Price Transparency: A Regulatory Priority
Price Transparency: A Regulatory Priority
March 6, 2025 – The Trump administration is beginning to lay out its regulatory (and deregulatory) priorities, and on February 25, 2025, the administration spotlighted one of those priorities in an executive order on price transparency. While the executive order mainly focuses on enforcing current price transparency requirements, it also hints at changing or even expanding them, which would require rulemaking to accomplish. To help me describe this executive order and potential changes to existing price transparency requirements, I’m bringing in my colleague Leigh Feldman.
Before diving into topic at hand, we want to note that we are assessing the impact of the policy statement that the US Department of Health and Human Services (HHS) issued on February 28, 2025, announcing HHS’s intention to refrain from rulemaking in certain situations. As background, the Administrative Procedure Act exempts certain rules from formal notice-and-comment rulemaking, including rules regarding “public property, loans, grants, benefits, or contracts.” Despite this exemption, past guidance known as the Richardson Waiver encouraged greater public participation and directed government agencies to use the more formal rulemaking process for this category of rules. HHS’s February 28 policy statement rescinds the Richardson Waiver. The scope of the regs that could be impacted is not easily defined, as other statutes and legal requirements may still require notice-and-comment rulemaking – such as for annual Medicare payment updates and policy changes. In all, the Trump administration will still likely carry out some policy priorities, such as promoting price transparency, through rulemaking.
With that important context, we now move on to the issue of the day. In the first Trump administration, the Centers for Medicare and Medicaid Services (CMS) established price transparency requirements for hospitals and health plans. Since January 1, 2021, hospitals have been required to make public:
A machine-readable file containing a list of all standard charges for all items and services.
A consumer-friendly list of standard charges for 300 “shoppable” services. (A hospital that maintains an internet-based, prominently displayed, free-to-use price estimator tool is deemed to have met this requirement.)
Under the hospital price transparency regs, a hospital’s “standard charges” include gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.
Health plans are required to:
Make detailed pricing information available to the public, including negotiated rates services between the plan and in-network providers, historical payments to and billed charges from out-of-network providers, and in-network negotiated rates and historical net prices for all covered prescription drugs. This requirement became effective on January 1, 2022.
Offer an online shopping tool that will allow consumers to see the rate negotiated by their provider and plan and an estimate of their out-of-pocket cost for 500 of the most shoppable items and services. This requirement became effective on January 1, 2023. Since January 1, 2024, health plans have been required to offer online shopping tools showing costs for remaining procedures, drugs, durable medical equipment, and other services.
As these requirements went into effect, stakeholders raised concerns regarding compliance among hospitals. In response, CMS underwent rulemaking in the CY 2022 and 2024 outpatient prospective payment system (OPPS) final regs to beef up penalties for noncompliance and lay out steps it would take to make sure that hospitals were complying.
The recent price transparency executive order indicates that the Trump administration believes that even more direct action needs to be taken. The president states that “progress on price transparency at the Federal level has stalled since the end of my first term. Hospitals and health plans were not adequately held to account when their price transparency data was incomplete or not even posted at all.” In order to make “more meaningful price information available to patients to support a more competitive, innovative, affordable, and higher quality healthcare system,” the executive order calls on the HHS secretary, working in conjunction with the secretaries of the US Departments of Labor and the Treasury, to take the following actions within 90 days:
Require the disclosure of the actual prices of items and services, not estimates.
Issue updated guidance or proposed regulatory action ensuring that pricing information is standardized and easily comparable across hospitals and health plans.
Issue guidance or proposed regulatory action updating enforcement policies designed to ensure compliance with the transparent reporting of complete, accurate, and meaningful data.
One question to consider is what additional steps the departments need to take to comply with the directive. Put simply, what’s new here that would require new regs to effectuate? Hospitals and health plans already must comply with definitive reporting requirements, and CMS has already issued guidance on the requirements and taken enforcement actions. However, it is apparent that the Trump administrative wants to do more, including issuing more regulations.
Immediately after the executive order was issued, CMS stated in an email to stakeholders that it is planning a “more systematic monitoring and enforcement approach.” We could also see changes, through rulemaking, to the requirements themselves and to the enforcement policies. These changes could be included in the Medicare payment regs affecting hospitals – either the fiscal year 2026 inpatient prospective payment system proposed reg (potentially to be released in April 2025, which would meet the executive order’s call for action within 90 days) or the CY 2026 OPPS reg. The proposed OPPS reg could be released in June or July 2025; this reg is where CMS has addressed hospital price transparency changes in the past. For either of these regs, the public, including hospitals, would have 60 days to provide feedback on the feasibility of implementing these changes.
With respect to the price transparency requirements, the first action required by the executive order (mandating “the disclosure of the actual prices of items and services, not estimates”) suggests a potentially substantial regulatory change. Currently, hospitals are permitted to include in their machine-readable files formulas for their negotiated rates that are a percentage of their gross charges (i.e., estimates). In the CY 2024 OPPS final reg, CMS clarified that:
It is generally appropriate for a hospital to display a payer-specific negotiated charge as a standard algorithm, to the extent a standard algorithm is the manner in which the hospital establishes its standard charges with third-party payers.
The hospital must include a description of that algorithm in its machine-readable file.
As of January 1, 2025, if a hospital’s standard charge is based on a percentage or algorithm, its machine-readable file must also specify the estimated allowed amount for that item or service.
The executive order seems to signal that the Trump administration believes these requirements are insufficient and that it plans to require that actual dollar amounts be listed.
Regarding enforcement, CMS increased the penalty for noncompliance with the hospital price transparency requirements in the CY 2022 OPPS final rule. In the CY 2024 OPPS final rule, CMS changed its methods for assessing hospital compliance and gave itself permission to publicize information about its assessments and any compliance actions taken against a hospital. The recent executive order indicates that the current administration may go even further to increase enforcement. For clues about what policies the administration may pursue, it may be instructive to look to the Lower Costs, More Transparency Act (LCMT), which passed the US House of Representatives last Congress. In addition to codifying then-current hospital price transparency regulatory requirements, LCMT would have required CMS to monitor each hospital’s compliance at least every three years and would have substantially increased the maximum penalties for noncompliance. LCMT also would have required (rather than simply permitting) CMS to publish information about its compliance assessments and enforcement actions taken against specific hospitals.
Even beyond the price transparency requirements themselves, another possible action the Trump administration could take (in the spirit of price transparency) would be the implementation of the No Surprises Act’s advanced explanation of benefit (AEOB) requirement. The law requires health plans to send enrollees an AEOB notification for certain services that includes:
(1) the network status of the provider or facility; (2) the contracted rate for the service, or if the provider or facility is not a participating provider or facility, a description of how the individual can obtain information on providers and facilities that are participating; (3) a good faith estimate received from the provider; (4) a good faith estimate of the amount the plan or coverage is responsible for paying, and the amount of any cost-sharing for which the individual would be responsible for paying with respect to the good faith estimate received from the provider; and (5) disclaimers indicating whether coverage is subject to any medical management techniques.
The AEOB requirement was supposed to go into effect on January 1, 2022, but has not yet been implemented. HHS and the Departments of Labor and the Treasury issued a request for information on September 16, 2022, that sought comments from interested parties on operational issues related to implementation. On April 23, 2024, the departments issued an update on implementation noting difficulties involved in sharing good-faith estimate information between providers, and between providers and health plans. The departments stated their intention to test industry-wide standards for data sharing, and stated that they were reviewing comments on the RFI and would work on a proposed reg to implement the AEOB requirement in the future. The departments issued another update on December 3, 2024, noting that they were making progress on developing and testing data-sharing standards, but did not indicate when the rulemaking process to implement the requirement might start.
Since the goal of the AEOB requirement is to tell patients what a service will cost before they receive it, the Trump administration could link this requirement to its overall efforts to improve price transparency. The executive order did not mention the AEOB requirement, however, so it remains to be seen when or if the Trump administration will implement that requirement.
Price transparency is a clear priority under the Trump administration, as it doesn’t go without notice that it was one of the first health policy priorities that the administration announced. Given the president’s directive in the executive order, we could see concrete regulatory action sometime within the next few months. We will keep you posted!
Until next week, this is Jeffrey (and Leigh) saying, enjoy reading regs with your eggs.
HHS Scraps Richardson Waiver, Clearing Way for Faster Rulemaking
On March 3, 2025, the United States Department of Health and Human Services (“HHS”) issued a policy statement rescinding the Richardson Waiver, a policy in place since 1971 that required notice-and-comment rulemaking for regulations on public property, loans, grants, benefits, or contracts. Under the new framework, HHS and its subagencies now have greater discretion to decide when to seek public input, and HHS has expanded its ability to bypass notice-and-comment altogether using the “good cause” exception of the Administrative Procedure Act (“APA”).
A copy of the policy statement can be found here.
Key Changes Under the New Policy
One of the most immediate effects of rescinding the Richardson Waiver is that HHS may now issue regulations, including those relating to the Medicaid program, with significantly less procedural delay. HHS subagencies (including the Centers for Medicare & Medicaid Services) will now have greater flexibility to modify funding rules and compliance requirements without the time constraints of the notice-and-comment process. Ostensibly, this change will improve efficiency, particularly for time-sensitive Medicaid funding decisions. However, eliminating mandatory public input may also create regulatory uncertainty, as stakeholders lose structured opportunities to influence policy. It may also increase the number of challenges regarding the enforceability and binding effect of certain regulations. While this shift will expedite rulemaking in many areas, most Medicare-related regulations remain unchanged, as statutory provisions continue to require notice-and-comment.
HHS has also expanded its reliance on the “good cause” exception, which permits agencies to bypass traditional rulemaking under the APA when notice-and-comment is deemed impracticable, unnecessary, or contrary to the public interest. Previously, HHS limited the use of this exception. The new policy, however, removes that restriction and provides agencies greater discretion to issue rules without public input. While this shift may allow HHS to act more swiftly, it also raises concerns about transparency and stakeholder engagement, particularly if significant policy changes occur with little or no notice. The broader application of the good cause exception may invite legal scrutiny, as stakeholders could challenge whether agencies have provided sufficient justification for bypassing procedural safeguards or sufficient notice of changes with imminent effective dates.
What’s Next? More Rapid Rulemaking and Potential Legal Challenges
With fewer procedural hurdles in place, HHS rulemaking will likely move at a quicker pace, at least in the short-term, especially in areas like Medicaid and federal grants and contracts. Thus, stakeholders should be prepared for reduced opportunities for public participation, requiring a more proactive approach to tracking regulatory changes. Ultimately, given the potential for litigation over the agency’s expanded use of the “good cause” exception, affected entities and stakeholders should closely monitor new rules and assess whether they comply with APA requirements.
This Week in 340B: March 4 – 10, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Contract Pharmacy; HRSA Audit Process; Medicare Payment; Rebate Model
In a case appealing a decision on a state contract pharmacy law, two amicus briefs were filed in support of the defendant-appellant state.
In one Health Resources and Services Administration (HRSA) audit process case, the court granted motion to withdraw the plaintiff’s motion for preliminary injunction.
In a case challenging a Medicare Advantage plan’s response to 340B payment cuts, defendants’ motion to compel the production of a damages spreadsheet was granted in part and denied in part.
In six cases against HRSA alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
In five such cases, the court granted intervenor’s motion to intervene and a group of amici filed an amicus brief in support of the defendant.
In one such case, intervenors filed a notice of supplemental authority to which the plaintiff filed a response and a group of amici filed an amicus brief in support of the defendant.
Nadine Tejadilla also contributed to this article.
HHS Secretary Kennedy Directs FDA to Consider Eliminating Self-GRAS Determinations
Is this the start of RFK, Jr., making good on his promise to transform the food industry?
Newly appointed Secretary of Health and Human Services (HHS), Robert F. Kennedy, Jr., directed the U.S. Food and Drug Administration (FDA) to “take steps to explore potential rulemaking to revise its Substances Generally Recognized as Safe (GRAS) Final Rule and related guidance to eliminate the self-affirmed GRAS pathway [1],” on March 10, 2025.
The stated rationale for directing FDA to explore the potential elimination of self-GRAS determinations is to “bring transparency to American consumers” about what ingredients are in the nation’s food supply and to close a “loophole that has allowed new ingredients and chemicals, often with unknown safety data, to be introduced into the U.S. food supply without notification to the FDA or the public,” according to Secretary Kennedy.
Authorization clearing the use of GRAS substances in food stems from the 1958 Food Additive Amendments, which amended the Federal Food, Drug, and Cosmetic Act (FFDCA) to require premarket clearance by FDA for “food additives.” In defining the term “food additive,” Congress specifically excluded from that definition substances that are “generally recognized as safe.” By so doing, Congress exempted GRAS substances from the Food and Drug Administration’s premarket review authority over food additives. (GRAS substances are defined under Section 201(s) in the Act as substances that are “generally recognized, among experts qualified by scientific training and experience to evaluate [their] safety . . . under the conditions of [their] intended use [2].”)
The GRAS Final Rule that the Secretary directed FDA to revise was published in August 2016 and has been effective since October of that year [3]. The rule formally established a voluntary notification process that allowed FDA to consider and comment on, as needed, the GRAS determinations made by industry. In practice, though, FDA began accepting these GRAS notifications in 1997. The GRAS submissions with accompanying data are linked to an FDA Inventory, along with comments made by the Agency on the submissions. Currently, there are 1219 GRAS submissions listed on the Inventory. FDA evaluates an estimated 75 a year. (Prior to 1997, companies were free to petition FDA to affirm by regulation a determination that a substance was GRAS for its intended use. See 21 C.F.R. Part 184.)
Given the personnel cuts and budget shortages being faced by FDA, it remains to be seen whether FDA will have the resources to effectively undertake the regulatory review in any timely way.
There is also a significant question as to what, if any, authority FDA has “to eliminate the self-affirmed GRAS pathway” as described in the press release, without amendment of the Food, Drug, and Cosmetic Act. Right now, the law provides FDA with jurisdiction to authorize only food additives, as defined in the Act, to be used in food. Since the definition of food additive excludes, among other things, GRAS substances, FDA does not have much room, if any, to regulate these substances beyond the way they already have.
Until the day that FDA completes its task of exploring regulatory pathways to end self-GRAS determinations, or Congress intervenes in the meantime to act on the matter, the Secretary’s announcement has no legal effect on the status of ingredients currently marketed.
[1] HHS Secretary Kennedy Directs FDA to Explore Rulemaking to Eliminate Pathway for Companies to Self-Affirm Food Ingredients Are Safe | HHS.gov
[2] See the Food Additives Amendment Act of 1958, signed into law on September 6, 1958, and amending the Federal Food, Drug, and Cosmetic Act of 1938, 21 U.S.C. § 301 et seq.
[3] Federal Register :: Substances Generally Recognized as Safe
Thinking of Selling Your Med Spa? Here Are Six Things to Do to Prepare
Numerous legal, regulatory and operational issues will arise when selling a med spa. Proper preparation by ensuring the business is regulatory compliant, assembling the right group of professionals and documents will save time and costs and ensure that the transaction is as smooth as possible.
Ensure your business is properly organized and licensed
You should ensure that the business complies with applicable law from a structural and regulatory standpoint. Illinois follows the legal doctrine known as the “corporate practice of medicine,” which requires that a facility that provides medical services be owned solely by a physician or a physician-owned entity. It is important to analyze the scope of services being provided by your med spa to determine if you are compliant with Illinois law.
If a med spa is not organized in a compliant manner, it could cause issues for the med spa from a legal and regulatory standpoint and raise flags for the purchaser. In such a case, it would be prudent to restructure the entity to comply with applicable law. Such restructuring may include creating a management service organization (MSO) structure, in which a new non-medical MSO is created to perform all non-clinical services with respect to the med spa entity. These non-clinical services may include human resource matters, marketing, payroll, billing, accounting, real estate issues, etc. It is important that any MSO arrangements, including compensation structures, be carefully structured to comply with applicable law. The MSO structure is critical for any med spa with a non-physician owner that intends to render services that may constitute the practice of medicine.
Review the business’s governing documents
It is crucial that the med spa’s governing documents are complete and accurate. A sophisticated purchaser will review the business’s articles of organization or incorporation, operating agreement or bylaws and timely filed annual reports. A purchaser will raise issues and have concerns if a med spa cannot provide complete and accurate corporate records.
The owner of a med spa with multiple shareholders or members selling the business via an asset sale should review the bylaws or operating agreement to confirm the percentage of owners that must agree to the sale in order for it to occur. The sale of all or almost all of the business assets is a standard situation that requires majority consent.
A business owner intending to sell via a stock or membership interest sale should review all governing documents to confirm whether there are drag-along or tag-along rights. A drag-along right allows the majority shareholder of a business to force the remaining minority shareholders to accept an offer from a third party to purchase the entire business. There have been situations where a minority shareholder objects to the sale and prevents it altogether. A tag-along right is also known as “co-sale rights.” When a majority shareholder sells their shares, a tag-along right will allow the minority shareholder to participate in the sale at the same time for the same price for the shares. The minority shareholder then “tags along” with the majority shareholder’s sale. Any drag-along or tag-along rights provided in the business’s governing documents should be addressed as soon as possible to ensure such rights are provided and to deal with any disputes.
Retain an attorney at the onset of the transaction
After a med spa is offered for sale, a purchaser may prepare and submit a letter of intent (LOI) for the med spa’s review and approval. A LOI is a legal document that sets forth the form of the transaction (whether it’s an asset or stock sale), purchase price, manner of payment, deposit terms, transaction conditions, due diligence terms and timeline, choice of law and other relevant terms of the sale. Business owners often make the mistake of not engaging an attorney until after the LOI has been signed. By failing to retain an attorney to negotiate the LOI, a business owner may be stuck with unfavorable terms or may have missed the opportunity to ask for something valuable at the onset, including taking into account tax implications of the proposed deal structure.
Engaging an attorney can save significant costs and time because imperative business issues can be discussed and agreed upon in the early stages and if the parties cannot come to an agreement, they can go their separate ways as opposed to wasting time, costs and the efforts involved with both negotiating a purchase agreement (PA) and conducting due diligence. Using an attorney will also ensure that the LOI contains a timeline or expiration so that if the sale is not completed by a certain time, the med spa can move onto another interested party without issue. The LOI will continue to be a material part of the entire transaction even as the PA is negotiated. If something is agreed upon in the LOI and one party tries to differ from the LOI terms during the PA negotiation, the other party will point to the LOI for support — often successfully.
Gather information on financials and assets
One of the most important and lengthy parts of any business sale is due diligence. Due diligence is the process in which the purchaser requests to review various documents, data and other information in order to familiarize itself with the business’s operations, background and to identify potential liabilities or issues related to the business or transaction’s closing. The results of the due diligence process can cause the purchaser to react in a variety of ways, from requesting more documents, a reduction of the purchase price or terminating the transaction altogether. Some of the critical documents a purchaser will request access to include the med spa’s tax returns, income statements, balance statements, a list of accounts receivable, accounts payable, a list of inventory and a list of personal property and equipment. A med spa owner can do itself a huge favor by gathering such documents and saving them electronically in an organized fashion. This way they can be easily sent to the purchaser or uploaded to a data site. The med spa and/or med spa owners will also have to make representations and warranties based upon the accuracy and completeness of such documents so it is in the med spa’s best interest to have organized and complete files.
Gather existing contracts
Another standard due diligence request from a purchaser is to review all of the med spa’s existing contracts, purchase orders, vendor and supplier agreements. The purchaser will want to determine, among other things, what work is ongoing and what liabilities and expenses it can expect. A med spa owner considering a sale should gather and save all of such agreements electronically and in an organized manner so they can be easily uploaded for the purchaser’s review.
Consider third party consents
The business’s existing agreements will need to be reviewed to see if they are assignable or able to be terminated as the purchaser will likely want to assume some and terminate others. Therefore, it is imperative that a med spa identify and understand the assignment, change of control and termination provisions of all existing contracts so that they can plan ahead and be prepared to take action at the appropriate time. A med spa owner should review existing agreements, including leases for such provisions, to identify whether an agreement can be assigned or terminated and, if so, what is required for each assignment or termination.
Typically, an agreement requires a certain number of days’ notice to the third party or the third party’s written consent to assign the contract from the med spa to the purchaser. For stock sales, the med spa should identify whether the existing agreements have change of control provisions. If consent of the third party is required then it may be prudent for the med spa to contact the third party as soon as possible to determine whether the other party is willing to consent, subject to coordination with the purchaser and appropriate confidentiality protections. For contracts that a purchaser may not want to assume, a med spa should review the termination provisions and identify if there are any fees or penalties for termination. Closings can be delayed over a med spa’s failure to receive an important third party consent. This issue arises often with landlords that do not wish to consent to the assignment of the lease from the med spa to the purchaser.
Limits on Physician Noncompete Agreements: Navigating New State Laws and Legislation
As anticipated, following the end of the Federal Trade Commission’s proposed rule prohibiting employer noncompetes, states have ramped up their efforts toward limiting noncompete agreements, including some states that have specifically focused on health care noncompetes.
We previously reported in 2024 that Pennsylvania passed The Fair Contracting for Health Care Practitioners Act that prohibited the enforcement of certain noncompete covenants entered into by health care practitioners and employers. Now, Louisiana, Maryland, and Indiana join the list of states limiting, or attempting to limit, the use of noncompete agreements in the health care industry.
Louisiana
On January 1, 2025, Act No. 273 (f/k/a Senate Bill 165) (the “Act”) became effective following Governor Jeff Landry’s approval. The Act enacts three subsections to Section 23:921, M, N, and O, which, as discussed further below, generally limit the timeframe and geographical scope of noncompetes for primary care and specialty physicians.
Subsection (M) of the Act prohibits agreements that restrain a primary care physician—defined as “a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology”—from practicing medicine for more than three years from the effective date of the initial contract or agreement. A subsequent agreement between the employer and primary care physician after the three-year term cannot include a noncompete. Should a primary care physician terminate the agreement prior to the three-year term, the primary care physician can be prohibited, for no more than two years from termination of employment, from “carrying on or engaging in a business similar to that of the employer in the parish[1] [defined in employer agreement] in which the primary care physician’s principal place of practice is located and no more than two contiguous parishes in which the employer carries on a like business.”
Subsection (N) applies to “any physician other than a primary care physician,” generally defined as a “specialty physician.” Subsection (N) prohibits a contract or agreement that restrains a specialty physician from practicing medicine for more than five years from the effective date of the initial contract or agreement, and a subsequent agreement after five years cannot include a noncompete. Should a specialty physician terminate the agreement prior to the five-year term, the same limiting provision as subsection (M) applies.
Lastly, subsection (O) of the Act exempts from the Act’s prohibitions (1) a “physician who is employed by or under contract with a rural hospital as provided for in the Rural Hospital Preservation Act,” and (2) a “physician who is employed by or under contract with a federally qualified healthcare center[.]”
The Act applies to any contract or agreement entered into on or after January 1, 2025. For any contract or agreement prior to the effective date, the initial three-or-five-year term and geographical limitation listed in the Act will begin on January 1, 2025.
Maryland
Maryland also joins the list of states limiting physician noncompetes. Maryland House Bill 1388 (HB 1388), will become effective July 1, 2025, and amends Maryland’s Annotated Code Labor and Employment Section 3-716(a) to ban certain veterinary and health care noncompete agreements and conflict of interest provisions “that restrict the ability of an employee to enter into employment with a new employer or to become self-employed in the same or similar business.”
HB 1388 prohibits noncompetes and conflict of interest provisions between an employer and employee who (1) “earns equal to or less than 150% of the State minimum wage . . . ,” (2) is required to be licensed under Maryland’s Health Occupations Article or is employed in a position that “provides direct patient care,” and earns equal to or less than $350,000 per year, or (3) is a licensed veterinary practitioner or technician under Maryland’s Agriculture Article.
For an employee who is required to be licensed under Maryland’s Health Occupations Article or “provides direct patient care,” and earns more than $350,000 per year, a noncompete agreement or conflict of interest provision is permitted only for one year from the last day of employment and cannot exceed ten miles from the primary place of employment. If a patient requests the new location of the former employee, an employer must provide the requested information.
Indiana
As recent as January 13, 2025, Indiana’s Senate introduced Senate Bill 45 (SB 45) which, if enacted, would, among other things unrelated to noncompetes, ban physicians and employers from entering into any noncompete. SB 45 would not apply to any physician noncompete entered into before the effective date, but rather, only apply proactively. SB 45 does not contain any other exceptions.
These three states are just the recent developments in legislation across the country which demonstrate a growing trend toward limiting or banning noncompete agreements, particularly in healthcare industries. It is likely other states will follow. We will continue to monitor SB 45 and provide further updates on this topic.
Gianna Dano, a Law Clerk in Epstein Becker & Green’s Newark Office (not admitted to practice), contributed to the preparation of this piece.
[1] “Parish” refers to a local government subdivision in Louisiana, which is analogous to a county in other states.
GLP-1 Receptor Agonists and Patent Strategy: Securing Patent Protection for New Use of Old Drugs
GLP-1 receptor agonists (GLP-1RAs) were initially approved for diabetes treatment (e.g., Ozempic®) but have revolutionized weight management (e.g., Wegovy®) and are now being explored for treating a wide range of health conditions. Discovering drugs with pleiotropic effects beyond their original purpose can facilitate drug repurposing and extend the market lifespans of existing drugs. However, leveraging newly discovered pleiotropic effects of existing drugs requires careful consideration of intellectual property strategies. This article provides strategic considerations for obtaining patent protection for new uses for old drugs such as GLP-1RAs.
The Extended Lifespan of GLP-1 Receptor Agonist Drugs from the Discovery of Pleiotropic Effects
Glucagon-like peptide-1 (GLP-1) was first discovered in the 1980s as a regulator of glucose levels. Further research led to the creation of a stabilized GLP-1RA called semaglutide, the active ingredient in Ozempic®, a successful diabetes treatment, and in Wegovy®, a revolutionary body weight management drug. Moreover, recent clinical studies and real-world clinical data have revealed broader pleiotropic effects of these drugs, opening doors for repurposing and extending the commercial lifespan of these drugs. For example, a recent study published in Nature Medicine (Jan. 20, 2025) used clinical data to analyze the primary intended effects of GLP-1RAs and secondary effects across multiple health conditions. This study uncovered potential applications of GLP-1RAs in reducing the risks of neurocognitive disorders, gastrointestinal issues, hypotension, syncope, interstitial nephritis, and drug-induced pancreatitis. In addition, a clinical trial published on Feb. 12, 2025, in JAMA Psychiatry, found that semaglutide can significantly reduce alcohol craving.
Discovering new clinical approaches for existing and approved drugs provides opportunities to extend the lifespan and market potential of the existing drugs, as shown for GLP-1RAs and other pleiotropic drugs. In the case of GLP-1RAs, patent protection has been successfully obtained for new uses and formulations based on discoveries of new clinical effects. In fact, many patents covering GLP-1RAs are drug-device combination patents or formulations adapted for particular administration routes, such as oral or subcutaneous formulations.
As shown for GLP-1RAs, the discovery of pleiotropic effects can effectively extend the lifespan and markets of drugs by facilitating repurposing. However, patenting repurposed drugs can be challenging and requires careful consideration of patent prosecution strategies.
Patent Prosecution Strategies for Repurposed Drugs
Patenting a new use for existing drugs can be challenging because the claimed new use may be implied or considered obvious based on the known characteristics and mechanisms of the existing drug. See, e.g., In re Woodruff, 919 F.2d 1575, 1578 (Fed. Cir. 1990) (stating “[i]t is a general rule that merely discovering and claiming a new benefit of an old process cannot render the process again patentable.”) A new use can also be found obvious if prior art discusses similar uses of related drugs. Still, the new use can be patented if the prior art does not mention using the same active agent for the same clinical indication, as explained in Eli Lilly and Co. v. Teva Pharmaceuticals International GmbH, No. 20-1747 (Fed. Cir. 2021).
Below are considerations and strategies for overcoming challenges in patenting existing drugs and turning the discovery of pleiotropic drug effects into patentable claims.
Discoveries of clinical benefits or their underlying mechanisms are not patentable but may suggest patentable uses or formulations.
The Federal Circuit has found that claims directed to new results obtained with a known method are inherently anticipated and, therefore, unpatentable if practicing the known method would necessarily produce the claimed results. See In re Woodruff and King Pharmaceuticals, Inc. v. Eon Labs, Inc., 616 F.3d 1267, 1275−76 (Fed. Cir. 2010). In King, the challenged patent claims were directed to beneficially increase the bioavailability of a drug when the drug was ingested with food. However, the prior art contained instructions for taking the same drug with food. Accordingly, the Court in King found that the claims relating to increasing bioavailability by food ingestion were inherently anticipated and invalid. The Court in King also clarified that the inventor’s ability to describe the underlying scientific principles or mechanisms, which was admittedly unknown or undisclosed in the prior art, does not confer patentability. Id. at 1328.
Moreover, it is usually unnecessary to disclose mechanisms’ underlying claimed inventions because understanding the principles underlying a claimed invention is not necessary. For example, Eames v. Andrews (The Driven-Well Cases), 122 US 40, 55–56 (1887) held that even though “the inventor did not know what the scientific principle was . . . . [t]hat does not vitiate the patent.” See also Radiator Specialty Co. v. Buhot, 39 F.2d 373, 376 (3d Cir. 1930) (explaining that “[i]t is with the inventive concept, the thing achieved, not with the manner of its achievement or the quality of the mind which gave it birth, that the patent law concerns itself.”). Hence, it may be beneficial not to disclose mechanisms’ underlying claimed inventions because mechanisms could be used to explain why the invention is obvious in some cases.
Thus, stakeholders should carefully consider if the discovery of new mechanisms or effects implies new method steps (e.g., specific administration routes), formulations, dosages, and treatments of different indications or patient populations to ensure the discovery can be covered by patentable claims as further discussed below.
Discoveries of new formulations or devices for delivering an existing drug can be eligible for patenting.
The Federal Circuit found a patent for a new formulation containing an existing drug valid in Endo Pharmaceuticals Solutions, Inc. v. Custopharm Inc., 894 F.3d 1374 (Fed. Cir. 2018). For example, many patents covering the GLP-1RAs claim a combination of a delivery device and an active agent. In other cases, a new formulation adapted for different administration routes, such as subcutaneous or oral administration, can be sufficient to obtain a new patent.
The discovery of a new patient population to be treated by an existing drug can be patentable.
The Federal Circuit explained in Sanofi v. Watson Labs Inc., Case Nos. 16-2722; -2726 (Fed. Cir., Nov. 9, 2017) that the asserted prior art did not provide the required “reasonable expectation of success” for treating the claimed patient population. Therefore, if a drug’s discovered effects or mechanisms indicate that an existing drug could be used to treat a novel patient population, this particular patient population could contribute to the novelty and non-obviousness of the patent claims for the new use.
The discovery of a new administration route or dosing schedule for an existing drug can be patentable.
The challenge of inherent disclosure can be overcome by adopting a different method of drug administration for the new use. The Federal Circuit found in Perricone v. Medicis Pharm. Corp., 432 F.3d 1368, 1378–79 (Fed. Cir. 2005) the prior art use did not teach the “topical application to skin sunburn” required by the claimed new use. In Perricone, the patent claims at issue were directed to treating skin sunburn or damaged skin by topically applying a composition that was known in the prior art to the skin. However, the prior art did not disclose topical application to the sunburned or damaged skin, so the Federal Circuit found the prior art did not inherently anticipate the claims. Accordingly, identification of specific new ways of administering the drugs or dosing schedules may provide options for addressing inherent anticipation of new uses for existing drugs.
Conclusion
The recent dramatic success of GLP-1RAs in weight management and the reports of numerous beneficial pleiotropic effects of this class of drugs highlight the immense potential for repurposing drugs to extend lifespan and markets of drugs. Maximizing the value of GLP-1RAs and next-generation pleiotropic drugs will demand effective navigation of data management and analysis, deals and licensing, regulatory exclusivity, and strategic patent prosecution.
With the rise of AI-driven clinical data analysis, stakeholders have unprecedented opportunities to detect pleiotropic effects and new uses for existing drugs to extend their lifespan and market. Securing robust and timely patent protection for new uses will be critical to extend the commercial lifespan of existing drugs.
EPA Extends Comment Period on Draft TSCA Risk Evaluation for DCHP
The U.S. Environmental Protection Agency (EPA) announced on March 7, 2025, that it is extending the comment period on the draft risk evaluation for dicyclohexyl phthalate (DCHP) under the Toxic Substances Control Act (TSCA). EPA released the risk evaluation for DCHP on January 7, 2025, with a comment period that closed March 10, 2025. EPA states that it will soon publish a Federal Register notice extending the public comment period for an additional 60 days. Upon publication of the Federal Register notice, EPA will accept public comments until May 9, 2025.
According to EPA’s January 6, 2025, press release announcing the availability of the draft risk evaluation, DCHP is used primarily as a plasticizer or stabilizing agent in polyvinyl chloride (PVC) products and in adhesives, sealants, paints, coatings, rubbers, and other applications. EPA preliminarily determined that DCHP presents an unreasonable risk of injury to human health for workers. EPA states that nine conditions of use (COU) significantly contribute to the unreasonable risk to workers. The draft risk evaluation preliminarily shows that DCHP does not pose unreasonable risk to the environment, the general population, or consumers. EPA notes that there are other uses of DCHP that are generally excluded from TSCA’s definition of chemical substance, such as food contact materials, and EPA did not evaluate risk associated with these uses.
Workers may be exposed to DCHP when making products or otherwise using DCHP in the workplace. According to EPA, when it is manufactured or used to make products, DCHP can be released into the water where most of it will end up in the sediment at the bottom of lakes and rivers. EPA states that if released into the air, DCHP will attach to dust particles and be deposited on land or into water. Indoors, DCHP has the potential over time to come out of products and adhere to dust particles that could be inhaled or digested.
Georgia Legislature Considering Substantial Overhaul to Medical Marijuana, Hemp Laws
I’ve had Georgia on my mind these days. I needed to get that out immediately because otherwise I would have been hearing that song in my head the entire time I was writing.
As is the case in many capitals around the country during legislative sessions, there’s cannabis reform afoot in Georgia. Before we dig into it, perhaps a brief vocabulary lesson is in order. “Cannabis” is essentially a scientific term that refers to the cannabis plant. “Marijuana” and “hemp” are legal terms distinguishing between strains of the cannabis plant. At the federal level, for example, “hemp” has been defined as a strain of the cannabis plant containing less than 0.3% delta-9 THC on a dry weight basis.
One more background fact. Marijuana is, for the moment, a Schedule I substance under the federal Controlled Substances Act. That means the manufacture, possession, and sale of marijuana is illegal in every state. There is an effort underway to reschedule marijuana to Schedule III, which would have interesting potential implications to marijuana operations. Still, as of the time if this writing, marijuana remains Schedule I.
Despite that, a plurality of states has adopted laws allowing for the medical (and in many instances) recreational use of marijuana. Instead of cracking down on activity that seems to clearly conflict with federal law, the federal law has for more than a decade gone to great lengths to demonstrate that it would not interfere with state marijuana regimes.
With that in mind, we turn to Georgia. Georgia adopted a “low THC oil program” in 2015. The rollout of that program was, to be charitable, not without bumps. But there may be a new regime on the horizon.
Three bills changing the way Georgia regulates hemp and medical cannabis have cleared the Senate ahead of Thursday’s Crossover Day deadline. The votes on the bills are some of the only ones this session that didn’t fall cleanly along party lines, with Senate Republicans divided over expanding medical access to cannabis and members of both parties split over new regulations on recreational hemp products.
Medical Cannabis
Senate Bill 220, also known as the “Putting Georgia’s Patients First Act,” passed in a contentious 39-17 vote after more than an hour of debate in the Senate. Like its counterpart in the other chamber, House Bill 227, the bill replaces the term “low-THC oil” with “medical cannabis,” in Georgia code, removes requirements that certain medical diagnoses like cancer or Parkinson’s disease be “severe or end stage,” and adds lupus to the list of qualifying health conditions.
Unlike the House version, SB 220 removes an existing prohibition against vaping cannabis oil and raises the percentage of THC that medical cannabis products may contain from 5% to 50%.
The bill was amended on the floor to include a provision allowing caregivers to pick up medical cannabis from pharmacies. Three other amendments aimed at reducing the amount of THC allowed in medical cannabis, removing the provision that allows for vaping, and removing PTSD and intractable pain from the list of approved diagnoses failed during a series of floor votes.
Hemp bills
Two bills aimed at strengthening hemp regulations in Georgia passed the Senate in decisive votes on Crossover Day, seeking to limit recreational use of marijuana as the chamber simultaneously eased restrictions for medical use.
Marietta Republican Sen. Kay Kirkpatrick’s SB 33 subjects chemical compounds like delta-8 THC, delta-10 THC, hexahydrocannabinol (HHC) and other cannabinoids to testing and labeling regulations that were added last year under Senate Bill 494. It passed in a 50-6 vote.
In her speech from the well, Kirkpatrick said her bill is aimed at cutting down on unregulated hemp products from China and other countries.
“This bill is not a ban,” Kirkpatrick said. “It’s a consumer protection bill that is not intended to impact processors that are already testing and labeling their products appropriately. It’s intended to make sure that consumers buying these products are clear on what they’re buying.”
Senate Bill 254, sponsored by Athens Republican Bill Cowsert, seeks to impose new limits on THC-infused products after the Georgia Department of Agriculture raised the maximum amount of THC that can be included in a single beverage from 5 mg to 10 mg.
Cowsert urged lawmakers to codify the original 5 mg serving size restrictions on THC-infused beverages, calling the higher-dose beverages a “loaded gun” and arguing that one 10 mg serving of THC was equivalent to four glasses of wine.
“Most states are limiting greatly the amount of THC that can be included in a beverage, or in a tincture, or any kind of lotions, or in gummies,” he said. “And the reason is to protect consumers — protect the public — from the psychoactive components of THC.”
Like SB 33, the bill includes new restrictions on cannabinoid variants like delta-8 THC and delta-10 THC. It was ultimately amended on the floor by a narrow 29-27 vote to ban all THC-infused beverages, and passed the Senate in a 42-14 vote.
One thing to consider is whether these proposals are all part of a big move by some interest group(s) to benefit one form of cannabis over another. Marijuana companies would obviously prefer a world where they didn’t have to compete with hemp companies. After all, hemp companies are not currently subject to the extraordinarily onerous regulations and taxes that stifle the growth of marijuana companies. On the other hand, cannabis politics make for strange bedfellows, where for example a marijuana operator may be lobbying in conjunction with anti-cannabis operators to lobby against hemp products. The enemy of my enemy…
It’s too early to tell how this will all play out. There are influential and well-heeled players in the hemp, marijuana, and alcohol industries on various sides of these issues. As always, we’ll monitor the situation so you don’t have to. Thanks for stopping by, and if you can do something to change Georgia’s absolutely nonsensical prohibition against attorneys advising state-legal cannabis companies, your author sure would appreciate it.
Even With FCC 1:1 Gone, the CMS 1:1 Rule is Still Standing
Obviously, a lot going on in the lead gen space over the last six weeks. The biggest change of all is the FCC’s one-to-one rule being vacated. The pivot the industry had to make immediately after that ruling affected so many businesses.
But, one thing that did not change was CMS’s requirement for one-to-one consent to share personal beneficiary data between TPMOs. This is true even though CMS’s guidance throughout the summary of the rule was all based on the FCC’s one-to-one rule.
As a reminder:
CMS requires individualized consent: Beneficiary consent for data sharing must be obtained on a specific, one-to-one basis, with clear and easily understood disclosures.
The key to obtain consent is transparency CMS mandates that beneficiaries understand
Where their personal data is being shared.
The specific purpose of the contact they are consenting to, and
The identity of the entity that will be contacting them.
CMS Consent is Broader than the FCC’s proposed 1:1 consent: The CMS consent rule has a wider scope than the proposed 1:1 consent in the TCPA because it also applies to manual dialed calls.
Opt-In Consent is Mandatory: CMS requires an opt-in consent model, meaning the default should be that data is not shared, and the beneficiary must affirmatively choose to allow sharing.
Separate Legal Entities Require Explicit Consent: TPMOs cannot share beneficiary data with a TPMO that is a different legal entity without the beneficiary’s prior express written consent. This applies even to affiliated agents within the same marketing organization.
While the industry took a collective sigh of relief when the TCPA’s 1:1 rule was vacated, those TPMOs under CMS’s purview must remain diligent. And, new CMS rules should be announced within the next few weeks, so stay tuned.
For Whom the Bell Tolls? The Impact of Wisconsin Bell v. United States ex rel. Todd Heath and United States v. Regeneron Pharmaceuticals Inc. on False Claims Act Litigation
The Supreme Court’s decision in Wisconsin Bell v. United States ex rel. Todd Heath clarifies what constitutes a “claim” under the federal False Claims Act (FCA). At issue in Wisconsin Bell was whether reimbursement requests submitted to the FCC’s “E-Rate Program” are considered “claims” under the FCA. The U.S. Supreme Court agreed that they were, finding that the plaintiff’s liability theory could move forward.
While the issues presented in Wisconsin Bell occurred in the context of the FCC, the implications of the Court’s decision appear to extend far beyond—reaching industries frequently targeted for FCA enforcement, such as health care, aerospace, defense, energy and others involving government contracts (like cybersecurity). As in years past, SCOTUS’s docket and Wisconsin Bell reflects the continued significance of FCA litigation and its importance to the government’s recovery of funds. Therefore, all companies that receive federal funds, particularly in highly regulated industries such as health care, should be interested in understanding this ruling and its impact.
Wisconsin Bell had argued that it could not be exposed to FCA liability because the E-rate program, congressionally mandated to help certain schools and libraries afford internet and telecommunications, is administered by a private nonprofit organization and funded by government-mandated payments from private telecommunications carriers into the Universal Service Fund (USF). But the Court ruled narrowly that, because the U.S. Treasury itself had provided $100 million to the USF, through its collection of delinquent debts to the USF and related penalties and interest, as well as other settlements and criminal restitution payments, the federal government did “provide” a portion of the funds at issue, so the whistleblower’s allegations are thus covered under the FCA.
One thing of interest is seen in the concurrence from Justice Kavanaugh (with Thomas concurring) who renewed their questions about the constitutionality of the FCA’s qui tam provisions (and thereby invited future challenges), writing in Wisconsin Bell that “the [False Claims] Act’s qui tam provisions raise substantial constitutional questions under Article II. … [I]n an appropriate case, the Court should consider the competing arguments on the Article II issue.” Ultimately though, it was a unanimous decision, where the Supreme Court found that that E-Rate reimbursement requests were “claims” under the FCA.
Another interesting aspect is that the Court’s decision was notably narrow, relying on the U.S. Treasury’s supply of a $100 million ancillary sliver of overall USF funding, which totals nearly $10 billion annually. Justice Thomas’s concurrence (with Justice Kavanaugh concurring, and Justice Alito concurring in part) highlights the limits of this approach, observing that, “the Government paid scant attention to the fact that courts historically have not applied the FCA to cover fraud on nongovernment entities unless the Government itself will face a financial loss.” And, the Court’s opinion itself forewarns that issues of, “whether (and, if so, how) the amount of money the Government deposited should limit the damages Heath can recover” are likely to emerge if Heath ultimately prevails.
The narrow holding was necessary because, as the Court explained, larger questions as to the constitutionality of the USF under the nondelegation doctrine are looming in a separate case, Consumers’ Research v FCC, Docket Nos. 24-354, 24-422 (set for oral argument on March 26, 2025). Notably, Justice Thomas’s concurrence sends a warning shot for the Government in that case, questioning the implications of its other two arguments – either that the entire USF constitutes government funds, or that the private, non-profit USF administrator is an agent of the United States – for those constitutional questions, and for compliance with a separate statute, the Government Corporation Control Act. Those answers are likely to affect Heath’s potential for eventual recovery. (The fact that Justice Kavanaugh – seen as a potential swing vote in Consumers’ Research – joined this concurrence may also be an ominous portent for the future of the USF as currently constituted. See our recent Client Alert for more details about the issues presented in the Consumers’ Research case.)
In another recent and important FCA decision, United States v. Regeneron Pharmaceuticals Inc., the First Circuit joined some other courts of appeal in holding that the “but-for” causation standard applies when purported Anti-Kickback Statute (AKS) violations result in FCA violations. This is a commonly used theory because it allows plaintiffs to allege that when a relationship becomes tainted by kickbacks then all reimbursement claims to a federal payor that follow are tainted and fraudulent, triggering FCA liability.
In Regeneron Pharmaceuticals Inc., the First Circuit had to evaluate competing arguments from the government and defendant about whether the 2010 amendments to the AKS effectively changed the proof requirements under this theory. As the court explained,
Regeneron argued that, under the 2010 amendment, the government “b[ore] the burden of proving that an AKS violation … actually caused [a] physician to provide different medical treatment (and thus caused the false claims).” United States v. Regeneron Pharms., Inc., No. 20-11217, 2023 WL 6296393, at *10 (D. Mass. Sept. 27, 2023). In other words, Regeneron asserted that the phrase “resulting from” in the 2010 amendment imposed a “ ‘but-for’ causation standard.” Id. The government disagreed, and it urged the district court to adopt the Third Circuit’s view that “all that is required to prove a causal link [under the 2010 amendment] is that ‘a particular patient is exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient.’ ” Id. (quoting United States ex rel. Greenfield v. Medco Health Sols., Inc.,880 F.3d 89, 100 (3d Cir. 2018)).
After evaluating various textual arguments asserted by the government, the First Circuit found that was no good reason “to deviate from the default presumption that the phrase ‘resulting from’ as used in the 2010 amendment imposes a but-for causation standard” and that “to demonstrate falsity under the 2010 amendment, the government must show that an illicit kickback was the but-for cause of a submitted claim.”
Since there is a clear circuit court split on this issue, it is ripe for certiorari by the Supreme Court.
Since False Claims Act plaintiffs are motivated by the potential of obtaining significant bounties by suing companies and individuals that do business with government agencies and affiliates, these and other recent decisions underscore the continued importance for companies that receive federal funds to have robust compliance plans and take appropriate steps to avoid becoming embroiled in these bet-the-company cases.
Reminder: FDA Does, In Fact, Review DOF
When was the last time you thought about “data on file” (“DOF”)? Probably not recently, but last week, the U.S. Food and Drug Administration (FDA) Office of Prescription Drug Promotion (OPDP) posted an untitled letter (the “Letter”)[1] that was issued on February 3, 2025 to Edenbridge DBA Dexcel (“Dexcel”) over allegedly misleading promotional materials for the multiple myeloma drug Hemady® (dexamethasone) involving—you guessed it—a DOF reference. This marks OPDP’s first untitled letter of the year and the first under the new administration. The letter is relatively uninventive in terms of enforcement angles—leading with a garden-variety failure to present “any” safety information—but it does serve as a reminder that FDA can and will ask for DOF references, especially those that substantiate Consistent with FDA-Required Labeling (“CFL”) promotional materials. And of course, despite all the news about regulatory cuts affecting FDA, OPDP still appears alive and well.
Promotional Content
FDA took issue with the promotional communication presented in an exhibit booth panel (“panel”)[2] for Hemady®, a drug indicated in combination with other anti-myeloma products for the treatment of adults with multiple myeloma. Specifically, FDA found the exhibit panel made false or misleading claims about the risks and efficacy of Hemady®. FDA does not make mention of the intended audience, but given the level of detail in the presentation of information, as well as the piece being part of an exhibit booth, we reasonably conclude the audience was intended to be healthcare professionals (“HCPs”).
Lack of Risk Information
First, FDA found that the panel made no mention at all of any risk information. The panel made beneficial claims such as “Hemady® reduces up to 80% of the number of tablets required for a therapeutic dose of dexamethasone for the treatment of adults with MM” and “Hemady® is a unique strength dexamethasone tablet bioequivalent to five 4 mg tablets of dexamethasone.” However, the panel did not present any information about side effects or other risks of the product, which, in FDA’s eyes, created a misleading impression about the product’s safety.
Misleading Claims of Efficacy
Second, FDA found that the panel information was misleading with regard to Hemady’s efficacy. FDA challenged a “Real-World Comparison” of adherence to Hemady® versus generic dexamethasone among patients with multiple myeloma. Crucially, FDA noted that while DOF was cited as support for the comparison, the associated “Adherence Study” did not support the conclusions regarding comparative adherence to Hemady® and generic dexamethasone. FDA specifically referenced issues with study design and methodology. Issues included: patients receiving Hemady® were not verified as having been diagnosed with multiple myeloma in the same way that patients receiving generic dexamethasone were; baseline characteristics were not controlled for across the patient populations; and the generic dexamethasone group had a significantly higher number of patients than the Hemady® group (3,775 versus 43). In light of these significant study limitations, FDA found the claim of Hemady’s efficacy over dexamethasone to be misleading.
Takeaways
This Letter was relatively short and less scathing than we have seen from FDA in previous untitled letters, but it raises interesting and significant points nonetheless. First, and perhaps most significant to FDA in deciding whether to issue the letter is the matter of risk presentation, or in this case, the complete lack thereof. While it is true that the exhibit panel did not contain any mention of safety information or risks associated with using Hemady®, it is possible that there were other materials at the exhibit booth that achieved this purpose. We wonder whether the offending piece was submitted on the Form 2253 alone, if it was submitted together with other pieces, or in either case, if the piece referenced other pieces. Alas, FDA makes no mention of other materials outside of the panel, nor does it make clear whether the exhibit booth was reviewed as a whole or if each piece making up the exhibit booth was evaluated for proper risk and efficacy presentation. Readers can draw their own conclusions. In any case, the Letter counsels that each piece of marketing material presented at conferences, symposia, and similar events should be evaluated on its own, as well as in concert with the pieces surrounding it.
CFL forms the basis for the second major issue raised by the Letter, and there are two takeaways resultant. First, FDA can and will scrutinize DOF references. We are no stranger to this and often suggest that clients prepare these references like scientific papers, including design methodologies, results, and conclusions, and having relevant scientific and/or technical experts either within the company or externally vet and sign-off. The level of detail and sophistication of the Adherence Study is unknown because FDA does not opine on it. So, we are left to conclude that regardless of its content, FDA at best wanted more contextual information (and maybe some disclaimers, which FDA loves) about the Adherence Study actually placed on the panel itself, or at worst disagreed entirely with the scientific merit of the Adherence Study and would have found it inappropriate to use, even if “explained/disclaimed-to-death.”
The second takeaway teed-up above is whether FDA would have still objected even in the face of additional contextual information and/or disclaimers. We view the FDA as saying that the study design and methodology do not match the manner in which the conclusions about benefit information are presented, and hence, the result misleads the audience. Without having reviewed the DOF, we will never know whether this is warranted, but it stands to reason that if we assume the exhibit panel contained no falsities in the conclusions presented (FDA never said there were), the DOF may have contained enough context for the HCP to understand that the study did contain various biases, and that the impact of the various factors on adherence should be interpreted with caution.
Readers of the blog will appreciate the extent to which we have discussed CFL in the past and will recall that we believe “context is key.” From a First Amendment protection perspective, the goal in CFL communications (provided you have met all the FDA guidance requirements) should be to provide enough context for the reader to fully understand and interpret the information and to be judicious about making conclusions. [3] The result on this piece may have been different if the CFL box was checked, but FDA already had its “no safety balance” hook, so it is unclear whether this would have made a difference from an enforcement perspective.
As noted at the open, the Letter marks the first major OPDP action under the new administration, suggesting that FDA staffing cuts, de-regulatory efforts, and all that has swirled around this new administration has not stopped OPDP from policing drug promotion. The Letter underscores the persistence of the FDA Bad Ad Program, which was how FDA received a complaint about the exhibit panel.
FOOTNOTES
[1] Untitled Letter available here: Hemady® Untitled Letter
[2] Promotional Content available here: Hemady® Promotional Material
[3] Contrary to popular opinion, we do not believe in the “when in doubt, disclaimer” approach. FDA may like disclaimers, but our marketing colleagues do not. So, finding a way to say what we want without hedging the message should be the goal.
Julian Klein contributed to this article.