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Transcript of Pharmaceutical Marketing and Information Exchange in Managed Care Environments - Panel 5

  Friday, October 20, 1995

8:35 a.m.

Quality Hotel
3727 Colesville Road
Silver Spring, Maryland





DR. PEDERSEN: We will resume this meeting. If the members of Panel 5 will come up to the speakers table, Bruce Kuhlik, Diane Zipursky, Jeffrey Gibbs, Richard Samp, and John Kamp.
We will now proceed with Panel 5. Before we do that, I just wanted to note, since the panel introduced itself this morning, that we have been joined by Dr. Burlington, who is Director of the Center for Devices in Radiological Health, and rejoined by Dr. Temple, who was not able to be with us this morning.

We will start with Mr. Kuhlik.

MR. KUHLIK : Good afternoon.
My name is Bruce Kuhlik. I am a partner in the law firm of Covington & Burling in Washington, D.C. I advise pharmaceutical companies and other clients on FDA and other regulatory matters. While a number of the firm's clients have an interest in this hearing, I am not appearing today on behalf of any client and I am not being compensated or reimbursed for this appearance or for my travel expenses. The views I am expressing are my own.
DR. PEDERSEN: Thank you.
MR. KUHLIK: I would like to begin by commending the agency for holding this hearing. The growth of managed care is one of the most important developments in health care today, and it is certainly the greatest challenge and opportunity for the pharmaceutical industry.
At the same time, managed care presents the FDA with perhaps its biggest challenge and opportunity with respect to regulating drug related communications since the rules of the agency adopted to implement the drug amendments of 1962.
FDA's existing framework for regulating drug claims is based on three factual assumptions which, taken together, I would call the traditional model. While this model is still important in its own sphere, none of its underlying assumptions captures important parts of the new reality represented by managed care.
The first assumption of the traditional model is that pharmaceutical companies principally convey information on their products through sales calls or details directed to individual physicians in private fee-for-service practice and through journal advertisements aimed at the same audience. Increasingly, however, pharmaceutical companies are providing information to health maintenance organizations and other managed care entities that have a different knowledge base and different informational needs from those of individual fee-for-service physicians.
The second traditional assumption is that physicians receive drug-related information from essentially two sources: On the one hand, pharmaceutical companies which are closely regulated and circumscribed in what they can say, and, on the other, textbooks, peer review journal articles, and communications with colleagues, virtually none of these being regulated by FDA at all. That assumption is also no longer supportable. Physicians increasingly receive drug-related information from managed care organizations, including HMO's, pharmaceutical benefit managers and insurers.
The third assumption underlying the traditional model is that pharmaceutical communications relate most significantly to clinical safety and effectiveness parameters measured through prospective control trials such as those submitted in support of an NDA. That assumption also is giving way, as managed care organizations are increasingly concerned with cost-effectiveness and outcomes data, as well as with disease management information that can be used to integrate pharmaceutical care into the overall management of patient health and disease.
So the new managed care model must recognize that sophisticated formulary committees and other entities receive and request drug-related information, that physicians receive information from managed care organizations, not just from pharmaceutical companies or independent professional sources, and that managed care organizations require information and base utilization decisions on cost outcomes and other factors in addition to safety and effectiveness.
I would encourage FDA to think creatively about how to respond to this new model. Nothing in the Federal Food, Drug and Cosmetic Act requires the agency to apply the same stringent limitations in the managed care arena that it has developed for the traditional model, and I emphasize that it would be poor public policy to do that. Managed care serves important cost containment and quality goals that would seriously be impeded by an overly restrictive regulatory response on the part of FDA. That is why I am encouraged by this hearing and by the agency's openness to alternative approaches based on the facts and on sound public health policy.
FDA's consideration of regulation based on the managed care model raises two fundamental questions, both of which are being addressed by speakers at this hearing. First, what should be the rules for communication of information by pharmaceutical companies to managed care organizations? How should these rules be different from those applicable to traditional detail calls, in view of the sophistication and expertise that managed care organizations bring to the table and the broader pharmacoeconomic information that they are requesting? This is obviously a topic of lively debate.
It seems to me obvious that the agency's existing rules are overly restrictive and that reform is needed. You have already heard from many speakers on this point, and others no doubt will address it, as well. I would urge you to give careful consideration to how the rules directly governing pharmaceutical companies can be changed to allow them to provide additional information that is scientifically sound and will ultimately benefit patients.
I would prefer to use the remainder of my time today, though, to address the second fundamental issue, which concerns a different level of communications, not those from a pharmaceutical company to a managed care organization, but those from a managed care organization to physicians responsible for the care of patients covered by the organization.
In other words, what rules apply to communications made by health maintenance organizations, pharmaceutical benefit managers, insurers and other entities to physicians with ultimate prescribing authority to inform them about clinical, economic, outcomes and disease management aspects of pharmaceutical products and to encourage them to prescribe in accordance with the formulary and other guidelines of the organization.
I have submitted for the record a copy of an article that I prepared on this topic which was published in an issue of the Food and Drug Law Journal earlier this year, and I would refer you to that for a detailed presentation of my views. Here I will summarize my conclusions stated in terms of four principles for regulating communications by managed care organizations.
Before I got into these, one preliminary, but vital question, should be considered and is being considered, obviously, in this hearing. Should FDA regulate these communications at all? A valid position would be that it should not because the market is capable of self-regulation.
I will proceed, though, on the assumption that managed care communications are sufficiently important and sufficiently related to the core areas of FDA regulatory concern that the agency will be strongly inclined toward some degree of regulation based, as I understand Dr. Woodcock's comments from yesterday and today, on the involvement of regulated pharmaceutical companies with these managed care organizations with the development and dissemination of the information that is produced.
So assuming that some form of regulatory response is deemed appropriate, I will offer the following suggestions on the scope and substance of regulation. Picking up on one of Dr. Morris' comments from this morning, I believe that the approach that I will outline serves the cause of competitive fairness, both vis-a-vis unaffiliated pharmaceutical companies on the one hand and on affiliated PBM's and other managed care entities on the other.
First, if FDA does regulate, the scope of its regulation should be comprehensive. The agency should reach similar communications by any managed care organization, regardless of whether it is a pharmaceutical benefit manager, health maintenance organization, insurer or some other entity. All of these organizations can develop and implement formulary guidelines and engage in communications with physicians affecting drug utilization, and all of them can have relationships with pharmaceutical companies.
It would not make any sense, in my view, to regulate only one or a few types of these managed care organizations, while leaving the others free to engage in the same activities on an unregulated basis. This would unfairly disadvantage the regulated entities and would not accomplish any governmental purpose, because the business would simply move to the unregulated organizations and thus would escape FDA oversight.
Second, I believe that FDA should specify that the therapeutic decisions underlying managed care organizations to physicians, pharmacists and patients be made independently of pharmaceutical manufacturers. If decisions about what drugs are on formulary or are preferred and decisions about the content of treatment algorithms and disease management programs are made by persons who are independent of the marketing operations of a pharmaceutical manufacturer, then there is no reason why FDA should regulate those communications as if they came from a pharmaceutical manufacturer.
The agency already applies a similar policy of independence pursuant to the continuing medical education draft policy statement. The reasons for the approach here I think are even more compelling.
This principle of independence insures that managed care organizations do not undertake to communicate to physicians on behalf of or as the agents of pharmaceutical manufacturers. Rather, they communicate to further the interests of the payor in providing quality care in a cost-containment environment. FDA's regulations already recognize that communications that are not made on behalf of a manufacturer are not considered labeling. The same concept should apply in the context of managed care.
Third, as long as therapeutic independence is maintained, pharmaceutical manufacturers should be permitted to have an economic interest in managed care organizations and in managed care decisions, and managed care organizations should be permitted to have an economic stake in pharmaceutical utilization, without subjecting the managed care organizations to full labeling and advertising regulation.
These economic interests are varied, ranging from contractual price concessions offered and earned on the basis of market share movements, to joint ventures and ownership arrangements. All of these developments I believe are subject to the test of the market. If they further quality and efficiency, they will succeed, and if they do not achieve those purposes, they will not be successful.
I suggest that the agency should allow these arrangements to prove themselves in the market, rather than burdening them with additional regulation. No public health goal would be served by basing full labeling regulation on economic interests, so long as therapeutic decisions by managed care organizations are in fact made independently of pharmaceutical marketing operations.
Fourth, finally, as to the substance of the regulation of communications by managed care organizations in which there is some relationship to a pharmaceutical company, I believe the substance should be very limited. The agency's regulation of communications by managed care organizations in this context should be restricted to core concerns over truthfulness and disclosure.
False claims and misleading omissions regarding pharmaceuticals may be an appropriate area of concern for the agency. Again, though, applying the full range of existing labeling requirements would be entirely inappropriate. Managed care organizations should be permitted to communicate to physicians based on accepted medical practice, regardless of whether this isn't labeling, and should be permitted to recommend one drug or a course of therapy over another based on economic considerations or published or unpublished data, without requiring substantiation in the form of too-well controlled clinical trials. The discipline of the market and the sophistication of managed care organizations make further regulation unnecessary.
I should add that putting primary reliance on the market doesn't mean leaving this area to a sort of Hobbesian free-for-all. Many other laws apply to managed care activities such as ERISA, the antitrust laws, the anti-kickback laws, and others. This is an area, therefore, that is already subject to legal restrictions, and I think FDA, in developing its policies, should recognize this.
Beyond this, beyond what I have outlined today, I think further regulation by the agency would be counterproductive, because it would interfere with the ability of managed care organizations to deliver on their cost containment and quality objectives, and with the ability of pharmaceutical companies to collaborate with managed care organizations in the furtherance of these goals.
I thank you for the opportunity to testify, and I would be pleased to answer questions at the conclusion of the panel's presentations.
DR. PEDERSEN: Thank you, Mr. Kuhlik.


We will now move to Diane Zipursky.

MS. ZIPURSKY : Good afternoon.
My name is Diane Zipursky. I am a partner in the law firm of Wiley, Rein& Fielding in Washington, D.C. Our firm represents pharmaceutical companies, as well as a number of communications companies, and my appearance here today is funded in part by a research-based pharmaceutical company.
I appreciate the opportunity --
DR. PEDERSEN: I am sorry, you are speaking on behalf of the firm yourself, or --
MS. ZIPURSKY: The firm. Thank you.
I appreciate the opportunity to participate in this hearing today. We believe that the goal of the industry and FDA in establishing standards for communications should be improving the quality of patient care. Because all forms of medical practice are information intensive, it is far better to have more information than less, even if some of this information is not picture-perfect.
Research-based pharmaceutical companies, because of the nature of the drug development process, possess an enormous amount of information. FDA should not put up unnecessary obstacles to making this information publicly available. Indeed, the role of drug manufacturers in providing information becomes even more important today because of the increase in the number of unregulated parties who are providing information in the health care marketplace.
As you have been discussing over the past several days, we live in a health care environment that is increasingly dominated by managed care. Just one example, 20 years ago, 95 percent of insured patients were covered by fee-for-service plans. Today, over 50 percent of employees with employer provided health coverage are enrolled in managed care plans, and this trend will only continue to grow.
The rise in managed care has dramatically changed the nature of the relationship between doctors and their patients. No longer do we have the Marcus Welby model of a physician who has had a longstanding relationship with the patient, and usually that patient's family. Rather, the more typical situation today is the doctor and the health plan, whose knowledge of a patient's history is often limited to the information on the chart. As a result, it is important that consumers, the patients have access to information to enable them to communicate more effectively with their doctors and be more intimately involved in the decisions affecting their health care.
Another consequence of the managed care world is the emphasis placed on cost considerations and health care decisions. The goal is not merely to use the most safe and effective treatment, but to do so at the lowest possible cost. These cost concerns necessarily impact the delivery of therapeutic pharmaceutical products. The drug companies are no longer just marketing directly to physicians. Rather, marketing efforts are focused largely on highly sophisticated buyers such as PBM's and other health plans. These new buyers are demanding more cost-effectiveness data, as they attempt to provide the best medicine at the lowest possible price.
This new environment has also created new outlets for the dissemination of information about specific drugs and treatments, as PBM's and other health plans try to influence the prescribing practices of participating physicians based on cost concerns. In addition, the industry itself is experimenting with different types of relationships to foster the delivery of their products to these large buyers who represent an increasing share of the overall market for the products.
As I will address more fully shortly, FDA needs to adopt a common standard applicable to all types of communications, no matter who receives the communications. In addition, it is important that any standards be flexible enough to apply to this constantly changing marketplace. The pace of change is only going to accelerate, and if the regulations are too rigid, FDA will never be able to keep up.
I would like to discuss some of these issues in more detail. In the new health care marketplace, the demand for information is great. FDA's current standard, however, which requires that all promotional claims be substantiated in the same manner as core safety and effectiveness data needed for drug approval greatly restricts the dissemination of helpful information. For example, I have identified the need for cost-effectiveness data. Large drug purchasers are demanding this information.
The draft guidelines detailing its approach to the regulation of pharmacoeconomics requires the same rigorous substantiation as used for drug approval. Specifically, the claims must be substantiated by two adequate and well controlled studies of sufficient scientific rigor to assure confidence in the claimed effect. Substantiation of data which conforms with, one, the accepted standards for evaluating competitive economic claims would not be adequate. It is not clear that the standard of requiring the two well-controlled studies is appropriate or even as helpful in evaluating and analyzing cost claims. Moreover, the cost of conducting such studies may prevent manufacturers from making cost-effectiveness claims, and the managed care organizations will denied this helpful information which could be useful in their providing quality care, while minimizing costs to the system.
We also think that the sophistication of the participants in the new marketplace has been underestimated. The managed care drug purchasing units are highly sophisticated buyers of pharmaceuticals. In addition, the patient has changed. Patients are more involved in decisions relating to their medical care, no longer relying solely on the physicians to provide information about available treatments and options.
You can see a sign of these changes by going into any book store and seeing the number of books available on health care, on prescription drugs, the PDR. In fact, on my way over here on the subway, there was a large advertisement for a new book on prostate and the new treatments for prostate problems.
In addition, there are a number of consumer patient oriented organizations which exist which help digest the health care information that is out there. There has been a rise in advocacy groups that provide information to members about specific health care products, and there have been disease specific support groups organized which provide a forum for discussion about available drug therapy. The physicians, as well, have more resources available, including materials published by professional organizations, as well as research facilities such as the NIH.
We think it is important that FDA not assume that a nefarious notice underlies promotional material. A drug manufacturer has a long-term interest in the high quality of scientific information concerning its product and those manufactured by others, and this interest is independent of the promotion of its own products.
In addition to more people having more information, there are also more sources of information, and many of these sources are not regulated. For example, with the utilization of plan formularies and the desire for compliance with those formularies, we have had a number of aggressive marketing programs implemented by PBM's and other health plan managers.
You are all aware of the advertised switching programs where the PBM's are encouraging their participating doctors to change their prescribing practices so they prescribe drugs on the formulary. These entities aren't subject to FDA regulation. As a result, there is no requirement that the information that they disseminate be substantiated to the same degree as that distributed by the manufacturers. By restricting the type of information which can be distributed by the drug companies, FDA then eliminates the best available counterweight to the unregulated and potentially invalid information.
The predominance of managed care has also encouraged new structural relationships within the industry in order to compete effectively in the managed care marketplace. Drug manufacturers are entering into a variety of business relationships, some including ownership of PBM's. FDA's primary fear seems to be that if a PBM is owned by a pharmaceutical manufacturer, the lines between the regulated entity and the non-regulated entity will become less clear and it would be difficult to determine who is making a communication.
While there may be potential for abuse in such relationships, FDA should not concentrate on the form of the relationship. Rather, the inquiry should be focused on identifying who is directing the communications and who is benefiting from such communications.
We have several recommendations to make to address this changing health care marketplace. First of all, we believe FDA should continue to play an important role in regulating the dissemination of promotional information about prescription drug products to all consumers, including managed care organizations. The goal should be to encourage the dissemination of as much truthful information as possible, so as to insure the most effective care at the best price.
FDA should also carefully consider what standards should apply to review of promotional information after a product has been approved. Once FDA has approved the core safety and effectiveness data about a product, it should have available a different standard tailored to the review of promotional information about approved products.
One set of principles should apply, whether the claim be one for cost-effectiveness, safety or efficacy, and regardless of the audience. First, the communication may not be false or misleading. Second, the data are supported by acceptable scientific methodology. And, third, the data and methodology must be adequately disclosed.
Because the marketplace of information will assure that a full range of views is communicated, FDA should not rigidly require each single communication to contain a balanced presentation of all information on the subject matter of the communication. We do not believe that new regulations governing structural relationships between drug companies and PBM's and other entities are required at this time.
There are well-established legal concepts which can be utilized to identify who is acting for whom in a specific business situation. For example, we have the well-known concepts of agency, of employer-employee relationships, of piercing the corporate veil when corporations lose sight of the distinctions between separate entities. These concepts can be employed by FDA on a case specific basis to determine whether any particular communication or a particular activity is being directed or controlled by an entity subject to FDA regulation. The focus should be on assuring the transparency of the relationship and requiring disclosure of the maker of the communication, where necessary.
Thank you again for your time. I will take any questions.
DR. PEDERSEN: Thank you, Ms. Zipursky.

We will now move to Mr. Gibbs.

MR. GIBBS : Thank you.
I am from Hyman, Phelps & McNamara, of Washington, D.C. The firm represents a number of pharmaceutical companies. My appearance today is funded in part by a research-based pharmaceutical company. I am speaking as a representative of the firm.
DR. PEDERSEN: Thank you.
MR. GIBBS: Thank you for the opportunity to speak at this meeting. I appreciate the chance to speak on such an important topic. The goal of all participants in the health care system, including FDA, pharmaceutical companies and managed care organizations and physicians, is to improve the treatment of patients. This can be accomplished by a variety of tools such as preventive care, medication, medical devices, patient counseling, diet, exercise, et cetera.
There are a variety of entities that are involved in patient are, and one form of health care delivery that is playing an increasing important role is that of the managed care organization or MCO.
To an ever-growing extent, the key to providing optimal patient care by MCO's is information. Having access to health care professionals, to rugs, to devices, to equipment is not enough. The decision-makers also need to have access to information that enables them to evaluate and choose from among the various therapeutic alternatives. They then in turn must be free to distribute that information to the individuals who directly care for patients.
In this type of environment, I believe that the basic goal should be to maximize the flow of accurate, truthful, useful medical information. As a general matter, MCO's and health care providers will make better decisions about patient care, if they have more information about therapeutic alternatives, including drugs, rather than less.
Thus, in considering how to approach this new health care environment, FDA should seek to encourage the flow of accurate information and not inhibit it. I think that should be the starting point of FDA's analysis and the premise that underlies the development of any policy that flows out of this proceeding today.
I also believe that that approach is supported by both the Federal Food, Drug and Cosmetic Act and by the United States Constitution, and my talk will focus on those two aspects, the FDC Act and the First Amendment to the U.S. Constitution.
First, I want to talk about the statute. Generally, the drugs that are the subject of the communications will have been approved by FDA for marketing for one or more indications, and so that is the context in which we are talking.
There are a variety of kinds of information that may be disseminated to MCO's. One of the most important kinds is cost-effectiveness information or pharmacoeconomics. Most often, this information relates to an indication that has already been approved by FDA, and that will be the focus of my presentation. And although I will be talking about drugs, I think the same kinds of comments would apply equally well to medical devices or biologicals, to the extent that biologicals are considered different.
I believe that DA's ability to restrict the dissemination of accurate information relating to cost-effectiveness under the FDC Act is not as broad as the agency has maintained, particularly in the MCO setting, and there are two different reasons that I say that.
One of the key provisions upon which FDA has relied in seeking to restrict cost-effectiveness or pharmacoeconomic claims is section 502(a) of the act. This section prohibits companies from making false or misleading statements in their labeling. The agency has seemingly taken the position in a number of documents that these types of claims must be supported by two adequate and well-controlled studies, as the previous speaker just mentioned.
But I think there are two problems with that approach. First, under the FDC Act, the statute does not require any particular quantum of evidence for a claim to avoid being "false and misleading." It is therefore different from section 505(b)(1)(A), the new drug application provision, which requires full reports of investigations showing that a drug is safe and effective, which FDA has determined requires two adequate and well-controlled studies. That standard does not apply to 502(a). I think you can conclude that by implication, a lower standard applies in other settings, but the full reports and investigation standard set by Congress in the MDA provision does not apply to 502(a).
In research case law, I did not find and am not aware of any court case which has ever applied an adequate and well-controlled test in evaluating the claim that a statement is false and misleading under 502(a). Thus, the two adequate and well-controlled studies requirement I believe exceeds FDA's authority, particularly under 502(a), and 505 simply does not apply to these products that are already approved and are being promoted or discussed in the context of pharmacoeconomic claims for on-label use.
Moreover, in evaluating whether a pharmacoeconomic claim is lawful under the FDC Act, FDA must take into account the context in which the claim is being made, and I think that is particularly true in the MCO arena. You must consider the audience to whom the claims and statements are being directed, and these individuals are not average consumers, but a highly sophisticated and trained group.
In the past and in numerous court cases that FDA is urging, courts have considered the nature of the audience to whom the labeling is directed in interpreting whether it is false or misleading in section 502(a). That is, the agency has argued that the courts must take into account the nature of the audience in interpreting a particular labeling statement.
For example, in United States v. Various Articles of Drugs, the court looked at the effect of the content of the labeling on the group of consumers to whom the labeling was directed, and the court said: "Allowance also has to be made for the susceptibility to the publicity of the groups or types of people at whom it is peculiarly aimed."
In another case, United States v. Vitamin Industries, the court cited the Federal Trade Commission precedent and held that the falsity or misleading character of a labeling or of advertising is to be measured by its significance as read by those to whom it appeals. I think that is an important principle in looking at 502(a).
In bringing enforcement cases against companies under that section, FDA has always asked the courts to take into account the audience and the nature of the audience. And now the agency is dealing with a more sophisticated, more highly trained audience, and the same principle ought to be applied. If false or misleading claims are to be evaluated in consumer promotional material based on a consumer standard, I think in the context of MCO's with highly expert people who are trained in pharmaceuticals, who are doctors or pharmacists or similarly trained people, FDA should apply the same kind of standard, that is taking into account the audience.
A case that I think strongly supports that, by the way, is V.E. Irons, a criminal prosecution that the FDA brought a number of years ago, and the court there said, in determining whether such labeling contained false or misleading statements, we must be careful not to read the literature with the eyes either of experts in nutrition or of overly skeptical buyers. What is pertinent is the effect the claims would have on those to whom they are addressed, namely prospective purchasers and actual customers of appellants, who cannot be presumed to have special expertise or to be unduly cautious.
If in that case the court said you cannot presume that someone has expertise and uses that standard, I think that in a case where someone does have special expertise, you need to use the same type of standard, taking into account the audience. I think that is a major factor in evaluating section 502(a) and its applicability to the managed care environment.
Individuals at MCO's will need to reach decisions regarding the use of drugs or medical devices or biologicals. They do not have the luxury of waiting for the perfect cost-effectiveness studies to be conducted. They need to make decisions now on an ongoing basis. Treatment protocols need to be developed and refined on an ongoing basis. In reaching those decisions, MCO's will rely upon a variety of sources, including peer review journal articles and other technical materials that experts of this type generally use in making their medical judgments.
If these materials are acceptable to decision-makers, they should not be deemed unlawful because they were distributed by a pharmaceutical company and were not supported by two adequate and well-controlled trials, or even because they were not supported by one adequate and well-controlled trial. Rather, if the material is truthful and non-misleading, given the nature of the audience, the materials can be lawfully disseminated under section 502(a).
The second point that I want to address is the First Amendment. The First Amendment restricts the government's authority to regulate the flow of free speech. That is well accepted. In a long line of cases, the United States Supreme Court has established that free speech is one of the core constitutional protections.
In regulating the pharmaceutical industry, FDA has generally not recognized that the First Amendment applies to its regulatory activities. It has been the agency's apparent belief over the years that it can restrict communications without regard to First Amendment considerations, and I think this may stem from the history.
When FDA developed its pharmaceutical regulations many years ago, at that point, commercial speech had not been afforded constitutional protection. It was only in 1976 when that occurred. So there is certainly a history of not recognizing the First Amendment. But constitutional protection to commercial speech has now been in place for nearly 20 years, and I think that it is time that the agency take it into account in making its rulemakings.
In the event that there is a dispute between the FDC Act and the Constitution, the Constitution prevails. It takes precedence over the Federal Food, Drug and Cosmetic Act, and I think that is a point that needs to be kept in mind.
The First Amendment limits the ability of the government to regulate truthful, non-misleading speech. In a seminal case in this area, the Central Hudson case, the Supreme Court distinguished between commercial and non-commercial speech, and it went on to say that commercial speech would be protected if it met a multi-part test, that it be truthful and non-misleading and lawful, that the government have a three-part test after that: Does the government have a substantial interest in the matter, does the regulation directly advance the government's interest, and is the regulation more extensive than necessary to serve the government's interest. If the answers are no to any of those, then the regulation is voided.
The Supreme Court Central Hudson to a case that I think is very important just this last spring. In April, the Supreme Court unanimously struck down a regulation relating to alcohol content labeling on beer in a case called Coors. The Supreme Court there said the curbing strength wars, which was the justification advanced by the government, was a substantial interest. However, the government said that there could not be a restriction on the amount of alcohol on labels, that that restriction, that prohibition was unconstitutional.
Interestingly, in the court's decision it specifically referred to the NLEA, the food labeling statute from 1990, as example of a general goal or approach of fostering communication to consumers. I think it is interesting that the Supreme Court cited that provision of the FDC Act and voiding a prohibition on free speech just this past spring.
Applying these cases to cost-effectiveness studies, I think it is apparent that FDA over-regulation of non-misleading communications between manufacturers and MCO's fails the Hudson/Coors test. While FDA has a substantial interest in protecting public health and safety by regulating false and misleading claims, regulation of communications between industry and MCO's that is accurate, truthful, non-misleading and informative does not advance that interest. The fact that a particular communication does not reach a level of substantiation set by FDA does not allow the government to prohibit that communication under the First Amendment.
There is another recent Supreme Court case that I think supports that view, and that is United States v. National Treasury Employees Union. That involved the government regulation which limited honoraria and payments the government employees could receive for speeches and articles. Incidentally, one of the individuals who was affected by that ban was an FDA microbiologist.
The court characterized the ban as a broad category of expression by a massive number of potential speakers as "a sweeping statutory impediment to speech. And the band," said the court, "chilled potential speech before it happens." Because of that, the court struck down the speech. The court said the government must show that the interest to both potential audiences and a vast group of present and future employees and a broad range of present and future expression are outweighed by "the effect of speech on the operation of government." That was the test the court set up there. It is a test that I think the FDA has to also meet in any restrictions it applies to communications with MCO's.
Limiting communications to those statements that FDA has authorized places the agency in the role of gatekeeper of speech. Companies are barred from conveying truthful and non-misleading information to MCO's, unless and until FDA has approved that speech or that company has met the quantum of evidence that the FDA has set, two adequate and well-controlled trials. The U.S. Constitution, however, prohibits the Federal Government from playing this role as gatekeeper.
To summarize, I believe that in going through this rulemaking proceeding or non-rulemaking proceeding, as the agency determines, that it is important that the Food and Drug Administration take into account both the limits of 502(a), both as to the nature of the claims and the nature of the audience, and also take into account the constitutional infirmities that may result from any attempt to unduly restrict or regulate the free flow of information.
Thank you. I appreciate the opportunity to speak.
DR. PEDERSEN: Thank you, Mr. Gibbs.
Before we go to our next speaker, I would just like to note that Diane Thompson, who is FDA's Associate Commissioner for Legislative Affairs, has joined our panel.

The next speaker this afternoon will be Richard A. Samp, from the Washington Legal Foundation.

MR. SAMP : Good afternoon. My name is Richard Samp. I am Chief Counsel of the Washington Legal Foundation, a public interest law firm located at 2009 Massachusetts Avenue, N.W., Washington, D.C. WLF devotes a considerable portion of its resources to opposing unwarranted government restrictions on commercial speech, thus our interest in the topic being considered in today's hearings.
Let me say at the outset that neither I nor the Washington Legal Foundation has any financial interest in the topics I will address. No one paid my travel or expenses for participating today. I am unaware of any financial support that the Washington Legal Foundation may have received from those with a financial interest. I have never even discussed the issue of pharmacoeconomic claims with any employee of a pharmaceutical company, so I am not at all sure what position the pharmaceutical industry takes regarding the issue. I am here today because I believe that FDA's recent efforts to regulate pharmacoeconomic claims are misguided, and for no other reason.
I suggest that FDA is approaching this issue from the wrong direction. The FDA is confronted with a rapidly changing health care environment and new methods of exchanging information, and its response is to rush to find new ways to regulate in order to head off potential problems.
I suggest that until a real problem has been identified, and none has been demonstrated to date, there is simply no reason for FDA to be expending its limited resources for suppressing the flow of information in this area.
It is important to focus on who are the recipients of comparative cost-effectiveness information. It is not individual doctors who are not in the position to make productive use of the information, even if they were capable of evaluating it critically. Rather, it is the managers of various health plans who are desperately crying out for this sort of information, and they are a relatively sophisticated audience capable of distinguishing claims that have been substantiated from those that have not.
Accurate cost-effectiveness information is essential to holding down health care costs. Yet, FDA's attitude appears to be that a complete lack of information is preferable to information that potentially is tainted with a promotional brush.
FDA's suggestions that it will begin regulating the activities of PBM's deemed to be controlled by a pharmaceutical company will only make matters worse. There are a whole host of potential relationships between a PBM and a pharmaceutical company, and the attempt by FDA to sort out when such relationships are sufficiently close so as to constitute control of a PBM would enmesh FDA in a cerbonian bog from which it could not extricate itself.
Moreover, the First Amendment simply does not permit FDA to control the speech of PBM's. With very few exceptions, the First Amendment prohibits any government efforts to suppress speech based on the content of that speech, and that is what FDA is contemplating doing here. It is proposing the suppression of pharmacoeconomic claims based precisely on what is being said.
While the Supreme Court has carved out a category of speech known as commercial speech that is entitled to a somewhat lower degree of First Amendment protection, pharmacoeconomic information distributed by a PBM does not fall into that category. Commercial speech is defined by the court as speech which proposes a commercial transaction, i.e., advertising.
When a PBM supplies pharmacoeconomic information to a health plan, it is because it has been hired by the plan to do so. That information is not transformed into advertising, simply because FDA fears that the PBM may be biased toward a pharmaceutical company with which it has financial ties. Accordingly, a constitutional basis for FDA regulation is totally lacking.
By way of analogy, suppose the Washington Post runs a favorable review of a book written by Bob Woodward and published by the Post affiliated publishing house. You can be sure that the Post would loudly invoke its First Amendment rights, if some government official attempted to regulate claims about the book that were contained in the book review. FDA's efforts to regulate information disseminated by PBM's would be equally as objectionable under the First Amendment.
Now, I am not speaking here about a company where there is no recognition of corporate formality so that the PBM is the same as the pharmaceutical company. But when they are separate entities, there is simply no basis for control.
The Constitution does not impose the same level of constraints on FDA efforts to regulate pharmacoeconomic claims made by a pharmaceutical company on behalf of one of its products. But as previous speakers have indicated, even those efforts raise constitutional concerns. More importantly, it makes little sense for FDA to impose controls on cost-effectiveness data disseminated by drug companies, while most current cost-effectiveness claims are not and constitutionally cannot be regulated by FDA.
Finally, I want to address briefly the potential dangers of widespread dissemination of pharmacoeconomic data. No one to date has made a convincing case that those dangers are significant. It must be remembered that all of the drugs in question have already been shown to be both safe and effective to treat specified conditions. If drug A is more cost-effective than drug B in treating a condition for which both have been approved, yet a health plan routinely uses drug B because of a pharmacoeconomic study that erroneously reached the opposite conclusion, the worst result is that health care costs will rise.
The use of the wrong drug in these circumstances simply is not a safety issue. Any possible side effects of the use of that drug will already have been considered by FDA in deciding to approve the drugs. In any event, unsubstantiated cost-effectiveness information is unlikely to be worse than no information at all. In the latter situation, both drugs will continue to be used.
Moreover, there is little need to worry about bias in cost-effectiveness information. The health plans who receive such information have every incentive, both economic and fiduciary, to keep down their costs. If information from a given source is found to be inaccurate on a routine basis, health plans are unlikely to continue turning to that source for information. The self-correcting mechanism is likely to be particularly effective in the case of PBM's whose entire livelihood is founded on the premise that they have valuable information for sale.
In sum, the Washington Legal Foundation opposes efforts by FDA to regulate pharmacoeconomic information. FDA regulation in this area is a relatively new phenomenon and nothing in existing statutes prevents FDA from withdrawing from the arena. Pharma has guidelines in place that seem to be working well and ought to be given an opportunity to work.
If regulation is eventually found to be necessary, we suggest that the proper organization to do so is the FTC, which has far more experience than FDA in regulating economic claims.
Thank you very much.
DR. PEDERSEN: Thank you, Mr. Samp.


Our final speaker for this panel will be Harry Sweeney, from the American Association of Advertising Agencies. Mr. Sweeney?

MR. SWEENEY : Thank you very much.
My name is Harry Sweeney. I am President of Dorland, Sweeney, Jones Agency, and Chairman of the Medical Advertising Committee of the American Association of Advertising Agencies. I would like to add that my father and brother-in-law are doctors, my sister and sister-in-law are nurses. I have another brother who is an inhalation therapist, and the discussions around the family table on these subjects have been very heated and very interesting lately.
As you might guess, I and my members do have considerable financial interests. We all work for members of the regulated industries in various ways. We produce every kind of communications known to God and man and to the members of the FDA.
DR. PEDERSEN: Thank you.
MR. SWEENEY: Like everyone in this room, we have a direct personal health interest in the outcome and, as I said, in our case is a financial interest in this rulemaking procedure.
The U.S. Food and Drug Administration enjoys a deserved reputation as one of the premier consumer protection agencies in the world. No one wishes to lose or diminish this unique national asset. We share the FDA's desire to constantly improve the quality of health care available to our citizens, and we appreciate the role of health care watchdog that is played by the agency.
We are delighted that the FDA has convened these hearings, and we appreciate the opportunity to offer some observations and some constructive suggestions concerning ways that we believe the agency's priorities and policies should be reordered and some of its practices streamlined.
Today's topic is particularly ripe for discussion. It is estimated now, as you have heard before, that about 50 percent of the American health care that is being paid for by employers is being delivered in a managed care setting. Policy-makers are forecasting that sometime after the start of the millennium, that figure is going up to 90 percent. Whether or not the figures are precise isn't the issue. They are indicative and direction of where things are headed, and this kind of change represents significant challenges for everyone in the room.
Participate is a key word for me in the group of 50 specialty agencies that I represent. I want to thank you again for recognizing that we do have a point of view and that it perhaps has not been heard in the corridors of Washington as frequently as it should.
We recognize that we are at a considerable disadvantage from a public relations perspective. A small, but very vociferous segment of the population holds any advertising in very low esteem and therefore loses no opportunity to denigrate it and its practitioners. The emotional intensity of the criticism only increases when the subject involves matters of health and well-being.
Part of the problem is that pharmaceutical or medical advertising is so widely misunderstood even among many people who should be familiar with it. Yes, we produce commercials that people see on television and hear on radio. Yes, we create advertisements that are in consumer magazines and newspapers and professional journals. But that is not the essence of what most of us do. It isn't even the majority of our work.
What we do best involves the packaging and the delivery of two kinds of information: First, information to help skilled licensed professionals understand new technologies and make practice decisions to help make sick patients well; and, secondly, to help those patients and their families understand how to cope better with whatever illnesses they are faced.
Some academicians would say we are in the innovation diffusion business, the business of moving new ideas and technologies rapidly from a lab bench to doctors' offices and health information to the public.
As America's policy-makers are reshaping the medical care system to reduce the number of specialists and retrain more primary care doctors and to put more responsibility on patients for making their own health care decisions, a process that demands more information than ever before, some of us find it ironic that we are dealing with conflicting policy decisions to restrict the flow of information.
There are two observations about all of this that I think sum up the regulatory policy dilemma. The first was made by Nobel Laureate Sir Francis Crick, who said, "Communication is the essence of science." A fellow Philadelphian, Gene Garfield from the Institute for Scientific Information, a few years ago wrote a wonderful editorial in which he observed that from the 17th Century hidden colleges of Robert Boyle to the contemporary new literacy of Joshua Lederberg were the computerized interactive scholarly skywriting notions of Steven Harnad, scientific communications has always been at this core of scientific advances. Much of the current regulatory controversy centers on the question of just who shall do what communicating and under what limitations.
The second observation is that of Yale Professor of Medicine Howard Spiro, who wrote a couple of years ago, commenting on the draft concept paper that came out of FDA concerning continuing medical education sponsorship by pharmaceutical companies, "The decision about what is information and what is promotion will depend on where you stand and how you define your terms. If all communications from or sponsored by a regulated industry member are defined as promotion, and if by law all promotion is subject to government regulation, then logically a government can control all communications for a regulated industry."
We have no dispute with the logic, but we are opposed to the philosophy upon which it is founded. Moreover, we don't believe that Congress ever intended such an outcome. We think that we begin on common ground with the FDA when we say that the best regulatory policy is one which encourages the broadest possible dissemination of truthful information to doctors and patients. To accomplish this end, we think that an essential first step involves a major procedural reform.
Over the past several years, new FDA marketing policies and regulations have accumulated like a patchwork quilt. Unfortunately, like a quilt which generally has a warming effect, some of these initiatives have had a chilling effect on industry sponsored communications. The end result is not only the inhibition of our ability to deliver effective, timely communications, ultimately these barriers inhibit the delivery of the most effective and cost-beneficial health care.
The uniquely powerful authority of the FDA derives from two sources, the agency's control over access to the marketplace through its new drug and device approval process, and its broad and general legislative authority to regulate communications from the regulated industries.
We believe that Congress should separate the FDA's product approval mechanism from its regulation of drug and device marketing. The separation of powers could be accomplished in at least two ways, either by reassigning oversight of drug and device marketing to another agency, or by creating a firewall within the agency between the new drug and device approval processes and its regulation of marketing communications. We think there are compelling reasons for the change.
First, the chilling effect which I mentioned. A few weeks ago, I was at the National Task Force on CME, and for the first time in two or three years people were making true confessions about the impact that this sword of Damocles of policy statement is having on their ability to function and on the budgets and the budget reductions which have occurred. Can I give you a double-blind study? No, I can't, but I can give you plenty of anecdotes about what has actually happened as a result of the uncertainty surrounding that issue.
Faced with an inappropriate rule or enforcement action on marketing communications, most companies will comply or face the serious threat of retaliation by agency personnel in the drug approval process. Let me very quickly add and underscore the word "threat."
My colleagues and I and our Washington representatives, one of whom is a 10-year veteran rulemaking attorney from the Federal Communications Commission, know very well that employee retribution is a rare occurrence anywhere in government. However, the fear of such action is not rare, as Congressman Barton's questions to the FDA over the past few months attest. Of course, the unspoken threat of such retaliation can force a company to comply, even when knowledgeable company personnel know better.
Rightly or wrongly, many observers today believe that decisions about marketing communications of pharmaceuticals are often driven at the FDA by the dynamics and policy concerns of the agency over economic issues, rather than by the need to foster safe and innovative drug uses in the clinical setting.
Separating the authority as we propose would not diminish the agency's primary mission to assure the safety and efficacy of the nation's drug supply, but it would enable the agency to develop a division whose focus would become more affirmative, promoting more rapid diffusion of innovative ideas, more price competition, and a more vigorous marketplace for goods and services, leaving enforcement for those instances where the agency can demonstrate the falsity or misleading nature of a communication, rather than relying on a knee-jerk definition of approved, but rapidly outmoded labeling.
That raises a second point. We believe that substantive FDA regulations should be refocused. The regulatory standards for drug and device marketing should be changed to emulate the basic consumer protection principles of section 5 of the Federal Trade Commission Act. As interpreted by the FTC, section 5 generally allows providers of goods and services freely to market their products, as long as the claims are not false, misleading, and don't otherwise materially misrepresent the product.
This standard for marketing practices prevents frauds on consumers and effectively protects both consumers and sellers. We believe that the same principles could effectively be applied in the prescription drug marketplace. Vigorous marketing by drug companies has multiple benefits, including consumer information, price optimization, and the diffusion of new innovations.
The FDA, of course, should not ignore patient and public health risks, but should consider them in the context of other major public policy goals and the new realities of professional and consumer behavior. FDA, in our judgment, should also declare a moratorium on these proposed plans to regulate pharmacoeconomic information.
The U.S. health care system is moving toward a managed care model in large part due to skyrocketing costs and uncertain medical outcomes. Pharmacoeconomic analysis has the potential to play a crucial role in this new system by providing information on the interplay between early diagnosis, therapeutics, costs and the outcomes of various interventions. But we are not there yet.
The processes for evaluating this exceedingly complicated calculus are being newly created. They are being made up as we go along, as we have heard here for the last couple of days, and they aren't the same processes that are used and tested in the evaluation of new drugs. Managed care at this point in time fundamentally means managed costs. Organizations with access to pharmacoeconomic and other economic impact data are able to balance and offer an acceptable level of care to their beneficiaries at a minimum level of cost to the payers. That is a desirable social result.
But there already is a marketing to managed care cliche which states: If you have seen one managed care organization, you have seen one managed care organization. Regulatory intervention in such a fluid marketplace seems very premature.
The information resident in many MCO's that is only rarely discussed is the database of real world medical care and outcomes against which these organizations can overlay their costs. From this, MCO's select the most favorable outcomes as measured against their own cost-benefit standards, and they use this information as practice guidelines for their own physician panels and in negotiations with the vendors, again which we heard this morning.
Their conclusions in this approach may seem rough and ready to scientific investigators accustomed to rigidly controlled trials, but this is the real world situation that we face as marketers. The audience is smart, sophisticated, and experienced, consisting of multi-disciplinary professional groups, administrators, and insurance experts. Old-fashioned salesman's puffery just doesn't cut it.
FDA concerns that these organizations can't sort out comparative benefits and claims cloaked in promotional terms in our judgment is unwarranted. Should you continue to study and evaluate the marketplace? Absolutely. Interfere with newly emerging phenomenon before any clear pattern emerges? It doesn't seem like very much of a common sense solution.
A recent case in point serves to highlight the complexity of what we are all trying to deal with here today. I am referring to the ongoing scientific controversy over the pharmacologic management of hypertension which erupted into a public health nightmare a few months ago, leaving a confused and frightened patient population, a polarized specialty group, nervous government officials and dazed observers in the industry.
From an innocuous beginning as an abstract of an epidemiological case control study propelled by a premature press conference seized upon by the media hungry for health related stories, this misleading report required clarification by its author and crisis-driven responses from the National Heart, Lung and Blood Institute, the FDA, the AMA, and the American Heart Association to reduce the panic. Still the aftermath persists.
Responsible people in the private sector and the public sector know that reform is needed. We know that the FDA wants to create a more effective and efficient system of regulating advertising and other marketing communications. We think we might even be able to help. The reform suggestions we have offered today are intended to enhance the position we know we share with you, the position that regulation should only be placed on communications to improve the ability of professionals to treat patients and patients to make informed health care decisions.
I appreciate the opportunity to deliver these comments today, and we look forward to participating in upcoming rulemakings and other related communications topics with you.
Thank you very much.
DR. PEDERSEN: Thank you, Mr. Sweeney.



Are there questions from the FDA panel? Dr. Temple?
DR. TEMPLE: That was a lot of discussion and it is almost hard to formulate a question, but let me see if I can.
A point that Mr. Samp made that certainly has some force is that if you are talking about drugs that are already approved for something and where the choice of therapy has only economic implications, you know, what is the big deal, why are we so worried. If somebody chooses the wrong one, they spend more money, that is their problem and we don't really need to worry about that.
Other speakers were variable on whether they were talking mostly about claims that are already approved and claims that are really not yet approved, and pharmacoeconomic analyses can be based on entirely things that are approved, but can edge over into things that are not. For example, one can imagine an analysis based on certain assumptions about whether calcium channel blockers are good for you after a heart attack compared to beta blockers being good for you after a heart attack, which I would allege does have major health care implications.
Other people talked as if all post-approval claims ought to be subject to a lesser standard, that is sort of whatever the market wants, and the distinction was not always clear. I guess I would like to hear some conversation about that. Obviously, from my point of view and probably others, if what you were talking about is variations on which drug to use, pretty much you are talking about stuff that is entirely approved, and that has one set of implications.
If what you are talking about is as soon as the drug is on the marketplace, say anything you want under some standard that will be invented later, that has different implications. So I would like to hear a little bit more about which of those things you all mean. Probably each of you I think has come close to that question.
MR. KUHLIK: It is ironic I am going first, since we said the least about this. Let me just underscore one part of your question, Dr. Temple, which is the difficulty in my mind of separating what is off-label versus what is on-label versus what is the economic.
We have heard a lot of discussion from people testifying today and yesterday about the need of managed care organizations to get information based on actual use in their patient populations as physicians are using the products in their practice. There can be just a host of situations where a drug may be used for the indication that is in the labeling, but the dosage may be different or the monitoring may be different or things like that, and I don't think it is completely a simple thing to classify that as on-label versus off-label and the like, and so I think it is important to take that into account, and I do think the agency needs to exercise some additional flexibility in allowing claims, including pharmacoeconomic claims that may incorporate what would traditionally be thought of as off-label conditions of use under a standard that might be different from the one that you would apply to a completely off-label indication, if that is of any help.
DR. TEMPLE: You are saying that there are some things that are so close to what is approved already, we wouldn't need to worry as much?
MR. KUHLIK: A combination of closeness to what is approved and keeping in mind the need of the managed care organizations for data that match real world utilization.
DR. TEMPLE: Let me also make another distinction that I thought some people were suggesting, that if someone is saying my drug is as good as your drug or my drug is better than this drug at some important outcome like new heart attacks, say, that is one kind of claim. Another kind of claim is you don't have to come visit the doctor as often, and one could probably argue that one of those is a lot more important than the other. Is there some feeling we should be making that kind of distinction, too, or, again, is the idea that if the drug is in the marketplace, forget it, don't worry about any kind of claim?
MR. KUHLIK: I would encourage you not to try to rigidly categorize these sorts of things. I think you need to look at the type of claim that is being made and look at the consequences of whether that claim is going to be incorrect, what the medical consequences are, rather than trying to classify it one way or the other. I think you end up with problems, if you try to say, well, these things in a cost-effectiveness environment or an outcomes environment, these are pure costs or these are pure clinical.
You just can't do it, which is why I think the agency ought to rethink a little bit of how it is looking at pharmacoeconomic claims, saying, oh, we are applying a pure well-controlled study aspect to the clinical aspect of it, not to the cost aspect. I think you end up, you call things clinical, but I think people in the industry might call cost, and vice versa.
DR. TEMPLE: That is sort of what I was trying to get at, actually. I wonder whether you thought we should try to make that distinction. Mr. Sweeney's example is a very interesting one, from my point of view. He thinks the study is all garbage and it came out wrong, and all the interested parties think it is all garbage. If it had shown a very substantial reduction in heart attacks, it would be the very kind of database analysis some people would like to see promoted. So it is not quite clear how one is supposed to make that distinction, and it has major health implications. This is not merely a matter of cost.
MR. KUHLIK: I would agree with that.
MR. SWEENEY: Since you mentioned Mr. Sweeney's name, I would like to respond right now. I did not say that the study was garbage. In point of fact, what was released and what was published was an abstract. There was no study. What happened was there was a press conference which was held on the basis of the abstract. The study was just published in September. The abstract was published in February, so there was no chance to look at the data and find out whether that study was worth anything or, as you characterized it, whether it was garbage.
DR. TEMPLE: No, I didn't characterize it.
MR. SWEENEY: The problem that I was alluding to wasn't the study or the lack of the study. I guess the issue that I was trying to address was that what used to be considered scientific communications, investigator communications that were contained at the highest levels of the scientific community are no longer such.
When an abstract can cause a public health threat like that, I think it is time to reexamine the entire process and what is going on. And I believe that the professionals' response to it, which was an open debate where two experts stood up and laid out all the data and debated it, which did not resolve the issue, by the way, but that was the appropriate response. So I do agree with you, the study was not garbage, although I do have some questions about these epidemiologic case control studies, because they are little more than arithmetic estimates and they are used to create a lot of political mischief.
DR. TEMPLE: Just to follow that up, those are the kinds of studies we are talking about using, these epidemiologic case control studies. I share your reservation.
MR. SWEENEY: And they are fraught with peril. I think we need to be very, very careful, and that is one of the reasons that we are suggesting we should hold back a little bit.
MS. ZIPURSKY: I will take my turn now. In my comments, I did not mean to represent that once a drug is approved, it is a free-fall and anything goes. We do believe the agency should be involved, and there are some limitations on what should be communicated.
But we think there needs to be more flexibility in that, that it shouldn't be rigidly applied so that all claims must have been specifically approved as part of the core safety and effectiveness data, that claims or statements that might be a logical outgrowth and are substantially supported by whatever kind of studies are accepted by that industry. For example, a pharmacoeconomic claim, by the type of studies that are generally accepted as appropriate to substantiate economic studies, those are the type of standards we would like to see applied.
We would be concerned, if there were separate standards applied to separate types of claims. So you have a separate standard for safety claims and a separate standard for pharmacoeconomic claims, because we think in this changing marketplace that is just not going to be workable as changes are happening all the time.
DR. PEDERSEN: Mr. Gibbs, did you want to make a comment?
MR. GIBBS: Yes, I would like to. I have tried to make it clear at the outset that I was directing my remarks primarily to products that were being used on label. By the way, I do have a copy of the handout which I will be able to give you at the break.
I think that you can look at it and should look at it differently for products on-label and off-label, and I grant you that what is on-label may not always be completely clear because of difference in dosage regimen or frequency of dosing or things like that. But I think that something which is generally consistent with the approved indication in the claim that is being made as to pharmacoeconomic will give you at FDA, should give you less reason for pause and less reason for regulation.
For off-label use, the agency has historically taken a very conservative position. That, of course, has drawn a lot of attention recently, and I think that the agency really ought to consider a different, less rigid standard on off-label use. I would look at it from a statutory standpoint on both 502(a), the false and misleading element that I talked about, 502(f)(1), adequate directions for use. When the product is being used in conjunction with its labeled indication, more or less you will have adequate directions for use.
What is being used off-label, you may have a new issue about whether the directions for use are adequate. I can see that as being a valid statutory scientific and medical concern that would arise with an off-label use and that would need to be addressed. But, again, I don't think there should be the stringent restrictions that have been upheld by the agency or applied by the agency uniformly to off-label communication.
As far as different kinds of communications and different tests, Dr. Temple, you mentioned going to a doctor more often or a hospitalization or incidence of a heart attack as perhaps a spectrum. I think that if you start getting into a matrix of different claims, that you are going to find yourselves in an incredibly complex regulatory arena, something that is almost unworkable, and I would urge you not to try to go down that road.
If you try to break out different claims and set different standards for different claims, you are not going to be able to classify them easily, and I think that is going to turn out to be a regulatory nightmare for industry and the agency.
DR. TEMPLE: I was responding to a point that I thought Mr. Samp was making, which is that there are no real consequences to -- you know, you thought there were fewer doctor visits with drug A, so you put that on your formulary. It turns out that is not really true. The data weren't very good. No big deal. You lose money, you correct it the next time, and it is no big problem.
On the other hand, there could be tremendous consequences from getting the fundamental benefits of the drug wrong, which I why I thought you were suggesting that there might be a distinction there. I guess I am still not quite sure why you reject trying to think about that. Don't they seem like substantially different issues?
MR. GIBBS: If a claim is false, if the claim that you will have fewer heart attacks or fewer hospital visits is a false claim, then 501(a) would apply, but the underlying assumption is the truth or falsity of the claim.
DR. TEMPLE: You don't get false, you get not proof. Proving something is false is virtually impossible. When you set us that task, it is almost impossible to meet, as I am sure you know.
MR. GIBBS: Over the years, the agency has done very well in "false and misleading." I don't think that has historically been the case. The agency has done very well in demonstrating something is false or misleading.
DR. TEMPLE: You can conclude something is misleading because they data aren't good enough to support it. But if you literally had to show that it wasn't true, you would have a great deal of difficulty doing that.
MR. GIBBS: Right, but the statutory test says it is false and misleading, and that is the standard that I talked about in my remarks, and that is the standard that you have to meet, if a company made a claim about reduction in visits to a hospital for MI's or another reason.
I think I will let Mr. Samp speak for himself on what he intended with his remarks.
MR. SAMP: I actually agree with much of what Mr. Gibbs has to say. When I was taking what might be viewed as a hard-line position before, that the FDA should just stay out of the area, I really was thinking of primarily pharmacoeconomic claims that are based on label usage.
Certainly, to the extent that some study that is done is based on the benefits of off-label use, I don't think that is a problem at all, so long as the results that they are concluding is that the drug ought to be used for on-label use because of its off-label benefits. To the extent that in fact a study could be seen as promoting off-label use, there is perhaps some role for FDA control, but I would agree that that is an are that FDA ought to rethink.
DR. PEDERSEN: Dr. Morris?
DR. MORRIS: I have a follow-up question to Dr. Temple's that I want to ask Mr. Gibbs, and perhaps some other members of the panel. In your testimony, you talked about truthful, but non-misleading information. You mention that the traditional standards that FDA used are inappropriate or should not be applied.
But the question that I have is what standards, if any, should be applied? Should it be that, as Dr. Temple intimated, that we have to prove it false or that we go to another basis or no standards? Could you clarify how one would determine whether something is truthful and non-misleading versus something that is not?
MR. GIBBS: I think that is a very good question. The courts over the years have grappled with what level substantiation is needed under 502(a). In most of the cases it has been relatively easy, because the statements have been outright false. What we are talking about now is a more difficult environment where the statement is true. I think what the speaker before raised described certain factors that I think would be important, the disclosure of funding of the study, any limits on the way it was done, a detailed description of methodology, the kinds of information that would show what weaknesses there are in the study.
If a study is put in that context so that it is the sort of information that would traditionally be relied upon my people who are making judgments in the expert community, I think that for a pharmacoeconomic claim that involves a labeled indication, that that is probably sufficient.
I would like to think about exactly how to refine it, but it is not too adequate in well-controlled trials. I think it has to be adequate in one well-controlled trial. I don't think it should be one anecdotal case report, although there are probably instances in which one anecdotal report may be of some use, as well as adequately disclosed that this is one report and take it for what it is worth.
I think what is important is there be a full disclosure, so that people who are assessing it can look at it and say this is good science or this is garbage. If it garbage, then reject it.
DR. MORRIS: If you disclose everything and put on this is garbage, the drug does it, but it is a garbage study, are you saying that is misleading or is that not misleading?
MR. GIBBS: I say that the garbage was, to go back to the word used before, I would not put on an abstract or a piece of paper that the --
DR. MORRIS: I assume not.
MR. GIBBS: I don't know where the word started. There is appropriate disclosure about the limitation, but this is a non-controlled study involving 5 patients, it is retrospective and it has the limitations involved with epidemiological, these are the conclusions and this is all that you can draw from this very limited case study, then someone could look at it and say, well, this gives us a little bit more information than we had before, or I don't believe that this is worth anything. We heard today about epidemiological data, and Mr. Sweeney downplayed it. My epidemiological friends were probably very offended by what you said, and I think some epidemiological studies, they think it is garbage, too.
I think that the key thing is full disclosure with limits, and it is not misleading if the limits are put out there, and a pharmaceutical company or whoever is using it is not making more out of it than the data supports.
DR. MORRIS: So anything that would meet a test of full disclosure would then be by your definition truthful and non-misleading? Is that the --
MR. GIBBS: It is truthful. You are assuming that the information there is truthful and it is an accurate report of what they found.
DR. MORRIS: But there is no level of science that needs to be applied. It is just a matter of disclosure.
MR. GIBBS: I am talking now about information being provided to the pharmacoeconomic environment, not off-label use or using a drug in a different way. But based on this small amount of data, and it is going to a group of experts who will project reject it, if it is the limited information.
If the agency believes that that is false or misleading, then the agency would be able to take action against it. What I am concerned about is starting at the other end. We could do a parade of horribles at one end or the other.
I think the two adequate and well-controlled or one adequate and well-controlled is far too rigorous. You can come back and say, well, the one person anecdotal study -- and I don't know where the happy medium is drawn, but I think that full disclosure with limits and caveats and not overstating or over-representing are key elements of making it non-misleading, as well as it being fully truthful.
DR. MORRIS: I am just trying to find out if you are saying it is somewhere in between or is it just disclosure. That is the only point of the question. You are saying if there is disclosure, it is pretty close and there may be a little bit of leeway around that.
DR. PEDERSEN: Ms. Stifano?
MS. STIFANO: I know that some of the elements of my question have been answered as part of your responses to other questions, but I thought I would pose this to the panel anyway.
We have heard both that FDA should be looking at information and we have heard that FDA should not be looking for information. We have heard that it is better to have more information than less, even if the more information is not perfect. Given that, what assurances could be provided that the industry would truly self-regulate and that a level playing field would be maintained by the industry?
MS. ZIPURSKY: I think one of the assurances you have that the industry will self-regulate is that the industry has an interest, a company has an interest in its own reputation. It spends a lot of resources conducting studies, developing products.
There is nothing to be gained by taking all those steps and then disseminating false information. It won't assist the industry in the long run in selling its product, because there are a number of other companies. There are competitors out there, as well as a very sophisticated marketplace. So if an industry is going to put out false information, it is going to be uncovered and it is for a particular manufacturer and it is going to come back to haunt them in their further marketing efforts.
In terms of a level playing field, from the drug manufacturer's perspective right now there isn't one, because their communications are regulated and the communications of managed care entities and PPM's are not. So I would suggest to you that the field does need to be level, but in the area of still encouraging more information, and again if we get to a standard which is nothing false and misleading, that is substantiated by acceptable studies, an acceptable level of studies and that that is disclosed, and if that is the standard that is applied both to the industry, as well as to the non-regulated entities, then we will have a more level playing field.
DR. PEDERSEN: Do other members of the panel want to comment on Ms. Stifano's question?
MR. SWEENEY: I would. I feel somewhat like that young woman in the beginning of Jaws being dragged out into the deep water here, but let me just make this observation.
You ask about assurances of self-regulation and how to level the playing field. We have a very recent example of a prescription drug which went OTC, actually two of them, and over-reaching claims were believed to have been made and the manufacturers wound up in court. So there are other ways of dealing with some of these issues. I am referring to the H2 receptor flap of last week.
If I could make one observation about the off-label issue, which is the one that drags you way out into the deep water, all of us, in the past, the agency has operated under a policy of forbearance. More recently, it has affirmatively pursued a legalistic stance upon which it claims that it must enforce and do these things to manufacturers who distribute information about off-label uses, because that is its role.
If the agency had taken that position back in the 1960's, we wouldn't have beta blockers for hypertension today, because beta blockers were introduced for angina and for seven or eight years they cruised along on all of the discussion about hypertension was off-label. Nobody was put under arrest, nobody was threatened, and beta blockers turned out to be pretty fine therapeutics.
I know it is a different time and a different era, but I am suggesting that maybe a little forbearance or demonstration of real harm would help us understand why this has become such an issue.
The other alternative to forbearance is to rethink the legislation. I was around when the 1962 amendments went through, and I have talked to many, many people and asked them do they remember or what the legislation was for efficacy being put into the act, and I haven't gotten a really good answer yet, nor have I found it in any of the material that I looked at.
Efficacy I thought at that time was meant to establish that it was efficacious and that would save the agency time from proving that it was a laetrile or some other kind of quack medication. But for some of these other off-label indications that doctors discover and people start to use and word of mouth carries it, I have real difficulty in understanding where the harm is in the manufacturers communicating about that.
I understand the legalistic argument, but I don't understand the practical argument, and I haven't heard an answer from anyone with the agency or outside as to why we have to pursue this.
DR. PEDERSEN: Dr. Temple, and then Mr. Drezin.
DR. TEMPLE: Let me give you a partial answer, just because that is a very important matter. There are some off-label claims that are very bad for people and very harmful. The fact that most people who have had a heart attack take a calcium channel blocker, instead of a beta blocker, can be calculated. There is a mortality cost to that. One of those drugs decreases mortality, and the other has no effect, and you can calculate roughly several thousand deaths a year because of the success. I don't even know how it was done in persuading people that is good medicine.
One can imagine a world in which the use of anti- arrhythmics for post-infarction suppression of ventricular premature beats might have been promoted. We have no reason to think that happened, but I can get you 10,000 or 15,000 deaths per year from those things. And I want to emphasize that it would have been perfectly plausible to make those kinds of promotions.
I can find journal articles that prove conclusively that having extra ventricular beats after a heart attack is bad for you and that drugs can suppress them. And if someone wanted to base a claim on that and pursue it vigorously, we would have large numbers of bodies in the streets. There is a public allegation that we already do.
So these are not all benign. I am certainly not going to tell you that every unapproved use is bad. Many of them, including the one you gave, is a very good example. But that happened not because someone single-mindedly promoted it, but because many, many physicians with diverse opinions gradually came to use it. We have no objection to that. That is how you learn things. It is promoting it in a single-minded way that can have major implications.
There are other examples I can give you. There can be terrible harm from these things, and it is important that -- it seems odd to me that, at a time when we are interested in outcomes and when the whole world is very enthusiastically pursuing outcomes with rigorous, large controlled trial, there is some feeling that you should learn about outcomes in a less rigorous way.
I guess the other thing I wanted to ask is how does one decide -- this is a question, the first was a comment -- how does one decide what an acceptable modality for learning something is, when there is substantial controversy? The OTA, for example, did a review of how much you can learn from epidemiologic methods, and on the whole concluded you cannot. Obviously, there are empidemiologists who feel quite different about that. We heard some of them yesterday. They are all reasonably smart. How does one decide what the standard for a field is, if that is what indeed we should be doing?
MR. GIBBS: I think that trying to establish a standard for deciding what is acceptable when there is controversy is jumping into a pit from which you will never emerge. Scientific controversy is absolutely the risk of scientific development, and over the years there have been innumerable controversies, not just in medicine, but in physics and astronomy and any realm of science, and I don't think the FDA should try to intrude in any way because something is controversial. There is a marketplace of ideas.
Going back to the First Amendment, you want people to sort out ideas. Ultimately, the results will be established in the clinics, in the laboratories, in epidemiological studies even perhaps. But for FDA to say that something has to be a non-controversial test or something like that would be a terrible mistake for the agency, if that is the direction in which your question was heading.
DR. TEMPLE: Are you following up on what I thought you wanted us to do, which was to say that if the methodology used is one that is considered credible by the field, we shouldn't worry too much? A good example is the use of epidemiologic data to learn about comparisons. It is very controversial, whether you can do that. So how would we enforce or impose or have an attitude toward the standard you were suggesting?
MS. ZIPURSKY: That is my standard. The easier case, of course, is where you don't have as much controversy, and there might be a number of standards that are deemed to be credible and acceptable by that part of the industry, say we are talking about economic studies.
When you have controversy, it is a more difficult issue, but I would think that you could have more than one standard that was deemed to be credible, as long as it was substantially supported by a credible or significant part of the industry. And the fact that another half might disagree with that, that doesn't make it any less valid.
MR. GIBBS: You might consider what the Supreme Court did with Daubert a couple of years ago and what level of scientific credibility was necessary. In the case of bendectin, there were people who were testifying that the product was a teratogen or caused birth defects of some sort, and there was found to be junk science and discredited, and the Supreme Court set a level that has to be used.
I wouldn't necessarily adopt that standard wholeheartedly, but there are cases that have now developed in judicial literature on what is an expert opinion. And you don't need uniformity, you don't need absolute universal acceptance, when there are people who still don't believe that there is evolution. I hope I haven't offended anyone, but you can find scientific controversy in any area, and I don't think that could be the test. But if it is supported by a reasonable basis that is acceptable to scientists and the general field, I think that ought to be sufficient, and it doesn't have to be the majority of scientists, and that would certainly stifle scientific progress.
DR. PEDERSEN: Mr. Drezin?
MR. DREZIN: I have two questions, one for Mr. Kuhlik and then one for the panel. Bruce, in your proposal you mentioned the therapeutic decisions being made independent of the manufacturer by the managed care organization or the health maintenance organization, and that that should not be regulated. Could you expand that a little bit to discussing the dissemination of that information by a manufacturer whose product was selected, and both within that particular health maintenance organization and elsewhere, as well?
MR. KUHLIK: I think right now, as near as I can tell, the agency's position seems to be that if the manufacturer's sales force touches the material, even if it was prepared independently, that that converts it into full labeling and would subject it to the regular rules that would apply to materials that the drug company itself prepared. I am not sure that is really a standard, that you need to go that far.
In my remarks, I was directed primarily to information that was developed independently of the pharmaceutical manufacturer and then disseminated by the managed care organization. But I think as you are developing your policies, you need to recognize that the drug company sales forces remain a very effective means of communicating sound information to people, and that if a managed care organization has adopted a formulary or treatment algorithm or something like that and has done so with its experts based on the on-label information provided by the drug companies, but based also, as we have heard for two days, on literature reviews and things like that independently of the drug company, that there is no reason not to allow some role for the drug companies in disseminating that information, as well, on behalf of the managed care organization.
MR. DREZIN: Thank you.
The question I have for the panel is that we heard from almost every member of the panel about the sophistication of the audience that you are addressing with the cost-effectiveness data, this smart sophisticated experience.
Yesterday, we had comments from the American Society of Health Care Pharmacists, when asked a question of their members who are in the decision-making process for managed care organizations, and the question was are the managed care organizations well-equipped to critically analyze the comparative pharmacoeconomic claims of drug manufacturers, 40 percent said they weren't. Could you comment on that as far as what your experience and data you derived as far as the sophistication of your audience goes?
MS ZIPURSKY: I don't have any hard data for you. I can't give you percentages as you just quoted. Our belief that the audience is sophisticated comes from the questions and inquiries they are making of our clients, asking them to provide certain data, and when that data is provided, asking questions after they have analyzed it which demonstrates to us that they have a great understanding of the claims that are being made and the basis for those claims.
DR. PEDERSEN: Do other members of the panel want to comment?
MR. SAMP: Well, if there are people out there who admit that they are not equipped to analyze the information, I suspect those are not the people who are demanding that the information be given to them, because they are not the ones who would rely on it in the absence of the ability to analyze it. Those people who do want it presumably are capable of analyzing it, and if they want the information, it only seems fair that they be allowed to have it.
MR. GIBBS: I think, in addition, you need to take into account sophistication at two levels. One is the level of the people in the managed-care organizations who are receiving information from the pharmaceutical companies. But we have also heard some discussion today, and yesterday, about the sophistication of payors, employers who have who have sophisticated benefit consultants, either on staff or working for them who are very well able to analyze the responses to RFP's by managed care organizations that are competing -- multi-disciplinary aspect. It seems to me that they asked the wrong question.
First of all, 60 percent said yes, that they were equipped. I am taking that from your example. So for the 40 percent who said no, I guess my question would be do you believe you could make a contribution on a multi-disciplinary committee that was going to evaluate some pharmacoeconomic claims in your area of expertise, and I think maybe the results to the question might have been different.
DR. PEDERSEN: Dr. Temple?
DR. TEMPLE: This is a follow-up to Norm Drezin's question to Bruce Kuhlik. When you spoke at first, but not in response to his question, you made a distinction I thought between whether the materials were prepared with the help of the marketing component of the company. You said specifically the marketing component of the company, as if they were prepared with some other part of the company, that was okay. Did you mean that distinction? You didn't actually say that in your answer to Norm, where you implied that any contact with the company was what you were talking about.
MR. KUHLIK: In the context of an independence type policy, I meant the folks who are involved in the traditional pharmaceutical manufacture areas, whether it is marketing or research and the like on the one hand, versus a managed care component on the other.
DR. PEDERSEN: Ms. Baylor-Henry.
MS. BAYLOR-HENRY: This is for Ms. Zipursky. In your written statement, you noted that in the context of every communication, that there was not a need to have every communication balanced, that you would reconcile that with your recommendation that the communication not be false and misleading, particularly in the context of managed care.
What I am asking is do you have an example where it would be acceptable to not have a communication balanced, and how can you then reconcile that with the fact that that communication then is not misleading? You believe that an unbalanced communication piece would not be misleading?
MS. ZIPURSKY: No, I might have used the term "balanced" or you are referring it as more a term of art in terms of what we have currently, the requirement that it be balanced, though it includes all the information, basically all the brief summary that is required with all the information.
What I meant was that false and misleading is the standard that must be applied, but you can have a communication and advertisement that doesn't necessarily provide all the information that currently is required under the FDA regulations and still be truthful and not misleading, and that there might be other available avenues of communication that are adding to that picture for information that others might deem to be material or relevant, also truthful, hopefully not misleading, but not necessarily for one particular communication.
MS. BAYLOR-HENRY: So the single communication in and of itself would need to be balanced somewhat, but you are saying there is a plethora of information out there that could be possibly added to that communication?
MS. KIPURSKY: Correct. I mean it would need to be balanced in the sense that it was not misleading, that you hadn't put too much, say, made the drug sound like the miracle drug, without saying that it is had a very significant counterindication. That would be in my mind and under my standards would be a misleading advertisement.
MS. BAYLOR-HENRY: Thank you.
DR. PEDERSEN: Any final questions for the panel?
If not, thanks to the panel. We will take a very short recess, maybe convene in 10 minutes.

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