   |
|
| |
 | |
| |
     |
|
| |
| |
| |
   |
|
| |
|
Posted - April, 1998
FDA to Regulate Promotion by Pharmacy Benefit Management Companies
Summary
On January 5, 1998, the FDA issued for comment a draft guidance document on medical product promotion by healthcare organizations or pharmacy benefit management companies (PBMs).1
Under the guidance, the FDA will hold medical product sponsors responsible for the promotional activities of PBMs or health care organizations that the sponsor owns. The FDA will also hold medical product sponsors responsible if the sponsor has ties to or influences the content and distribution of promotional materials by a PBM or healthcare organization.
From a risk management perspective product sponsors will have more exposure, since they will have more responsibility for the promotional activities of PBMs or healthcare organizations with which they have ties. This article will discuss the draft guidance and some actions sponsors can take to help manage this potential new exposure.
Historical Background
The managed care model of health care delivery has developed in response to the increasing cost of health care. This has resulted in the formation of different organizational structures and information dissemination channels within the managed care setting,2 as well as in increased competition among pharmaceutical sponsors for placement of their products on managed care formularies.
In recent years some pharmaceutical companies have formed business relationships with pharmacy benefit management companies. In 1993, Merck & Co. acquired Medco Containment Services, Inc. The next year saw the purchase of Diversified Pharmaceutical Services by SmithKline Beecham Corp., and of PCS Health Systems Inc. by Eli Lilly & Co.3
These developments spurred increased FDA scrutiny of the issues surrounding promotion in the managed care environment. As part of its investigation the FDA gathered information about these changing health care delivery relationships, reviewed reports by other government agencies, and participated in a number of programs and meetings with sponsors, managed care organizations, academics, professional groups and consumers. In October of 1995 the FDA also held a public hearing to solicit comments on the issues surrounding changing organizational structures, new modes of drug information dissemination, and the formation of alliances between manufacturers and PBMs.4
FDA Findings
As a result of these investigations, the FDA identified some important changes in the healthcare marketplace that they believed could influence promotion in the managed care setting. One of these was the acquisition of healthcare provider organizations and PBMs by medical product sponsors as discussed above. The FDA believed these acquisitions might be partially motivated by sponsors' expectations that the PBMs' market power and promotional efforts would help maintain profits and increase market share.
The FDA also began to express concerns about campaigns to switch patients from one drug in a class to another in the same class, believing this practice could potentially produce therapeutic failures and increased liability for drug companies.
Another change the FDA noticed was sponsors' pursuit of marketing affiliations and pricing agreements with PBMs and other healthcare provider organizations that provided product-specific incentives. Some of these incentives included disease management or drug utilization review programs, or drug interchange programs.
The FDA also became concerned about promotional activities or interventions being directed at those providers who make the decisions about coverage for groups of insureds. The FDA found that these interventions could include suggestions about using specified drug formularies or preferred product lists.
The FDA also noted that subsidiaries acting on behalf of sponsors could be participating in promotional activities as a way of avoiding regulatory oversight of these activities, and that these materials were not being submitted to the agency under the current reporting requirements.5
The Draft Guidance
The ultimate outcome of these investigations was the issuance of the draft guidance document on PBM promotion, that covers two situations in which the FDA may hold a medical product sponsor responsible for promotion by healthcare organizations or PBMs. The first is promotion carried out by a PBM or healthcare organization that is a subsidiary of a medical product sponsor. The guidance states that medical product sponsors will be held responsible for promotional activities performed by a subsidiary healthcare organization or PBM that violate the regulations.
The second situation concerns promotional activity undertaken by a non-subsidiary PBM or healthcare organization on behalf of a sponsor. The guidance outlines factors that the FDA will consider to determine if a medical product sponsor can be held responsible for the promotional practices of a non-subsidiary healthcare organization or PBM. The FDA will look at the nature of the ties between the sponsor and the PBM or healthcare organization under which the entity promotes the sponsor's products. The FDA will also take note of whether or not the sponsor controls or influences the content and distribution of promotional materials by the healthcare organization or PBM.
As evidence of control, the FDA will look at whether or not the sponsor scripted the information or targeted points for emphasis, or otherwise acted to control or influence the information disseminated by the PBM or healthcare organization. The FDA will look to see if individuals involved in the development of the promotional materials are also involved in helping the sponsor with sales or marketing of the sponsor's product. Evidence of control will also depend on whether similar messages are contained in promotional materials that the sponsor disseminates directly, and if the target audience was determined by the sponsor's sales or marketing department. The FDA will also make note of complaints about attempts by the sponsor to influence the content of disseminated information.
The draft also notes that promotional materials disseminated by a medical product sponsor, by a subsidiary of a sponsor, or by an organization under the circumstances described above are subject to the existing postmarketing reporting requirements. The medical product sponsor and not the PBM is responsible for ensuring compliance with these reporting requirements.6
Interpreting the Intent of the Draft
This guidance document was prepared by the combined advertising staffs of CDER, CBER and CDRH, and applies to drugs, biologics and devices.7 It sends a clear message to industry that all centers at the FDA intend to extend their oversight into areas of promotion they have not regulated in the past. Importantly, the draft addresses not only relationships between pharmaceutical sponsors and their subsidiary PBMs that could influence product promotion, but also relationships between sponsors and healthcare entities with which they may have other kinds of contractual ties. The draft does not make clear, however, what kind of activities would constitute a relationship that would trigger FDA scrutiny. The draft also does not define "health care organization." Depending on how these terms are interpreted, the FDA could have a say in the internal workings of many different types of healthcare entities.
This guidance is the first to be issued on the topic of promotion to managed care organizations. It is labeled "Document I" and only addresses one aspect of this promotion.8 Industry is now on notice that the FDA intends to issue other guidance documents addressing different aspects of promotion in the managed care setting.
This guidance, when finalized, could create more obligations and exposures for medical product sponsors with ties to other health care organizations, because it makes sponsors responsible for the promotional practices of those health care entities and PBMs. However, there are a number of things medical product sponsors can do from a risk management perspective to address these issues and manage their exposure to liability.
What Sponsors Can Do
According to Minnie Baylor-Henry, Director of the Division of Drug Marketing, Advertising and Communications at FDA, few comments had been received on this draft as of the end of February. However, she did indicate that some industry spokesmen had expressed concern that the guidance is too broad, and some companies have filed for an extension in order to have more time to prepare a response.9 Although the comment period officially expired on April 6, 1998, it would be in the best interests of product sponsors to make comments to the FDA about the far-reaching nature of this document, and to ask for clarification of the key terms discussed above.
Sponsors should also evaluate their business relationships with their subsidiaries, and discuss with them the appropriateness of any promotional materials the PBM or healthcare organization may be distributing on behalf of the sponsor. They should make sure the promotional materials they are providing to their subsidiaries are used as received, and not revised in a way that would support inappropriate comparisons between products.
They should make certain that their subsidiary PBMs or healthcare organizations with which they have relationships have a mechanism in place that allows patients to receive drugs not on formulary, and that does not inappropriately promote the sponsoring company's products for inclusion on such formularies.
They should carefully review the data they provide through their subsidiary PBMs to managed care organizations for evaluation of potential products for formulary inclusion, making sure it is objective and complete. They should also review the content of any disease management programs or drug utilization studies they give to their subsidiary PBMs to use as incentives, to make sure the programs are not just drug ads but are based on professional standards.
They should submit the promotional materials used by PBMs or healthcare organizations to which they have ties to the FDA at the time of first use, as required by federal regulations.
Conclusion
According to Ms. Baylor-Henry, changes will be made to the draft guidance before it is issued in final form, based on comments received from industry and other interested groups. The FDA intends to meet with the parties affected by this guidance over the next few months, and to issue the final document sometime in 1998.10 As noted above, this will be the first of a series of guidance documents that the FDA will be developing concerning promotion in the managed care environment. In order to be ready when the first guidance is issued in final form, sponsors should begin to think about how they will manage their relationships with their subsidiary pharmacy benefit organizations, both for the short term and in the future.
References
The information contained herein is not intended to serve as legal advice. The sources used to develop this information are believed to be reliable, but CNA accepts no responsibility or legal liability for the correctness or completeness of this material or for its application to specific factual situations. Specific legal concerns or questions should be directed to individual competent counsel. As appropriate, you may also wish to contact the Food and Drug Administration for more specific or complete information. CNA is a registered service mark and trade name of CNA Financial Corporation.
Links to other internet sites that are not maintained by CNA may be accessed through this web site. Such external internet addresses contain information created, published, maintained or otherwise posted by organizations and entities independent of CNA. CNA is not responsible for the content of those sites nor does it approve, endorse or certify information available at any external site or linked addresses contained herein.
No part of this site may be reproduced without written permission from CNA. Material may be reprinted upon proper attribution to CNA and inclusion thereon of the words ©2000 by the CNA Financial Corporation.
|