Breakthrough Year for New Drugs - Pharmaceutical Executive


Breakthrough Year for New Drugs

Pharmaceutical Executive

Legal challenges

While FDA approval of more new drugs is welcome news for patients, providers, and pharma companies, that success also is intensifying efforts to save money by uncovering fraud and waste in federal and state drug benefits. Several leading senators are demanding greater scrutiny of waste in Medicare Part D outlays. And it could get much worse, as pharma companies contend with a host of new "compliance challenges," notes Paul Keckley of Deloitte Center for Health Solutions. The list includes changes to the Medicaid Average Manufacturer Price (AMP) definition, expansion of drug classes subject to Medicaid rebates, pricing changes for 340B entities, the new Branded Prescription Drug Fee now applied to revenues from government contracts, and pending "Sunshine" payment disclosure requirements.

Cutting Costs
Law enforcement agencies also are revving up scrutiny of drug manufacturing activities. Most high-profile pharma legal cases in recent years have targeted off-label marketing and related pricing and promotional activities. That will continue, as seen in a wave of late-2012 settlements: Pfizer agreed to pay nearly $100 million to resolve federal and state charges for illegal off-label marketing; Amgen settled charges related to violative marketing of several leading therapies for $762 million; and Sanofi paid $109 million to resolve kickback charges related to an injectible treatment. These fines are paltry, though, compared to earlier billion-dollar settlements, with GlaxoSmithKline's $3 billion fine in July 2012 topping the list. While prosecutors expect more violative marketing cases, there may be a slow-down as lawyers and litigators digest the impact of the recent Caronia case and whether that undermines FDA's authority to limit a marketer's ability to discuss off-label claims that are not false or misleading.

Consequently, the feds anticipate a rise in legal actions involving lax adherence to current good manufacturing practices (cGMPs) that result in adulterated products. With manufacturing problems linked to devastating drug shortages and deaths associated with contaminated compounded injectibles, drug quality issues have become more prominent on the law enforcement radar screen.

More whistleblowers are going to qui tam lawyers with evidence of violations related to GMPs for drugs and biologics, observed former Department of Justice (DoJ) official Eugene Thirolf at the December enforcement conference sponsored by the Food and Drug Law Institute (FDLI). In deciding whether or not to bring a case, DoJ's consumer protection branch looks to assess how bad was the misconduct, whether it was condoned by management, whether the alleged activity affects the integrity of the drug regulatory process and the broader impact of GMP enforcement on consumers. The feds don't expect settlement payments in GMP cases to be as large as those from off-label marketing suits, but manufacturing issues raise the possibility of charges against individual corporate executives, including penalties that exclude an individual from doing business with the government.

Jill Wechsler is Pharm Exec's Washington correspondent. She can be reached at


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