Drug & Device News

Federal and State Governments Join Suit Charging Medicaid Cheated by Wyeth

The federal government and several states have joined two whistleblower lawsuits against drug manufacturer Wyeth. The suits claim that the drug manufacturer, between 2000 and 2006, overcharged Medicaid for the stomach medication Protonix.

By law, drug manufacturers must inform the government of the lowest price at which their products have been offered to others, and they must give the government a rebate of any excess it has paid over that price. According to the Department of Justice release on the case, “Although Wyeth was required under the Medicaid Drug Rebate Program to determine the effective prices paid by hospitals under this arrangement, and to pass along the benefit of the lowest prices to the state Medicaid programs, Wyeth allegedly failed to do so and therefore avoided paying hundreds of millions of dollars to Medicaid in quarterly rebates.” See http://www.usdoj.gov/opa/pr/2009/May/09-civ-483.html. The two whistleblower lawsuits are pending in the District of Massachusetts. The suits claim Wyeth gave deep discounts on intravenous (up to an 80% discount) and oral (up to a 94% discount) versions of Protonix when hospitals bought the two preparations together.

Doctor's Prescription Negates Manufacturer's
Responsibility

The U.S. District Court for the Eastern District of New York has thrown out a case against Eli Lilly & Co. which claimed the drug Zyprexa caused a boy to gain weight and develop diabetes. The boy, who was being treated for Tourette's Syndrome, was prescribed the antipsychotic drug in May 1999. Four years later, after gaining considerable weight while on Zyprexa, the boy was diagnosed with diabetes. When he brought suit against Eli Lilly, the company moved for summary dismissal. The court granted the motion, finding that not only was the boy's physician's prescription of the medication an intervening cause (the learned intermediary defense), the plaintiff also could not prove that Zyprexa was the proximate cause for his developing diabetes. The case is In re: Zyprexa Products Liability Litigation (Singer v. Eli Lilly & Co.).

Obama Reverses Bush's Summary Federal Preemption Policy

On May 20, President Barack Obama issued a memorandum to the heads of all the federal executive departments and agencies reversing the Bush administration's policy encouraging federal entities to proclaim their rules and regulations preempt state and local laws. The Bush policy prompted the FDA to claim that its regulations and rulings preempted state law drug safety protections, leading to litigation concerning whether or not such a shift in jurisdiction could be accomplished without Congressional action. According to the memorandum that changes the previous policy, the Bush Administration's method for changing the balance of powers should not have been attempted: “An understanding of the important role of State governments in our Federal system is reflected in longstanding practices by executive departments and agencies, which have shown respect for the traditional prerogatives of the States. In recent years, however ' executive departments and agencies have sometimes announced that their regulations preempt State law, including common law, without explicit preemption by the Congress or an otherwise sufficient basis under applicable legal principles. The purpose of this memorandum is to state the general policy of my Administration that preemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with sufficient legal basis for preemption.”

The new policy prohibits federal executive departments or agencies from including preemption language in their regulatory preambles unless such preemption provisions are included in their codified regulations. It also directs department and agency heads to initiate the processes to remove any non-codified preemption language inserted into regulatory preambles within the last ten years. The memorandum can be viewed at: http://www.whitehouse.gov/the_press_office/Presidential-Memorandum-Regarding-Preemption/.

Suit Says Gene Patents Squelch Scientific Research

Two organizations have filed suit against the U.S. Patent and Trademark Office protesting the award of patents in two human genes. The case is being brought on behalf of women's health groups, individual women and scientific researchers in the U.S. District Court for the Southern District of New York by the American Civil Liberties Union (ACLU) and an organization affiliated with the Benjamin N. Cardozo School of Law, the Public Patent Foundation. The patents in question, which were granted to Myriad Genetics, give that company the exclusive right to conduct tests on two genes and to prevent others from working with, researching or otherwise having anything to do with those genes, absent Myriad's permission. As a consequence of the patent, Myriad has the exclusive right to test women for the genetic markers that indicate they may be genetically susceptible to developing breast or ovarian cancer. Myriad charges about $3,000 for these tests, and women who are tested do not have the option of having a different test done in order to get a second opinion.

In a release announcing the suit, Executive Director of the ACLU, Anthony D. Romero, said, “Knowledge about our own bodies and the ability to make decisions about our health care are some of our most personal and fundamental rights. The government should not be granting private entities control over something as personal and basic to who we are as our genes. Moreover, granting patents that limit scientific research, learning and the free flow of information violates the First Amendment.” The ACLU says this is the first case to apply a First Amendment argument to a gene patent challenge.

Greater FDA Decision-Making Transparency Promised

The FDA has formed a task force to promote greater transparency in the agency's decision-making processes. The new Transparency Task Force is being created at the behest of President Obama, who in January directed his executive agencies to implement policies that will allow information to be disseminated to the public in a faster and more user-friendly manner. “President Obama has pledged to strengthen our democracy by creating an unprecedented level of openness and public participation in government, and the FDA looks forward to participating in this process,” said FDA Commissioner Margaret A. Hamburg, M.D., in a release announcing the formation of the task force. The group's chair will be the FDA's Principal Deputy Commissioner, Joshua Sharfstein, M.D., and will also include FDA center directors, its associate commissioner for regulatory affairs, its chief scientist and chief counsel.

Federal and State Governments Join Suit Charging Medicaid Cheated by Wyeth

The federal government and several states have joined two whistleblower lawsuits against drug manufacturer Wyeth. The suits claim that the drug manufacturer, between 2000 and 2006, overcharged Medicaid for the stomach medication Protonix.

By law, drug manufacturers must inform the government of the lowest price at which their products have been offered to others, and they must give the government a rebate of any excess it has paid over that price. According to the Department of Justice release on the case, “Although Wyeth was required under the Medicaid Drug Rebate Program to determine the effective prices paid by hospitals under this arrangement, and to pass along the benefit of the lowest prices to the state Medicaid programs, Wyeth allegedly failed to do so and therefore avoided paying hundreds of millions of dollars to Medicaid in quarterly rebates.” See http://www.usdoj.gov/opa/pr/2009/May/09-civ-483.html. The two whistleblower lawsuits are pending in the District of Massachusetts. The suits claim Wyeth gave deep discounts on intravenous (up to an 80% discount) and oral (up to a 94% discount) versions of Protonix when hospitals bought the two preparations together.

Doctor's Prescription Negates Manufacturer's
Responsibility

The U.S. District Court for the Eastern District of New York has thrown out a case against Eli Lilly & Co. which claimed the drug Zyprexa caused a boy to gain weight and develop diabetes. The boy, who was being treated for Tourette's Syndrome, was prescribed the antipsychotic drug in May 1999. Four years later, after gaining considerable weight while on Zyprexa, the boy was diagnosed with diabetes. When he brought suit against Eli Lilly, the company moved for summary dismissal. The court granted the motion, finding that not only was the boy's physician's prescription of the medication an intervening cause (the learned intermediary defense), the plaintiff also could not prove that Zyprexa was the proximate cause for his developing diabetes. The case is In re: Zyprexa Products Liability Litigation (Singer v. Eli Lilly & Co.).

Obama Reverses Bush's Summary Federal Preemption Policy

On May 20, President Barack Obama issued a memorandum to the heads of all the federal executive departments and agencies reversing the Bush administration's policy encouraging federal entities to proclaim their rules and regulations preempt state and local laws. The Bush policy prompted the FDA to claim that its regulations and rulings preempted state law drug safety protections, leading to litigation concerning whether or not such a shift in jurisdiction could be accomplished without Congressional action. According to the memorandum that changes the previous policy, the Bush Administration's method for changing the balance of powers should not have been attempted: “An understanding of the important role of State governments in our Federal system is reflected in longstanding practices by executive departments and agencies, which have shown respect for the traditional prerogatives of the States. In recent years, however ' executive departments and agencies have sometimes announced that their regulations preempt State law, including common law, without explicit preemption by the Congress or an otherwise sufficient basis under applicable legal principles. The purpose of this memorandum is to state the general policy of my Administration that preemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with sufficient legal basis for preemption.”

The new policy prohibits federal executive departments or agencies from including preemption language in their regulatory preambles unless such preemption provisions are included in their codified regulations. It also directs department and agency heads to initiate the processes to remove any non-codified preemption language inserted into regulatory preambles within the last ten years. The memorandum can be viewed at: http://www.whitehouse.gov/the_press_office/Presidential-Memorandum-Regarding-Preemption/.

Suit Says Gene Patents Squelch Scientific Research

Two organizations have filed suit against the U.S. Patent and Trademark Office protesting the award of patents in two human genes. The case is being brought on behalf of women's health groups, individual women and scientific researchers in the U.S. District Court for the Southern District of New York by the American Civil Liberties Union (ACLU) and an organization affiliated with the Benjamin N. Cardozo School of Law, the Public Patent Foundation. The patents in question, which were granted to Myriad Genetics, give that company the exclusive right to conduct tests on two genes and to prevent others from working with, researching or otherwise having anything to do with those genes, absent Myriad's permission. As a consequence of the patent, Myriad has the exclusive right to test women for the genetic markers that indicate they may be genetically susceptible to developing breast or ovarian cancer. Myriad charges about $3,000 for these tests, and women who are tested do not have the option of having a different test done in order to get a second opinion.

In a release announcing the suit, Executive Director of the ACLU, Anthony D. Romero, said, “Knowledge about our own bodies and the ability to make decisions about our health care are some of our most personal and fundamental rights. The government should not be granting private entities control over something as personal and basic to who we are as our genes. Moreover, granting patents that limit scientific research, learning and the free flow of information violates the First Amendment.” The ACLU says this is the first case to apply a First Amendment argument to a gene patent challenge.

Greater FDA Decision-Making Transparency Promised

The FDA has formed a task force to promote greater transparency in the agency's decision-making processes. The new Transparency Task Force is being created at the behest of President Obama, who in January directed his executive agencies to implement policies that will allow information to be disseminated to the public in a faster and more user-friendly manner. “President Obama has pledged to strengthen our democracy by creating an unprecedented level of openness and public participation in government, and the FDA looks forward to participating in this process,” said FDA Commissioner Margaret A. Hamburg, M.D., in a release announcing the formation of the task force. The group's chair will be the FDA's Principal Deputy Commissioner, Joshua Sharfstein, M.D., and will also include FDA center directors, its associate commissioner for regulatory affairs, its chief scientist and chief counsel.