REGULATORY DEVELOPMENTS

Expedited reporting

• 
  
• Critical safety information (suspected adverse drug reactions [SADRs] that are serious and unexpected) unless the company is sure that the product didn't cause the reaction;
  
• Medical errors occurring in this country, even if not serious, including near-misses;
  
• Unexpected reactions for which a determination of serious or non-serious can not be made;
  
• 'Medically significant' reactions that may jeopardize the patient or subject and may require medical or surgical intervention to treat the patient or subject;
  
• Safety findings from studies or other information sufficient to consider changes in product administration; and
  
• All serious adverse reactions for blood and blood products
  
  

Improved data in reports

• 
  
• Internationally harmonized post-marketing periodic safety and update reports (PSURs)
  
  

Proposed Rule: Bar Code for Human Drug Products and Blood

The FDA also proposes a new regulation mandating that 'bar codes' be used on all prescription, as well as some over-the counter drugs and vaccines. See, 'FDA Proposes Bar Code Regulation' (available at ). As indicated in this press release, the DA's regulation would require, at a minimum, that the bar code contain each drug's National Drug Code number, its strength, and its dosage form. This proposed rule would also cover blood and blood components.

On March 3, 2003, the Office of the Inspector General (OIG) for HHS posted a Special Fraud Alert titled 'Telemarketing By Durable Medical Equipment Suppliers' and an accompanying press release at its website (http://oig.hhs.gov/). As the agency explained in the release, 'Medicare law prohibits DME suppliers from making ' or hiring outside firms to make ' unsolicited telephone calls to Medicare beneficiaries about the furnishing of Medicare-covered items, except in three specific situations described in the Special Fraud Alert. These three exceptions are:

• 
  
• The beneficiary has given written permission to the supplier to make contact by telephone;
  
• The contact is regarding a covered item the supplier has already furnished the beneficiary; or
  
• The supplier has furnished at least one covered item to the beneficiary during the preceding 15 months.
  
  

Then-HHS Inspector General Janet Rehnquist explained, '[t]his law helps ensure that Medicare beneficiaries aren't pressured into buying items they neither need nor want and that taxpayers and beneficiaries are not stuck paying the tab for unnecessary items,' also warning that '[w]e are determined to investigate reports we receive about such practices and hold violators accountable.' (On March 4, 2003, Inspector General Rehnquist, daughter of Supreme Court Chief Justice William Rehnquist, announced her resignation effective on June 1, 2003. See, 'HHS Official Janet Rehnquist, Under Probe, to Resign June 1; Aides Say She's Not Being Pushed' (which is posted at http://abcnews.go.com/wire/Politics/ap20030305_2292.html).

On February 20, 2003, HHS's Office of the Assistant Secretary for Planning and Evaluation (ASPE) announced that the Centers for Medicare & Medicaid Services (CMS) had published a Final Rule to implement standards for protecting health care data, which Congress mandated be done in Title II, subtitle F, ” 261 through 264 [the 'Administrative Simplification' subtitle] of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191.

The Final Rule, titled 'Health Insurance Reform: Security Standards,' is codified at 68 Fed. Reg. 8333-8381. These regulations are effective on April 21, 2003, and '[c]overed entities, with the exception of small health plans, must comply with the requirements of this final rule by April 21, 2005.' 68 Fed. Reg. 8334. Small health plans have until April 21, 2006 to comply with these requirements. Id. CMS explained the convoluted history of this Final Rule as follows:

'On August 12, 1998, we published a proposed rule ' to establish a minimum standard for security of electronic health information. We proposed that the standard would require the safeguarding of all electronic health information by covered entities. The proposed rule also proposed a standard for electronic signatures. This final rule adopts only … security standards. ' [C]omments concerning the proposed electronic signature standard, responses … , and a final rule for electronic signatures will be published ' later …. A detailed discussion of the provisions of the August 12, 1998 proposed rule can be found at 63 [Fed. Reg.] 43245 through 43259. We originally proposed to add part 142, entitled 'Administrative Requirements,' to title 45 of the Code of Federal Regulations (CFR). It has now been determined that this material will reside in subchapter C of title 45, consisting of parts 160, 162, and 164.

68 Fed. Reg. 8334-35. A thorough discussion of the requirements of the Final Rule is beyond the scope of this short piece.

On February 26, 2003, R. Hewitt Pate, Acting Assistant Attorney General for the Antitrust Division of the Department of Justice (DOJ) addressed the public audience attending the opening day of the 'Joint DOJ/FTC Hearings on Health Care and Competition Law and Policy,' in Washington, DC. The text of his comments can be accessed at www.usdoj.gov/atr/public/speeches/200809.htm. In describing the DOJ Antitrust Division's interest in the healthcare industry, Asst. A.G. Pate noted that '[i]n the past decade, the Division has brought nearly 20 cases and issued over 55 business reviews in the health care sector.' He described four major cases that the Antitrust Division had brought during 2002:

1. 
   
2. Mountain Health Care (which involved an action to disband a physician organization based in Asheville, NC, for developing a uniform fee schedule for its physicians to use in negotiations with managed care companies);
   
3. Washington State Medical Association (a business review concerning a fee and reimbursement survey that the Association wanted to conduct);
   
4. United States v. Dentsply (an enforcement action filed against the dominant manufacturer of artificial teeth in the United States for two exclusive dealing arrangements with dental laboratory distributors) (See, the 'Case Developments' section for a description of a qui tam settlement involving Dentsply for violating FDA reporting obligations as to injuries caused by one of its dental cement products);
   
5. and United States v. Federation of Physicians and Dentists (where the Division obtained a decree against this professional union for recruiting most of the private practice orthopedic surgeons in Delaware as members, who then used the union as their designated agent to negotiate acceptable fee levels from Blue Cross & Blue Shield, and then terminated their contracts with the insurer in an effort to get it to capitulate to their demands).
   
   

In addition, Assistant Attorney General Pate outlined some current investigations in the health care industry, many of which focus on the conduct by health plans in marketing their products to employers and other groups.

On February 28, 2003, Deputy Assistant Attorney General Deborah Platt Majoras of the DOJ Antitrust Division also addressed the audience at the joint agency hearings. The text of her remarks, titled 'A Tale of Two Cities,' is posted at . In addition, the text of comments and slides presented by various FTC officials and academicians so far during these hearing is available at.

In a March 7, 2003 press release (available at www.fda.gov/bbs/topics/NEWS), the FDA explained its proposed new regulation to protect consumers by requiring current good manufacturing practices (CGMPs) be used during manufacturing, packing, and holding of dietary supplements. In outlining the need for the proposal, the FDA noted some examples of major problems with such products, including one firm that had to recall its supplements because they were found to be contaminated with excessive amounts of lead.

Since 1993, the agency reports that it has received about 7000 dietary supplement-related voluntary adverse event reports ' many of which it believes may be related to misbranding or adulteration. As noted by FDA, the Dietary Supplement Health and Education Act of 1994 provided the Secretary of HHS, and FDA through subsequent delegation, the express authority to issue regulations on dietary supplement CGMPs. Under the proposed regulation, if dietary supplements contain contaminants or don't have the dietary ingredient represented to contain, then the agency would consider the products to be adulterated. The agency will take public comments for 90 following the publishing of the proposal in the Federal Register.

On March 13, 2003, Tommy G. Thompson, Secretary of the U.S. Department of Health and Human Services (HHS), announced two proposed rules from the Food and Drug Administration (FDA) that are intended to improve patient safety and are part of a strategic initiative by the FDA to reduce adverse events involving products that it regulates.

Proposed Rule: Safety Reporting Requirements for Human Drug and Biological Products

The FDA proposes amending current regulations that outline the duty of members of the industry to report safety information their products to the agency. See, 'FDA Announces Proposed Rule to Improve Safety Reporting for Human Drugs and Biological Products' (available at www.fda.gov/oc/initiatives/barcode-sadr/fs-sadr.html). As described in this press release, among its many features, the proposed rule requires:

Expedited reporting

• 
  
• Critical safety information (suspected adverse drug reactions [SADRs] that are serious and unexpected) unless the company is sure that the product didn't cause the reaction;
  
• Medical errors occurring in this country, even if not serious, including near-misses;
  
• Unexpected reactions for which a determination of serious or non-serious can not be made;
  
• 'Medically significant' reactions that may jeopardize the patient or subject and may require medical or surgical intervention to treat the patient or subject;
  
• Safety findings from studies or other information sufficient to consider changes in product administration; and
  
• All serious adverse reactions for blood and blood products
  
  

Improved data in reports

• 
  
• Internationally harmonized post-marketing periodic safety and update reports (PSURs)
  
  

Proposed Rule: Bar Code for Human Drug Products and Blood

The FDA also proposes a new regulation mandating that 'bar codes' be used on all prescription, as well as some over-the counter drugs and vaccines. See, 'FDA Proposes Bar Code Regulation' (available at ). As indicated in this press release, the DA's regulation would require, at a minimum, that the bar code contain each drug's National Drug Code number, its strength, and its dosage form. This proposed rule would also cover blood and blood components.

On March 3, 2003, the Office of the Inspector General (OIG) for HHS posted a Special Fraud Alert titled 'Telemarketing By Durable Medical Equipment Suppliers' and an accompanying press release at its website (http://oig.hhs.gov/). As the agency explained in the release, 'Medicare law prohibits DME suppliers from making ' or hiring outside firms to make ' unsolicited telephone calls to Medicare beneficiaries about the furnishing of Medicare-covered items, except in three specific situations described in the Special Fraud Alert. These three exceptions are:

• 
  
• The beneficiary has given written permission to the supplier to make contact by telephone;
  
• The contact is regarding a covered item the supplier has already furnished the beneficiary; or
  
• The supplier has furnished at least one covered item to the beneficiary during the preceding 15 months.
  
  

Then-HHS Inspector General Janet Rehnquist explained, '[t]his law helps ensure that Medicare beneficiaries aren't pressured into buying items they neither need nor want and that taxpayers and beneficiaries are not stuck paying the tab for unnecessary items,' also warning that '[w]e are determined to investigate reports we receive about such practices and hold violators accountable.' (On March 4, 2003, Inspector General Rehnquist, daughter of Supreme Court Chief Justice William Rehnquist, announced her resignation effective on June 1, 2003. See, 'HHS Official Janet Rehnquist, Under Probe, to Resign June 1; Aides Say She's Not Being Pushed' (which is posted at http://abcnews.go.com/wire/Politics/ap20030305_2292.html).

On February 20, 2003, HHS's Office of the Assistant Secretary for Planning and Evaluation (ASPE) announced that the Centers for Medicare & Medicaid Services (CMS) had published a Final Rule to implement standards for protecting health care data, which Congress mandated be done in Title II, subtitle F, ” 261 through 264 [the 'Administrative Simplification' subtitle] of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191.

The Final Rule, titled 'Health Insurance Reform: Security Standards,' is codified at 68 Fed. Reg. 8333-8381. These regulations are effective on April 21, 2003, and '[c]overed entities, with the exception of small health plans, must comply with the requirements of this final rule by April 21, 2005.' 68 Fed. Reg. 8334. Small health plans have until April 21, 2006 to comply with these requirements. Id. CMS explained the convoluted history of this Final Rule as follows:

'On August 12, 1998, we published a proposed rule ' to establish a minimum standard for security of electronic health information. We proposed that the standard would require the safeguarding of all electronic health information by covered entities. The proposed rule also proposed a standard for electronic signatures. This final rule adopts only … security standards. ' [C]omments concerning the proposed electronic signature standard, responses … , and a final rule for electronic signatures will be published ' later …. A detailed discussion of the provisions of the August 12, 1998 proposed rule can be found at 63 [Fed. Reg.] 43245 through 43259. We originally proposed to add part 142, entitled 'Administrative Requirements,' to title 45 of the Code of Federal Regulations (CFR). It has now been determined that this material will reside in subchapter C of title 45, consisting of parts 160, 162, and 164.

68 Fed. Reg. 8334-35. A thorough discussion of the requirements of the Final Rule is beyond the scope of this short piece.

On February 26, 2003, R. Hewitt Pate, Acting Assistant Attorney General for the Antitrust Division of the Department of Justice (DOJ) addressed the public audience attending the opening day of the 'Joint DOJ/FTC Hearings on Health Care and Competition Law and Policy,' in Washington, DC. The text of his comments can be accessed at www.usdoj.gov/atr/public/speeches/200809.htm. In describing the DOJ Antitrust Division's interest in the healthcare industry, Asst. A.G. Pate noted that '[i]n the past decade, the Division has brought nearly 20 cases and issued over 55 business reviews in the health care sector.' He described four major cases that the Antitrust Division had brought during 2002:

1. 
   
2. Mountain Health Care (which involved an action to disband a physician organization based in Asheville, NC, for developing a uniform fee schedule for its physicians to use in negotiations with managed care companies);
   
3. Washington State Medical Association (a business review concerning a fee and reimbursement survey that the Association wanted to conduct);
   
4. United States v. Dentsply (an enforcement action filed against the dominant manufacturer of artificial teeth in the United States for two exclusive dealing arrangements with dental laboratory distributors) (See, the 'Case Developments' section for a description of a qui tam settlement involving Dentsply for violating FDA reporting obligations as to injuries caused by one of its dental cement products);
   
5. and United States v. Federation of Physicians and Dentists (where the Division obtained a decree against this professional union for recruiting most of the private practice orthopedic surgeons in Delaware as members, who then used the union as their designated agent to negotiate acceptable fee levels from Blue Cross & Blue Shield, and then terminated their contracts with the insurer in an effort to get it to capitulate to their demands).
   
   

In addition, Assistant Attorney General Pate outlined some current investigations in the health care industry, many of which focus on the conduct by health plans in marketing their products to employers and other groups.

On February 28, 2003, Deputy Assistant Attorney General Deborah Platt Majoras of the DOJ Antitrust Division also addressed the audience at the joint agency hearings. The text of her remarks, titled 'A Tale of Two Cities,' is posted at . In addition, the text of comments and slides presented by various FTC officials and academicians so far during these hearing is available at.

In a March 7, 2003 press release (available at www.fda.gov/bbs/topics/NEWS), the FDA explained its proposed new regulation to protect consumers by requiring current good manufacturing practices (CGMPs) be used during manufacturing, packing, and holding of dietary supplements. In outlining the need for the proposal, the FDA noted some examples of major problems with such products, including one firm that had to recall its supplements because they were found to be contaminated with excessive amounts of lead.

Since 1993, the agency reports that it has received about 7000 dietary supplement-related voluntary adverse event reports ' many of which it believes may be related to misbranding or adulteration. As noted by FDA, the Dietary Supplement Health and Education Act of 1994 provided the Secretary of HHS, and FDA through subsequent delegation, the express authority to issue regulations on dietary supplement CGMPs. Under the proposed regulation, if dietary supplements contain contaminants or don't have the dietary ingredient represented to contain, then the agency would consider the products to be adulterated. The agency will take public comments for 90 following the publishing of the proposal in the Federal Register.