Category: Health Care Law

Comments to CMS’ 2011 IPPS Proposed Rule are due by June 20th

Posted this week at the National Law Review by Scott J. Thill of von Briesen & Roper, S.C. – a reminder about the comment deadline for  CMS’ 2011 Inpatient Prospective Payment System Proposed Rule  

 

Just a reminder, comments to CMS’ 2011 Inpatient Prospective Payment System Proposed Rule are due by June 20, 2011.  Several notable provisions in the Proposed Rule include:

  • Policies for several hospital quality initiatives, including policies related to the Hospital Readmissions Reduction Program and the Hospital Value-Based Purchasing Program.
  • The addition of contrast-induced acute kidney injury as a hospital acquired condition.
  • The removal of excisional debridement cases from the current MS-DRG and assignment of them to three new MS-DRGs that would provide more accurate, but lower, payment.
  • The creation of two new MS-DRGS for autologous bone marrow transplants.  One MS-DRG would apply to such transplants with complications or comorbidities, while another MS-DRG would apply to such transplants without any complication or comorbidity.
  • Revisions to the rules for determining pension costs for Medicare cost-finding and wage index purposes.
  • Clarification that Medicare’s 3-day/1-day payment window policy applies to both preadmission diagnostic and non-diagnostic services furnished at a physician practice wholly owned or wholly operated by the admitting hospital.
  • The exclusion of patient days and bed days for inpatient hospice services from the Medicare disproportionate share adjustment and indirect medical education adjustment.
  • Clarification of CMS’ “under arrangements” requirements.

You may access the Proposed Rule here.

A summary of the Proposed Rule is available from CMS here.

©2011 von Briesen & Roper, s.c  

Which Employers Will Be Responsible For Health Coverage In 2014?

Recently posted at the National Law Review by Abby Natelson  of  Greenberg Traurig, LLP – provides more details about which employers will be responsible for providing healthcare coverage in 2014:

The new health care law, otherwise known as the Patient Protection and Affordable Care Act (PPACA), requires that, beginning after December 31, 2013, “applicable large employers” must provide affordable health coverage to their full-time employees.   Failure to do so may subject these employers to a shared responsibility payment, or an “assessable payment,” pursuant to Internal Revenue Code §4980H.

An “applicable large employer” is defined as “an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.” A full-time employee with respect to a given month is defined as “an employee who is employed on average at least 30 hours of service per week.”

While these definitions may appear to be straightforward, the recent Notice issued by the Internal Revenue Service, together with the Department of Labor and the Department of Health and Human Services, indicates that the analysis is not so simple.

Notice 2011-36 was issued on May 2, 2011, seeking comments and providing suggested rules for interpreting and applying the meaning of “full-time employees” for purposes of IRC §4980H.

Notably, the Notice provides rules for determining whether an employer has “50 full-time employees,” which includes full-time equivalents. This means that, on a monthly basis, an employer must take the following steps to determine whether 50 full-time employees are employed:

1)                  Determine the number “full-time” employees. 
This group includes seasonal employees and all employees of a controlled group, an affiliated group, and a predecessor employer. This group does not include leased employees.

2)                  Determine the “full-time equivalents.”
This number is determined by aggregating the number of hours of service for all employees determined not to have a full-time status for the month, and then dividing these hours by 120.

At the end of a calendar year, the employer must add together the 12 monthly calculations, and divide the sum by 12 to get the average monthly full-time employees for the prior year. If the final number is 50 or more, the employer is an “applicable large employer.” 

For example, if a business employs 40 full-time employees with 40 hours of service per week and 20 part-time employees with an average of 20 hours of service per week, the employer will still be considered an “applicable large employer.”   This is because each month, the employer will have to add approximately 13.3 “full-time equivalents” (approximately 80 hours worked per month by each part-time employee, multiplied by 20 part-time employees, divided by 120) to the 40 full-time employees, bringing the total “full-time employees” for purposes of health coverage obligations to 53.3. As this example demonstrates, an employer that relies on part-time employees may still be subject to the shared responsibility provisions of the PPACA.

The Notice provides for an exception in the case of seasonal workers. This seasonal employees exception applies where an employer’s workforce exceeds 50 full-time employees for 120 days or less during a calendar year and the employees in excess of 50 were employed during those days as seasonal employees. In this case, the employer is not considered an “applicable large employer.”

Employers “not in existence during an entire preceding calendar year,” are not exempt from assessment payment liability pursuant to the Notice, and will be considered an applicable large employer if the employer reasonably expects to employ an average of at least 50 full-time employees on business days during the current calendar year.

The Notice also indicates the intent of the IRS, DOL, and HHS to allow employers to measure 130 hours of service per month to determine full-time status, rather than 30 hours of service per week. Further, the Notice includes a safe harbor for determining an employee’s full time status for future months based on the employee’s status as a full-time employee in prior months, which is intended to make administration of this rule for full-time employees easier.

In short, the proposed guidance set forth in Notice 2011-36 expands upon the inclusive definition of “full-time employees” set forth by the PPACA and reinforces the continuous burden imposed on employers to evaluate the “full-time” status of each of their employees.

©2011 Greenberg Traurig, LLP. All rights reserved.

Illinois Civil Union Law Requires Employer Action

Posted yesterday at the National Law Review by Thomas G. Hancuch and Jessica L. Winski of Vedder Price P.C. a great overview of the implications for employers in Illinois of the law recognizing civil unions which will be in effect June 1st:

The recently enacted Illinois law recognizing civil unions has implications for all Illinois employers.  The law becomes effective June 1, 2011.  Before that date, employers should review and update their policies and employee benefit programs that may be affected by the law.  This is true for both employers that provide domestic partner benefits and those that do not.

The Illinois Religious Freedom Protection and Civil Union Act ( the “Civil Union Act”) allows same-sex and opposite-sex couples to enter into a new form of legal relationship called a “civil union.”  Under the Act, persons entering into a civil union are entitled to the same legal protections, benefits, obligations and responsibilities as spouses under Illinois law.  The law provides a process for establishing a civil union and for dissolving one.

The Civil Union Act also contains a reciprocity provision under which Illinois will recognize as a civil union any same-sex marriage, civil union or other substantially similar legal relationship (other than a common law marriage) that was legally entered into in another jurisdiction.  Currently, five states (Connecticut, Iowa, Massachusetts, New Hampshire and Vermont) and the District of Columbia, as well as a number of foreign countries (including Canada) permit same-sex couples to marry.  Other states (including Oregon, Nevada, New Jersey and Washington) have laws similar to the new Illinois Civil Union Act recognizing civil unions or domestic partnerships.  Still other states (including Colorado, Maine, Maryland and Wisconsin) accord more limited legal recognition to such relationships.

Complicating matters, the federal Defense of Marriage Act provides that, for purposes of federal law,  “the word ‘marriage’ means only a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers only to a person of the opposite sex who is a husband or a wife.”  So, while civil union partners generally are to be treated the same as spouses under Illinois law once the Civil Union Act becomes effective later this year, it appears that they will not have the same rights or status as spouses under federal law.

Of course, employers operating in Illinois are subject to both Illinois and federal law.  Certain programs maintained by private-sector employers, such as bereavement leave, are governed exclusively by state law; others, such as retirement plans and flexible spending accounts, exclusively by federal law; and still others, such as insured health benefits plans (but not self-insured plans), by both federal and state law.  Unfortunately, this creates significant complexity for employers.

Illinois employers that currently offer domestic partner benefits should review their domestic partner benefit program in light of the Civil Union Act.  For example, the definition of “domestic partner” in the domestic partner benefits policy and the applicable benefit program documents and leave of absence and other policies may need to be revised to specifically encompass civil union partners.  In addition, consideration should be given to whether an affidavit attesting to the existence of a domestic partnership will continue to be regarded as sufficient, or if Illinois employees should be required to formalize the relationship as a civil union in order to receive domestic partner benefits.

Illinois employers that do not offer domestic partner benefits will need to review their benefit plans and leave of absence and other human resources policies that involve spouses of employees to determine the impact of the Civil Union Act.  For example, an employer with medical or dental insurance funded through a group insurance policy issued in Illinois will find that civil union partners will be eligible for coverage on the same terms as spouses beginning June 1, 2011, even though the employer may not want to provide such benefits.

© 2011 Vedder Price P.C.

Appeals Court Overturns Stem Cell Ban

Recently posted at the National Law Review  by WarrenWoessner of  Schwegman, Lundberg & Woessner, P.A.– an update in the U.S. Court of Appeals for the D.C. Circuit concerning research using human embryonic stem cells.

On April 29th, in Sherley v. Sebelius, the U.S. Court of Appeals for the D.C. Cir., overturned the injunction imposed by the district court, which had blocked the implementation of the 2009 NIH Guidelines on finding research using human embryonic stem cells. 74 Fed. Reg. 32170(2009). The Guidelines, in turn, had been formulated to implement President Obama’s executive order 13505 that lifted President Bush’s executive order banning such funding. The suit, brought by two researchers working with adult stem cells, argued that the Guidelines were in conflict with the 1996 Dickey-Wicker Act, which banned funding for both research that would create human embryos for research purposes or would destroy human embryos. For more background, see my post of Sept. 1, 2010.

The Court found that preliminary injunction was improperly granted “becauseDickey-Wicker is ambiguous and the NIH seems reasonably to have concluded that, although [D-W] bars funding for the destructive act of deriving an ESC from an embryo, it does not prohibit funding a research project in which an ESC will be used.”  In other words, if some other unfunded entity disassembles an unwanted embryo obtained with informed consent of the donor from an in vitro fertilization clinic and provides the ESCs to a researcher, the researcher can obtain federal funding to study them. Since establishing the Guidelines, the NIH has approved additional ESC lines for federal funding. While this is good news for researchers working with embryonic stem cell lines approved under the NIH Guidelines, the underlying suit will continue to threaten the administration’s more liberal view of stem cell research.

© 2011 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

From Trips to ACTA: Establishing the Intent to Uphold Access to Medicine in the Face of Ambiguity

The National Law Review would like to congratulate Guadalupe A. Lopez  of the American University Washington College of Law  one of our Spring 2011 Student Legal Writing Contest Winners. Guadalupe writes about generic drugs and patents and the distribution of  pharmaceuticals  in developing countries:  

Introduction

The numbers speak for themselves. Each year, over 9.5 million people die due to infectious diseases for which there exists medication – most live in developing countries.i Currently, there are over 33 million people around the world living with HIV/AIDS,ii 70 percent of whom are in dire need of anti-retroviral medication but not receiving it.iii This has been attributed, in part, to the lack of affordable healthcare in developing countries, along with the high drug prices associated with monopolies provided by pharmaceutical patents.iv

Studies demonstrate that there is a significant change in the price of a drug once its patent expires, allowing its generic version to be legally manufactured and introduced into a given market.v The introduction of a generic drug often results in the reduction of prices anywhere between 22% and 88%, depending on the type of drug and the number of generic manufacturers producing it.vi In some instances, even the threat of introducing a generic drug into a market will be enough to significantly lower the price of its patented version.vii For this reason, it is in the best financial interest of pharmaceutical companies to acquire and maintain the highest levels of intellectual property rights (“IPR”) protection on their patents. In furtherance of that objective, pharmaceutical companies have actively engaged in campaigns, both domestically and around the world, aimed at preventing generic manufacturers from accessing global drug markets.viii Unfortunately, this comes at a high cost to patients who are in need of treatment and cannot afford the patented versions of these medicines. This paper will address this concern by explaining how the pursuit of high levels of IPR protection has exacerbated the inaccessibility of medication by keeping more affordable, generic drugs off the market.ix This has been largely possible due to a narrow application of the Trade Related Aspects of Intellectual Property Rights Agreement (“TRIPS Agreement”), as well as efforts to establish the highest possible levels of IPR protection, led mainly by industrialized nations.

The first section of this paper will provide an introduction to the TRIPS framework as well as a timeline of international events leading to the Doha Declaration on the TRIPS Agreement and Public Health (“Doha Declaration”). This was a declaration by all members of the TRIPS Agreement reaffirming their obligation to protect public health through the use of provisions referred to as “TRIPS flexibilities.” The second section explains that despite the Doha Declaration, certain TRIPS flexibilities have been undermined through the implementation of bilateral trade agreements with developing countries, and regulations within regional trading blocs providing vigorous protection of IPRs.x These trade agreements and regulations contain “TRIPS-Plus” provisions demanding higher levels of IPR protection than those required by the TRIPS Agreement itself.xi In essence, they have been seen as attempts to circumvent the obligations agreed to during the Doha Declaration, acknowledging that public health issues take precedent over IPRs. The third section of this paper introduces the Anti-Counterfeiting Trade Agreement (ACTA) recently negotiated by the world’s most industrialized nations, and presents the arguments raised in opposition to the accord. Many have argued that due to the special interests behind ACTA’s negotiating countries, this agreement will have a detrimental impact on developing countries, as they will be forced to adopt a framework of heightened IP standards to which they did not explicitly assent.xii The last section argues that despite the clear threats posed by ACTA, negotiating countries have expressed a clear intent to uphold access to medicine principles as asserted in the Doha Declaration. However, because many of the ACTA negotiations have been held behind closed doors, there is no record that reflects this intent outside of the public statements made by country representatives. The section proposes creating an unofficial drafting history for ACTA based on amendments made to various drafts of the text as well as public statements released by the parties. This drafting history will provide assistance when interpreting any ambiguity within ACTA that may be used to impede access to medicine or undermine any of the obligations made under the Doha Declaration.

I.  The implementation of TRIPS and the resulting need for the Doha Declaration on public health

A. The Development of the TRIPS Agreement

During the 1980s, a number of corporate actors mobilized together after realizing that they shared the common goal of increasing the protection of their intellectual property rights.xiii This alliance was comprised of trans-national corporations from a variety of sectors, among them agricultural chemical producers, software producers, entertainment providers, and brand-name pharmaceutical providers.xiv After successfully lobbying their interests at a domestic level, these actors began seeking a way to further expand the protection of their interests by pursuing higher levels of IPR protection outside the United States.xv They did so by creating a strategy to link IP with trade, two areas of law which until then, were vastly unrelated. In addition, this interest group also formed strong political ties within the U.S. and gained considerable support with the U.S. government, particularly the Office of the US Trade Representative.xvi Through transnational mobilization and aggressive lobbying of various governments, international organizations and private sectors, this coalition managed to include its newly formulated trade-based IP regime in the agenda for the GATT’s Uruguay Round of Multilateral Trade Negotiations (“Uruguay Round”) held in 1995.xvii

During the Uruguay Round, the United States persistently promoted the adoption of a new global intellectual property regime.xviii Some scholars have noted that many countries assented to the TRIPS Agreement in hopes that a multi-lateral rule based system would eliminate the US’ coercive economic policy.xix As a result, many developing countries were at a disadvantage during TRIPS Agreement negotiations due to the asymmetry in bargaining power vis-à-vis more industrialized countries. Furthermore, developing countries were at an additional disadvantage because their negotiators lacked the necessary training in the area of intellectual property essential to negotiating a new set of IP standards.xx Daniel Gervais explains that as a result, industrialized countries made very few concessions during the negotiations while developing countries were “forced to accept a package that they perhaps did not fully understand and yet, contained a set of foreign IP norms which they now had to implement.”xxi This Uruguay Round of negotiations resulted in what is known today as the Trade-Related Aspects of Intellectual Property Rights Agreement- adopted and put into force in 1994.xxii

The TRIPS Agreement was an effort to implement a global intellectual property rights regime and establish what industrialized countries believed should be the minimum levels of IPR protection required of all countries before acceding as members of the WTO.xxiii As a result, the TRIPS Agreement obligated developing nations to enforce levels of IPR protection similar to those adopted by highly industrialized nations, despite the lack of development in their own domestic IP laws.xxiv Included as part of the TRIPS Agreement were provisions requiring a 20-year term of protection for patented medication, which pharmaceutical companies argued were necessary to sustain innovation and fund research and development for future pharmaceutical products.xxv Along with these higher levels of protection, however, came huge impediments to the accessibility of essential medication in developing nations.

B.  Access to Medicine Consequences

The implementation of the TRIPS Agreement provided pharmaceutical companies with a legal and effective monopoly over their products due to the period of protection granted to their products before the introduction of any generic competitors.xxvi This meant that name-brand pharmaceutical companies were able to maintain high drug prices so long as they were still under the 20-year patent protecting their products. Within developing countries, however, this additional term of patent protection ultimately resulted in the overall reduction of affordable medicine.

This monopoly over medicines and prices proved to be devastating during the late 1990s when the HIV/AIDS epidemic was reaching its peak.xxvii It was at this point that developing countries realized the extent of the serious access to medicine implications that accompanied the adoption of the TRIPS Agreement. Developing countries, particularly South Africa, took initiatives to address the crisis by providing low-cost medication to its citizens and by issuing compulsory licenses for anti-retroviral HIV/AIDS medication.xxviii These efforts were met with fierce resistance from pharmaceutical companies and retaliation in the form of a lawsuit by the U.S. government.xxix The outcome was a wave of public outrage and widespread protests against the U.S. and pharmaceutical companies, largely led by developing countries, civil activists, and international organizations.xxx Due to mounting international pressure, the U.S. government eventually caved, withdrawing the lawsuit against South Africa as well as the trade sanctions previously implemented against it.xxxi At this point, it became clear that there was a much-needed reassessment of the objectives and interpretation of the TRIPS Agreement.

C. A Call for the Doha Declaration on the TRIPS Agreement and Public Health

In an effort to address the public health concerns resulting from the implementation of the TRIPS Agreement, the WTO introduced a “development round” in 2001 known as the Doha Declaration on the TRIPS Agreement and Public Health (“Doha Declaration”).xxxii During this round, members of the WTO unanimously recognized the need of developing countries to address serious public health issues such as HIV/AIDS, tuberculosis, malaria and other epidemics.xxxiii The Doha Declaration thus stands for the assertion that the TRIPS Agreement should not prevent any WTO member from taking measures to protect the health of its citizens. In doing so, the Declaration reaffirmed each member’s right to use the safeguards within the TRIPS Agreement without risking retaliation from other WTO members.xxxiv Specifically, the Doha Declaration reaffirmed a member’s right to parallel import medication under Article 6 of the TRIPS Agreement, and issue compulsory licenses under Article 31.xxxv

Parallel Imports

Article 6 of the TRIPS Agreement provides WTO members with the right to import patented drugs after they have been sold in other markets.xxxvi This provision essentially allows WTO members to import brand-name drugs from other countries where it is being sold at a lower retail price.xxxvii This means that once a brand-name drug is legally sold in one country, the patent holder “exhausts” his rights over the product, at which point the drug may be re-sold and exported to other countries.xxxviii This TRIPS flexibility thus provides developing countries the option to purchase medicine from foreign markets where it is being sold at a lower price than within its own domestic market. By taking advantage of this flexibility, developing countries with limited healthcare resources are able to import cheaper medicine, thereby increasing its affordability and overall access to its citizens.

Compulsory Licensing

Another safeguard reaffirmed during the Doha Declaration is a country’s right to issue compulsory licenses in cases of national emergencies, granted through Article 31 of the TRIPS Agreement.xxxix Article 31 allows a country to license the manufacturing of a generic drug while its brand-name version is still under patent without the express consent of the patent holder.xl Compulsory licenses have proven to be one of the most effective tools for providing life-saving drugs, such as anti-retroviral medication, to patients in developing countries, particularly within Africa.xli They have led to greater competition in the drug market by allowing generic drugs to compete with patented pharmaceutical products, driving down its overall cost.xlii This leads to more affordable prices for both citizens and governments providing healthcare services in the country where it is issued. The issuance of compulsory licenses have proved so effective in reducing drugs costs that even the mere threat of issuing one will often compel pharmaceutical companies to drastically reduce their prices in an effort to keep generic manufacturers off the market.xliii

The use of TRIPS flexibilities such as the two discussed above have been praised and strongly encouraged by non-profit organizations and civil society groups working to promote access to medicine in developing countries.xliv Despite the progress made, however, there is growing concern that these efforts have been undermined through pressure from bilateral and regional trade agreements, domestic legislation, and new forms of multilateral agreements such as ACTA.

II.  Circumventing the Doha Declaration Through TRIPS-Plus Agendas

The TRIPS Agreement succeeded in implementing a new global regime of heightened standards of intellectual property right protection. However, it also left room for countries to implement measures to protect the public health of its citizens through provisions known as “TRIPS flexibilities.”xlv Through TRIPS flexibilities, governments are free to address issues arising from the lack of innovation for diseases affecting their populations, coupled with high pharmaceutical prices and restrictions on availability.xlvi Despite these flexibilities though, recent free trade agreements (FTA) between developed and developing countries, particularly those with the US, have been criticized for restricting the adoption of these TRIPS flexibilities.xlvii By including “TRIPS-Plus” provisions into their FTAs, developed nations have narrowed the application of TRIPS flexibilities, thereby posing dangers to the production and availability of medicines in developing countries. More recently, regional trading blocs, such as the EU, have similarly begun to draw criticism due to the inclusion and strict enforcement of TRIPS-Plus measures within its borders.

A.  TRIPS-Plus Obligations in Free Trade Agreements

Since the Doha Declaration and the reinforcement of TRIPS flexibilities, several industrialized countries have continued to vigorously represent the commercial interest of pharmaceutical companies in trade negotiations with developing countries.xlviii By using access to their markets as a form of inducement, developed countries have been able to secure higher levels of IPR protection, known also as “TRIPS-Plus” measures, through trade agreements.xlix As reported by Oxfam International, some FTAs have contained TRIPS-Plus provisions providing for the following increased protection:

  • Expanded scope over pharmaceutical patents (covering new therapeutic uses of existing medicines and formulations);
  • Limitations on the grounds for issuing compulsory licenses to highly restrictive emergencies, government non-commercial use, and competition cases;
  • Barring parallel imports of patented medicines sold more cheaply elsewhere;
  • Extending patent monopolies for administrative delays by patent offices and drug regulatory authorities.l

In a report prepared for House Representative Henry Waxman in 2005, the Committee on Government Reform declared that “[C]ontrary to the Doha Declaration, U.S. trade negotiators have repeatedly used trade agreements to restrict the ability of developing nations to acquire medicines at affordable prices.”li Although Congress requires that the U.S. Trade Representative (“USTR”) comply with the Doha Declaration on Public Health, nearly every free trade agreement negotiated in the past decade by USTR has included TRIPS-Plus provisions significantly restricting the manufacturing of generic drugs.lii In addition, the USTR has previously announced its TRIPS-Plus agenda as well as a commitment to pursue levels of IPR protection in accordance with those of the pharmaceutical industry.liii Oxfam International asserts that this commitment to higher standards of IPR protection can be explained by the close relationship between the USTR and the pharmaceutical industry within the U.S.liv

Special 301 Watch List

One effective tool that the U.S. has used to enforce the TRIP-Plus provisions within its FTAs is the Special 301 Watch List (“Special 301”).lv The Special 301 is a report mandated by the U.S. Trade Act of 1974 through which the USTR assesses whether countries are complying with IPR standards contained in bilateral or multi-lateral agreements with the U.S.lvi If the USTR finds that a country is not in compliance with such standards, it sends a “warning” through the Special 301 Report threatening to impose trade sanctions pursuant to the U.S. Trade Act.lvii Oxfam International argues that the U.S. has used the Special 301 process to pressure countries into unilaterally implementing TRIPS-Plus provisions.lviii In addition, the Government Accountability Office has noted that while the overall number of countries listed on the Special 301 has decreased, the number of countries cited for pharmaceutical-related issues has increased.lix One example of this, sparking controversy among various members of Congress, was the placement of Thailand on the Special 301 Watch List for having issued a compulsory license for HIV/AIDS medication in 2006.lx

After this incident sparked international attention, however, Congress took it upon itself to adjust the USTR’s attitude on how it proceeded to negotiate bilateral trade agreements.lxi Since then, the USTR has made significant concessions by providing greater flexibility to provisions that at one point may have impeded access to medicine in developing countries.lxii These efforts have been reflected in amendments made to the US-Colombia and US-South Korea FTAs, making them more amenable to the adoption of TRIPS flexibilities.lxiii

B.  TRIPS-Plus Obligations in Regional Agreements:  The Case of EU Council Regulation 1383/2003

In addition to TRIPS-Plus obligations contained in FTAs, some industrialized nations have enacted far-reaching TRIPS-Plus measures as part of their domestic legislation. As noted by the International Centre for Trade and Sustainable Development (ICTSD), the European Union (EU) has been particularly active in vigorously enforcing “maximalistic” standards of IPRs within its own region.lxiv To illustrate, the EU implemented Council Regulation 1383/2003, which involves the searches, seizures, and destruction of goods suspected of infringing intellectual property rights by customs officials throughout its borders.lxv This regulation explicitly grants IP right holders the ability to prohibit the import or export of goods suspected of infringing patents, copyrights, and trademarks to and from the EU.lxvi Because this regulation is directed at all imports and exports, it has been greatly criticized by advocacy groups concerned with access to medicine due to its obstruction to the transit of pharmaceutical goods passing through EU territory.lxvii In doing so, EC 1383/2003 comes into conflict with Article V of the GATT, which establishes the principle of freedom of transit through the territory of each contracting party.lxviii The regulation also conflicts with the obligations to public health undertaken by all WTO members under the Doha Declaration.

In particular, the implementation of EC 1383/2003 has resulted in several detentions of shipments of generic medication that did not meet the heightened IP standards within the EU, but were otherwise legal in their importing and exporting countries.lxix This incident sparked widespread controversy as most of the shipments were traveling from India and destined to developing countries – such as Mexico, Brazil, Nigeria, Peru, Colombia and Ecuador – and only briefly traveling through the EU.lxx While most of the shipments were only temporarily seized, some of them were in fact destroyed for not complying with IPR standards within the EU, pursuant to EC 1383/2003.lxxi The EU defended its actions as an unfortunate result of the MEDI-FAKE initiative, which targets illegal counterfeit medicines entering the EU.lxxii Still, critics argue that these detentions, all involving generic medication, were neither incidental nor accidental, but were rather opportunistic acts of IPR holders in an effort to obstruct generic competition through false counterfeiting allegations.lxxiii Whichever may be the case, these incidents demonstrate EU officials generalized the use of the term “counterfeit,” thereby implicating other forms of IP infringements having nothing to do with counterfeiting (such as patent violations). The EU seizures have resulted in a great deal of debate over the consequences that EC 1383/2003 (and similar policy) has on freedom of transit principles and on the overall impeding effect it can have on access to medicine. This brings us to ACTA.

III.  The Anti-Counterfeiting Trade Agreement

The Anti-Counterfeiting Trade Agreement (“ACTA”) is a multilateral agreement currently being negotiated between the world’s most industrialized nations,lxxiv and aimed at combating counterfeit goods.lxxv It represents one of the most important attempts to negotiate a “North to North” agreement on issues of intellectual property rights protection after the TRIPS Agreement. For this reason, ACTA is seen by critics as an attempt to create a new template of TRIPS-plus protection outside any interference from developing countries, multilateral organizations, or civil society in general. Parties to these negotiations assert, however, that the objectives behind the implementation of ACTA are to “establish an international framework for participating governments to more effectively combat the proliferation of counterfeiting and piracy” and to “define effective procedures for enforcing existing intellectual property rights.”lxxvi

To many of its critics though, ACTA reflects a fairly clear intent to expand TRIPS standards and even remove some of its flexibilities.lxxvii In particular, ACTA has been criticized by civil society groups and developing countries for threatening the freedom of transit of generic medicines. India and China are some of ACTA’s most vocal opponents; they argue that such measures do not take into consideration the interests of developing countries or their commitments to the Doha Declaration on Public Health.lxxviii These countries also warn that ACTA would create trade restrictions for WTO members who are not negotiating parties of ACTA, yet who are still subjected to obligations beyond those required by the TRIPS Agreement.lxxix

The criticism over ACTA has not stopped there. Other institutions that have taken issue with ACTA have included the World Trade Organization and the World Intellectual Property Organization. These organizations argue that ACTA goes far beyond what was needed to combat counterfeiting and piracy, and in the process, is creating a new regime of IPR protection that will undermine multilateral institutions such as themselves by weakening their authority.lxxx

A.  Access to Medicine Threats Posed by ACTA

The most serious concern raised by access to medicine advocates is that like EC 1382/2003, ACTA will jeopardize shipments of affordable medicines in transit between developing countries, having a chilling effect on the trade of generic pharmaceuticals and on the TRIPS Agreement flexibilities.lxxxi This problem has been mostly raised with regard to proposed border measures granting customs officials the ability to restrict shipments being imported or exported from ACTA member countries. This measure has been highly criticized for essentially requiring customs officials to make highly specialized and technical determinations as to what amounts to patent infringements.lxxxii These complex adjudications, critics say, should follow after the presentation of highly specific facts related to patents, which may only be resolved by an appropriate panel or tribunal post hoc, not while the goods are in transit.lxxxiii

Under existing TRIPS provisions, border measures are to be taken only against suspected counterfeit, trademark, and copyright violations.lxxxiv Customs officials are allowed to take ex officio action against alleged infringers only after they have acquired prima facie evidence showing that an IP right has been infringed.lxxxv In addition, TRIPS requires those who requested the ex officio action to pay for any injury caused to suspected infringers as a result of a wrongful detention of goods.lxxxvi ACTA, on the other hand, permits such actions to be taken on the mere suspicion that the goods are infringing not only copyright and trademark, but also patent rights. Furthermore, ACTA indemnifies authorities from any injury caused by the wrongful detention of goods, which may last for up to a year under this new agreement.lxxxvii This creates incentives for right holders to abuse ACTA procedures and to initiate border investigations and seizures without having to prove, within any reasonable period of time, that the goods are in fact infringing. This leaves serious implications relating to the transit of shipments carrying generic medication.

In addition, provisions addressing penalties for ACTA violations vis-à-vis the penalties enforced under the TRIPS Agreement have similarly raised serious concerns.lxxxviii Under the TRIPS Agreement, any willful, commercial-scale counterfeiting is a criminal act sanctioned by national law enforcement.lxxxix In contrast, civil IP infringements under TRIPS, including violations of patent rights, consist of commercial disputes between legitimate entities and are compensable only through legal remedies.xc The reason for this distinction is that unlike counterfeiting, civil infringements of IPRs are not seen as attempts to defraud the public and are therefore not subject to the same criminal sanctions.xci While TRIPS has made it clear what types of infringements will result in criminal and civil liability, ACTA does not distinguish between the two.xcii This leaves the inference that because ACTA explicitly targets counterfeits, all infringements will be punishable as criminal violations.

Furthermore, various ACTA drafts have included provisions extending injunctions against third parties who have provided “intermediary services” that have facilitated the infringement involved.xciii While ACTA fails to define what an “intermediary party” is, those who would likely be affected under this provision include generic drug manufacturers, international shippers, and other key players involved in the international trade of medicines.xciv In turn, such injunctions could potentially “inhibit the supply and distribution systems and thereby deter generic entry, robust generic competition, and legitimate international trade of generic medicines of assured quality.”xcv Due to its failure to define “intermediary,” this provision may similarly jeopardize non-government organizations such as Medicins Sans Frontieres and UNITAID, who assist in funding the purchase of generic drugs destined for developing countries.xcvi

The unfortunate result of these ACTA provisions is that they have a potentially chilling effect on the production, trade, and ultimate distribution of generic drugs. Due to the risk of incurring not only civil, but criminal liability, many generic drug manufacturers and third-party carriers will potentially be deterred from producing and transporting medication because of the blurred distinctions between counterfeit and simple patent infringements.

B.  New IP Law-Making in the Process?

A number of scholars have argued that ACTA is an effort to seek an alternative forum that is more responsive to higher levels of IP protection.xcvii As part of this forum-shifting argument, Susan Sell notes that protectionists have previously shifted their agenda from the World Intellectual Property Organization (“WIPO”) to the World Trade Organization (through the TRIPS Agreement), to bilateral and regional trade agreements (such as those discussed above), and now to ACTA.xcviii Each time the chosen forum becomes more receptive to exceptions, likely due to pressure from civil society groups, the forum once again changes. Thus, ACTA is seen as the creation of an entirely new international institution for IP enforcement, establishing its own set of rules, standards, and methods of enforcement, notwithstanding those outlined in prior multilateral negotiations such as the TRIPS Agreement.

However, other scholars argue that ACTA is more than a mere effort aimed at shifting the forum of protection. Instead, they assert that such attempts reflect a broader notion of international IP law-making in the process.xcix This argument is based on the impact which bilateral trade agreements tend to have on a country’s position on IP standards during subsequent multilateral negotiations. These scholars argue that this is all part of a strategy to create an endless upward spiral of international IP obligations.c This movement, often referred to as the “global IP ratchet,” is only the first stage of a conscious effort on the part of IP interest groups to use bilateral agreements as vehicles to incorporate heightened IP standards into subsequent multilateral treaties, such as ACTA.ci Targeting countries on a one-on-one basis through bilateral agreements ensures that they are on-board with future stated agendas. Scholars argue that in the end, if enough of these bilateral agreements are negotiated, these higher IP standards will become the minimum standards from which future trade negotiations will proceed.cii As cited by Kimberlee Weatherall:

“Once a substantial portion of trading partners have agreed to observe the same standards as those enshrined in present U.S./EU legislation, there is no way back to a meaningful lessening of what appear as widely accepted rules, creating a spiral endlessly moving upwards.” ciii

That is to say, that all of this is not merely about shifting the forum away from the WTO, but rather, a part of an overall scheme to slowly, but certainly, increase global levels of protection for IP right holders. Weatherall suggests that bilateral agreements have ultimately served as the “stepping stones” for ACTA by setting minimum standards of IP protection among the parties involved, while creating leverage for certain countries at the negotiating table.civ As reflected by the leaked ACTA drafts, these higher levels of IP protection were, without a doubt, introduced during the various rounds of negotiation.cv

Along these lines, ACTA is seen as part of a larger “enforcement agenda” being pushed by special interest groups within highly industrialized nations. This enforcement agenda has been described as, “[A] continuous, wide-ranging effort by special-interest groups and lobbyists to secure favorable legislation and institutionalize practices that support their current business models, all under the claim of enforcing intellectual property rights.”cvi Ultimately, what emerges is “[A] web of numerous forums, regional, and bilateral agreements and unilateral institutions, all being captured to pursue a global TRIPS-plus agenda.”cvii The unfortunate consequence of this agenda is that because it caters to special interest groups, it fails to consider the disproportionate impact that these higher standards carry for developing countries lacking the resources and infrastructure to implement them. Nonetheless, many fear that such standards will soon become the norm as more and more countries continue to adopt them through efforts such as ACTA.cviii

IV.  ACTA’s Unofficial Drafting History: Establishing An Intent to Promote Access to Medicine

Despite the concerns stated above, recent leaked drafts of the text have indicated that ACTA has amended some of the measures that have been stirring controversy with access to medicine advocates.cix The two most significant of these are provisions on border measures and intermediary liability.cx According to the new draft, ACTA no longer requires countries to provide preemptive border measures for patents, meaning that if adopted, generic medicines will no longer be subject to border detentions for alleged patent violations.cxi In addition to this, ACTA parties have dropped the provision requiring intermediary liability for carriers of shipments of generic medication. The new draft reflects that the parties have made significant concessions in response to public health concerns, resulting in what some have referred to as “ACTA-Lite,” a watered down version of what ACTA was intended to be.cxii

Aside from demonstrating the tremendous impact that civil society groups can bring to the negotiating table, this move indicates that there is at least some commitment to preserve the safeguards and flexibilities established by the TRIPS Agreement. To demonstrate this commitment, many governments have released public statements ensuring that the passage of ACTA will not affect a country’s right to provide for the public health of its citizens.cxiii In a joint statement issued by the participating governments with respect to the potential obstruction to access to medication, the parties stated that, “ACTA will not hinder the cross-border transit of legitimate generic medicines,” while reaffirming that “patents will not be covered in the section on Border Measures.”cxiv

USTR officials released similar statements after certain members of Congress voiced concern over the ways in which ACTA would affect the availability of generic medicine. In a letter from Senator Ron Wyden to the USTR regarding ACTA’s impact, one of his main questions involved the ways in which ACTA would preserve the public health flexibilities under the TRIPS Agreement and the Doha Declaration.cxv In its response, the USTR stated that “ACTA is not intended to interfere with a signatory’s ability to respect its citizens’ fundamental rights and civil liberties, and will be consistent with the WTO TRIPS Agreement and will respect the Declaration on TRIPS and Public Health. (emphasis added).”cxvi From these comments, it would therefore appear that the overall purpose of ACTA is not to limit the transit, sale, or distribution of generic medicine. Nonetheless, while this intent has been reflected through a number of press releases, likely aimed at bolstering public support, there is no record of negotiation binding the parties to this intent.

The importance of legislative history within the context of multilateral negotiations is that it establishes the parties’ intent at the time of negotiation, giving the text meaning in light of potential ambiguity. However, in the case of ACTA, there is no such record of negotiations as these have been highly secretive and mostly held behind closed doors.cxvii As a result, the only evidence of the parties’ actual negotiating intent comes from inferences that have been drawn from the modifications made to several leaked versions of the agreement.cxviii This paper suggests that based on these modifications, there be an unofficial “drafting history” established, reflecting a principle of intent aimed at upholding access to medicine. This legislative history would be a compilation of the parties’ stated objectives to the press, civil society, members of Congress and Parliament, and other government officials regarding the purpose of ACTA. These statements should be analyzed with respect to the various proposals for modification made by each respective party, as reflected by the leaked versions of the agreement. Furthermore, such a drafting history will require close scrutiny of prior versions of the text in comparison with its final version (to be released in the following weeks) in order to determine whether the parties did in fact bind themselves to their publicly stated objectives. Such an analysis will also allow scholars to draw inferences from the various amendments proposed and those that were actually adopted, such as the changes to border measures discussed above. Functionally, this drafting history will serve to provide guidance to officials whenever there may be ambiguity in the text, by establishing a principle that such ambiguity shall be read in light of the parties’ intent to provide for the unrestricted transit of generic medication.

V. CONCLUSION

Due to legitimate concerns that ACTA may be creating a new institutional framework of IP standards, it is vital that parties clearly define the limits of this new agreement. As we have seen with the cases of EU detentions, there is a genuine fear that heightened IP standards may have serious restrictions on the transit and ultimate distribution of generic medication within developing countries. For this reason, there is a need to clearly and effectively communicate that parties do not intend for this to be the case with the implementation of ACTA. Through publicly released statements, leaked drafts, and new amendments made to the agreement, it appears that the parties to ACTA have made active efforts to communicate that they do not intend to impede the flow of generic medication. However, there is still a need to bind parties to this principle through a more formal manifestation of this commitment.

i Global Health Council, Impact of Infectious Diseases. Available from: http://www.globalhealth.org/infectious_diseases (citing World Health Organization, WHO Global Burden of Disease: 2004 Update).

ii World Health Organization, Global Summary of Aids Epidemic: 2009. Available from: http://www.who.int/hiv/data/2009_global_summary.png. 

iii Medicines Sans Frontiers, Running In Place: Too Many Patients Still in Urgent Need of HIV/AIDS Treatment, Briefing Document on HIV/AIDS. Available from: http://www.msfaccess.org/main/hiv-aids/introduction-to-hivaids/msf-and-hivaids.

iv See Generally, Bryan C. Mercurio, TRIPS, Patents, and Access to Life-Saving Drugs in the Developing World, Marquette Intellectual Property Law Review 211 (Summer 2004).

v Id.

vi Id.

vii Id.

viii Id.

ix Oxfam Briefing Paper, Patents versus Patients: Five Years after the Doha Declaration, Oxfam International (November 2006).

x Id.

xi Id.

xii See Generally, Andrew Rens, Collateral Damage: The Impact of ACTA and the Enforcement Agenda on the World’s Poorest People. PIJIP Research Paper No. 2010-08, Program on Information Justice and Intellectual Property (2010).

xiii Susan Sell, Trips and the Access to Medicine Campaign, Wisconsin International Law Journal 481, 484 (2001-2002).

xiv Id.

xv Id.

xvi Id. at 485.

xvii Id. at 487, 488.

xviii Id. at 489.

xix Id. (noting that the US often used access to its large domestic market as a means to force other countries to adopt and enforce stricter intellectual property policies).

xx Daniel Gervais, Intellectual Property, Trade & Development: The State of Play, Fordham Law Review 505, 507 (2005).

xxi Id. at 509.

xxii Trade Related Aspects of Intellectual Property Rights Agreement (1994), available at http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm.

xxiii Bryan C. Mercurio, supra note 4, at 218.

xxiv Oxfam Briefing Paper, supra at note 9, at 5.

xxv Id.

xxvi Id.

xxvii Id.

xxviii Id. A compulsory license is a type of flexibility provided by the TRIPS Agreement, stating that countries may grant drug manufacturers the authorization to produce the generic version of a patented drug without the consent of the right holder in order to meet a public health emergency.

xxix Id.

xxx Bryan C. Mercurio, supra note 4, at 224.

xxxi Id.

xxxii Doha Declaration on the TRIPS Agreement and Public Health (2001), available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

xxxiii Id.

xxxiv Rahul Rajkumar, The Central American Free Trade Agreement: An End Run Around the Doha Declaration on TRIPS and Public Health, Albany Law Journal of Science and Technology 433, 441 (2005) (citing Doha Declaration).

xxxv Id.

xxxvi Agreement on the Trade Related Aspects of Intellectual Property Rights (1995).

xxxvii Rahul Rajkumar, supra note 35, at 444.

xxxviii Id.

xxxix Agreement on the Trade Related Aspects of Intellectual Property Rights (1995).

xl Oxfam Briefing Paper, supra note 9, at 9.

xli Id.

xlii Id. at 10.

xliii Id. (explaining the case in Brazil in 2005 after it threatened to issue a compulsory license, causing a 46% discount in the price of Kaletra, an anti-retroviral AIDS drug).

xliv See e.g., Medicine Sans Frontieres, available at http://www.msf.org.

xlv See Generally Bryan C. Mercurio, supra note 4.

xlvi Sisule F. Musung et al., The Use of Flexibilities in TRIPS by Developing Countries : Can They Promote Access to Medicine?, Study 4C, Commission on Intellectual Property Rights, Innovation and Public Health (August 2005).

xlvii Id.

xlviii Oxfam Briefing Paper, supra note 9, at 13.

xlix Id. (citing as an example, the US-Jordan free trade agreement).

l Id. at 15.

li Report of Committee on Government Reform, Trade Agreements and Access toMedicine Under the Bush Administration (June 2005).

lii Jorn Sonderholm, Intellectual Property Rights and the TRIPS Agreement: An Overview of Ethical Problems and Some Proposed Solutions, Policy Research Working Paper No. 5228, World Bank Development Research Group (March 2010).

liii Oxfam Briefing Paper, supra note 9, at 13. (USTR declaring an internal reorganization plan to “better support vital US innovation, including those of the pharmaceutical industry”).

liv Id. (noting that there are currently 20 pharmaceutical-industry representatives on USTR advisory committees).

lv 19 U.S.C. § 2411 (1974).

lvi Id.

lvii Oxfam Briefing Paper, supra note 9, 1t 14. (noting that this applies despite the fact that countries may be in compliance with minimum IPR standards required by the TRIPS Agreement).

lviii Id. at 17.

lix Government Accountability Office Report, supra note 60.

lx Id.

lxi Id.

lxii Id. at 41. (noting that several pending free trade agreements have been amended and made more responsive to provisions outlining TRIPS flexibilities).

lxiii Id.

lxiv Xavier Seuba, Free Trade of Pharmaceutical Products: The Limits of Intellectual Property Enforcement at the Border, International Centre for Trade and Sustainable Development, Issue Paper No. 27, 9 (2010).

lxv Council of Regulation (EC) No. 1383/2003 of 22 July 2003.

lxvi Id.

lxvii Xavier Seuba, supra note 65.

lxviii General Agreement on Tariffs and Trade (1947).

lxix Xavier Seuba, supra note 65, at 2.

lxx Id. at 5.

lxxi Id.

lxxii Id.

lxxiii Id.

lxxiv Negotiating countries include the US, the EU, Japan, Mexico, Switzerland, Australia, NZ, South Korea, Morocco, Singapore, and Canada

lxxv United States Trade Representative, ACTA Fact Sheet (March 2010), available at http://www.ustr.gov/acta-fact-sheet-march-2010.

lxxvi Id.

lxxvii ICTSD, Animated TRIPS Council Meeting Tackles Public Health, ACTA, Biodiversity, Intellectual Property Programme, Vol. 14:22 (June 16, 2010).

lxxviii Id.

lxxix ICTSD, ACTA Faces Criticism at WTO and in the United States, Bridges Weekly Trade News Digest, at 8, Vol. 14:38 (Nov. 3, 2010).

lxxx Id.

lxxxi Peter Mayberduk, ACTA and Public Health, PIJIP Research Paper No. 2010-09, Program on Information Justice and Intellectual Property (2010).

lxxxii Id. at 2.

lxxxiii Id.

lxxxiv Id. (citing Trade Related Aspects of Intellectual Property Rights Agreement (1994)).

lxxxv Id. (citing TRIPS Article 48).

lxxxvi Id.

lxxxvii Peter Mayberduk, supra note 82, at 3.

lxxxviii Id. at 5.

lxxxix Id.

xc Id. (These remedies include monetary damages, injunctions, and declaratory relief).

xci Id.

xcii Id.

xciii Anti-Counterfeiting Trade Agreement (August 2010).

xciv Brook K. Baker, ACTA: Risks of Intermediary Liability for Access to Medicine, Program on Information Justice and Intellectual Property, PIJIP Research Paper No. 2010-01.

xcv Id.

xcvi Id.

xcvii See Generally, Peter K. Yu, Six Secret (and Now Open) Fears of ACTA (June 14, 2010). SMU Law Review, Vol. 64, 2011.

xcviii Susan K. Sell, The Global IP Upward Ratched, Anti-Counterfeiting and Piracy Enforcement Efforts: The State of Play, IQsensato Occasional Papers No. 1 (June 2008) (stating that, “As soon as one venue becomes less responsive to a high protectionist agenda, IP protectionists shift to another In search of a more hospitable venue.”). 

xcix Kimberlee Weatherall, ACTA as a New Knd of International IP Law-Making, PIJIP Paper No. 2010-12, Program on Information Justice and Intellectual Property (2010).

c Id.

ci Id. at 6. (noting that several of the countries participating in ACTA negotiations are parties to a U.S. free trade agreement (either active or pending Congressional approval) and that the negotiating position of these countries has been influenced by their respective FTA with the US).

cii Id.

ciii Id. at 9.

civ Id. at 6.

cv Anti-Counterfeiting Trade Agreement (August 2010).

cvi Peter Mayberduk, supra note 82 (arguing that the key players behind this agenda are multinational tobacco, pharmaceutical, film and record companies, noting that these are the primary lobbying bodies behind the advancement of ACTA).

cvii Andrew Rens, supra note 12.

cviii Id.

cix ICTSD, Watered-down ACTA Approaching Conclusion, Bridges Weekly Trade News Digest, Vol. 14:30 (September 8, 2010)

cx Anti-Counterfeiting Trade Agreement (October 2010).

cxi Id.

cxii ICTSD, Watered-down ACTA Approaching Conclusion, supra note 110.

cxiii ICTSD, Officials Seek to Ease Fears of Privacy Violations under ACTA, Bridges Weekly Trade News Digest, Vol. 14: 25 (July 7th 2010).

cxiv Id.

cxv Letter from Ron Wyden to USTR, January 6, 2010, available at http://www.ustr.gov/webfm_send/1701.

cxvi Response from USTR to letter from Senator Ron Wyden, January 28, 2010, available at http://www.ustr.gov/webfm_send/1700.

cxvii See generally, Over 75 Law Profs Call for Halt of ACTA, available at http://www.wcl.american.edu/pijip/go/blog-post/academic-sign-on-letter-to-obama-on-acta (accessed November 22, 2010).

cxviii See generally, ACTA- Text and Leaked Documents, PIJIP Database, available at https://sites.google.com/site/iipenforcement/acta (accessed November 22, 2010).

Guadalupe Lopez Copyright © 2011

Life Sciences Strategies for Anti-Corruption & FCPA Compliance 23-24 June Washington, DC

The National Law Review is  a proud media sponsor of the upcoming Life Sciences Strategies for Anti-Corruption & FCPA Compliance – which addresses  the Unique Challenges and Risk Areas Tied to FCPA and Corruption Faced by the Pharmaceuticals, Medical Device and Biotechnology Companies  

Pharmaceutical and medical device companies operating overseas are particularly vulnerable to FCPA violations because of the nature of public health systems in many foreign countries where health care systems are owned and operated by the government. Given the fact that employees are in constant contact with the health care providers at different touch points within the organization, there is a need to ensure all interactions are monitored and effective policies are in place to curb any potential violations.

Gain insights on how to deal with issues stemming from gifts and entertainment of government officials to develop effective training programs and best practices in operating in emerging countries as well as dealing with 3rd parties.

With a one-track focus, the Life Sciences Strategies for Anti-Corruption & FCPA Compliance Conference is a highly intensive, content-driven event that includes case studies, presentations and panel discussions over two full days. This conference targets industry leaders from the pharmaceutical, medical device and biotechnology and clinical research organizations in order to provide an intimate atmosphere for both the delegates and speakers.

key conference topics include:

  • Analyze the key provisions of the UK Bribery Bill and the impact on life sciences industries by Abbott Laboratories

  • Identify practical strategies to develop effective global anti-corruption compliance program from CareFusion

  • Assess the challenges of conducting and implementing effective global traning programs by Medtronic, Inc.

  • Develop robust internal controls for 3rd party due-diligence by Talecris Biotherapeutics, Inc.

  • Address FCPA and corruption risk stemming from sales and marketing activities and interaction from Covidien

    •  

    key conference features include:

  • Expert Case Studies and Presentations by Industry Leading FCPA & Anti-Corruption Professionals

    •  

  • Illuminating Roundtable Discussions Led by St. Jude Medical (June 23rd) and Johnson & Johnson (June 24th)

  • Earn up to 16 hours of CLE Credits

    •  

    for more details and to register:


    ABA's 21st Annual National Institute on Health Care Fraud -May 11 – May 13 Miami Beach, FL

    The  ABA’s 21st Annual National Institute on Health Care Fraud provides a rewarding educational experience for health care attorneys, regulators, prosecutors, criminal defense attorneys, and qui tam relators’ counsel. This National Institute draws panelists, facilitators, and participants from each of these significant groups and offers unique opportunities to meet and share experiences and concerns in a non-adversarial setting.

    The program planning committee is committed to creating a program that advances education, communication, professionalism, and discussion of current legal and ethical issues that arise in the health care fraud practice. These issues are addressed in panel discussions and small workshop formats designed to maximize audience participation.

    Early Bird Tuition Rate- Expires April 11th

    Mandatory continuing legal education (MCLE) accreditation has been requested from all states which require continuing legal education. 16.75 hours of CLE credit including 1.25 hours of Ethics credit have been requested from those states recognizing a 60-minute credit hour and 20.10 hours of CLE credit including 1.50 hours of Ethics credit have been requested from those states recognizing a 50-minute credit hour.

    Program Location:

    Eden Roc Renaissance Miami Beach

    Wisconsin Tort Reform 2011: Governor signed the Omnibus Tort Reform Act

    As posted on the National Law Review by Joseph Louis Olson and Adam E. Witkov of Michael Best & Friedrich LLP – implications of the Wisconsin Omnibus Tort Reform Act signed into law today by Wisconsin Governor Scott Walker:  

    Governor Scott Walker signed the OmnibusTort Reform Act (the “Act”) today, January 27, 2011.  The Act addresses several areas of interest for Wisconsin companies.

    Specifically, the Act:

    Limits Punitive Damages.

    • Punitive damages are capped at to $200,000 or double the amount of compensatory damages, whichever is higher. The cap does not apply to lawsuits related to operating a motor vehicle while intoxicated.

    Raises the Standards for Expert Testimony.

    • This Act adopts the standard set forth in Federal Rule of Evidence 702, also known as the “Daubert standard.” The Daubert standard allows the admission of expert testimony only if it is based on sufficient factors or data and is the product of reliable principles and methods.

    Limits the Application of the Risk Contribution Theory.

    • This provision is a response to the Wisconsin Supreme Court’s 2005 decision in Thomas v. Mallett, 2005 WI 129, 285 Wis. 2d 236, 701 N.W.2d 523, where the Court permitted a case to proceed against seven paint manufacturers despite the fact that the plaintiff could not prove who made the lead-based paints that he claimed poisoned him as a child. The Act limits the holding in Thomas. If the claimant can not identify the specific product that allegedly caused the injury, a manufacturer, distributor, seller, or promoter of a product may be held liable only if all of the following apply: (1) the claimant proves: (a) no other lawful process exists for the claimant to seek any redress from any other person for the injury or harm; (b) that the claimant has suffered an injury or harm that can be caused only by a manufactured product chemically and physically identical to the specific product that allegedly caused the claimant’s injury or harm; and (c) that the manufacturer, distributor, seller, or promoter of a product manufactured, distributed, sold, or promoted a complete integrated product, in the form used by the claimant or to which the claimant was exposed, and that meets all of the following criteria: (i) is chemically and physically identical to the specific product that allegedly caused the claimant’s injury or harm; (ii) was manufactured, distributed, sold, or promoted in the geographic market where the injury or harm is alleged to have occurred during the time period in which the specific product that allegedly caused the claimant’s injury or harm was manufactured, distributed, sold, or promoted; and (iii) was distributed or sold without labeling or any distinctive characteristic that identified the manufacturer, distributor, seller, or promoter; and (2) the action names, as defendants, those manufacturers of a product who collectively manufactured at least 80 percent of all products sold in this state during the relevant production period by all manufacturers of the product in existence during the relevant production period that are chemically identical to the specific product that allegedly caused the claimant’s injury or harm.

    Limits Strict Product Liability Claims.

    • Under the Act, Wisconsin is now in line with the majority of other states that have adopted the “reasonable alternative design” test instead of the broader “consumer expectation” test. Accordingly, a manufacturer will be liable for damages caused by the manufacturer’s product based on a claim of strict liability only if the injured claimant proves that the product was defective, the defective condition made the product unreasonably dangerous, the defective condition existed at the time the product left the control of the manufacturer, the product reached the user or consumer without substantial change, and the defective condition caused the claimant’s injuries. If the injured party’s percentage of total causal responsibility for the injury is greater than the percentage resulting from the defective condition of the product, the injured party may not, based on the defect in the product, recover damages from the manufacturer, distributor, seller, or any other person responsible for placing the product in the stream of commerce. If the injured party’s percentage of total causal responsibility for the injury is equal to or less than the percentage resulting from the defective condition of the product, the injured party may recover but the damages recovered by the injured party shall be diminished by the percentage attributed to that injured party.

    Toughens State Rules Relating to Damages for Frivolous Claims.

    • In civil cases, a party or his or her attorney may be liable for costs and fees for actions that are done (1) in bad faith, solely for the purpose of harassing or maliciously injuring another; or (2) was without a reasonable basis in the law. If the offending party withdraws or corrects the improper conduct within 21 days of receiving the other party’s motion for fees, the court can decide whether to award actual costs taking into consideration the offending party’s mitigating conduct. If the offending party does not timely withdraw or correct the conduct, actual costs shall be awarded. If the decision is appealed and the appellate court affirms the award of fees, the offending party must also pay the attorney fees incurred in the appeal.  

    In addition to the tort reform provisions outlined above, the Act includes several health care related provisions previously discussed in a client alert dated January 10, 2011, also available here.

    © MICHAEL BEST & FRIEDRICH LLP

    Agencies Issue Additional FAQs on Health Care Reform and the Mental Health Parity Act

    Recent featured guest blogger at the National Law Review Penny C. Wolford of Ford & Harrison LLP – brings to our attend the recent actions by Departments of Health and Human Services, Labor and Treasury regarding the implementation of the the Patient Protection and Affordable Care Act (“health care reform”) and the Mental Health Parity and Addiction Equity Act.  Of most note to employers is: 

    Right before the holidays, the Departments of Health and Human Services, Labor and Treasury issued additional Frequently Asked Questions (FAQs) regarding implementation of the Patient Protection and Affordable Care Act (“health care reform”) and the Mental Health Parity and Addiction Equity Act. The guidance of most note to employers is as follows:

    1. Automatic Enrollment in Health Plans: The agencies clarified that the automatic enrollment requirement of health care reform does not become effective until the agencies issue regulations on the requirement. The Department of Labor indicated that it intends to issue regulations on the automatic enrollment requirement sometime before 2014.

    2. 60-Day Prior Notice Requirement for Material Modifications: Health care reform requires group health plans to provide notice of modifications to participants no later than 60 daysprior to the date on which the modification becomes effective. The agencies clarified that group health plans are not required to comply with the 60-day advance notice requirement until standards for the requirement are issued by the agencies.

    3. Dependent Coverage of Children to Age 26: Health care reform prohibits group health plans from making distinctions based upon age in dependent coverage. (For example, charging a higher premium for adult children than for minor children would be a prohibited distinction.) The agencies clarified that health care reform does not prohibit distinctions based upon age that apply to all coverage under the plan. Therefore, in answer to the specific question posed in the FAQs, the agencies determined that it is permissible for a group health plan that normally charges a co-payment for physician visits that do not constitute preventive services, to charge a co-payment to individuals age 19 and over, including employees, spouses, and dependent children but waive the requirements for those under age 19.

    4. Grandfathered Health Plans: The agencies clarified that a fixed amount cost-sharing, other than a co-payment, that is based on a percentage-of-compensation formula, will not cause a plan to lose grandfathered plan status as long as the formula remains the same as that which was in effect on March 23, 2010, even though the actual cost-sharing may change as a result of a change in the employee’s compensation.

    5. Mental Health Parity Act: The agencies issued several answers to questions on the Mental Health Parity Act, including: (a) confirming that a small employer exempt from the Act is an employer with 50 or fewer employees; (b) stating that a contracting health care provider can request and is entitled to receive the plan’s criteria for medical necessity determinations; and (c) explaining that plans can apply for the increased cost exemption under the Act if costs under the plan have increased at least 2 percent in the first year that the Act applies to the plan (the first plan year beginning after October 3, 2009), or at least 1 percent in any subsequent plan year (generally, plan years beginning after October 3, 2010.) The exemption lasts for one year and allows the plan to be exempt from the requirements of the Act for the following year. Plans can apply for the cost exemption by following the exemption procedures described in the 1997 Mental Health Parity Act regulations.

    6. Wellness Programs: Along with health care reform and the Mental Health Parity Act, the agencies also addressed a few FAQs on HIPAA and wellness programs. Most notably, the Department of Labor explained that under health care reform, the maximum reward that can be provided under a HIPAA wellness program will increase from 20% to 30%. The increase will not occur under health care reform until 2014. However, the agencies intend to propose regulations using regulatory authority under HIPAA to raise the percentage for the maximum reward that can be provided under a HIPAA wellness program to 30% before the year 2014.

    Employers’ Bottom Line

    The agencies continue to define the landscape of health care reform even for the first round of requirements that have already gone into effect or will be going into effect for employer‑sponsored plans beginning on or after the first plan year following September 23, 2010. Employers should keep an eye out for additional guidance and make a good-faith effort to comply with existing guidance with an understanding that additional adjustments may be necessary as further guidance and clarifications are issued.

    © 2011 Ford & Harrison LLP

    Arizona Employers Must be Ready for New Medical Marijuana Use Law

    From featured guest blogger at the National Law Review Dinita L. James of Ford & Harrison LLP, a great overview of Arizona’s Medical Marijuana Use Law: 

    Almost two weeks after the polls closed, Arizona became the 15th state in the nation to allow the use of marijuana for medical purposes. Proposition 203, or the Arizona Medical Marijuana Act, appeared unlikely to pass early on election night. However, after the early voter and provisional ballots were finally counted, the tally put the yes votes ahead by a mere 4,341 votes out of the nearly 1.7 million cast.

    The election results became official November 29, 2010. The Arizona Department of Health Services (ADHS) has 120 days from that date to promulgate regulations implementing the law. According to information from the ADHS, the agency will publish an informal draft of the regulations by December 17, 2010 and a formal draft by January 31, 2011. The agency has stated that it expects to issue final regulations by March 28, 2011. Thus, by spring of 2011, Arizona employers need to have reviewed their drug-testing and employment discrimination policies to ensure they comply with the new law.

    What Does the Law Provide?

    Generally, the law permits medical marijuana cardholders (which includes qualifying patients, designated caregivers, and nonprofit medical marijuana dispensary agents) to possess, transport and, in some situations, cultivate an allowable amount of marijuana for medical use. Significantly for employers, the law prohibits discrimination against medical marijuana cardholders and registered qualifying patients.

    Discrimination Prohibited: The law provides that employers may not discriminate against a person in hiring, termination or by imposing any term or condition of employment or otherwise penalize a person because of that person’s status as a medical marijuana cardholder, unless a failure to do so would cause an employer to lose a monetary or licensing related benefit under federal law or regulations. As noted above, medical marijuana cardholders may include not only patients, but also designated caregivers and nonprofit medical marijuana dispensary agents. Thus, the law creates a new category of individuals protected from discrimination.

    The law also prohibits discrimination against a registered qualifying patient based on that person’s positive test for marijuana unless the patient was impaired by marijuana on the employer’s premises or during the hours of employment. While the law does not require an employer to permit an employee to ingest marijuana at work or to work while under the influence of marijuana, it also states that a registered qualifying patient is not considered to be under the influence of marijuana solely because that person tests positive for marijuana metabolites in an amount that is insufficient to cause impairment.

    Who is a Qualifying Patient? A qualifying patient is a person who has been diagnosed by a physician as having a debilitating medical condition. Debilitating medical conditions include diseases such as cancer, HIV/AIDS, Hepatitis C, amyotrophic lateral sclerosis (Lou Gehrig’s disease), Crohn’s disease, and other conditions that result in certain symptoms such as wasting syndrome, severe and chronic pain, severe nausea, or severe and persistent muscle spasms. For a qualifying patient to receive a registry identification card, the patient must submit written certification from his or her physician stating that in the physician’s professional opinion the patient is likely to receive therapeutic or palliative benefit from the medical use of marijuana to treat or alleviate the patient’s debilitating medical condition or symptoms associated with the debilitating medical condition.

    ADHS will establish a process for issuing photo ID cards for qualified patients, designated caregivers, and authorized agents of dispensaries. The law requires the ADHS to act on applications for ID cards within 10 days and to issue photo ID cards within 5 days after approving an application. Thus, based on the time-frame given by the ADHS, employers can expect to see medical marijuana ID cards by mid-April 2011 and should be prepared to comply with the law by that date, at the latest.

    Employers’ Bottom Line:

    The law presents employers with a number of issues, some of which may be clarified after the ADHS issues its regulations. Zero-tolerance and pre-employment drug-testing policies likely will present the most challenges under the new law in light of the prohibition of discrimination against qualifying patients based on the presence of marijuana metabolites insufficient to cause impairment. Because there is no accepted testing standard for determining impairment due to marijuana use, this determination will by necessity be subjective unless the state issues regulations defining a standard to be used under the law.

    © 2011 Ford & Harrison LLP