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Teaching Hospital Update - February 15-19, 2010


Email Alert

By Leah Voigt*

February 19, 2010

Eli Lilly Agrees to Pay $18.5 Million to Resolve Mississippi Zyprexa Allegations

Pharmaceutical manufacturer Eli Lilly and Co. has agreed to pay Mississippi $18.5 million to settle allegations that the company marketed the anti-psychotic drug Zyprexa for many unapproved uses and suppressed studies that showed it caused diabetes, Mississippi Attorney General Jim Hood (D) announced earlier this month.

The consent order was filed in late January in the State Circuit Court of Lafayette County, Hood said. Eli Lilly, based in Indianapolis, also agreed to not make any false, misleading, or deceptive claims about Zyprexa, which was approved only for major psychotic disorders, and to not market the drug for off-label use, such as minor depression, for six years from the agreement's effective date. The company also has to rewrite its promotional materials to clearly state the U.S. Food and Drug Administration's (FDA's) approved indications for the drug. The agreement places more restrictions on how Eli Lilly can market the drug. Under the agreement, Eli Lilly did not admit to any wrongdoing.

Mississippi began pursuing its claims against Eli Lilly in July 2006, alleging that the drug company promoted the drug to doctors for many unapproved uses, and that the company suppressed internal studies for eighteen months that showed the drug caused diabetes, Hood said. The state also alleged that the company misled doctors regarding the safety and efficacy of the drug, and sought to expand its use by convincing them to prescribe the drug for mood, thought, and behavioral problems based on patients' symptoms and behaviors, not on their confirmed diagnoses, Hood said.

The state sought to recover funds spent on Zyprexa for nonmedically necessary uses and in cases where its use was outweighed by its dangerous side effects. Mississippi also pursued the drug company in a federal court. In December 2009, a federal district court in New York granted Eli Lilly summary judgment on the bulk of the state of Mississippi's claims alleging that it promoted off-label use of the antipsychotic drug Zyprexa and failed to warn patients, physicians, and payers about its serious metabolic side effects--excessive weight gain, hyperglycemia, and diabetes (Hood v. Eli Lilly & Co., E.D.N.Y., No. 07-CV-645, 12/1/09).

Eli Lilly Agrees to Pay $18.5 Million to Resolve Mississippi Zyprexa Allegations, BNA's Health Care Daily Report (Feb. 17, 2010) (note: registration is required to view this content).

White House Hints at New Healthcare Bill

With the House and the Senate still at loggerheads over their healthcare bills, the White House hinted on Tuesday that President Barack Obama might post his own bill on the Internet before the bipartisan healthcare summit he is planning at Blair House next week.

In the nearly a year since Congress began debating a healthcare overhaul, President Obama has yet to make his own priorities explicit. He said at the outset that he would set broad parameters for the measure and leave the details to lawmakers. Now, with the bill stalled on Capitol Hill in the wake of the Republican Senate victory in Massachusetts, President Obama has announced the health summit as a high-stakes gambit to breathe life back into the legislation and has promised to put the Democrats' bill online before the session.

During a news conference last week, President Obama said he envisioned posting a merged House-Senate bill that would address his goals of controlling costs and expanding coverage. "Now, we have a package, as we work through the differences between the House and the Senate, and we'll put it up on a Web site for all to see over a long period of time, that meets those criteria, meets those goals," President Obama said. But President Obama may be running out of time. White House Press Secretary Robert Gibbs, was asked Monday if the president would simply post his own bill if the House and the Senate cannot come to terms. "Stay tuned," Gibbs said. He declined to elaborate.

Sheryl Gay Stolberg, White House Hints at New Healthcare Bill, N.Y. TIMES (Feb. 16, 2010).

FDA Seeking Comments on Proposed Rule Requiring Reports of Study Data Falsification

The FDA is seeking comments on a proposed rule that would require companies, including drug and device makers, to report confirmed or suspected falsification of study data, according to a notice the government made available this week.

FDA said the proposal is rooted in events in the 1990s when FDA learned of "particularly egregious cases of falsification of data by clinical investigators." In one example, the FDA said an investigator made falsifications affecting ninety-one applications from forty-seven sponsors. "This proposed rule is intended to help ensure the integrity of data submitted to FDA because reliance on falsified data could lead to clinical testing of unsafe products, approval of ineffective or unsafe products, or marketing of products with false or misleading claims," the agency wrote in the proposed rule.

FDA would require a sponsor to notify the agency within forty-five days of learning of even a suspected falsification, and reports could lead to administrative or enforcement actions, "such as excluding clinical trials from consideration by FDA, placing a clinical trial on hold, or initiating disqualification of investigators or criminal proceedings." FDA said it has discovered data falsification through its own inspections, but study sponsors "are in a better position to discover possible falsification of data through their monitoring, auditing, and reviewing of data. We understand that in the process of reviewing and monitoring studies, some sponsors have discovered falsification of data and have been reluctant, or uncertain as to whether it was necessary, to report the information to us."

FDA listed examples of data falsification, including reporting a nonexistent study subject, forging an informed consent form, modifying a laboratory measurement, and omitting exclusionary medical history. The agency said that unintentional errors, such as typographical errors, are not to be reported under the proposed rule. FDA also said plagiarism would not need to be reported: "Although plagiarism is an important issue in the context of Federal research grants and contracts, it is an area generally outside the scope of FDA compliance oversight."

The regulations would apply to data falsification "in the course of reporting study results, or in the course or proposing, designing, performing, recording, supervising, or reviewing studies that involve human subjects (e.g., clinical investigations) or animal subjects (e.g., nonclinical laboratory studies and clinical studies in animals) conducted by or on behalf of a sponsor or relied on by a sponsor."

According to the proposed rule, reports of data falsification that are submitted to the FDA would include the name, address, and phone number of the person suspected of the falsification. In addition, the report would include the affected study and a description of the falsification.

The proposed rule, which would amend agency regulations, is set to be published in the Federal Register today, and comments are due within ninety days of publication. Comment on the proposed rule.

FDA Seeking Comments on Proposed Rule Requiring Reports of Study Data Falsification, BNA's Health Care Daily Report (Feb. 19, 2010) (note: registration is required to view this content).

Court Holds Insufficient Evidence Supports Denial of Hospital's Medical Education Costs

A federal district court this week held that insufficient evidence supported the U.S. Department of Health and Human Services Secretary's (HHS Secretary's) denial of reimbursement for medical education costs of services that a California teaching hospital provided to Medicare+Choice (M+C) enrollees (Loma Linda University Medical Center v. Sebelius, D.D.C., No. 1:08-cv-01530-HHK, 2/16/10).

The U.S. District Court for the District of Columbia remanded the lawsuit filed by Loma Linda University Medical Center to the HHS Secretary after finding that timeliness was not a legitimate basis for refusing payment to the hospital. The court determined that the Centers for Medicare & Medicaid Services (CMS) administrator's conclusion that Loma Linda had notice of the deadline for filing direct graduate medical education (DGME) and the indirect medical education (IME) bills for costs associated with the Medicare Part C services could not be sustained.

The court rejected the CMS administrator's finding that the May 12, 1998, rule and the July 13, 1998, bulletin, which contain notification of billing requirements, implicitly put Loma Linda on notice. The court found flawed the administrator's reasoning that requiring hospitals to submit the information for their Part C M+C medical education bills using the Part A form, UB-92, meant that Part C payments would also fall under all Part A regulations. "It is true that, according to CMS regulations, hospitals' bills for Part A payments must be submitted as UB-92 forms. But it does not follow that UB-92 forms can only be used for Part A payments," Judge Henry H. Kennedy Jr. wrote. "It may well be within the authority of CMS to decide to categorize requests for the new medical education payments as Part A claims, but the agency did not inform hospitals of this decision. Thus the conclusion that Loma Linda should have inferred earlier that 42 C.F.R. §424.44 applied is 'arbitrary and capricious' and 'unsupported by substantial evidence.'"

Loma Linda submitted claims for fiscal years 1998-2000 to receive interim payments for medical education services for M+C enrollees. A review of its records in late 2002 and 2003 concerning an overpayment by the intermediary to Loma Linda revealed a large number of health maintenance organization claims that had never been billed and that Loma Linda requested instructions from the intermediary on how to handle the unbilled Medicare claims on its cost report.

Court Holds Insufficient Evidence Supports Denial of Hospital's Medical Education Costs, BNA's Health Care Daily Report (Feb. 18, 2010) (note: Registration is required to view this content).

Federal Judge Rules That E-Cigarettes are Not Subject to FDA Oversight

In a decision that riled the public health community, a federal judge ruled that the FDA cannot regulate electronic cigarettes as drug delivery devices. The case was prompted when the FDA in September 2008 seized imports of the battery-operated devices that vaporize a nicotine solution for inhalation. Citing safety concerns over unknown levels of nicotine and other chemicals contained in e-cigarettes, the agency blocked their U.S. entry on the basis that they were unapproved and misbranded drug delivery devices being marketed as alternatives to traditional cigarettes. Smoking Everywhere Inc. and NJOY, whose products were impounded, sued the FDA alleging that the agency overstepped its authority.

The U.S. District Court for the District of Columbia agreed in a January 14, 2010, decision. "There is no basis for FDA to treat electronic cigarettes . . . as a drug-device combination when all they purport to do is offer consumers the same recreational effects as a regular cigarette," Judge Richard J. Leon wrote. The court also found that the FDA's public health concerns did not outweigh the economic harm to the plaintiffs. "FDA cites no evidence that [e-cigarettes] . . . are any more an immediate threat to public health and safety than traditional cigarettes, which are readily available."

The ruling bars federal restrictions on e-cigarette marketing while the case is being litigated. An appeal is expected. "The public health issues surrounding electronic cigarettes are of serious concern to the FDA," an FDA spokeswoman said. The relatively new technology has sparked questions over the possible role of e-cigarettes as a smoking-cessation tool, though the World Health Organization has said it does not consider it to be a legitimate therapy. The American Medical Association is studying the issue and is expected to address the topic at its House of Delegates Annual Meeting in June.

Amy Lynn Sorrel, Judge: E-Cigarettes Are Not Subject to FDA Oversight as Drug Delivery Device, Am. Med. News. (Feb. 15, 2010).

Study Finds Healthcare Debate Drives Uptick in Federal Lobbying Spending

Reported spending on Washington lobbying jumped more than 5% to $3.47 billion in 2009, with healthcare helping drive the increase, according to a summary of federal Lobbying Disclosure Act reports compiled by the Center for Responsive Politics, a nonprofit watchdog organization.

The center, which released the report late last week, said that spending on lobbying was driven by the legislative focus on key issues, including healthcare, financial regulation, and energy policy. The biggest sectors for spending included the pharmaceutical and health products industry, which spent nearly $267 million and outpaced all other industries in 2009. The amount stood as the greatest amount ever spent on lobbying efforts by a single industry for one year, the center said. The second-biggest spending sector was business associations, at $183 million; followed by oil and gas interests at
$168.4 million; and insurance interests at $164.2 million. All of these sectors had spending greater than in 2008, the center said.

Other big spenders included electric utilities, computer and internet companies, manufacturers, hospitals and nursing homes, entertainment companies, and educational institutions.

The total for last year represented a continuation of the trend of increased lobbying spending seen since Lobbying Disclosure Act reporting requirements went into effect in the mid 1990s. The $3.3 billion worth of federal lobbying reported in 2008 was the previous all-time annual high for lobbying expenditures, the center noted. What made the 2009 figure more remarkable was that it came in a year when the general economy was suffering and unemployment rates increased. The center said that in the final quarter of last year, lobbying expenditures increased nearly 16% over fourth quarter levels from 2008. Spending increased only about 3% from the third quarter of 2008 to the same period in 2009.

Kenneth P. Doyle, Healthcare Debate Drives Uptick in Federal Lobbying Spending, Study Says, BNA's Health Care Daily Report (Feb. 17, 2010) (note: registration is required to view this content).

FDA Approves Chronic Lymphocytic Leukemia Treatment

FDA has approved rituximab (Rituxan) for treatment of patients with previously untreated chronic lymphocytic leukemia (CLL) or with CLL that has failed prior therapy. Approval came after a review of data from two studies, one involving 817 patients with treatment-naive CLL and the other with 522 patients whose diseased had progressed on other therapies. Rituxan is manufactured by Genentech.

The addition of rituximab to cytotoxic chemotherapy with fludarabine and cyclophosphamide increased progression-free survival by eight months in treatment-naive disease and by five months in the treatment-failure trial, compared with chemotherapy alone. "Rituxan is the third drug approved for the treatment of CLL since 2008 and underscores the FDA's commitment to expediting the development and approval of drugs for patients with serious and life-threatening disease," Richard Pazdur, MD, FDA director of oncology drug products, said in a statement.

CLL primarily affects people older than fifty. FDA analyzed clinical-trial data on use of rituximab in patients ages seventy and older. The analysis turned up no evidence that adding rituximab to chemotherapy benefited older patients, but reviewers also found no evidence that the drug caused harm in that patient population. A monoclonal antibody that targets the CD20 surface antigen on B cells, rituximab package labeling includes boxed warnings related to infusion reactions, rash and stomatitis, progressive multifocal leukoencephalopathy, and tumor lysis.

Charles Bankhead, FDA Adds to CLL Weapons, MedPage Today (Feb. 18, 2010).

AHLA Teaching Hospital Updates are intended to provide quick summaries of cutting-edge issues of interest to teaching hospitals and their counsel. Additional information and more in-depth coverage on these topics may be available from AHLA Health Lawyers Weekly and appropriate AHLA Practice Groups.

*We would like to thank Leah Voigt, Esquire (Squire Sanders & Dempsey LLP, Washington, DC), for providing this week's update.

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