October 2, 2009

FDA Regulatory Symposium

FDA Regulatory Symposium

Jim Davidson

Welcome to the 6-ring health care reform circus!

• White House

• Energy & Commerce

• Labor & Education

• Ways & Means

• Health Education

Labor & Pensions

• Finance

Health care reform — 1994• President Clinton elected with 43%

of the vote

• Congressional members/staff shut out of bill development

• 56 Democrats in Senate - 51 votes virtually impossible

• One lone Republican supported it - Jim Jeffords of VT

• Two House committees reported markedly different bills

• Chairman Moynihan not enthusiastic

• Speaker Foley distracted

Health care reform — 15 years later• President Obama elected with 53% of the

vote

• President offered broad outline - 5 Committees writing the bill

• 60 Democrats in Senate - 51 votes within reach - maybe 60

• One lone Republican supports reform - Olympia Snowe of Maine

• Three House and two Senate Committees likely to report bills

• Chairman Baucus - may have the glue to hold it together

• Speaker Pelosi and Chairmen Miller, Waxman and Rangel enthusiastic

Sen. Max Baucus

Come down from the 100,000 foot level to advertising issues

• Ad Industry Gears Up for Battles With Washington

• Health care, behavioral marketing and kids' TV among myriad fronts By John Eggerton – Broadcasting & Cable

• Up to now, advertisers and agencies have dodged a bullet

• 'Perfect storm?' This is more like a tsunami!

• Health care reform . . . could be double-edged sword

• 'I don't think . . . it would stop at prescription drug advertising.'

• Urban Institute study: Restrict snack food advertising

The ad fight is not over

•Chairman Henry A. Waxman: A moratorium is a 'top priority' speaking to the Prescription Project in December 2008

•Delivered same message to a media executive

•Waxman staff has echoed the quest for a moratorium

•Yogi was right - it ain’t over till it’s over!

Rep. Henry Waxman

Yogi Berra

Return to 2007•Democrats won majorities in House and Senate

•FDA Reform was a top priority for Chairman Kennedy and Chairman Dingell

•Senate and House FDA reform bills included advertising restrictions

• Moratoriums, pre-clearance of ad content, warning language/labels

•Reported on party line vote in HELP – lacked Senate votes

•Health Chairman’s ad restrictions defeated

Rep. Ed Towns

Rep. Steve Buyer

2008 – Setting the stage for round two

• Oversight Subcommittee launches investigations

• Lipitor: Dr. Jarvik’s medical credentials• Did Dr. Jarvik use a double?• Procrit: Was advertising of treatment for chemotherapy

induced anemia accurate?

• Vytorin: Effectiveness of drug to treat high cholesterol• Kaiser Research: “ . . . Public views are mixed about how

well drug ads present specific information about the drugs they advertise.”

Energy & Commerce Committee has changed

• New sheriff in town - he doesn’t like advertising

• 23 of 34 on Health Subcommittee voted with us in 2007

• 7 of the 23 have left the Subcommittee

• Subcommittee membership expanded to 39

• Thus we have potential 16 votes out of 39

• We have work to do!

Rep. Henry Waxman

Changes in political environment

• Multiple potential vehicles – begin with healthcare

reform or medical device and cosmetics legislation

• Current Acting Commissioner and Deputy

Commissioner at FDA – Joshua Sharfstein

• Stronger Democratic majorities in the Senate and

House

• President's Chief of Staff, Rahm Emanuel: Deny

deduction for ad costs

Joshua SharfsteinFDA Deputy Commissioner

Advertising draws critics across legislative spectrum

•Chairman Waxman believes ads expose more people to risk - wants 3-year moratoriums on new drug ads

•Waxman, Pallone, Dingell and Stupak believe FDA oversight is inadequate

•Rep. Moran would treat DTC advertising as indecent programming

Rep. Jim Moran

Rep. John Dingell

Why can't Congress do what it wants to pharmaceutical advertising?

•First Amendment:

• Congress shall make no law . . . abridging the freedom of speech, or of the press . . .

• Congress may regulate advertising:

• Regulation advances a substantial government interestCongress can assert public healthRegulation directly advances the asserted government interestWill less advertising protect patients – or hurt them?Regulation is not more extensive than necessaryHardly seems to permit 3-year moratorium on all ads for all new drugsRegulation must be the last and not the first resort!

Why can't Congress do what it wants to pharmaceutical advertising?

Thompson v. Western States Medical Center (2002)

• FDA rule banned advertising of compounded drugs

• Concern — compounding would become unregulated manufacturing

• Supreme Court struck down the regulation

• FDA had many other options to restrict compounding

• Cannot choose to restrict speech first

What the First Amendment really means• Supreme Court Justice Sandra Day O'Connor:

• " Even if the Government . . . fear[s] that advertising compounded drugs would put people who do not need such drugs at risk by causing them to convince their doctors to prescribe the drugs anyway, that fear would fail to justify the restrictions. . . “

• “ [It] amounts to a fear that people would make bad decisions if given truthful information about compounded drugs."

More threats - when has the First Amendment stopped Congress?

• The deduction of the cost of DTC advertising

• Proposed by Rep. Rahm Emanuel in 2008

• Reps. Nadler and Lipinski introduce bills to deny deduction

• Senate Finance debates, then rejects 'tax' on DTC advertising

• 16 media and advertising groups weigh in with concerns

House Ways and Means Committee – To Tax or Not to Tax

• Chairman Rangel briefs reporters on $37 billion tax on advertising

• The Advertising Coalition presents economic, First Amendment objections

• The Advertising Coalition reaches out to White House

• Issue reminds me of Ken Burns' photographs of Mt. Kilauea

Chairman Charles B. Rangel (D-NY)• "One thing that's not off the table is you can pick up $37 billion knocking out the deduction for advertising" for prescription drugs.

• “It's inappropriate for taxpayers to subsidize ads for pharmaceuticals because they encourage viewers to ask for drugs they may not need. I do it. I go to the doctor and say, 'Did you ever think about ordering this for me? If he says no, I don't like him, because they promised me on TV that I have no

bl t ll "

Rep. Dan Lipinski (D-IL)

• "There's no reason the American people should subsidize big pharmaceutical companies' marketing expenses when they already have plenty of incentives to spend that money."

• "The time for that is over and the advertising tax break that health insurance companies currently enjoy is a gift they don't deserve."

What could flow from the threat of taxing DTC advertising?

• Bad precedent: First time Congress denied

deduction for any advertising

• Chilling effect on willingness of companies

to buy advertising

• Deprives public of important information

• Amorphous definition: Includes marketing

and not just advertising

Calculating the lost deduction for advertising costs

• Estimated $4.6 billion spent on DTC advertising in 2008

• Discounts by media reduce actual amount to $3 billion

• Using top corporate marginal rate:

• 35% x $3 billion = $1.05 billion/$10.5 billion over 10 years

• Where does the other $27 billion come from?

• Physician marketing events

• Medical journals

• Free samples

What more is on the horizon?

• More proposed taxes on DTC

advertising

• Possible extension to OTC

advertising and medical devices

• Waxman proposals to impose

moratoriums

• New frontier: Internet and social

media advertising

The Advertising Coalition• ABC

• American Advertising Federation

• American Association of Advertising Agencies

• Association of National Advertisers

• CBS

• Grocery Manufacturers of America

• Magazine Publishers of America

• National Association of Broadcasters

• NBC Universal

• National Cable & Telecommunications Association

• National Newspaper Association

• Newspaper Association of America

• Pharmaceutical Research & Manufacturers of America

• Time Warner

Thank you!

• Jim Davidson

• 1152 15th Street Northwest, Suite 800

• Washington, D.C. 20005

• jdavidson@polsinelli.com

• www.polsinelli.com