Please enjoy some previous Nixon Law Group articles:

• HHS Proposes New Safe Harbors Under the Anti-Kickback Statute and The Stark Law

• FDA: Abbreviated, Special and Traditional 510(k) Clearance Applications

• FTC Warnings to CBD Companies

• Breakthrough Devices: CMS Removes Hurdles and Increases Payments for New Technology Add-On Payments Under the IPPS Final Rule

Ready to innovate? Click here to find out how we can help you get there safely

Welcome to January 2020! I am Tommy Miller, I am Senior Counsel, and life science practice lead here at Nixon Law Group. Today I want to walk you through what I think are the highs and lows of 2019, specifically related to the legislative and regulatory actions taken in the pharmaceutical and medical device space. Topics that I want to cover are most likely going to reappear here in 2020, so I think it's an opportunity to learn from 2019 and keep an eye forward to what we might see again as we move through the rest of the year.

Neither high nor low, but it was a big topic of conversation. In the beginning of last year, when the OIG proposed to eliminate the rebate safe harbor under the anti-kickback statute, pharmaceutical manufacturers were on one side of the fence, arguing that the price that they pay in rebates and discounts to PPM’s and insurance payers, really keep drug prices high. On the other side of the fence you have the PPM’s and the insurance market, arguing that the dollars that they brought in for rebates and discounts actually helped to offset premiums keeping insurance costs low for patients. So we ended up with 19,000 comments. But the OIG ultimately withdrew the rule and we ended up with status quo coming into 2020. I do think we'll see some portion of this type of legislation or rulemaking reappear in 2020 for pharmaceutical and device manufacturers, just because of what we've seen in some of the more recent anti-kickback and Stark proposed rules, specifically related to value based care. So as you're looking at 2020 I think we can expect to see more of this. If not, this, in a different iteration, for drug pricing control.

I think we can all give a big thumbs up to the FDA for the amount of guidance both final and draft, they issued in the space of medical devices. We saw a handful of guidance documents issued by the FDA for their interpretation of the 21st Century Cures Act. Specifically, we saw guidance related to the medical software policies, under the 21st Century Cures Act. We also saw final guidance issued for MDDS and general wellness products specifically around what would be a device, what would not be a device, and which devices the FDA expected to exercises enforcement discretion on. We also saw a draft guidance around clinical decision support software, which is important for many reasons being that it attempts to explain when CDS would be a device and again, when the FDA would exercise its enforcement discretion. Ultimately, the draft guidance I think is up for another iteration. I think this past draft guidance did a good job of trying to clarify the FDA’s position on CDS but I do think it's going to take another round of guidance or draft guidance and comments to get us to a final version, so you can expect to see that again here in 2020.

The next piece of conversation that's been ongoing is drug pricing legislation and I think it's a big thumbs down for the industry. You see the Trump administration continue to talk about drug price control. You see his talking points even include the idea of importing less expensive drugs from other countries including Canada, to be able to compete with higher priced drugs here in the United States. You see those same type of themes echoed in Nancy Pelosi’s house plan, which would allow Medicare Part B to negotiate directly with drug manufacturers to help lower the costs of Medicare Part D beneficiaries. Medicare Part B beneficiaries pay for their drugs as an outpatient. That same plan would also allow for the government to benchmark United States approved drugs with their same drugs that are available in other countries. Keep in mind though that a lot of other countries have single payer health systems where they have federally mandated caps which do not allow drugs to exceed certain dollar values or their currency equivalents. And so to benchmark them with the US drugs, would definitely lower prices but it would also have a huge impact to the research and development opportunities and the spans that end up happening with US based pharmaceutical companies. So I think it's something to keep an eye on from a federal level, and in an election year I don't necessarily think we're going to see meaningful federal legislation around drug pricing. But the States will continue to lead as they've been doing in the past couple of years, around drug price reporting requirements, even as soon as this legislative session. We've at least seen Virginia introduce a very similar bill to what's been seen in other states related to studying and drug prices as well as drug pricing reporting legislation. We'll see how far that goes in the General Assembly. My guess is we don't see it go very far. But for the other states, it's a good thing to keep an eye on as well because there are states that are implementing and passing these rules. So, I do think the States will continue to lead in this area. But again, something to keep an eye out for in 2020.

Ironically CBD products isn't a high for 2019. I do think they come in at a low. We saw 22 companies get issued FDA warning letters for the claims that they were making about their products. Remember that any claims related to whether or not a product treats or prevent certain medical conditions or any medical condition, usually has to go under FDA review, as a drug product or some sort of other regulatory pathway. You recall that we have at least one approved pharmaceutical product that uses CBD and because of that, it's CBD is not allowed to be a supplement and it's not allowed to be included in an OTC product. So the products that we see on the market that are not approved as drugs cannot have claims related to their effectiveness curing or treating or preventing any type of disease. You see the FTC getting more involved in these types of actions for false advertising. And we also just saw two class action lawsuits get filed against CBD companies in California. So I do think this trend of enforcement is going to continue in 2020, but I also think that you'll see the other side of more states legalizing recreational and medical use marijuana products. You see the state's regulating hemp products more, but I do think the trend of CBD hemp and marijuana is going to continue in 2020, but related to FDA enforcement I do think that's going to continue to step up.

The last thing I think we can talk about and give another big thumbs up to the FDA on is the accelerated approval pathways. They issued several different guidance documents explaining and implementing the abbreviated 510 k program, the special 510 k program specifically related to devices, and the updates that manufacturers are making to those devices that don't necessarily require full 510k review. You also saw CMS align some of its payment policies to help manufacturers achieve reimbursement for their new products, quicker. For example, you saw add on payments for devices that had been previously designated as breakthrough devices. That pathway is going to become quicker. And we also saw CMS change its coding policies to allow new drugs and devices to get permanent billing codes on a more frequent basis than it previously had. So as we move into 2020 I think there's an opportunity for new drugs and devices to achieve not only approval, but reimbursement at a quicker level, and that's always good news for the industry.

I think as you look at these topics, you'll see that a lot of these themes will repeat in 2020. And I think it's a good opportunity at the beginning of the year to set out a plan on how to deal with these as they come up. Obviously, the Nixon Law Group, continue to monitor these topics. We've written several blog posts and articles and we encourage you to visit our website and read them. If you're a current client, we look forward to continuing to work with you in the new year. And if you're new to Nixon Law Group, we look forward to meeting you. Contact us here. Again, I'm Tommy Miller. I'm Senior Counsel at Nixon Law Group. Thank you for listening. Have a Happy New Year.