[Federal Register Volume 63, Number 2 (Monday, January 5, 1998)]
[Notices]
[Pages 236-239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-85]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. 97D-0525]
Draft Guidance for Industry: ``Promoting Medical Products in a
Changing Healthcare Environment; I. Medical Product Promotion by
Healthcare Organizations or Pharmacy Benefits Management Companies
(PBMs)''
AGENCY: Food and Drug Administration, HHS.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is announcing the
availability of a draft guidance for industry entitled ``Promoting
Medical Products in a Changing Healthcare Environment; I. Medical
Product Promotion by Healthcare Organizations or Pharmacy Benefits
Management Companies (PBMs).'' This document provides guidance to
sponsors of regulated medical products (human drugs, biologics, and
medical devices) by describing circumstances in which sponsors may be
held responsible for promotional activities performed by healthcare
organizations or PBM's that violate the Federal Food, Drug, and
Cosmetic Act (the act) and regulations issued thereunder. The intent of
this draft guidance is to provide clarification and consistency in the
agency's regulation of medical product promotion in light of changes in
the healthcare environment.
DATES: Written comments may be submitted on the draft guidance document
by April 6, 1998. General comments on agency guidance documents are
welcome at any time.
ADDRESSES: An electronic version of this draft guidance is available on
the Internet using the World Wide Web (WWW) at http://www.fda.gov/cder/
guidance.htm. Submit written comments to the Dockets Management Branch
(HFA-305), Food and Drug Administration, 12420 Parklawn Dr., rm 1-23,
Rockville, MD 20857. Submit written requests for single copies of the
draft guidance for industry entitled ``Promoting Medical Products in a
Changing Healthcare Environment; I. Medical Product Promotion by
Healthcare Organizations or Pharmacy Benefits Management Companies
(PBMs)'' to the Drug Information Branch (HFD-210), Center for Drug
Evaluation and Research, Food and Drug Administration, 5600 Fishers
Lane, Rockville, MD 20857. Send one self-addressed adhesive label to
assist that office in processing your request. Requests and comments
should be identified with the docket number found in brackets in the
heading of this document. A copy of the draft guidance and received
comments are available for public examination in the Dockets Management
Branch between 9 a.m. and 4 p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT:
Regarding prescription drugs: Laurie B. Burke, Center for Drug
Evaluation and Research (HFD-40), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857, 301-827-2828, or via Internet at
burkel@cder.fda.gov;
Regarding prescription biological products: Toni M. Stifano, Center
for Biologics Evaluation and Research (HFM-200), Food and Drug
Administration, 1401 Rockville Pike, Rockville, MD 20852-1448, 301-827-
3028, or via Internet at stifano@cber.fda.gov;
Regarding restricted medical devices: Byron L. Tart, Center for
Devices and Radiological Health (HFZ-302), Food and Drug
Administration, 2098 Gaither Rd., Rockville, MD 20850, 301-594-4639, or
via Internet at bxt@cdrh.fda.gov.
SUPPLEMENTARY INFORMATION:
I. Background
A. FDA's Guidance Document Development Process
On March 28, 1997, as part of the agency's ongoing efforts to
ensure meaningful public participation in the guidance document
development process, FDA's Division of Drug Marketing, Advertising, and
Communications (DDMAC) requested public comment on guidance documents
relating to prescription drug advertising and labeling (Ref. 1).
Included in the list of currently proposed guidance documents was
``Promotion to Managed Care Organizations.'' The draft guidance
document now being made available is the first draft document to be
issued on this topic and addresses only one aspect of promotion to
managed care, i.e., promotion by healthcare organizations or PBM's.
Other related draft guidance documents will be issued separately under
the general heading ``Promoting Medical Products in a Changing
Healthcare Environment.''
B. Statutory and Regulatory Requirements
Under the act, FDA has responsibility for regulating the labeling
and, in many cases, the advertising of medical
[[Page 237]]
products (human drugs, biologics, and medical devices). Section 301 of
the act (21 U.S.C. 331) prohibits the introduction or delivery for
introduction into interstate commerce of an adulterated or misbranded
drug or device and of an unapproved new drug; the adulteration or
misbranding of a drug or device in interstate commerce; and the doing
of any act that results in the adulteration or misbranding of a drug or
device while such article is held for sale after shipment in interstate
commerce. The introductory phrase of section 301 provides that the
``causing'' of any prohibited act, as well as the act itself, is
prohibited.
A drug or device is misbranded if its labeling is false or
misleading (section 502(a) of the act (21 U.S.C. 352(a)) or if its
labeling fails to bear adequate directions for use (section 502(f) of
the act). A change or modification in the intended use of a device may
cause the device to be adulterated (section 501(f)(1)(B) of the act (21
U.S.C. 351(f)(1)(B)) and misbranded (section 502(o) of the act).
Labeling and advertising include promotional information that is
disseminated by a sponsor or by other persons on behalf of the sponsor
(see 21 CFR 202.1(l)(1) and (l)(2)).
C. FDA's Information-Gathering Activities
In August 1994, FDA invited four product sponsors to meet with the
agency individually to discuss regulatory issues in light of their
newly established relationships with PBM's. Since that time, FDA has
continued to gather information about changes in the process of
healthcare delivery. In so doing, the agency has participated in
programs, meetings, and workshops with managed care experts and other
parties, including medical product sponsors, managed care
organizations, academia, consumer advocacy groups, and health
professional organizations. FDA has also participated in the design and
review of studies and reports funded and/or performed by other Federal
organizations to address various aspects of medical benefits
management. These organizations included the Health Care Financing
Administration (HCFA), the Office of the Inspector General of Health
and Human Services (OIG-HHS), and the Federal Trade Commission (FTC)
staff. FDA has also reviewed documents pertaining to the General
Accounting Office (GAO) and the National Association of Attorneys
General (NAAG) investigations, as well as court proceedings that
examined contractual arrangements between medical product sponsors and
other healthcare entities.
On October 19 and 20, 1995, FDA held a public hearing on
``Pharmaceutical Marketing and Information Exchange in Managed Care
Environments'' (Ref. 2). The purpose of this hearing was to solicit
information and views concerning the potential impact of changing
organizational structures and information dissemination channels in the
managed care setting on the agency's responsibilities to regulate drug
marketing and promotion. FDA heard testimony from 26 individuals
representing sponsors, PBM's, managed care organizations, national
pharmacy organizations, advertising agencies, academia, law firms,
State and Federal agencies, and consumer advocacy groups. The agency
reviewed an additional 38 comments from similar organizations that were
submitted to the hearing docket. Since the public hearing, the agency
has held individual discussions about the changing healthcare
environment with representatives from the pharmaceutical industry, a
State attorney general's office, retail and institutional pharmacists,
representatives from several professional organizations,
representatives from several consumer advocacy organizations, and
representatives from medical insurer organizations who provide pharmacy
benefits. FDA continues to participate in several interagency work
groups that address policy development issues relevant to the influence
of managed care.
II. FDA's Findings Regarding Changes in the Healthcare Environment
That Affect FDA's Regulation of Medical Product Promotion
As a result of the activities outlined in section I.C of this
document, several important changes in the healthcare marketplace were
identified that affect FDA's regulatory approach with respect to
promotional labeling and advertising. One such change is the
acquisition of healthcare provider organizations and PBMs by medical
product sponsors. Because of public concern about the effects of the
merger of pharmaceutical sponsors with PBM's, GAO investigated, among
other things, the objectives of these mergers. GAO reported that ``drug
manufacturers have merged or allied with PBMs because they believe that
the PBMs' market power will help maintain the manufacturers' profits at
a time when their drugs face increased competition.'' GAO also reported
that, in order ``to bolster profits, manufacturers are relying on their
PBM partners to help them increase market share for their drugs and
develop new programs for treating specific diseases (Ref. 3).'' This
type of environment fosters medical product promotion by sponsor-
controlled PBM's on behalf of the sponsor.
In 1995, FTC issued a consent order to address the antitrust
implications of Eli Lilly's (the Lilly Order) acquisition of the PCS
Health System (PCS), a large PBM. The FTC's Order was intended to
minimize anticompetitive foreclosure by ensuring that PCS customers
have an alternative to sponsor-controlled formularies. The Lilly Order
therefore requires, among other things, that PCS offer an ``open''
formulary that is compiled by an independent pharmacy and therapeutics
(P&T) committee utilizing only objective criteria. However, the Order
does not restrict or ensure independence in the promotional practices
of sponsor-controlled PBM's. Furthermore, FTC's Order explicitly
permits Lilly-PCS to offer other more restrictive formularies to its
customers and places no restrictions on the selection of drug products
for those formularies.
In addition to corporate ownership, many sponsors are pursuing
marketing affiliations and pricing agreements with PBM's and other
healthcare provider organizations. Some of these agreements provide
product-specific incentives for the provider organizations to influence
prescribing decisions. In some cases, patients on chronic drug therapy
are switched from one product to another as a result of these
incentives. Some agreements include variable pricing (via rebates)
according to market share growth attained (Ref. 4). In an effort to
affect the market share of specific products, a healthcare provider
organization may enforce restrictions on prescribing decisions or
disseminate promotional materials designed to influence prescribing
decisions toward particular products and away from their competitors
(Ref. 5).
Additionally, PBM's are expanding their role beyond claims
processing and mail-order pharmacy to other activities, such as
treatment intervention and disease management programs. These
activities include compiling and furnishing a wide range of materials
about medical products to their clients (healthcare plans and
providers) with the intent of providing information and services that
will influence clinical outcomes and control healthcare costs (Ref. 6).
As a result, promotional activities of medical product sponsors are
often focused on managed care's demand for product-specific
information.
[[Page 238]]
Increasingly, promotional activities are being directed to, and
channeled through, providers who make coverage policies and treatment
recommendations for groups of insured individuals in managed healthcare
organizations. Coverage policies may include the use of specified drug
formularies \1\ or preferred product lists. \2\ Treatment
recommendations or decisions may be enforced by a number of
interventions, (Ref. 7) such as the dissemination of materials to
healthcare providers and patients, implementation of disease management
\3\ programs, prior authorization requirements, \4\ interchange
programs, \5\ and drug utilization reviews. \6\ The incentive to
promote medical products is extended by product sponsors to other
persons in cases where contracts include sliding rebate scales based on
the proportion of claims processed that conform to the formulary or
declared product preferences (Ref. 8).
---------------------------------------------------------------------------
\1\ A formulary is a list of drug products. An open formulary
includes all (or nearly all) available products yielding a minimal
amount of formulary restrictiveness. A closed formulary is a limited
list of drugs approved for use or covered under the drug plan.
\2\ A preferred product list is sometimes called a ``managed''
formulary because, even though product use is unrestricted,
incentives exist to increase utilization of the ``preferred''
products. Insurers and their clients often benefit financially from
the use of preferred products through rebates from manufacturers and
reduced drug costs.
\3\ Disease management directs product use and patient behaviors
to minimize the total cost of illness and improve medical and
pharmaceutical care.
\4\ Prior authorization is a mechanism to restrict the use of
services by requiring advance approval before coverage is granted.
\5\ Interchange programs direct treatment choices to preferred
products at the point of dispensing or product use.
\6\ Utilization review interventions change patterns of product
use by contacting the clinician who ordered the product. Utilization
review may be retrospective or prospective at the point of
dispensing or product use. Educational tools may be included.
---------------------------------------------------------------------------
FDA was told at the October 1995 public hearing that promotional
efforts are now being directed toward P&T committee members in hopes of
influencing decisions about formulary inclusion of particular
product(s) (Ref. 9). FDA is also aware that some benefits management
companies who have business relationships with medical product sponsors
are distributing product-specific information to P&T committees (as
well as to managed care professionals and patients) that is false or
misleading and would be considered violative if distributed directly by
the product sponsor (Ref. 10).
A survey of 368 health maintenance organization (HMO)
decisionmakers \7\ in the United States (Ref. 11) found that the
biggest concern of HMO's about PBM's is the potential for bias
resulting from alliances of the PBM's with drug manufacturers.
Preferred or restricted product lists or formularies are sometimes
established without objective criteria and without review by
independent bodies who utilize deliberative scientific decisionmaking
processes (Ref. 12). In some situations, formulary decisions are made
to serve the economic needs of the healthcare organization or of the
sponsors whose drugs are found on those formularies (Ref. 13). Despite
the concerns of HMO's, however, HMO's rely primarily on PBM-supplied
data and reports for overseeing performance of their PBM's. They rely
less on independent assessments from their own clinicians and patients
(Ref. 14).
---------------------------------------------------------------------------
\7\ An HMO decisionmaker represented either the chief executive
or head pharmacy services.
---------------------------------------------------------------------------
III. Conclusions
During the past several years, there have been many changes in the
way healthcare is delivered and in the role medical product sponsors
play in that marketplace. For example, some product sponsors have
acquired or entered into agreements with healthcare organizations or
PBM's. Medical product sponsors often cause subsidiaries and other
persons acting on their behalf to participate in promotional
activities, including the dissemination of promotional labeling and
advertising, and, in some instances, such arrangements are utilized as
a means to avoid regulatory oversight of these activities.
FDA is particularly concerned about promotional activities that may
create a public health risk. For example, promotional materials
disseminated to healthcare providers and patients may result in
inappropriate medical decisions if the information is false,
misleading, or promotes an unapproved use. FDA is also concerned that
sponsors are not submitting all such materials to the agency under the
existing postmarketing reporting requirements. Furthermore, FDA seeks
to maintain ``a level playing field'' for all medical product sponsors
with respect to the regulation of their promotional activities. In
public testimony, a pharmaceutical industry representative suggested to
FDA that sponsors should be held accountable for promotional material
related to their product(s) even when such material is prepared by or
disseminated through a PBM or other healthcare provider (Ref. 15).
Therefore, this draft guidance document clarifies circumstances in
which FDA may hold a medical product sponsor responsible for
promotional activities performed by a healthcare organization/PBM
subsidiary of the sponsor, and by a nonsubsidiary healthcare
organization/PBM on behalf of the sponsor that violate the act and
regulations. The draft guidance lists several factors that the agency
will use to determine sponsor responsibility for medical product
promotion performed by a nonsubsidiary healthcare organization/PBM on
behalf of the sponsor.
The draft guidance for industry also reminds medical product
sponsors of their responsibility to submit or, in the case of some
devices maintain historical files of, promotional labeling and
advertising. This responsibility includes those activities performed by
subsidiaries or, in certain cases, by healthcare organizations/PBM's.
IV. References
The following references have been placed on display in the Dockets
Management Branch (address above) and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday through Friday.
1. ``Prescription Drug Advertising and Promotional Labeling,
Development and Use of FDA Guidance Documents; Request for
Comments,'' (62 FR 14912 to 14917, March 28, 1997).
2. ``Pharmaceutical Marketing and Information Exchange in
Managed Care Environments, Public Hearing,'' (60 FR 41891 to 41893,
August 14, 1995).
3. Pharmacy Benefit Managers, Early Results on Ventures with
Drug Manufacturers, United States General Accounting Office,
Washington, DC 20548, GAO/HEHS-96-45, November 195.
4. ``Assessment of the Impact of Pharmacy Benefit Managers,''
HCFA-95-023/PK, September 30, 1996.
5. Testimony by Stephen Stefano, Vice President and General
Manager, Health Management Division, Glaxo Wellcome, at FDA public
hearing, p.25, October 19, 1995.
6. Testimony by Per Lofberg, President, Medco Containment
Services, at FDA public hearing,
p. 43, October 20, 1995.
7. ``Assesment of the Impact of Pharmacy Benefit Managers,''
HCFA-95-023/PK, September 30, 1996.
8. See Pfizer, Inc. v. PCS Health Sys., Inc., No. 126154/95
(N.Y. Sup. Ct. October 27, 1995).
9. Testimony by Richard Jay, Vice President of Corporate
Pharmacy Services, FHP, Inc., and representing the Group Health
Association of America (GHAA), at FDA public hearing, p. 14, October
20, 1995. (This association is currently called the American
Association of Health Plans (AAHP).)
[[Page 239]]
10. Testimony by Stephen Stefano, Vice President and General
Manager, Health Management Division, Glaxo Wellcome, at FDA public
hearing, October 19, 1995, p. 22; and complaints directed to DDMAC
by other drug sponsors.
11. Brown, J. G., ``Experiences of Health Maintenance
Organizations with Pharmacy Benefit Management Companies,''
Department of Health and Human Services Office of Inspector General,
Office of Evaluation and Inspections, Boston Regional Office; OEI-
01-95-00110; April 1997.
12. See Pfizer, Inc. v. PCS Health Sys., Inc., No. 126154/95
(N.Y. Sup. Ct. October 27, 1995) (Pfizer Complaint).
13. See Pfizer, Inc. v. PCS Health Sys., Inc., No 126154/95, at
5-11 (N.Y. Sup. Ct. November 21, 1995) (Pfizer's supplemental
memorandum).
14. Brown, J. G., ``Experiences of Health Maintenance
Organizations with Pharmacy Benefit Management Companies,''
Department of Health and Human Services Office of Inspector General,
Office of Evaluation and Inspections, Boston Regional Office; OEI-
01-95-00110; April 1997.
15. Testimony by Stephen Stefano, Vice President and General
Manager, Health Management Division, Glaxo Wellcome, at FDA public
hearing, October 19, 1995, p. 21-22; and a complaint directed to
DDMAC by another pharmaceutical sponsor.
V. Comments
Interested persons may submit written comments on the draft
guidance to the Dockets Management Branch (address above).Two copies of
any comments are to be submitted, except that individuals may submit
one copy. Comments are to be identified with the docket number found in
brackets in the heading of this document. The draft guidance and
received comments may be seen in the office above between 9 a.m. and 4
p.m., Monday through Friday.
Dated: December 29, 1997.
William B. Schultz,
Deputy Commissioner for Policy.
[FR Doc. 98-85 Filed 1-2-98; 8:45 am]
BILLING CODE 4160-01-F
