Drug manufacturers are boxing patients in with delayed adverse event reporting

Drug manufacturers have delayed in reporting to the FDA nearly 10 percent of serious adverse events related to consumer medications, according to the results of a University of Minnesota researcher’s study, which was published in the American Medical Association’s JAMA Internal Medicine. Although drug companies are obligated to report unexpected adverse events and side effects resulting from their medications within 15 days, according to the study, manufacturers were regularly skirting that obligation and were less likely to meet the deadline when the adverse event led to a patient death. An additional study, in the same journal raised patient safety concerns over the lack of disclosure of boxed warnings to human subjects in medical research.


Pinar Karaca-Mandic, the author of the adverse event study called the research the “first to empirically examine the extent of delays in reporting.” The study analyzed serious adverse event reports received by the FDA between January 2004 and January 2014. Out of 1.6 million reports reviewed, researchers discovered that 160,383 of those reports were not received by the FDA within the 15-day reporting window. Out of those 160,383 late reports, 40,464 involved patient deaths. The serious adverse events that did not involve death were related to cases that were life-threatening, required hospitalization, resulted in disability, or led to birth defects. Researchers discovered that in addition to not meeting the 15-day reporting obligation, some manufacturers took considerably longer, with 3 percent of reports being reported within three to six months and an additional 3 percent taking six months or longer to report.


Rita Redberg, the editor of JAMA Internal Medicine told the Associated Press that “such reporting delays should never occur, as they mean that more patients are exposed to potentially avoidable serious harm, including death.” Additionally, she recommended that physicians who report patient’s adverse reactions to drugs should report those adverse events directly to the FDA rather than to the manufacturer. Redberg also recommended that the FDA employ its ability to suspend drug sales or withdraw approval for unsafe medications in order to encourage timely reporting.

Boxed warnings

Another study, published in the same journal, focused on an additional threat to patient safety related to boxed warnings. The study analyzed the disclosure of boxed warnings to research patients. Roughly 35 percent of all FDA-approved drugs carry a boxed warning as part of a manufacturer’s full prescribing information. The boxed warning is usually related to potential toxic effects of the drug, when they are serious enough to be considered potentially fatal, life threatening, or permanently disabling. Researchers found that out of 57 consent forms, 63 percent did not disclose one or more boxed warning risks to patients considering participation in a research study.

Little Sisters gear up for round two before the Supreme Court

The Little Sisters of the Poor Home for the Aged (Little Sisters), a group of Catholic nuns, is going before the Supreme Court yet again in its challenge of the contraception mandate found in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). This petition follows a lengthy Tenth Circuit decision upholding the district court’s denial of the preliminary injunction requested by Little Sisters after finding that the ACA and its regulations do not burden the free exercise of religion or violate First Amendment rights.

First challenge

The Little Sisters first challenged the government’s accommodation allowing religious organizations that were not exempt from the contraception mandate to file Employee Benefits Service Administration (EBSA) Form 700. This form notifies HHS of the organization’s religious objection, and submission to the insurer or third-party administrator puts the responsibility of providing the coverage on these parties. The Little Sisters were initially denied a request for preliminary injunction, but the Supreme Court granted relief pending appeal (see Supreme Court grants reprieve to nuns opposing contraceptive requirement, pending appeal, Health Reform WK-EDGE, January 29, 2014, and Little Sisters of the Poor file appeal in contraceptive challenge, Health Reform WK-EDGE, February 26, 2014).

The Little Sisters maintained that the government’s solution to the EBSA Form 700 was inadequate. The government created interim rules allowing an organization to simply write to HHS letting it know of a religious objection to contraception coverage, and HHS would do the rest to ensure that a third party provided the coverage. The Little Sisters stated that the rule further insists that they comply with the mandate and “facilitate the distribution of contraceptives in conjunction with their benefit plan, which is precisely what they have already said they cannot do.”

Mark Rienzi, lead attorney for the case, said that the Little Sisters consider involvement in the distribution of contraception to be immoral, and wish for an exemption. Instead, “the government insists that it can take over their ministry’s employee healthcare to distribute these drugs to their employees, while dismissing the Sisters’ moral objections as irrelevant.” The Beckett Fund for Religious Liberty theorizes that the court is likely to consider all of the petitions this fall, and, if granted the case would be decided prior to the end of the June 2016 term.

CMS extends temporary moratoriums for some HHAs and ambulance suppliers

CMS has released a notice that its temporary moratorium on the enrollment of ambulance suppliers and home health agencies (HHAs) in designated geographic locations is being extended to combat fraud, waste, and abuse. CMS made the announcement in an advance release that covers metropolitan areas in Florida, Illinois, Michigan, Texas, Pennsylvania, and New Jersey.


Section 6401(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provided the HHS Secretary with the authority to impose a temporary moratorium on providers and suppliers in Medicare, Medicaid, or CHIP if it is determined that a moratorium is necessary to “prevent or combat fraud, waste, or abuse” in the programs.


In 2013, CMS imposed moratoriums on the enrollment of new HHAs in Miami-Dade County, Florida and in Cook County, Illinois and their surrounding counties. It also imposed moratoria on Part B ambulance suppliers in Harris County, Texas and its surrounding counties. The moratoriums were extended for another six months in 2014 and expanded to include HHAs located in Broward County, Florida; Dallas County, Texas; Harris County, Texas; and Wayne County, Michigan and their surrounding counties. The ambulance supplier moratoriums were also expanded to include Philadelphia, Pennsylvania and its surrounding counties.


CMS consulted with the HHS Office of Inspector General (OIG) and the Department of Justice (DOJ) in identifying two types of providers and suppliers in nine geographic areas that warranted temporary moratoriums. CMS also consulted with appropriate state Medicaid agencies and state departments of emergency medical services and determined that the moratoriums would not create access care issues for Medicaid or CHIP beneficiaries.


Under 42 C.F.R. Sec. 424.570(b), temporary moratoriums will remain in effect for six months, and may be extended in six-month increments. CMS consulted with HHS OIG and determined that there remains a significant potential for fraud, waste, and abuse in the identified geographic areas and the circumstances that warranted the moratoriums have not abated. Additionally, CMS has determined that the moratoriums are needed to allow it to continue to monitor and proceed with administrative actions against providers and suppliers. As a result, CMS is extending the temporary moratoriums for the enrollment of HHAs and ground ambulance suppliers in Medicare, Medicaid, and CHIP.

Part D could save billions if CMS had negotiating power

Medicare Part D pays more for name-brand drugs than many other countries and even other U.S. government programs, such as Medicaid and the Veterans Health Administration (VHA). The Carlton University School of Public Policy and Administration found that, because brand-name drug prices are so high, many beneficiaries fail to fill prescriptions due to financial constraints. Reducing the prices would reduce premiums and co-pays, as well as taxpayer contributions used to fund Part D.

Part D

Part D is the largest federal drug program, with $69.3 billion spent on prescription drugs in 2013 and over 39.1 million people covered. Part D represents about 7 percent of the global prescription drug market, and about 58 percent of Part D spending goes to brand-name manufacturers. Plan sponsors are able to obtain rebates from manufacturers and pharmacies, but the HHS Office of Inspector General (OIG) has previously expressed doubts that these savings are passed on to beneficiaries in the form of lower premiums. Medicare itself is prohibited from interfering with these negotiations and therefore cannot leverage its purchasing power. Without congressional approval, CMS cannot reduce drug prices by securing rebates or discounts.


According to the study, due to CMS’ constraints, the Part D program pays 73 percent more than Medicaid and 80 percent more than the VHA for drugs. If Part D could secure the same prices as these other programs, it would save between $15.2 billion and $16 billion per year. However, even Medicaid and VHA pay higher prices than many countries in the Organization for Economic Co-operation and Development (OECD). The majority (21) of OECD countries cover 100 percent of their populations with a public drug plan, while the U.S. and Canada rely on private plans and have higher drug costs. Studies show that U.S. costs per capita for drugs are $1,010, while the OECD average is $498. Further, 19 percent of Americans chose not to fill prescriptions due to cost in 2014, which is a high ratio of cost related non-adherence (CRNA). Although the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) reduced the CRNA from 26 percent in 2010, other countries have ratios from 2 percent to 13 percent.

In 2014, Part D provided no coverage for the first $310 a beneficiary spent on drugs per year without a rebate, then covered 75 percent of spending between $310 and $2,850 with a rebate average of 17 percent. Between this amount and the catastrophic limit on out-of-pocket costs of $4,550, the study notes, there is limited coverage for generic and brand-name drugs although there is a mandatory discount of 50 percent for brand name drugs. The report notes that discounts and rebates are different, as rebates are reimbursed by manufacturers after the drug is purchased at full price and discounts are price reductions at the point of sale. Sponsor rebates lowered Part D payments to an average of 83 percent of official manufacturer prices.

Medicaid receives a mandatory rebate of at least 23.1 percent of the average manufacturer’s price for brand-name drugs. An inflation rebate is imposed if the average price rises faster than general inflation, and represents more than half of brand-name drug rebates. The VHA has four different options for receiving lower prices on drugs, and by utilizing the option that offers the lowest price, VHA paid on average about 46 percent of official manufacturer prices.


Proponents of the current system argue that public interference would undermine the competitive system used by plan sponsors. The report’s authors argue that Switzerland and the Netherlands also have managed competition models, like Part D, and that lower drug prices do not undermine competition among insurers and beneficiaries in these countries are subject to lower premiums. The authors also dispute the argument that reducing prices would also reduce research and development spending with by arguing that the Part D system offers few incentives for innovation, and manufacturers are more likely to produce new drugs that are extremely similar to existing drugs, but more expensive. They recommend that Part D should reduce brand name drug prices to at least match the levels of Medicaid or VHA, introduce mandatory discounts similar to VHA’s inflation discount, require generic substitution, and use these price reductions to reduce copays and deductibles.