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Focus on Regulation

Posted on By Donna Boswell, Melissa Bianchi, Erin Hertzog, Margia K. Corner, Lindsey Murtagh and Natalie Morris

HHS Issues Proposed Rule Regarding Program Integrity and the Exchanges

On June 14, 2013, HHS released a Notice of Proposed Rulemaking proposing several new policies with respect to the Exchanges, focusing in large part on program integrity, including with respect to qualified health plans (QHPs) offered through both state-run Exchanges and the Federally-facilitated Exchange (FFE).  The rule also addresses the resolution of certain QHP-related grievances and correction of improperly allocated premium tax credits and cost-sharing reductions, provides states with new flexibility to operate just a Small Business Health Options Program (SHOP) Exchange, and makes certain notable technical corrections.  These changes are summarized briefly below.  CMS has also prepared a fact sheet regarding the proposed rule.

Program Integrity

  • State Exchanges: The proposed rule establishes oversight and financial integrity standards for state exchanges, including reporting and audit requirements.  In particular, the rule focuses on establishing program safeguards to ensure that state exchanges have safeguards in place to avoid inaccurate eligibility determinations.
  • FFE: The proposed rule also provides details regarding the oversight functions of the FFE, including records retention requirements and compliance reviews to be conducted by HHS, and proposes the bases and processes for imposing civil monetary penalties in the FFE, as well as for decertifying plans from participation therein. 

Resolution of Grievances

The rule also establishes a process for resolving “cases” received by a QHP issuer operating in an FFE (i.e., grievances regarding the operation of the plan, other than advance benefit determinations).  While these cases generally must be resolved within 15 days, “cases involving the need for urgent medical care” must be resolved no more than 72 hours they are received by the plan (unless a stricter state standard applies).  Notably, a determination regarding benefit tiers or plan design may fall within HHS’ proposed definition of a “case” for these purposes, so long as it is not a claim denial, which is subject to a different process.

Correcting Improper Allocation of Premium Tax Credits and Cost-Sharing Reductions

The proposed rule specifies the actions a QHP must take if it does not provide the appropriate premium tax credit payments or cost-sharing reductions.  Notably, the proposed rule prohibits QHPs from recouping excess funds paid on behalf of the individual or to a provider and requires QHPs to refund any excess payments made by enrollees within certain, specified time frames.

State Flexibility to Operate Just a SHOP Exchange

The proposed rule would allow states to operate just a SHOP exchange, leaving the operation of the exchange serving both the individual and small group markets to the federal government. To implement this change, HHS proposes to allow states that have received conditional approval to operate a state-based exchange to modify their proposal to offer just the SHOP exchange. 

Moreover, those states that have not received conditional approval do not have the option of operating only a SHOP in the 2014 plan year. However, for plan years 2015 and beyond, CMS will consider new Blueprints from states wanting to operate only the SHOP.

Technical Changes

The proposed rule also makes the following two notable “technical” changes:

  • Amends the applicable definitions of “small employer” and “large employer” for purposes of the Exchanges.  This change is significant in that the definitions, as revised, differ from those used under the Public Health Service Act, the Internal Revenue Code, and the Employee Retirement Income Security Act (ERISA). 
  • Makes a “technical correction” to clarify that coverage sold through associations is considered individual coverage under the PHS Act, affecting the application of the Affordable Care Act’s insurance-related consumer protections.

 

Posted on By Meredith Manning and Susan Lee

FDA Seeks Comments on Proposal to Make De-Identified and Masked Data from Product Applications Available for Use by Outside Experts and Other Interested Parties

On Tuesday, June 4, 2013, FDA made available for comment a proposal to make available to the public, de-identified and masked clinical and preclinical data contained in product applications submitted to the agency.  To see the Federal Register notice (the “Notice”),  click here.

FDA explains that the impetus for this proposal is to improve the efficiency and effectiveness of product development “by providing scientific data that may be of value in the generation of new knowledge to facilitate innovation in the development and evaluation of critically needed medical products.”  For example, the agency indicates that it has used data drawn from multiple studies across different drug development programs to address important regulatory issues, such as identifying potential endpoints for clinical trials, understanding the predictive value of preclinical models, clarifying how medical products work in different diseases, informing the development of novel clinical trial designs, analyzing safety issues, and identifying potential safety biomarkers for clinical trials.  Notice at 33422.

FDA is now considering a proposal to “fully realize the potential of these data” by allowing “non-FDA experts and other interested parties” to access these data for research purposes.  The agency also contemplates that wider availability of such data could maximize the contribution of patients who participate in clinical trials by, for example, using a model of disease progression in control arms of future studies based on pooled control group data from past studies in the same disease or indication.  Id. at 33422-23.

FDA emphasizes that data from product applications would be made available for external use only after steps have been taken to de-identify the data and remove the data’s link to a specific product, study, and/or product application.  Id. at 33422.  To this end, the agency explains that it considers “masked data” to be “data with information removed that could link [the data] to a specific product or application.”  Id.  Data could be masked in a variety of ways, such as making available a random sample or appropriate sampling of a data set, restricting the data fields provided, or pooling data from studies of multiple products in a class without identifying the specific products.  The agency considers “de-identified data” to be “data that does not identify an individual and with respect to which there is no reasonable basis to believe that the information can be used to identify an individual.”  Pursuant to FDA’s regulations, de-identified data would be stripped of any information that could identify patients or research subjects directly or in combination with other publicly available information.  Id. at 33423.

 FDA has requested comments on this proposal, and in particular on these 5 questions:

 (1)  what factors should be considered in masking study data (e.g., data fields from regulatory submissions to remove or modify, number of different products to pool within a product class);

 (2) what limitations, if any, should there be on the Agency’s ability to make the masked data available;

 (3) are there any additional factors FDA should consider in deidentifying data in addition to FDA’s requirement to remove any names and other information (e.g., birth date, death date, local geographic information, contact information) which would identify patients or research subjects before disclosing information;

 (4) would regulatory changes facilitate implementation of such a proposal, and if so, what changes would be most useful; and

 (5) which situations do you believe disclosing masked data would be most useful to advance public health?

 The Notice indicates that comments should be submitted by August 5, 2013 to Docket No. FDA-2013-N-0271.

This Notice comes at a time when regulators in Europe are considering broad policy initiatives to make product-specific clinical trial data publicly available.  In its own efforts to enhance transparency and advance regulatory science, FDA must grapple with—among other issues—its existing FOIA regulations, which confer protected status on data and information contained in marketing applications, and the takings clause of the U.S. Constitution.  Because this Notice raises potential legal issues and represents a policy change by FDA, we urge clients and the public to take a close look at FDA’s Notice.

Posted on By Christopher Lott

Court dismisses suit that alleged coach made players fight

On May 20, the Georgia Court of Appeals dismissed a lawsuit filed by a former Georgia Southern University football player who suffered injuries after the football coach allegedly forced team members to fight one another during practice.

The student, Jerome Pelham, was a member of the varsity football team at Georgia Southern University.  During a spring practice in 2008, the football coach allegedly organized the team in two lines with players facing each other, and then ordered each pair of players to fight.  The coach allegedly told the team that normal football rules did not apply to the fights, and that he wanted to see who was tough enough to be on the team and earn a scholarship.  Pelham claimed that, during his fight, another player grabbed him by the face mask, jerked him from side to side, and then threw him to the ground, resulting in injuries to his right knee and leg. Continue Reading

Posted on By Cullen G. Taylor, Robert Church and Jim Johnson

New FDA Draft Guidance on Contract Manufacturing Quality Agreements

On May 28, 2013, FDA issued a draft guidance for industry, titled Contract Manufacturing Arrangements for Drugs: Quality Agreements.  The release of this draft guidance is important because, although it has long been common practice for drug companies to contract with third parties to perform parts of the manufacturing process (such as formulation, analytical testing, packaging, and labeling) or in some cases, to perform all of the manufacturing process, FDA previously had provided only limited guidance on the issues that the agreements establishing these arrangements should address. The newly-released agency document provides guidance on defining, establishing, and documenting the responsibilities of each party (or all parties) involved in contract manufacturing of drugs. Continue Reading

Posted on By Stuart M. Langbein and Beth Roberts

CMS Hears Opposition to Preliminary Decisions on HCPCS Codes at Second of Three Public Meetings

Yesterday, CMS held the second of three public meetings to discuss preliminary decisions regarding applications for Healthcare Common Procedure Coding System (HCPCS) Level II codes.  Applicants submitted requests for new codes by early January, and CMS released preliminary decisions in response to those requests in April.  Those commenting on a preliminary decision are invited to be heard at a series of public meetings before CMS issues its final decisions in the fall.

The first of these meetings, held on May 8, 2013, addressed the preliminary decisions regard code requests for drugs, biologicals, and radiopharmaceuticals.  In its preliminary decisions, the HCPCS Workgroup proposed granting the majority of coding requests.

The second meeting, held yesterday, addressed supplies and “other” products and services.  Presenters supporting a dozen applications spoke at the meeting, opposing CMS’s preliminary decisions.  In its preliminary decisions, CMS did not grant a single applicant’s code request.  The limited interplay between speakers on behalf of applicants for a code and the HCPCS Workgroup suggests that many of the preliminary decisions issued may be finalized as proposed. 

Similarly, CMS’s preliminary decisions regarding Durable Medical Equipment (DME) and Accessories, to be discussed at the third public meeting on June 4, 2013, granted very few of the applicants’ requests.  Information about how to attend the final public meeting can be found on the CMS website.

Based on additional information and discussion at the public meetings, CMS may alter preliminary decisions.  Final decisions will released be in late October or early November.

 

Posted on By Tom McGovern

Incorporating Cybersecurity Standards into the Federal Acquisition Process

Michael J. Scheimer, an Associate in Hogan Lovells’ Government Contracts Practice, contributed to this post.

Section 8(e) of Executive Order (EO) 13,636, Improving Critical Infrastructure Cybersecurity, issued on Feb 13, 2013, requires the Department of Defense (DoD) and the General Services Administration (GSA), in coordination with the FAR Council, to make recommendations to the President within 120 days of enactment on “incorporating security standards into acquisition planning and contract administration [including] what steps can be taken to harmonize and make consistent existing procurement requirements related to cybersecurity.”  The recommendations will take the form of an interagency report by the DoD-GSA Section 8(e) Working Group, which also includes representatives from the Department of Homeland Security (DHS), the Office of Federal Procurement Policy (OFFP), and the National Institute of Standards and Technology (NIST).

To that end, a long awaited Request for Information (RFI) was published in the Federal Register on May 13, 2013.[1] In general, the RFI seeks industry input on the feasibility of incorporating cybersecurity standards into federal acquisitions; best commercial practices; and comments about how the government can address any conflicts in existing procurement rules related to cybersecurity.  Due to the late release of the RFI and the imminent due date of the report to the President, GSA can only incorporate comments received by May 24th, 2013 into the draft report.

A discussion draft of the report for industry review is available here.  The key highlights in the draft report are: Continue Reading

Posted on By Howard Boigon, Jennifer Biever and Ana Gutierrez

Hydraulic Fracturing on BLM-Administered Public and Indian Lands

On May 16, 2013, the Bureau of Land Management (BLM) released a Supplemental Notice of Proposed Rulemaking and Request for Comment regarding hydraulic fracturing on BLM-administered public and Indian lands (Revised Proposed Rule). This Revised Proposed Rule was issued in response to comments on the initial draft Proposed Rule published on May 11, 2012 (Initial Proposed Rule). The BLM received over 177,000 comments on the Initial Proposed Rule. The impetus for this proposed rule is the increasing incursion of drilling and development activity in populated areas, which has raised public awareness and intensified regulatory scrutiny of hydraulic fracturing. This issue, coupled with the fact that BLM’s hydraulic fracturing regulations are outdated (established in 1982 and last updated in 1988), has caused the BLM to conclude that there is a need to revise its regulations to “modernize” BLM’s management of hydraulic fracturing operations and create a “uniform” national standard for operations on BLM-managed oil and gas resources.

The Initial Proposed Rule required operators to (1) disclose to the public the chemicals used in hydraulic fracturing, after the fracturing operation is completed; (2) confirm that wells used in fracturing operations meet appropriate construction standards to ensure well-bore integrity; and (3) require operators to employ appropriate plans for managing flowback waters from fracturing operations. In addition to these three main components — which remain in the Revised Proposed Rule — the Revised Proposed Rule also requires the use of an expanded set of cement evaluation tools (rather than cement bond logs) to ensure that water resources are being protected and provides more detailed guidance on disclosure requirements, modeling Colorado’s rule, which adopts FracFocus as the disclosure medium and entitles operators to trade secret protections. Furthermore, the Revised Proposed Rule would allow operators to seek a variance from the BLM rules allowing deference to states and tribes that already have standards in place that meet or exceed those proposed by this rule in order to reduce administrative costs, eliminate duplication, and improve efficiency.  Significantly, the variances would apply only to operational activities, including monitoring and testing technologies, and do not apply to the actual approval process for obtaining a permit to drill from the BLM.

Environmental advocates, who in response to the first call for comments had pushed for full disclosure of the chemicals used in the drilling process and tougher standards for groundwater protection and well-bore integrity, are disappointed that their proposals were not adopted in the Revised Proposed Rule. Industry trade associations have expressed the concern that perceived ambiguity and vagueness in the Revised Proposed Rule could lead to misinterpretation by operators and inconsistent application by BLM engineers and inspectors, and that the Department of the Interior still has not justified the rule from an economic or scientific point of view. This 171-page Revised Proposed Rule is the first significant regulation issued under the new Secretary of the Interior. Balancing the competing interests, Secretary of the Interior Sally Jewell commented on the Revised Proposed Rule: “As the President has made clear, this administration’s priority is to continue to expand safe and responsible domestic energy production. In line with that goal, we are proposing some commonsense updates that increase safety while also providing flexibility and facilitating coordination with states and tribes … As we continue to offer millions of acres of America’s public lands for oil and gas development, it is important that the public has full confidence that the right safety and environmental protections are in place.”

The BLM suggests that most of the new requirements can be satisfied by submitting additional information during the current application process for drilling operations on public or Indian lands and opines that the productivity in oil and gas gained in the last three years will not be impacted by the Revised Proposed Rule. BLM’s goal with these Initial and Revised Proposed Rules is to ensure that additional impositions on operators are the least burdensome, while still accomplishing the goal of protecting public lands and resources. The BLM also estimates the imposition of this rule would cost from US$12 million to US$20 million per year for operators. Upon publication in the Federal Register, interested persons have 30 days to comment. Note also that congressional leaders of the House Committee on Natural Resources have asked the BLM to extend the comment period to 120 days. The entire Revised Proposed Rule is available for public comment. Comments can be submitted through the Federal eRulemaking Portal. 

Posted on By Dennis Arfmann, Joanne Rotondi and Margery Fernald

Polar Bear Endangered Species Act Listing Upheld by D.C. Circuit While New Challenge May Loom

A recent denial of rehearing by the D.C. Circuit Court of Appeals brought closure to a lawsuit challenging a five-year old decision by the U.S. Fish and Wildlife Service (FWS) to list the polar bear under the Endangered Species Act (ESA).  One environmental group, however, has now indicated its intent to sue FWS with a new challenge concerning the polar bear’s listing.

On May 15, 2008, FWS finalized its rule listing the polar bear (ursus martimus) as a threatened species under the ESA (the Listing Rule).  FWS reasoned that, due to the impacts of climate change and the loss of summer sea ice habitat, polar bears faced extinction within the forseeable future.  Several lawsuits challenging the Listing Rule were filed by states, industry and environmental groups and consolidated before the U.S. District Court for the District of Columbia, which upheld the FWS’ listing of the polar bear as threatened.  In re Polar Bear Endangered Species Act Listing and § 4(d) Rule Litigation, 794 F. Supp.2d 65 (D.D.C. 2011).  In a March 1, 2013 opinion the D.C. Circuit agreed with the district court’s decision and also upheld FWS’ Listing Rule. 

The D.C. Circuit explained:

The Listing Rule rests on a three-part thesis: the polar bear is dependent upon sea ice for its survival; sea ice is declining; and climate changes have and will continue to dramatically reduce the extent and quality of Arctic sea ice to a degree sufficiently grave to jeopardize polar bear populations. . . . No part of this thesis is disputed and we find that FWS’s conclusion—that the polar bear is threatened within the meaning of the ESA—is reasonable and adequately supported by the record.

On April 29, 2013, the D.C. Circuit rejected without comment requests for a panel rehearing and rehearing en banc, bringing closure to that challenge of FWS’ Listing Rule.

Following the D.C. Circuit’s rejection of rehearing, on the five-year anniversary of the Listing Rule, May 15, 2013, the Center for Biological Diversity issued a notice of intent to sue to FWS for allegedly “failing to timely conduct a [five-year] status review and complete a recovery plan” under the ESA since listing the polar bear in 2008.  A 60-day notice of intent is required before a lawsuit can be filed under the ESA.

In related ursus martimus news, on February 20, 2013, the FWS issued a new Final Special Rule under section 4(d) of the ESA. The ESA’s § 4(d) is significant because it allows the Service to use the Marine Mammal Protection Act to develop practices for on-site management of the polar bear in the bear’s range—such as bear patrols or site-specific plans for oil and gas exploration and development projects—not allowed under the ESA.  It also provides that incidental take of polar bears resulting from activities outside the bear’s range—such as from increased greenhouse gas emissions—is not prohibited under the ESA.  The Final Special Rule is unchanged from the April 19, 2012 proposed rule (described in a previous blog) and became effective as of March 22, 2013. 

Posted on By Paul Dacam

Freedom of Information in the private sector?

The Confederation of British Industry (“CBI“) has revealed that it is developing “transparency guidelines” that will apply to private companies that provide services to the NHS (the “Guidelines“).

The CBI’s public service strategy board, which includes managers and directors from some of the UK’s most high-profile outsourcing firms, will be responsible for drawing up the Guidelines which have already been dubbed “an industry version of FOI” (Health Service Journal: May 15, 2013).

The Guidelines follow closely on the heels of the report produced by Monitor in March entitled: “A fair playing field for the benefit of NHS patients” (the “Monitor Report“), following its review of the opportunities available to potential NHS service providers.

The Monitor Report favoured increased transparency in the health sector, stating:

“[H]istorically, public providers have faced higher levels of scrutiny than other providers… This degree of scrutiny can improve accountability to patients and promote good practice.”

At present most private providers are not subject to the Freedom of Information Act (“FOIA“) but since NHS commissioners are, the current NHS standard contract sets out a number of transparency requirements with which private and charitable providers must comply.  These include, for example, a requirement that such providers should provide information to commissioners who are the subject of FOIA requests.

The Monitor Report highlighted the inconsistencies in the current approach, explaining that extending FOIA requirements to private and charitable providers did not appear to be “operating effectively as yet” and noting that, in any event, “other aspects of transparency do not apply across all types of provider.” The Report, therefore, recommended that the Government should ensure transparency is “implemented across all types of provider of NHS services on a consistent basis.”

These Guidelines appear to be aiming towards this consistency of approach, although at present it is unclear precisely what their scope and impact will be. However, with transparency now firmly on the agenda for private companies providing services to the public sector, there is clearly potential for similar guidelines to be introduced in other industries, beyond healthcare.

Posted on By Mikael Salmela, Fabien Roy and Hélène Bernhard

Remaining French Sunshine regulations have finally been adopted

Click here to view the French version

Blue beakersFrench Decree n°2013-414 dated 21 May 2013 implementing the French Sunshine regulations was published in the Official Journal of 22 May 2013 (the “Decree“).

The Sunshine regulations were introduced to French law pursuant to a law dated 29 December 2011 (aka. Bertrand law) setting out the obligation for enterprises working in the health sector to publish benefits granted and agreements entered into with several players in the health sector, including healthcare professionals.

A further governmental publication will be adopted soon by the French State Health Department (Direction Générale de la Santé – DGS) to specify the interpretation of the French Administration on the various concepts contained in the Decree (the “Circular“). The Circular is expected to be published in the coming days. Continue Reading