September 2011 Archives

The U.S. government is stepping up its use of the so-called "responsible corporate officer doctrine" to hold pharmaceutical company executives personally and criminally responsible for violations of FDA laws. (Here is one example.) This enforcement approach doesn't require the executives to be personally responsible for an offense or even to be aware that an offense was committed. As we know, all Americans are supposed to be innocent until proven guilty, which requires prosecutors to prove criminal intent and criminal behavior. With the responsible corporate officer doctrine, prosecutors simply need to prove that a law was broken somewhere in the company and it follows that the executive(s) at the top of the organization are guilty.

One conviction is worse than merely a fine and jail time; it can mean the end of that executive's career because the government is also trying to ban convicted individuals from doing business with Medicaid and Medicare. No drug company can afford to forego those segments of its business and therefore no drug company would ever hire such an employee. Welcome to "one strike and you are out."

Sometimes the violation might be due to bad luck if, for instance, a raw ingredient is later found to be tainted. Perhaps most amazing, however, is that some of the FDA's rules--violations of which can end an executive's career--actually harm patients. These supposed "crimes" actually have clear beneficiaries.

Consider off-label prescribing. Off-label prescribing is a legal and common way for physicians to provide the best medicines for their patients. When a new medicine is approved by the FDA, it is approved for a particular disease or diseases. Usage for these disease(s) is called on-label prescribing. If the disease isn't listed on the product's package insert, that prescribing is called off-label.

Off-label prescribing is legal, widely practiced, and is actively encouraged by Congress, the National Institute for Health, Medicare, the Veterans Administration, and the National Cancer Institute. However, the company that markets that medicine can't encourage off-label prescribing in any manner whatsoever because the FDA considers such promotion illegal. The prescribing itself is legal; it is the communication that is illegal. This prohibition on communication for legitimate medical conditions does real harm to real people, to say nothing of the harm to our First Amendment rights.

Consider the following case. A pharmaceutical sales representative reads a peer-reviewed science journal article that recommends an off-label use of the company's product. This enterprising sales rep then gives a reprint of that article to an interested doctor and that doctor prescribes the drug for that condition. The cost of the drug is reimbursed by insurance companies and Medicare. Patients get better. The doctor receives kudos. The federal government then sues the drug company and the top executives, forcing them to pay fines and serve prison time. When they are later released, they are unable to find any employment in the pharmaceutical industry. Why? Because one of their employees was trying to help patients and physicians.

Pharmaceutical companies are energetically trying to find better ways to help patients and physicians--that's their whole business model. Treating company executives as criminals with a "one strike and you are out" doctrine won't help a single patient fight breast cancer or Parkinson's disease.

If you're in product development at a biotech, pharma, or med device company - big or small - you're not sleeping much these days.

Rising product development costs, stingier public and private reimbursements, and increasing regulatory hurdles mean that companies are struggling harder than ever to bring new products to market at prices that sustain ongoing investments in innovation. 

And it's not going to get any easier. It's going to get harder. Facing unsustainable health care costs, payers are going to demand more health outcomes and cost effectiveness data before agreeing to reimbursement at premium, or even par levels. (Take Germany, for instance.)

But I still think innovative companies that demonstrate the value of their products in this environment will flourish. Successful players will work to incorporate the needs of all stakeholders (payers, patients, physicians) into the product development process and generate new medicines and medical devices that meet unmet needs and provide real value.

It's not the Kremlin, but since the FDA rarely (if ever) explains its own internal decision making process when it grants or denies marketing approval for a new drug, medical device, or diagnostic, agency watchers can only speculate about what signals the agency is sending to stakeholders, Congress, and the media when it changes its mind in very high profile cases.

There's a lot to speculate about this week.

The FDA reversed itself on two products that had drawn quite a bit of attention from Congress, think thanks, and the blogosphere.

Sometimes, libertarian ideology and the reality of modern technology come into conflict--we saw that at the Republican presidential debate in Tampa on Monday night. The issue then was healthcare, but the issue, in the future, could be many other things as well.

It was a lot easier, for example, to practice laissez-faire live-and-let-live in the era before modernity gave each individual, and each country, the capacity to generate significant amounts of pollution or maybe even weapons of mass destruction (like a genetically engineered smallpox bioweapon).

So the Super Committee--formally known as the Joint Select Committee on Deficit Reduction-- is up and running on Capitol Hill. It even has its own website. And yet one US Senator, Mike Lee of Utah, told a reporters' breakfast this morning that he is "bleak," "pessimistic," even "bitter," about the prospects for the Super Committee. The fundamental problem, Lee says, is the inability of one Congress to bind a future Congress. To which we can add, the even more fundamental problem is straight out of the Austrian School of Economics--the unknowability of the future, and the folly of trying to know the unknowable.    

The mission of the Super Committee, as everyone knows, is to reduce the future deficit by $1.5 trillion over the next ten years. Although some members of the Super Committee, including Rep. Chris Van Hollen (D-MD), have urged the Super Committee to seek even larger deficit reductions, as much as $4 trillion. Inevitably, deficit reductions of that magnitude will cut into Medicare, Medicaid, and all other federal health and research programs.  

There are three items in the news this week that appear unrelated at first glance, but actually have deep and potentially long-lasting implications for job creation, economic growth, and the overall competitiveness of the U.S. economy.

Solyndrya's Implosion

I'll leave detailed commentary on Solyndra's implosion and ongoing Congressional investigations to my colleagues like Diana Furchtgott-Roth, who follow these things in much greater depth than I do. 

Still, I think that there are some clear lessons to be drawn from Solyndra's spectacular failure. First and foremost: Rather than trying to bootstrap otherwise unprofitable industries with massive federal subsidies, the U.S. should be exploiting and expanding its advantage in critical global industries where we already have a significant comparative advandage.

One of those fields is biomedical innovation, where the U.S. is clearly the global leader. But our leadership may not endure much longer.

Recently, the New York Times ran an article on the new dean of Weill Cornell Medical Center, Dr. Laurie H. Glimcher.  The article implied - or at least strongly hinted - that some impropriety or at least suspicion should attend her appointment because she has "strong ties to the pharmaceutical industry."

The new dean, Dr. Laurie H. Glimcher, 60, who has ties to the pharmaceutical giants Merck and Bristol-Myers Squibb as well as to scientific and biotechnology companies, said she wanted to use her experience to forge partnerships with both the public and private sectors.

Dr. Glimcher, an immunologist with a strong interest in osteoporosis, defended her outside interests, saying they presented no conflict as long as they were transparent. She said she wanted to "leverage the strengths of everyone," whether scientists, pharmaceutical companies or biotechnology companies. "There should be no silos between all of these different strengths," she said.

The tragedy is that Dr. Glimcher has to defend her involvement with "outside interests" who bring lifesaving new treatments to patients. It is imperative that academic and industry scientists collaborate in the process of translating new basic science discoveries into innovative new treatments for patients.

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