February 20, 2020
Darshan: Hey everyone. Welcome to another episode of DarshanTalks. We have a really, really exciting conversation for you. Today what we're going to talk about, is the idea of PRC review or Promotional Regulatory Committee review, which sometimes is also called the MLR or the LMR, which is the Legal Medical Regulatory review. The Kulkarni Law firm provides services reviewing these types of promotional pieces. So what are some issues that have popped up in 2019 that are different, or worth mentioning as you go into 2020?
Narrator: This is the DarshanTalks Podcast, Regulatory Guy, Irregular Podcast, with host Darshan Kulkarni. You can find the show on Twitter @DarshanTalks, or the show's website at darshantalks.com
Darshan: The number one issue, lay summaries. If you are engaged in any type of clinical research, the EMA has put out certain requirements saying that you need to put up plain language summaries, so that patients can understand this information. However, that's more for the EMA. The moment you do that in the US, that would be considered potentially promotional. Is that information being... And a lot of companies are saying, "You know what? What do we want to do is we want to have a global standard that reviews these pieces." So plain language summaries. Are they being reviewed in your company? What rules are they being reviewed as? Scientific discussion may not be subject to PRC review. On the other hand, medical stuff, doesn't necessarily always go through PRC review. However, if it's patient-facing, maybe it does. What are your rules around this information?
Darshan: Number two, patient groups. Everyone's been talking about using patient groups and patient advocacy, and that's great. However, there have been several instances where patient groups are getting prosecuted. It's often because these patient groups, end up being four methods in which copays for these companies, copays towards these products, are being paid for. Copays are used as a system by the government to ensure that moneys are appropriately being used towards the cost of drugs. However, these patient advocacy groups often come out and pay the copay, and the result of that is, allegedly, that drugs are being inappropriately prescribed. At least three different companies have agreed to pay a total of $122.6 million to resolve claims that they violated the False Claims Act by illegally paying the Medicare or Civilian Health and Medical Program copays for their own products. And, Jazz and Lundbeck each entered five-year corporate integrity agreements with the OIG as part of the respect of settlements. So, stay tuned. Just because it's a patient group doesn't mean you're home free. You need to make sure it's being reviewed appropriately.
Darshan: Then the next question we'll look at is social media. And when we talk about social media, we're really talking about the Amarin vs... The Amarin case. And essentially what had was, Amarin accused DSM Pharmavite and Nordic Naturals of importing dietary supplements, and making claims. And essentially, their argument was that these are new drugs that have not received approval from the FDA. They went to the ITC and they said that you need to launch an investigation, because the FDCA, the Food, Drug, and Cosmetics Act, bars private enforcement, the ITC tossed the claim in 2017. The Federal Circuit held that the ITC can refuse to probe allegations. So, Amarin's claims are based on alleged violation of the Food, Drug, and Cosmetics Act, which only the government can enforce and the Appeals Court actually agree with that. The Supreme Court declined to review the Lower Court's judgment, essentially letting the ITCs decision stand, and let alone the Appeals Court decision stand as well.
Darshan: The next thing to look at is this idea of how are you engaging with physicians? Are they using speakers, speakers bureaus? Are you using other methods in which you are talking to these doctors? What seems to have come under increased scrutiny over time, is this idea of paying physicians in different ways, and essentially providing a kickback. If you were involved in kickbacks, you were being potentially prosecuted. Insys was one of the companies that that got caught doing this and has problems. So, if you are serving on a PRC or MLR board, stay aware, make sure you're looking into this.
Darshan: And then I would say that the fifth piece that came out in 2019 that is interesting, is Outcome Health. And what Outcome Health did was it installed screens and doctor's offices and waiting rooms, and the idea was that they will be able to promote products for companies. The company gained widespread attention in 2017 when it secured funding, and grew to a valuation of about $5.5 billion. However, the allegation was the former executives ran a massive fraud scheme, that brought in almost $500 million in financing, $110 million loan, and a $375 million loan amounting to a total of about a billion dollars. And these were all based on fraudulent claims.
Darshan: Allegedly Outcome Health employees misled advertisers with inflated data, and the investigation kept...It's still ongoing in many ways, but this was considered to be a billion dollar fraud scheme. One of the executives, [inaudible 00:05:27], I'm not sure, he happens to be a 26-year-old, entered the first guilty plea. The company also falsify financial figures, and one of the examples they highlighted was where Outcome calculated an ad campaign that generated more than $1.7 million in new revenue, but the data showed that the actual amount that the company made was only $81,600.
Darshan: So that's hugely problematic. This was another one of these issues where again, if you're using vendors, you need to be able to A, look at their data, make sure that this data is not being inappropriately put forth. Trust the data. How do you trust it? And again, this should all be included in your PRC review as you continue.
Darshan: Stay tuned, listen in. We should have more information for you. This was just your top five issues that may affect PRC review, that effective PRC review in 2019, and may affect it in 2020.
Narrator: This is the DarshanTalks Podcast, Regulatory guy, Irregular Podcast, with host Darshan Kulkarni. You can find the show on Twitter at @DarshanTalks or the show's website at darshantalks.com.
February 18, 2020
Darshan: We're going to be discussing a few different issues. We're going to start focusing and talking about just a recap of how 2019 went. And we're going to start by talking a little bit about should we think about the typical general counsel. Think about the typical lawyer. What are the big legal issues that happened in 2019?
Narrator: This is the Darshan Talks Podcast, Regulatory Guy, Irregular Podcast, with host Darshan Kulkarni. You can find the show on twitter @darshantalks or the show's website at darshantalks.com.
Darshan: So, let's start with the basics. One of the big things that happened if you are a US attorney, is how you engage with contractors. And this was unusual and unexpected because if you're a startup, if you're a mid-sized company, or even if you're a large company, you probably use a lot of consultants. Now, there was a April 2018 California Supreme Court decision, that has implications that kick in mostly starting 2019. And essentially, it changed the rules. What it came out and said is that there's a new test for employers. So if you're an independent contractor, the independent contractor must be free to perform their work as they wish. And they must be in a different line of work from the company contracting them, and must operate their own business.
Darshan: So, what they really were initially going after were the Airbnb's of the world, and the Ubers of the world. But, it obviously has major implications on companies that aren't those types of companies. So, if you are a car driving company, the idea that all your drivers are consultants or contractors may not work as well. However, if you are a biotech, or if you are a medical device company, or you are some kind of health company, recognize that if you're in a startup phase, you're often using people as consultants and contractors, and that may not necessarily fly.
Darshan: The impact of this is an additional 20 to 30% in labor costs, when you include Social Security and Medicare taxes, and unemployment and disability insurance. All of this suddenly adds up. Again, remember you're now suddenly exposed to all kinds of liability, including discrimination, sexual harassment. If you are using consultants out of California, if you are a business based in California, consider these issues.
Darshan: The other thing that came into play is GDPR. As we know, that really started occurring more in 2018; however, the impact of that is really coming out in 2019. The overall awareness levels are high; however, how this actually impacts the life sciences sector is a little bit up in the air. It seems to vary from company-to-company. There are companies aware of it, there are companies who are not, and I'm not necessarily talking about small companies. I've heard through the grapevine that CROs are telling sponsors to stay outside the European Union because of the implications of that, and because of the methods that have to be taken to protect personal data that belongs to individuals.
Darshan: Essentially, if you are a company that's processing personal data in relation to the offering of goods or services to individuals in the EU. Or, if you monitor the behavior of individuals in the EU, you probably need to comply with GDPR. Obviously, if you're doing clinical trials in the EU, that very much falls under the ambit of what GDPR includes. As we said that there are a lot of the European companies are aware of this. Non-European companies are mostly going, "Well, I'm not subject to it." Well, that's not necessarily true. The US Secretary of Commerce himself has come out, or herself, I'm actually not sure who the US Secretary of Commerce is right now. They've voiced concerns about the uncertainty around GDPR. They state, and I quote, "GDPR creates serious and unclear legal obligations for both private and public sectors, including the US Government. We do not have a clear understanding of what is required to comply, and this could disrupt Transatlantic cooperation on financial regulation, medical research, emergency management, and important commerce."
Darshan: Obviously, it's one thing to talk about it if this was a monolith of information. However, each member state in the European union is free to implement derogations or exemptions for scientific research purposes, which interestingly, is actually undefined in GDPR. So, member states can derogate from the GDPR position, the idea of subject right to access, rectify, or restrict processing, etc., etc., etc. And this is going to become interesting because as you continue, some states are going to say, "You know what? We won't require it as much." And if you're doing studies of those states, good for you. However, if you're planning on selling in those states, you're going to have other implications that kick in. So stay tuned, keep looking out for GDPR. Just because you're not a European company doesn't mean you aren't subject to it.
Darshan: We were recently dealing with another situation. I was dealing with this one situation where you had a company that is a, how should I put this, where we were using them to hire a new individual. And, remember, even that type of company, maybe collecting information from people within the EU, make sure that they're compliant because you made then be subject to those requirements as well.
Darshan: Then let's talk about non-competes, and that's been interesting. Because non-competes, for the most part, are almost boilerplate. You leave them in most executive contracts, and in non-executive contracts as well. But there's been a pushback on them. For example, Massachusetts has this rule that they'll allow for garden leave for businesses. Garden leave being sort of a term dejour, if you will, for businesses to pay workers during the period that they're barred from working for competitors. So you can't just say, "You can't work," you've got to pay them for that period.
Darshan: You can't use a trade secret defense. So, anyone who actually intends to steal trade secrets, just because you have a non-compete, it doesn't necessarily mean that it's a get out of jail free. So you can't really take that information and say, "You know what? My state doesn't necessarily appear to non-competes, so we aren't going... So I can actually walk over to trade secrets." Courts have actually pushed back on that. States like Colorado have actually come out and said that, "We aren't going to allow for the blue line or the blue pencil clauses." Essentially what that means is if you read any kind of general executive contract, what it will often say is things like, "You know what? This is a contract, but if a court disagrees, court you can take out the pieces that you think are inapplicable or unenforceable, and the rest of the contract stands." And courts have come back and said, "No, no, no. You can't actually make the court your agent, and said that they can fix everything." So, stay tuned, stay aware that that may not always work.
Darshan: At a practical level, I'm still seeing a lot of companies still adhere to that, because it's just simpler, because there are so many different variations and otherwise you'd have to create a new contract for every one of the different states, and that can get extremely expensive very, very quickly.
Darshan: Indiana, for example, goes into non-solicitation clauses. And, they actually looked at brokers and they said that if you are a broker, you don't violate your non-solicitation clause if you engage in good faith communications to clients, informing them of job changes. Essentially, if your executive leaves, and they worked for your company, just because they inform the previous people that they're moving to a new place, that may not necessarily father the non-solicitation clause for non-compete agreement. So that's kind of interesting.
Darshan: So we talked about three things so far. We've talked about the non-competes, we've talked about GDPR, and we've talked about the California 1099 ,standards and the implications there are now. We talked about GDPR, but let's go back, and is GDPR necessarily just a European thing? Generally speaking, the major impact is on European companies. However, several US states have started following their own version of GDPR and have put things into place. The most notable one of them being California CCPA. And that's their own version of GDPR. So again, if you are a company that's either dealing with California or is in California, be aware. If you have gross revenues over 25 million you buy or receive for commercial purposes or sell or share for commercial purposes the personal information of 50,000 or more consumers, households, or devices. So if you're an ad agency, that starts kicking in. If you derive a 50% or more of your annual revenue from selling consumers' personal information, that starts kicking in.
Darshan: Now just be careful. If you are a company, for example, a life sciences company, and you're dealing with big data, and that data is being sold, and that may be implicated in some ways. And again, I've seen variations of this before. Be careful, you may be subject to the CCPA. People think of CCPM more as an advertising law, and it has the primary impact on promotion and advertising, but that's not the only place it has an impact. And again, they define things like consumer and personal information, but personal information is anything that identifies, relates to, describes, or can be associated with linked directly or indirectly with a consumer household. So if you're a patient, maybe. But now here are the exemptions, and this is what makes it interesting.
Darshan: Personal information process pursuant to HIPAA, CMIA in certain clinical trials, may be exempt from it, but that does not provide a blanket exemption for all processes involving patients or healthcare, health information customers. So, does that mean you have a safe space? Not necessarily. Stay tuned, talk to your lawyer, find out what actually applies to you. And you may have to actually have a full-blown compliance assessment to help you with that.
Darshan: Judicial deference to FDA decisions. If you're a general counsel, if you are an attorney working with life sciences companies, stay aware of this. The Supreme Court in June placed new guardrails on this idea that you always have to defer to the administrative agency, the FDM, in this situation. Supreme Court came out and said, "No, no, no. This deference only applies if there is an ambiguous regulation. However, if it's not ambiguous, you don't necessarily have to defer to the FDA." That could have major implications.
Darshan: Now, having said that, that was number five. You had your judicial deference, you had your CCPA, you and your non-compete. You had your GDPR, you had your California 1099 issues. But, remember, in the last month of 2019, drug re-importation came onto the table. And HHS proposed new rules saying that states may import cheaper prescription drugs from Canada, and it's a proposed rule at this time, but essentially it lets states submit proposals to the FDA for authorization to import prescription drugs from Canada, which would then be tested for quality and relabeling. And, states like Maine, Colorado, Vermont, and New Hampshire have expressed an interest in this new pathway. On the other hand, it also helps drug manufacturers import FDA-approved drugs manufactured abroad, to allow for the sale of these drugs at lower prices that are currently offered to American consumers. So this might be helpful as well.
Darshan: So, stay tuned. That's your other issue that if you are general counsel, you should be thinking about, you should be considering. Stay tuned, we'll talk about what does this make 2020 look like as we continue.
Narrator: This is the Darshan Talks Podcast, Regulatory Guy, Irregular Podcast, with host Darshan Kulkarni. You can find the show on Twitter @darshantalks or the show's website at darshantalks.com.
February 13, 2020
Darshan: We have previously talked about pharmacy and we've talked about what happened in 2019 and what was the many, many issues that pharmacists should be aware of in 2019. Well, let's talk about what this actually means for 2020.
Narrator: This is the DarshanTalks Podcast, regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter @darshantalks or the show's website at darshantalks.com.
Darshan: We talked about the cannabis issue and we talked about CBD versus THC. I would expect that more states will actually land up passing more cannabis supportive laws. There are already, the majority of states have some version of cannabis supportive laws. However, I expect that there will be more. On the other hand, I do not expect that we will see a law at the federal level which legalizes cannabis. It's an election year. I simply don't see Congress taking that step right now. It would make a lot more sense for them to do it in 2021 or later. Interestingly enough though, I do expect that the FDA will take this opportunity to comment and provide some clarity around what to expect around cannabis. So stay tuned. I expect that as a pharmacist, you might find this to be really, really interesting in how you integrate cannabis into your practice.
Darshan: In the context of Telepharmacy, I expect that we've talked about how, for the most part, Telepharmacy has really taken root in the West coast and in the Midwest. I expect it will continue to expand. You'll see some of the Eastern states continuing to consider Telepharmacy more aggressively. On the other hand, when it comes to TCPA and unwanted, unsolicited auto dial phone calls, I expect that there will continue to be prosecutions, but I don't expect it to be a major issue as we continue, especially for smaller players in the pharmacy space. I expect that they will, to the extent that they do... when I say they, I mean the government, uses the TCPA as a option. I expect that it will primarily be used against the larger companies in 2020. Again, they might pivot but I would be more surprised than not.
Darshan: In terms of privacy, we've talked about how California has gone live with its own version of GDPR, its own privacy law. However, I expect that more states will actually come out. There are various bills across the many states that are going to have privacy implications and significant focus on privacy. However, I would be very surprised if in 2020 you would see a federal privacy law. I expect that to actually happen in 2022 maybe or later than that. I don't see that being a primary goal for any presidential candidate or either a new or an existing president to do in their first year.
Darshan: On the other hand, as it relates to executive movement and non-competes being enforced, we talked about the Rhode Island federal judge who actually scolded a CVS drug middleman basically for moving. However, non-competes have become a area in which a lot of companies are continuing to fight and the government has started pushing back.
Darshan: For example, New York and California generally tend to hate non-competes. However, I expect that, I don't expect non-competes to go away. I think we're going to land up having more of a step back where you need to do a state-by-state analysis and non-competes will continue to be argued in the short term to the longer term.
Darshan: As it relates to drug importation, I expect that we've talked about HHS and they've put out policies and how they will enable for importation of cheaper prescription drugs from Canada and what that policy looks like. It's just out of policy, it's a proposal right now. I don't expect any kind of solidification in 2020. I expect that, to the extent of does become enforced, it'll become something everyone talks about for the presidential primaries and for the actual presidential election. However, in 2020 and 2021 I expect some version of this to actually go into place. On the other hand, as it relates to the DEA, I would expect that the DEA will be allowed to actually ask for more data from pharmacies on a more frequent basis than already exists.
Darshan: We also talked about Surescripts. We talked about how the FTC and Falconer Pharmacy are going after Surescripts for essentially being anti-competitive. I expect that there will be some level of settlement and we will see more competition in this space in the future. And to my friends in the EU and in the UK where there was a first pharmacy that got its first GDPR fine, I expect that there will be an effort to be more compliant. In the U.S. itself, whether you're talking about CCP or you're talking about HIPAA, I expect company pharmacies for the most part, I've figured out the rules around general HIPAA electronic compliance. However, I don't expect that a lot of companies who realize what their offline compliance needs to look like and there may be some OCR fines that come down this path as well.
Darshan: Stay tuned if you disagree with me and let me know if you think that there are things I missed, things that you think should have been discussed. Love to talk to you. You can reach out to me on Twitter @darshantalks or at my website at darshantalks.com. Look forward to hearing from you.
Narrator: This is the DarshanTalks Podcast, regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter at @darshantalks or the show's website at darshantalks.com.