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.

A settlement in principle has been reached between the FTC and giant drug manufacturer Bristol-Myers Squibb Company (whose total domestic net sales last year exceeded $13 billion). On March 7, 2003, the FTC announced the settlement. It resolves allegations filed by the FTC (In the Matter of Bristol-Myers Squibb Company) that the company violated federal antitrust laws and abused FDA's regulatory process in preventing generic drug manufacturers from competing against three of its widely prescribed products ' Taxol ' (paclitaxel) and Platinol (anti-cancer drugs), and BuSpar' (an anti-anxiety drug). The result of Bristol-Myers' conduct, according to the government, was that consumers were forced to pay hundreds of millions more than they needed to had generic products been available.

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In a recent article in this newsletter, we described a hypothetical situation about a publicly traded health care entity that was under attack by government regulators, disgruntled shareholders, and likely a qui tam relator. See, Michael E. Clark, Proffer Agreements May Be a Viable Strategy for Negotiating with Government, (Health Care Fraud & Abuse Newsletter, October 2002). This hypothetical situation continues in this article, as we illustrate some of the heightened compliance risks facing officers, directors, and attorneys who represent publicly traded entities as a result of The Sarbanes-Oxley Act of 2002 ('Sarbanes-Oxley'), Pub. L. 107-204, 116 Stat. 745 (2002), which ushered in major reform measures when signed into law on July 30, 2002 (and also in light of other proposals for strengthening corporate accountability from the major self regulatory organizations and exchanges: the National Association of Securities Dealers (NASD) (see NASDAQ Corporate Governance Proposals, September 13, 2002) and The New York Stock Exchange (NYSE) (see Corporate Governance Rules Proposals Reflecting Recommendations from the NYSE Corporate Accountability and Listings Standards Committee As Approved by the NYSE Board of Directors, August 1, 2002).

The proposed arrangement between a non-profit hospital and a for-profit emergency medical services transport services provider that serves a 17-county area in a prominently rural area of an anonymous state is the subject of a new OIG ruling. On July 3, 2003, the OIG posted Advisory Opinion No. 03-14, which involved a request concerning emergency helicopter transports of trauma patients. The unidentified state's Department of Transportation had concluded there was a real need for such emergency transport services because of higher mortality rates involved in transporting patients in this part of the state to appropriately equipped emergency rooms. Under the arrangement, the ambulance provider would buy, operate, staff, and maintain a helicopter that is equipped with a mobile intensive care unit to transport trauma victims, while the hospital would provide a landing pad next to the facility, and modest crew quarters and services for the helicopter ' which would be available to any ambulance company that brings or receives a patient to or from the facility. Moreover, emergency calls to 911 in the area are routed, based on pre-determined criteria, to a predetermined hospital, based on the patient's needs.

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This month, we examine a few Web sites that focus on antitrust law matters, including antitrust issues that involve the healthcare industry.

A New Jersey medical magazine publisher recently agreed to pay $3.7 million to settle allegations it defrauded the postal service. On July 2, 2003, the U.S. Attorney's Office for the District of New Jersey issued a press release announcing that Medical World Communications, a Jamesburg, NJ, publisher, agreed to settle civil False Claims Act allegations that it defrauded the government over a 6-year period (1994 to 2000) through a scheme by which it inflated the number of subscribers to obtain a lower rate, thereby failing to pay adequate postage for mailing its periodicals.

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Part One of a Two-Part Article. The FDA's approval of a prescription drug or biologic is the product of an often-delicate risk-benefit analysis of public benefit as opposed to individual safety. The therapeutic balance of these products must always be weighed against the risks inherent in their use. And there are always inherent risks associated with their use. Accordingly, while millions of Americans reap the benefits of prescription drugs every day, these same drugs may pose an unavoidable health hazard to a narrow, and often unidentifiable, subset of potential users. The American legal system currently regulates these risks by two means ' through the federal regulatory system as administered by the FDA, and through the common-law tort liability regime.

AstraZeneca Pharmaceuticals LP, the major pharmaceutical manufacturer headquartered in Wilmington, DE, pled guilty in a Delaware federal court to conspiring to violate the Prescription Drug Marketing Act (PDMA). (The PDMA was enacted in 1988 to regulate prescription drug marketing practices, such as providing free drug samples to physicians, since the practices could cause the diversion of drugs into gray markets, and incorporated into the federal Food Drug and Cosmetics Act under the 'prohibited acts' section at 21 U.S.C. ' 331(t)). AstraZeneca admitted that it caused claims to be submitted by urologists (who had received free samples from the company) for its anti-prostate cancer drug, Zoladex, to be submitted for reimbursement to federally funded health care programs during an 11-year period (from the beginning of 1991 through the end of 2002), resulting in almost $40 million in losses to these programs.