board spectrum of constituents and included (in alphabetical order):

  • Jeff Brown - Director IT, Partners Healthcare
  • Deighton Liverpool - Director,  IT , American Association for Cancer Research
  • Okey Okuzu - Director -  US Managed Markets Strategy & Innovation, Novartis Pharmaceuticals Corporation
  • Arman Ozgun – Managing Partner, Netsoft USA
  • Chad Pomeroy - VP Innovation & eBusiness, WellPoint

The session provided ample opportunity to discuss and highlight key challenges and opportunities of the US healthcare system.

In my opinion, the underlying problem with the current Healthcare system is misaligned incentives.  That is, each stakeholder is incentivized and compensated based on different and often conflicting benchmarks.

For example:

  • Research institutions seek public and private funding to conduct focused research
  • Life-Science companies seek to recoup and profit for the high risks and costs associated with bringing new products to market
  • Health Insurers seek to manage and lower healthcare costs and make profit
  • Healthcare providers seek to improve patient outcomes and reduce costs while minimizing litigation risks
  • Technology companies offer enabling platform to automate and “smart-up”  healthcare

What if we found a way to align incentives and gain synergies from all these stakeholders? 

Imagine, if you would, a model where each stakeholder is a link in the healthcare chain, and gets benefits from others in the ecosystem.

In this environment:

  • Research institutions could partner with Life-Science companies early in the discovery process and feed new compounds to Pharma R&D. 
  • Another benefit is looking blockbusters from the trash bin.  In other words finding new uses for compounds that did not show promise with the initial target (Rogaine and Viagra were side effects)
  • Hospitals could provide de-personalized patient information to build better models toward the road to virtual clinical trials and targeted “personalized medicine”
  • Insurance companies could lower costs and make better treatment decisions based on appropriate diagnostic tools and “pay for outcome” model (Geisinger already offers Heart Surgery warranty which has lowered costs as well as 30-day readmission rate 44%) 

These do not even take into considerations the benefits associated with bringing medical records to the electronic age or applying Lean and Six Sigma techniques to a very inefficient Healthcare model.

According to a recent reports, patients in the American Healthcare system received the recommended care only 54.9% of the time. By contrast, your car, phone and PC are built to meet requirements 99.997%. 

In my opinion, aligning incentives for healthcare stakeholder would yield lower healthcare costs and improved patient outcomes.

June 25th, 2009

Medical Device TPLC Research Report Now Available

By Daniel R. Matlis

To determine the industry’s adoption of a Total Product Life Cycle approach, as advocated by FDA, Axendia, in cooperation with Cambashi and FDAnews recently conducted a major research project on this subject.

A total of 212 industry insiders from a wide range of medical device and diagnostic companies participated in this research.

The research is now complete and the full findings are available in a new report entitled, “Total Product Lifecycle Management: Lowering Costs while Increasing Quality.”

We hope this research will serve as an aid to enable Medical Device companies in their transformation to a holistic end-to-end Total Product Lifecycle (TPLC) strategy.

The research is co-sponsored by five companies - all of which are active in the Medical Device industry. These companies provide deep and diverse expertise in medical devices practices and provide design, product lifecycle management, production, quality, and related software and services to the industry as well as management consulting services to leverage applications appropriately. Working together, these underwriting sponsors hope to increase the medical device market’s understanding of how to reduce risks and improve compliance and profitability.

Research Sponsors for the study are: management and technology consulting firm PricewaterhouseCoopers LLP (www.pwc.com/pharma), enterprise manufacturing and quality software provider Camstar Systems (www.camstar.com ), product lifecycle management (PLM) software innovator Dassault Systèmes Enovia (www.3ds.com) with its medical device industry PLM partner Integware (www.integware.com), and PLM and enterprise content management software provider PTC (www.ptc.com).

The analysis and report was prepared by Axendia and Cambashi, which retain full editorial control.

April 2nd, 2009

New Research on Medical Device TPLC Practices Launched

By Daniel R. Matlis

Innovation is the lifeblood of the medical device industry. Managing the Total Product Life Cycle (TPLC) could enable medical device manufactures to lower costs while increasing quality. 

To determine the industry’s adoption of a Total Product Life Cycle approach, as advocated by FDA, Axendia ™ , in cooperation with Cambashi and FDAnews launched a major research project.
This study entitled, Managing the Total Product Lifecycle: Lowering Costs While Increasing Quality, will examine the transformation from waterfall processes to more concurrent and collaborative processes. 

This study will:

  • identify major challenges associated with managing the Total Product Lifecycle
  • uncover the transitional issues facing medical device organizations and their ecosystem, including globally distributed production, outsourced operations, suppliers, distributors and trading partners
  • describe innovative strategies, best practices, and technologies that medical device companies should consider to achieve quality and cost benefits
  • characterize the current state of the medical device industry and provide insight into how industry leaders are meeting today’s challenges

 To be a part of this important industry research and share your perspectives on Medical Device trends, complete the survey by clicking on the link below:

http://www.surveymethods.com/EndUser.aspx?E6C2AEB0E0A6B0BD  The survey will be open from April 2 until April 14th. 

Note: Individual responses will remain strictly confidential.

Survey respondents will receive the final report as an aid to enable their transformation from disconnected “silo” processes to holistic end-to-end product approaches, plus valuable related reports. 

The results of this survey will be released at the Sixth Annual Medical Device Quality Congress June 3-5 in Cambridge, MA in a special session on the research, Managing the Total Product Lifecycle:  Lowering Costs while Increasing Quality.  This research ties in closely with this year’s conference theme, “Leading the Way to Better Performance With Quality Systems Compliance”. 

To learn more about this research visit: http://axendia.com/blog/managing-the-tplc/

The research is co-sponsored by five companies – all of which are active in the Medical Device industry.  These companies provide deep and diverse expertise in medical devices practices and provide design, product lifecycle management, production, quality, and related software and services to the industry as well as management consulting services to leverage applications appropriately.  Working together, these underwriting sponsors hope to increase the medical device market’s understanding of how to reduce risks and improve compliance and profitability. 

Research Sponsors for the study are: management and technology consulting firm BearingPoint (www.bearingpoint.com), enterprise manufacturing and quality software provider Camstar Systems (www.camstar.com ), product lifecycle management (PLM) software innovator Dassault Systèmes Enovia (www.3ds.com) with its medical device industry PLM partner Integware (www.integware.com), and PLM and enterprise content management software provider PTC (www.ptc.com).

The analysis and report will be prepared by Axendia and Cambashi, which retain full editorial control.

December 16th, 2008

Wyeth v. Levine in Light of the Obama Paradigm and the State of our Economy

Issues for the Supreme Court to Consider - Part II

 By:Iana DeSouza, Esq. and Judith Meritz, Esq.

On November 3rd 2008, counsel for Wyeth Pharmaceuticals and for Vermont resident Diane Levine presented oral arguments to the Supreme Court of the United States

In Part One of this series, we covered the key issues the Supreme Court will need to consider in this case. Specifically, whether the FDA or a Jury should determine Drug Safety Standards? 

Part Two of the Wyeth v. Levine series covers issues the Supreme Court may consider in light of the election of President-elect Obama and the state of the US economy.

The Obama Paradigm of Information and Patient Safety

On January 20, 2009, President-Elect Barack Obama will be sworn in and will focus on using technology to manage information, requiring full transparency regarding quality of care and promoting patient safety.  According to Obama’s plan to lower health care costs for Americans, the Obama administration is expected to spend $10 billion dollars over the next 5 years on Health Care Information Technology.

Preparing for this Obama paradigm of information and patient safety, the Court may decide that Wyeth did not do all that it could have to utilize available information regarding the drug’s risks to ensure patient safety. The Court may decide to hold Wyeth out as an example, to the community of  pharmaceutical and health care providers of a company that failed to adequately protect patients due to its delinquent  use of information. As  Levine argued in her brief, possibly, Wyeth knew of the serious risks and could have added a stronger warning or instruction against the IV-push injection method even after the drug was approved by FDA. If the Court agrees that Wyeth had access to greater specific information about Phenergan and the IV push method than the FDA, then the Court may find Wyeth responsible for Levine’s amputated arm. Moreover, since Wyeth is responsible for drafting the label on the drug, the Court could also decide that ultimately it was Wyeth’s responsibility to strengthen the warning even absent a mandate from the FDA to do so.

However, the Court may instead accept Wyeth’s response that it complied with all of the laws and regulations by disclosing to the FDA all of the information in its possession. Moreover, Wyeth relied on the FDA’s concurrence that the warnings were adequate. Wyeth complied with FDA’s instructions to include prominent warnings that IV administration required extreme care or gangrene requiring amputation was likely to follow. The Court may find that Wyeth did all it was required to do to prevent patients from suffering any harm. The Court may agree that it would be unreasonable to expect Wyeth to go above and beyond the required FDA standard safety warnings since the FDA, currently, is the ultimate standard for drug approvals.

Can the Current U.S. Economy Afford More State Claims?

Moreover, as Levine’s counsel asserted in their brief, permitting state actions would incentivize drug manufacturers to stay abreast of all potential injuries stemming from their products. However, how much would this cost? If Wyeth was responsible to protect against every potential harm that could result from its drug, how much more would that cost the drug companies to research, manufacture and market these drugs? How much more would Medicare and Medicaid have to pay for these drugs? And at the bottom line, how much more would that cost middle America, already barely able to afford the cost of drug prescriptions?

As America stands today in a slowing economy with many Americans who struggle to purchase their medications, a Court decision permitting state actions against drug manufacturers may continue to drive this economy into a deeper hole. If every patient who suffered any side effect or harm from a drug sued the drug manufacturer, would these companies be able to afford to research and develop the next new drug? Ultimately, a decision in favor of state actions, might also affect the development of our pipeline of medications available to the American public. Is permitting state actions against drug companies truly in the best interest of this country and should this enter into the Court’s analysis?

As we await a decision from the Court, these are just a few of the issues that the Court may consider in its adjudication.  Ultimately, the Court will decide whether the FDA’s approval of a drug should preempt state tort actions brought against a drug manufacturer based on an unintended side effect suffered by one patient which was caused by a drug that has helped millions of patients.

The views expressed in this article are those of the authors and do not necessarily represent those of Life-Science Panorama, its editor or Axendia, Inc.

DesouzaI-80.jpgIana DeSouza Esq. is an associate in the Health Law Practice Group at Blank Rome LLP. She concentrates her practice on healthcare with a focus on FDA compliance, licensure, certification, accreditation, contract drafting and negotiation, fraud and abuse, and corporate transactions.

Ms. DeSouza provides counsel to clients regarding due diligence for new acquisitions, business ventures, and strategic partnerships. She also advises clients on all aspects of regulatory affairs and governmental compliance including quality assurance, product labeling, registrations, recalls, the handling of adverse events, security breach and consumer notifications. Prior to this position, she obtained pharmaceutical industry experience while working for a global drug manufacturer.

MeritzJ-80.jpgJudith K. Meritz, Esq. is a partner in the Health Law Practice Group at Blank Rome LLP.  She concentrates her practice in FDA compliance counseling in the areas of drugs, devices and biologics. She also offers regulatory expertise in the areas of DEA, OSHA, DOT and EPA.

Judith Meritz served as Assistant General Counsel for the American Red Cross responsible for regulatory affairs.  In this capacity, she was the chief counsel to the Biomedical Services group providing guidance to ARC headquarters staff, as well as field blood regions and national testing labs, with particular emphasis on compliance with FDA regulations and the FDA Amended Consent Decree. 

December 9th, 2008

Should FDA or a Jury Determine Drug Safety Standards?

Issues for the Supreme Court to Consider on Wyeth v. Levine Case

By: Iana DeSouza, Esq. and Judith Meritz, Esq.

On November 3, 2008, while most of America anxiously awaited Election Day to cast their vote, counsel for Wyeth Pharmaceuticals and for Vermont resident Diane Levine presented oral arguments to the Supreme Court of the United States on this issue.  This two part article will cover the key issues the Court may need to consider on the Wyeth v. Levine case.

“Intra-Venous (IV) administration requires extreme care or gangrene requiring amputation will likely follow.”

Is this an adequate warning? Should the Food and Drug Administration (“FDA”) or a state jury determine the adequacy of the warning?

FDA approved a drug label for a Wyeth Pharmaceuticals Inc., drug named Phenergan. Diana Levine, was injected with Phenergan to treat nausea. Levine experienced an unintended side effect that led to the amputation of her arm. Levine sued Wyeth on a tort state claim. The Vermont Supreme Court upheld the lower courts verdict for the plaintiff and Wyeth appealed and brought the matter to the U.S. Supreme Court (the “Court”). The Court will soon decide this issue in the Wyeth Pharmaceuticals Inc. versus Diana Levine suit.

When the FDA has determined a drug to be safe and efficacious, and authorizes a drug manufacturer to sell and distribute that drug, should individuals, such as Diana Levine who lost her arm due to an unintended effect of the drug’s IV push administration, have recourse to sue the drug manufacturer under state law when the drug does not perform as it was expected? This is the question in front of the Highest Court of the U.S. Judiciary system.

Counsel for Wyeth urged the Court to overturn the $7 million dollar state verdict and rule that state tort claims against Wyeth are preempted by federal law. Levine’s counsel argued that individuals should be able to sue drug manufactures in spite of the drug’s approval by the FDA. The Supreme Court is asked to decide this question which could significantly change the landscape of the drug industry.

If the Supreme Court decides that federal law preempts the state claims and that FDA approval is a sufficient standard, patients will not be able to assert state tort claims against manufacturers of FDA approved drugs. However, if the Supreme Court decides to permit state claims, then drug manufactures could be exposed to potential suits brought by patients from every state. These drug companies might then need to significantly increase their budget and their efforts to anticipate and avoid all drug risks. Perhaps the Court will render a decision that will consider both the interests of patients who have been harmed by a drug and yet still protect drug manufacturers from excessive risk of state claims.

The Court might decide this case on one or more of several sub-issues.

Who Is Better Suited to Determine Drug Safety Standards?

Is the FDA or a state jury better suited to decide drug manufacturer’s drug safety standards? Wyeth argues that the FDA is better suited to decide which product label warning standards are required. Wyeth asserts that the FDA’s expertise enables it to possess the training and experience necessary to properly decide which drug warnings are necessary on a drug label. Thus, Wyeth’s briefs argued that Wyeth was justified in relying on the FDA’s approval of the drug’s labeling as adequate and safe to distribute in the market.  Levine’s counsels point of view prefers to substitute lay jurors opinions’ of a single victim’s injury, gathered during the time of the trial, as adequate perspective on the overall pharmaceutical system. Wyeth’s counsel asserts that this process is not optimum in order to decide the adequacy or inadequacy of a drug label.

However, a jury that has heard the arguments delineating that the drug manufacturer complied with FDA regulation and utilized best efforts to warn of drug risks and has also witnessed how the patient was harmed, may be able to make the best decision as to which drug safety standard is adequate. For example, in one state claim case, a jury might find that a drug manufacturer did do everything it could have done to prevent the patient harm and thus the drug manufacturer should not be liable. However, in another state claim case, a jury might find that the warnings were not adequate in light for the risks associated with that drug.

Risks and Benefits of Federal Pre-Emption

The Supreme Court could resort to a risks-benefits analysis to assess whether or not to permit FDA’s drug approval to pre-empt state tort claims. If plaintiffs were prohibited from bringing suit against drug companies for FDA approved drugs, the risks would include the following possibilities: 1) drug manufacturers may become less concerned with safety if there was no risk of state tort claims; 2) the FDA may realize it is the final judge on product safety and might become ultra conservative in reaching drug approval determinations; and 3) people harmed by a drug may not adequately financially recover for  harm suffered from a drug’s unintended effect if the drug companies are protected from lawsuits.

Possible benefits of preempting state claims and allowing the FDA to be the final authority on drug labels include:

  1. drug manufacturers would avoid drug labeling requirements from the various states;
  2. drug manufacturers would not be subject to juries focused solely on the harm caused by the drug and not on the benefit;
  3. plaintiffs may be forced to shift liability  to other parties, such as the hospital or physicians, who may have had more control over the administration of the drug; and
  4. maintain a national, uniform regulation of drug labels.

After weighing the risks and benefits of preempting state claims, the Court could decide that the benefits of preempting state claims justify the risks and thus preemption is necessary. This would mean that state claims would be prohibited from being brought once the FDA has approved a drug and its labeling. However, the Court might also decide that the risks of preempting state claims do not justify the benefits of preemption and thus disallow preemption as it relates to state tort claims. Plaintiffs would still be able to file state claims contesting an FDA approved drug label.

Part Two of this article will cover issues the Supreme Court may consider in light of the election of President-elect Obama and the state of the US economy.

The views expressed in this article are those of the authors and do not necessarily represent those of Life-Science Panorama, its editor or Axendia, Inc.

DesouzaI-80.jpgIana DeSouza Esq. is an associate in the Health Law Practice Group at Blank Rome LLP. She concentrates her practice on healthcare with a focus on FDA compliance, licensure, certification, accreditation, contract drafting and negotiation, fraud and abuse, and corporate transactions.

Ms. DeSouza provides counsel to clients regarding due diligence for new acquisitions, business ventures, and strategic partnerships. She also advises clients on all aspects of regulatory affairs and governmental compliance including quality assurance, product labeling, registrations, recalls, the handling of adverse events, security breach and consumer notifications. Prior to this position, she obtained pharmaceutical industry experience while working for a global drug manufacturer.

MeritzJ-80.jpgJudith K. Meritz, Esq. is a partner in the Health Law Practice Group at Blank Rome LLP.  She concentrates her practice in FDA compliance counseling in the areas of drugs, devices and biologics. She also offers regulatory expertise in the areas of DEA, OSHA, DOT and EPA.

Judith Meritz served as Assistant General Counsel for the American Red Cross responsible for regulatory affairs.  In this capacity, she was the chief counsel to the Biomedical Services group providing guidance to ARC headquarters staff, as well as field blood regions and national testing labs, with particular emphasis on compliance with FDA regulations and the FDA Amended Consent Decree.  

October 20th, 2008

Presidential Candidates Agree on Drug Re-Importation - That is Not Fair

By Daniel R. Matlis

Although Senators McCain and Obama (listed in alphabetical order) are looking to address many of the same problems, they have very different approaches.

The Presidential candidates don’t agree on many things, from the economy to energy, healthcare to taxes, even Joe the Plumber.

One thing they both agree on: Drug Re-importation.

John McCain will look to bring greater competition to our drug markets through safe re-importation of drugs and faster introduction of generic drugs.

Barack Obama and Joe Biden will allow Americans to buy their medicines from other developed countries if the drugs are safe and prices are lower outside the U.S.

I thought it would be worth discussing some facts about drug re-importation:

FACT: You can buy many pharmaceutical drugs abroad for a lower price.
FACT: Some of these drugs are made by the same company at same plant, to the same standards as those sold in the US.

So why is a 30 day supply of 20mg Lipitor available for $60.78 on CanadaDrugs.com while Drugstore.com offers the same product and dose for $119.99?

The answer is good American capitalism.  No, not in the way you think. Pharmaceutical Companies are not charging more in the US simply because they can.

Pharma Companies are obliged to charge less for the same product in every “G-7″ (Group of 7) industrialized nation countries (Canada, France, Germany, Italy, Japan, the United Kingdom) except for the United States (see Table for examples).

Drug Pricing in Canada
In Canada, the Patent Medicine Prices Review Board establishes and enforces guidelines that determine the maximum prices at which manufacturers can sell brand name drugs. The Canadian pricing system results in brand name drug prices that are an average of 38% lower than prices in the US

Drug Pricing in France
The French pricing system allows pharmaceutical companies to sell their products at any price. However, if these companies want the national health care system to reimburse patients for the cost of the drug, the companies must agree to a lower, negotiated price. The French pricing system results in brand name drug prices that are an average of 45% lower than prices in the US

Drug Pricing in Italy
Italy’s national health care system allows manufacturers to sell their drugs at any price.
However, if these drugs are to be eligible for reimbursement under the national health care system, pharmaceutical companies must set the price of the drug at a cost that does not exceed a twelve country European average price. The Italian pricing system results in brand name drug prices that are an average of 48% lower than prices in the US.

Drug Pricing in the United Kingdom
Drug companies in the United Kingdom are free to establish their own prices for individual drugs. However, under the country’s pharmaceutical laws, the maximum profit that drug manufacturers can earn on sales in the United Kingdom is limited. The pricing system in the United Kingdom results in brand name drug prices that are an average of 31% lower than prices in the US.

Reference: http://oversight.house.gov/documents/20040629103247-74022.pdf

The fact is that price controls in 6 of the G7 nations places an undue strain on the US consumer.

To put it in simple terms, the US (about 300 million people) subsidize R&D for the other six G7 countries (about 425 million people). That doesn’t seem fair to me.

Having been born and raised in what we now call a “Developing Economy” (we used to be known as 3rd world counties), I recognize that adjustments must be made to factor economic conditions.  However, industrialized nations should be able to equitably share in the development of life-saving therapies.

Unfortunately, drug re-importation proposals by both Presidential candidates seek to address the symptom, not the cause.

Forcing Pharmaceutical companies to artificially lower the cost of drugs in the US will have a negative impact on their ability to bring new and life-changing products to market.  And that hurts us all. 

In my opinion, we should seek to address the root cause of higher prescription drug costs in the US.  To this end, every G7 nation should equitably share in the cost of R&D for pharmaceutical drugs. That would bring prices down in the US, while supporting the development of new and innovative Pharmaceutical therapies.