Deceptive Practices Spotted Among Marketers of Melanoma Detection Apps

Marketers of mobile apps claiming the ability to detect symptoms of melanoma are being challenged for deceptive marketing techniques by the Federal Trade Commission (FTC). The FTC charged that no scientific evidence supported the claims of the ability to detect early stage melanoma. The FTC reached settlements with some marketers of MelApp and Mole Detective, while charges are being pursued against two additional Mole Detective marketers who refused to settle.

Users were instructed to submit a photograph and other information about moles found on their body. The apps used this information to calculate melanoma risk. Although the apps suggested that users see a physician over melanoma concerns, the FTC’s associate director for advertising practices, Mary Engle, said that marketing gave the impression that the apps were diagnosis tools. In 2013, the Journal of the American Medical Association published the results of a study on the classification of melanomas by various apps conducted by dermatologists. Although the apps were not named, three of the apps were found to incorrectly classify at least 30 percent of melanomas as low risk.

Mole Detective was created and first marketed by Kristi Kimball’s company New Consumer Solutions, LLC in January 2012. Avrom Lasarow’s company L Health Ltd. oversaw marketing from August 2012 forward. The Kimball settlement prohibits the company from claiming that an app can detect or diagnose melanoma unless this statement is supported by scientific evidence obtained by clinical testing, and the company must disgorge $3,930. Lasarow and his company did not settle, and the FTC will pursue litigated judgment.

MelApp was marketed by Health Discovery Corporation in 2011. A proposed settlement contains prohibitions similar to the Mole Detective settlement on claims regarding the app’s reliability. The company must disgorge $17,963.

Who Will Pay the Bill After the Medical Device Tax Repeal?

The Patient Protection and Affordable Care Act (ACA) (P.L.  111-148) Medical Device Excise Tax has returned to headlines in light of renewed efforts to repeal the tax. The controversial ACA provision— a fundamental financial support of health reform—is projected to bring in $29 billion over the next 10 years. According to a New York Times article, the apparent legitimacy of the tax repeal effort is being given unusual bi-partisan support due to “liberal Democrats in states with large concentrations of device manufacturers.”  Amidst the reintroduction of legislation to repeal the tax—H.R. 160, the “Protect American Innovation Act”—opinions are divided as to who ultimately bears the cost of the 2.3 percent tax and whether the tax produces harm or supports positive industry reform.

Impact

The ACA provision imposes a 2.3 percent tax on the sale of medical devices. The tax is paid by manufacturers and importers. According to the New York Times, trade groups have brought strong opposition to the tax, indicating that it has already led to reduced spending and will lead to a loss of “195,000 jobs among manufacturers and suppliers and in the general economy over the next five years.” The Congressional Research Service (CRS) plainly disagrees with the industry’s analysis. The CRS estimated in a January 2015 report that the tax will have “fairly minor effects, with output and employment in the industry falling by no more than two-tenths of 1 percent.” Additionally, the CRS analysis concluded that most of the cost of the tax would fall on consumers, and not on the profits of medical device companies. The CRS also indicated that the subsequent effect on the price of healthcare would be negligible.

Response

Steven Ubl, chief executive of the Advanced Medical Technology Association (AdvaMed), and Gail Rodriguez, executive director of the Medical Imaging and Technology Alliance, responded critically towards the tax and the ACA in the form of a letter to the editor in the New York Times.  Primarily, Ubl and Rodriguez took issue with the assertion that, in the aggregate, pharmaceutical and medical device companies benefit from expanded insurance coverage under the ACA, regardless of the excise tax. The letter critiqued the argument in light of what the letter referred to as an “essentially nonexistent” growth in the demand for medical devices.  To support their position that the ACA tax is damaging the industry, UBL and Rodriguez pointed to a study conducted by AdvaMed—a medical device trade association. According to the study, which contradicted sharply with the CRS findings, the tax was responsible for 8,500 job losses and will lead to 20,500 less new jobs in the next five years. The study also indicated that 53 percent of companies participating in the survey indicated that research and development spending was cut as a result of the tax.

Future of the Tax

What the future holds for the ACA and its device tax remains unclear. Although opinions could hardly differ more significantly with respect to the tax’s actual effect, there are some facts that are less contested. For example, it is seldom disputed that the purpose of the tax was to generate revenue to support the expansive reforms of the ACA. The CRS indicates that although the tax is small, if it were repealed, “no revenue replacement has been proposed and it may be difficult to find.” Additionally, repeal efforts are raising other concerns. For example, both the CRS report and a New York Times opinion page have expressed concerns that success with medical device repeal may lead to industry challenges of other health care revenue provisions.   The worry is that without adequate revenue, already significant budget deficits will increase and struggling health care programs will be forced to face damaging cuts. The President and Congress will be asked to decide, in the near future, what should become of this particular tax. However, this issue once again poses the outstanding question about how we, as a country, should go about paying our health care bills.

FDA Commissioner Stepping Down After 6 Controversial Years

Dr. Margaret Hamburg, the FDA’s leader for the last six years, announced that she will be stepping down in March 2015. The FDA’s chief scientist, Stephen Ostroff, will become acting commissioner while Commissioner Hamburg’s permanent successor is appointed by the President and confirmed by the Senate. Commissioner Hamburg’s stint in the top role was one of the longest in decades. She was well-prepared for the job as a Harvard Medical School graduate and the former New York City health commissioner. While Commissioner Hamburg states that she is unsure of her next move, she says that she’s pondered leaving for some time and never planned to stay in the position for this long but found the agency “extraordinary.”

Legacy

Commissioner Hamburg’s reviews are mixed after years of FDA-centered controversy, some of which her defenders point out were not her fault or within her control. For example, in 2012, a compounding pharmacy in Massachusetts released tainted steroids that caused 64 deaths and hundreds of other illnesses from fungal meningitis. Lawmakers argued that Commissioner  Hamburg and the FDA had failed in their regulatory duties, but others pointed out that compounding pharmacies are regulated by states and not under federal purview.

Key Moments

Commissioner Hamburg led the agency through the implementation of the Food Safety Modernization Act (FSMA) (P.L. 111-353) and the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) (P.L. 111-31). She was at the center of a controversy between the courts, the White House, HHS, and the FDA, regarding age restrictions on emergency contraception with the Secretary of HHS overruling her decision to make emergency contraception available to all women of child-bearing potential.

Industry Responses

Commissioner Hamburg was named to the job in 2009 by President Obama after problems at the agency grew increasingly alarming, and she describes the agency morale as “low” when she started. In years prior to her appointment, the FDA failed to publish warnings regarding the anti-inflammatory drug Vioxx®, which was believed to have caused thousands of deaths before it was pulled from the market, and a previous commissioner had hidden his investments in pharmaceutical companies regulated by the agency. Although many find that her presence stabilized the agency and allowed it to flourish, others were concerned about overreaching. The FDA approved 51 new drugs and biologics last year, the most in 20 years. Some think the agency has gotten too close with pharmaceutical companies and is approving drugs too quickly without clearly studying the effects. Others praise the expedited development and streamlined process of drug testing and approval. Many are concerned about the FDA’s lack of involvement in opioid dependency. Regardless of opinion, most agree that the FDA has many important steps to take in the future regarding obesity, electronic cigarettes, opioids, cancer treatments, and food safety.

Senate Committee Paves Way for Streamlined, Efficient Drug & Device Approval

The Senate Health, Education, Labor and Pensions (HELP) Committee seeks to begin a process to address the status quo in the development of new drugs and medical devices and identify how Congress can improve policies and promote efficiency and effectiveness in such development, according to a report by the Committee titled Innovation for Healthier Americans. The report states that the Committee also hopes to pass “transformational legislation” for President Obama to sign later this year.

Background

The Committee’s report stresses, “It has never been more difficult to bring a therapy through the development pipeline,” and notes that it costs between $1 billion and $2 billion to have a drug approved by the FDA. In addition to monetary cost, the lengthy approval process slows down the release of one product, while keeping resources, researchers, doctors, and providers from moving on to new treatments and investigational therapies. The venture capital community is losing interest in drugs and devices in the U.S. because of “increasing regulatory burden and uncertainty” and is shifting its focus to Europe and Asia. Because of these issues, the Committee seeks to gain insight on the allocation of resources and the oversight of development.

Funding for Basic Research

The National Institutes of Health (NIH) is vital in the support of basic research, representing one-fifth of federal research and development spending. More than 80 percent of NIH funding is invested in extramural research, which is awarded through the peer review process, and about 11 percent is spent on intramural research. Academic research institutions rely largely on federal grants (60 percent), which, the report states, “leaves an enormous capacity for growth in support from non-government entities and opportunities for far greater partnership and collaboration between academic research institutions, industry, patient groups, and other stakeholders.” According to the Committee, finding ways to facilitate enhanced partnership between government and non-government entities to support research is critical to advancing medical innovation.

Advancing Research to Clinical Testing

Despite the large number of promising candidates for new drugs, many are unable to move beyond animal studies to clinical testing, as scientific and economic challenges can be too great to justify further investment and study until it is ascertained that the candidates are low-risk enough to develop with limited resources. Even when drugs to get to clinical testing, the report states that 80 percent that make it to human trials are never approved and never commercially available to patients because they are deemed to be toxic. To address these barriers, the Committee recommends improving predictive capabilities for toxicology and efficacy, as well as use of disease registries to more easily—and more affordably—enroll eligible patients in clinical trials.

Improving Clinical Trials

Clinical trials face challenges such as “spiraling costs, high failure rates, administrative inefficiencies, the rise of precision medicine, and regulatory hurdles.” The Committee notes that the current approach to clinical trials leads to administrative inefficiencies, increasing the time and cost involved, but that advancements are being made to define data standards and streamline clinical trials. The NIH also supports clinical trial networks that increase patient engagement and involvement with clinical trials. The report states, “[W]e can see the promise of more efficient clinical trials, but the promise has not yet been realized. Currently, efforts are duplicated, best practices are not shared, and transformative innovations are not scaled up.” The Committee also notes that regulatory barriers—such as the FDA requirement of three-phase clinical trials—prevent clinical trials from being efficient and streamlined and suggests that a more flexible and responsible approach could reduce costs in terms of time and money, allowing drugs to reach patients more quickly. Similar streamlining for medical device review is also suggested. 

The gold standards for approval. The standards for approving drugs and medical devices are decades old, the report states, and expediting medical product review is not a new concept. Drugs and biologics can qualify for expedited designations or pathways toward approval, such as: (1) accelerated approval pathways for drugs treating a serious condition and providing a meaningful advantage over other therapies if they are demonstrated to be reasonably likely to provide clinical benefit; (2) fast track designation to expedite development and allow for rolling review of drugs treating a serious condition, if data demonstrates the potential to address an unmet medical need; (3) priority review for drugs treating a serious condition and providing a significant improvement in safety and effectiveness; and (4) breakthrough therapy designation for drugs intended to treat serious conditions with preliminary clinical evidence that the drug may demonstrate a substantial improvement on a clinically significant endpoint over available therapies.

The FDA released a guidance on a pilot project allowing devices treating or diagnosing a life-threatening or debilitating disease to have early and often interaction with the FDA to shorten approval time, but “[t]he impact of this guidance and pilot program remain to be seen,” according to the report.

Global Competition in Product Development

Despite the U.S.’s long-held position as the predominant global player in drug and device development, competition is growing. The Committee states that legislators and innovators “have a critical role in ensuring that the U.S. maintains superiority in medical product development and that American patients get the best treatment possible.” Globalization results in more drugs and devices being manufactured beyond U.S. borders, creating additional challenges for regulators in protecting the public’s health. Regulatory harmonization presents an opportunity to reduce international drug development costs by streamlining and limiting the requirements that companies must fulfill to market a drug or device globally. However, current policy deviates from this goal, as the FDA participates and supports an international standard, “only to then raise the bar in its draft guidance.” The Committee states that it is a goal to align FDA policies with international standards.