The FDA should make GMPregulations more specific,attorney says............Page 2

The FDA is continuing itscrackdown on unapproveddrugs as PharmaFab entersinto consent decree with theagency.....................Page 7

Warning letter: The FDA isrequiring Niagara Pharma-ceuticals to file a new drugapplication for its OTC eye-wash products...........Page 7

Industry guidance on con-taminated glycerinreleasedby the FDA .............Page 8

The FDA intends to requestaccess to a newly launchedEuropean Medicines AgencyGMP database..........Page 9

Akorn says that an FDAwarning letter for its De-catur, Ill. facility will costthe firm $2 million in rev-enue ........................Page 9

IINNSSIIDDEE TTHHIISS IISSSSUUEE

Issue No. 178May 2007

Regulatory Authorities Should Share Inspection Information Globally

Roche and Genentech are advocating that regulatory authoritiesthroughout the world share information from facility inspections inorder to reduce duplicative audits by multiple countries.

Manufacturing facilities owned by Roche had more than 70 in-spections by foreign authorities in 2005 and the company found thatthere was a large overlap of what observations the different regulato-ry agencies made.

“Each inspection basically starts from ground zero,” VirginiaBeakes-Read, Genentech director of regulatory liaison, said at theFood and Drug Law Institute’s 50th Annual Conference last month.Beakes-Read gave the presentation on behalf of Roche, which ownsa majority stake in Genentech.

“There’s no information exchange. There’s no acceptance of re-sults or observations from other inspections and when Roche looked

(See Warning Letters, Page 6)

(See Global Inspections, Page 4)

Warning Letters Sent to Headquarters RequireCorporatewide cGMP Assessments

When the FDA sends a warning letter to corporate headquar-ters, the agency is expecting that the company assess its manufactur-ing compliance across the entire firm, Fredric Richman, director ofthe FDA’s Division of Compliance Management Operations, said.

“Where a warning letter has been sent to a corporate head-quarters, [we expect] there will be a corporatewide assessment,”Richman said during the Food and Drug Law Institute’s 50th AnnualConference.

During a recent FDAnews audioconference, industry expertsstressed that the FDA is increasingly taking a corporatewide view ofcGMP compliance (GMP, April 2007).

Page 2 DRUG GMP REPORT May 2007

FDA Should Consider Making GMP Regulations More Specific

The FDA should consider whether it is betterto make GMP regulations more specific and, inturn, rely less on guidance documents, attorneyDaniel Jarcho said at a recent industry conference.

Jarcho, a partner with McKenna, Long &Aldridge, questioned whether the FDA should beeffectively pushing guidance as legal requirementsin a presentation at the Food and Drug Law Insti-tute’s 50th Annual Conference.

“Would it be better to rely less on guidancesand make the regulations more specific so thatfor whatever quality principles the agency be-lieves are important to require as a legal matter,we can all go to the Code of Federal Regulations… and see what those requirements are?” Jarchoasked. “I think that the agency ought to be askingthose questions as it goes forward.”

Jarcho noted the case of the U.S. v. Utah Medical Products in which the court ruled that theFDA’s use of the Quality System Compendium andthe Process Validation Guidance as a basis for reg-ulatory action was inappropriate because the guid-ance requirements were not reflected in regulations.

Following the ruling, Utah Medical Systemssubsequently filed a petition with HHS asking thedepartment to review the FDA’s conduct in en-forcing quality systems regulations, alleging thatFDA inspectors abused their powers.

In the case, the FDA argued that although theprinciples in the guidance documents are not bind-

ing, many manufacturers were following the princi-ples and therefore they were industry standards,and thereby cGMPs, Jarcho said.

Although the case demonstrates that an enforcement action based on guidance documentsmight not stand up in court, Jarcho noted thatfirms, generally, are more concerned with main-taining good relations with the FDA.

“If the companies contest the imposition ofspecific requirements that are derived from guid-ances, there’s a good chance that the agency is go-ing to lose,” Jarcho said. However, firms are notnecessarily concerned with winning in court. Theyare more concerned with cooperating with the FDAand making the issues disappear, he said.

“There’s a general impression that GMPs aresort of this free-flowing, ever-evolving set ofquality principles that aren’t necessarily writtendown anywhere, but as time goes on and thingsimprove, they change, and they then can be en-forced by the agency,” Jarcho said.

One of the problems Jarcho noted was thatfederal agencies, under the Administrative Proce-dures Act (APA), are required to initiate a formalrulemaking process with comment periods for newregulations. One of the reasons for the APA, Jarchosaid, is to give companies time to check the Code of Federal Regulations and understand their legal obligations.

One area where the lines are blurred betweenlegally binding requirements under GMP regula-tions and guidance recommendations is when in-spectors cite firms for “objectionable conditions” on establishment inspection reports (EIRs).

The FDA’s Investigations Operations Manu-al instructs inspectors to note deviations from of-ficial industry guidance documents in EIRs anddiscuss them with management, Jarcho said.

“So the practical effect of this, in many instances, is that companies have an impressionthat guidances are binding,” Jarcho said. On theother hand, some firms are “not interested infinding out whether this legal matter is binding or not. They want to make the investigator hap-py,” he added. — Christopher Hollis

Michael AnisfeldPresidentGlobepharmDeerfield, Ill.Troy FugateVice PresidentCompliance InsightHamilton, OhioRalph DillonDirectorCompliance Surety AssociatesMundelein, Ill.

EEDDIITTOORRIIAALL AADDVVIISSOORRYY BBOOAARRDD

May 2007 DRUG GMP REPORT Page 3

Page 4 DRUG GMP REPORT May 2007

at the data there was really a 90 percent overlapin the questions that were asked and the observa-tions that were made,” Beakes-Read said.

Roche estimates that one inspection requiresapproximately 120 man-days of work and that 1,500foreign inspections are conducted globally each year.

“The amount of time that goes into thesethings, it’s not just an inspector coming into aplant. It is phenomenal the impact this has on theindustry, on the company [and] the time that’staken in terms of preparation,” Beakes-Read said.

Instead of focusing on duplicative inspec-tions, Beakes-Read noted, regulators could be de-voting resources to fighting counterfeit drugs andworking on harmonizing GMP regulations.

Top Ten Inspection Agencies

According to the company, the followingcountries have the top ten inspection agencies inthe world: U.S., Brazil, EU, Mexico, Uganda, Ko-rea, Colombia, Australia, Libya and Canada. Thefirm has confirmed inspectorates from nearly 40countries, most notably Nigeria, Iran and Yemen.

However, Roche said that just one organiza-tional unit conducting one or two inspections ofeach manufacturing site annually would be ideal.

“How do we do it?” Beakes-Read asked.“We share inspection reports, coordinate inspec-tion programs, have joint inspections.” In addi-tion, use of a risk-based approach for schedulinginternational inspections, acceptance of GMP cer-tificates, joint development of global manufactur-ing guidelines and working with the Pharmaceuti-cal Inspection Cooperation Scheme (PIC/S) areother ways to improve the process, Beakes-Readsaid (see related story, page 9).

PIC/S, which is an organization made up ofmostly European health authorities, and Canadaand Australia, is used to exchange informationand experience in GMP related areas.

“Regulatory authorities could apply formembership, get trained and then share informa-tion” and have a common database of inspectionreports, Beakes-Read said.

“From an intellectual property perspective… it’s not like you’re sending a whole data regis-tration package to a country,” Beakes-Read said.“We’re asked to send batch records, all kinds ofstuff, to avoid inspections. Well if we could dothat by sharing our [Form] 483 and there is con-sent, that would be a great thing.”

In that case, firms would not have to dealwith inspectors from several different countrieswalking through their facilities and visually ob-serving manufacturing techniques that are regard-ed as trade secrets, Beakes-Read added.

Matthew Eckel, staff director for Europe, har-monization and trade in the FDA’s Office of Inter-national Programs, expressed support for coopera-tive efforts between health agencies globally.

“I actually have a lot of optimism for thisarea,” Eckel said. “I totally agree with the goal ofsaying ‘Look if there’s 90 percent commonalitybetween our inspection and the UK inspection, itwould be really great if they give us the 90 per-cent and we can make a decision, do we need tosee the remaining 10 percent, maybe we do, butthat’s a lot shorter of an inspection.’”

The FDA applied for membership to PIC/Slast year, but Eckel said that FDA entry into theorganization could be complicated because theagency does not have the authority to revokemanufacturing licenses and does not provide ex-port certificates to other countries as assurancesfor U.S. manufactured products.

Eckel also noted regulatory agencies fromdifferent countries may approach facility inspec-tions from an alternative perspective. For exam-ple, the FDA’s most mature relationship regard-ing joint inspections is with Switzerland. Yetthese joint inspections may yield different resultsthan what other inspection authorities find.

“Even if our laws differ, they can still havedifferent emphases when they go into the plant,”Eckel said. “We had an experience when one ofthe plants we jointly audited down in Puerto Ricoturned out to get inspected six months later bythe UK and they shut it down after we both hadsaid ‘It looks fine to us.’” — Christopher Hollis

Global Inspections, from Page 1

May 2007 DRUG GMP REPORT Page 5

Page 6 DRUG GMP REPORT May 2007

Richman also gave the agency’s perspectiveon when warning letters would not be issued,such as in cases where the FDA anticipates nottaking regulatory action, or when it finds that afirm is uncooperative.

“We would … not generally issue a warningletter if we are not prepared to take an enforce-ment action should the firm not provide us withan adequate correction. Further, we also need toknow from our investigators whether the firm ap-pears to be willing and fully interested in taking aprompt and effective corrective action,” Richmansaid.

Enforcement vs. Warning Letters

Richman also described certain situationswhere noncompliant companies would be subjectto regulatory actions other than warning letters.

“It’s not FDA’s practice to issue warning let-ter after warning letter after warning letter. If thefirm has been previously warned about similar oreven other [Food, Drug & Cosmetic] Act or otherstatutory regulation violations, either through awarning letter or an untitled letter, or a regulatorymeeting or other meetings, then there should beno expectation on the part of the firm that anotherletter will be issued,” Richman said

In addition, “where there have been inten-tional or flagrant violations, or Title 18 criminalviolations, one should not expect those to bebrought to the attention of their firm in a warningletter,” Richman continued.

Warning letters are issued where there is alikelihood of prompt and voluntary correction,Richman said, adding that in situations where in-tentional or flagrant violations of a criminal na-ture have occurred, criminal prosecutions wouldbe the appropriate agency action.

However, warning letters could be issued to firms with histories of going in and out of

compliance, only taking corrective actions whenthe FDA shows up on its doorstep, Richmansaid.

“We look at the risk posed by the product,and most importantly the risk posed by a prod-uct that’s manufactured under poor conditions.If such risk is so great that [the firm] has to beput on formal notice, and if we believe that aformal response is needed from the firm outlin-ing, in detail, their specific corrective action,then we may decide to issue a warning letter,”Richman said.

In addition, the FDA may issue a warningletter even if the firm begins corrective actionsduring the inspection. “If following or even dur-ing an FDA inspection, a firm begins to acknowl-edge the out-of-compliance conditions and beginscorrecting them, that’s great. But does that meanthe firm will not receive a warning letter, or anuntitled letter, or be called into the district or anFDA center for a regulatory meeting? No,” Rich-man said.

Timetables and Acquisitions

The agency also considers a company’s pro-posed timetable for bringing its operations intocompliance following inspections. “The timetablefor completion of the corrective actions has to beacceptable to FDA, and it needs to be commensu-rate with the risk that’s posed by the violativemanufacturing conditions,” Richman said.

After being asked for the FDA’s opinion re-lated to the issuance of warning letters for newlyacquired manufacturing facilities, Richman said,“We expect that corporations do their homeworkbefore they acquire companies and know whatthey’re getting into.

“We may give some relatively small amountof time for the firm to catch up and become fa-miliar with the operations of the new company[and] new technology, but nothing changes thefact that these companies have to comply withthe law,” Richman added. — Christopher Hollis

Warning Letters, from Page 1

May 2007 DRUG GMP REPORT Page 7

FDA Continues Crackdown On Unapproved Drugs

The FDA is continuing its crackdown on firmsdistributing unapproved drugs with a recent con-sent decree with contract manufacturer PharmaFab.

The decree requires PharmaFab to halt the“illegal manufacture and distribution of prescrip-tion and OTC drug products” and bring the firm’sproduction operations into conformance withcGMPs, the FDA announced April 25.

The consent decree follows two warning let-ters citing PharmaFab for marketing unapprovednew drugs and for serious deviations from cGMP,the agency said.

“The consent decree requires the defendantsto destroy certain illegal drugs and bars themfrom distributing all drugs until they obtain re-quired FDA approval and fully comply withcGMP,” the FDA said.

In addition, PharmaFab is required to retainan auditor to conduct inspections of productionfacilities for five years and provide subsequent

reports to FDA regarding compliance of the site.

“The decree also allows FDA to require re-call or shutdown in the event of future violationsand provides for damages of $5,000 per day and$1,000 per violation, up to a maximum of $5 mil-lion per year, if the defendants fail to complywith its terms,” the agency said.

In response to the consent decree, Phar-maFab told DGR that “over the next severalmonths, PharmaFab will work diligently so thatits facility will be certified by FDA as being indrug cGMP compliance in order to again com-mercially manufacture approved drug products.”

Ownership of the company has been trans-ferred to an unidentified party and the companyplans to file the appropriate new drug applica-tions and abbreviated new drug applications re-quired to resume manufacturing operations.

The unapproved drugs include: De-Conges-tine sustained release capsules; guaifenesin1200/dextromethorphan 60/pseudoephedrine 60

FDA Requiring NDA’s For Purified Water

The FDA is requiring Niagara Pharmaceuti-cals to submit a new drug application (NDA) ifthe firm wants to continue selling its OTC eye-wash preparations in the U.S., despite the factthat the active ingredient in the product is puri-fied water, according to an FDA warning letter.

Currently, several hundred thousand units ofthe eyewash products have been denied entry intothe U.S. market because of the letter, Robert Schiff,CEO of regulatory compliance consulting firmSchiff & Company, told DGR. “This is a very un-usual situation as to how to proceed,” Schiff said.

Because the product is sterilized via gammaradiation, the agency is requiring the NDA, andcited the firm in the letter for marketing an unap-proved product. Schiff, who is representing thecompany, said that one option under considera-

tion is to file a 505(b)(2) application with theFDA. The application would be based on litera-ture reviews, include summaries of the manufac-turing process and lot validations.

Schiff explained that Niagara uses the radiationmethod because it is required in Canada. HealthCanada mandates the use of gamma irradiation inthe sterilization process for these products; however,the FDA prefers the use of aseptic filtration, he said.

During the interim, the company intends toretain a contract manufacturer to produce its eye-wash solutions as it prepares the submission tothe FDA, Schiff said.

The agency warning letter also cited thefirm for cGMP observations (DGR, April 2007).Niagara has subsequently responded to the letterand agreed with the FDA’s observations. Themanufacturing issues are currently being correct-ed, Schiff said. — Christopher Hollis

(See FDA Crackdown, Page 8)

Page 8 DRUG GMP REPORT May 2007

FDA Releases Guidance On Contaminated Glycerin

The FDA is warning manufacturers, com-pounding pharmacies, repackers and suppliers toconduct appropriate tests to ensure that contami-nated glycerin is not used in pharmaceutical liq-uids, according to an agency guidance documentpublished in the Federal Register.

Glycerin is used in manufacturing and com-pounding pharmaceutical syrups. Recent cases ofthe product being contaminated with diethyleneglycol (DEG) led the agency to release the guid-ance. DEG is a sweet-tasting poison used in auto-mobile antifreeze.

DEG poisoning outbreaks occurred in Pana-ma in October 2006, and in Haiti in 1995 and1996, the FDA said. Hundreds of child deaths inArgentina, Bangladesh, India and Nigeria result-ed from DEG poisoning between 1990 and 1998,according to the agency.

The contaminations occurred because manu-facturers of certain cough syrups did not conductfull identity tests on the raw material and reliedon certificates of analysis submitted by glycerinsuppliers that did not contain a chain of custodyfor the ingredient, the FDA said.

The agency is recommending manufacturersperform appropriate tests to prevent further con-tamination. “It is critical that all manufacturersand others using glycerin to manufacture or pre-pare drug products be aware of the importance ofproperly testing glycerin to detect DEG contami-nation,” the FDA said.

The tests, in accordance with cGMP regula-tions, are required to identify each component ofa drug product, the FDA said. The recommendedtests include limit and identity tests listed in theUSP monograph for glycerin, or a thin-layerchromatography testing method.

The agency is also recommending thatrepackers and compounding pharmacists test forthe poison. The relevant safety limit on DEG is0.01 percent, per the USP monograph for glycerin.

Additionally, the agency asks that precautionsbe taken to identify reliable suppliers for othercomponents, such as propylene glycol, that havebeen associated with DEG poisoning in the past.

DEG was responsible for 107 poisoningdeaths in 1937 when then manufacturer S.E.Massengill mixed its antibiotic sulfanilamidewith the chemical to make a liquid form of sul-fanilamide primarily for pediatric use. The inci-dents eventually lead to the codification of thefederal Food, Drug and Cosmetic Act in 1938.

The guidance, “Testing of Glycerin for Diethylene Glycol,” is at www.fda.gov/OHRMS/DOCKETS/98fr/07D-0135-gdl0001.pdf. — Christopher Hollis

extended-release tablets; Rhinacon A tablets; Su-dal 12 chewable tablets; Histex PD 12 suspen-sion; Atuss HX CIII; ergotrate tablets; andhyoscyamine sulfate time-release capsules.

The manufacturing problems at PharmaFabhave also contributed to a legal dispute betweenAuriga Laboratories and Athlon Pharmaceuticals.Auriga licensed the Levall brand of cough and coldproducts from Athlon in 2006, and PharmaFabmanufacturered Levall G, a guaifenesin and pseu-doephedrine oral solution, under contract to Athlon,according to court documents filed by Auriga.

Although the legal dispute centered aroundAthlon marketing competing products to theLevall franchise, a clause in the contract calledfor a royalty reduction to be paid to Athlon if acontract manufacturer for the products received aForm 483 within 36 months prior to the date ofthe agreement, Auriga said.

Further, Auriga “PharmaFab’s cessation ofproduction of the Levall G product has or willlead to a complete elimination and impairment of Auriga’s new sales for the Levall G product,”Auriga said.

The firms have subsequently entered into asettlement agreement which included the royaltyreduction. — Christopher Hollis

FDA Crackdown, from Page 7

FDA Intends to Request Access To New European GMP Database

The FDA is planning to request access to theEuropean Medicines Agency’s (EMEA) new in-spection database to help determine surveillancepriorities, the agency told DGR May 3.

The EMEA announced the launch of thedatabase May 1. The system, called EudraGMP,is designed to facilitate the exchange of informa-tion on cGMP compliance, the EMEA said.

The Center for Drug Evaluation and Researchintends to request access to the consolidated EMEAinspection database, the FDA said. The agency hasprovided regulators in the European Union with ac-cess to similar information, the agency noted.

“FDA expects to use the database in decid-ing FDA surveillance priorities, including the fre-quency and duration of FDA inspections in EUcountries,” the agency said.

Currently, EudraGMP is accessible to EU

member states, as well as Iceland, Liechtensteinand Norway, the EMEA said.

“The availability of EudraGMP is expectedto greatly improve the sharing of information andcoordination of action in the area of manufactur-ing authorizations and GMP certificates between-national competent authorities,” the EMEA said.

“Efficiency gains are anticipated through theelimination of duplication of work,” the EMEAsaid. “The database is also expected to facilitate in-formation sharing on the outcome of EU inspectionswith certain regulatory authorities outside the EU.”

The agency anticipates that the database willbe populated with 7,000 new GMP certificatesannually and it will include GMP certificates is-sued to sites outside of Europe.

“With the addition of third-country inspec-tions and following the introduction of new GMPrequirements for active substances, the databasewill grow rapidly over the coming years,” theEMEA said. — Christopher Hollis

May 2007 DRUG GMP REPORT Page 9

Firm Estimates That Warning LetterWill Cost $2 Million in Lost Revenue

Parenteral drug and contract manufacturerAkorn is anticipating a $2 million reduction inrevenue due the receipt of an FDA warning letter,the company said.

The March 29 warning letter, issued follow-ing inspections Sept. 12 through Sept. 29, 2006,at its Decatur, Ill., facility, is holding up thelaunch of IC Green (indocyanine green), an in-jectable product indicated for determining cardiacoutput, hepatic function, liver blood flow and forophthalmic angiography, the company said.

Akorn has filed an application with the FDAfor a manufacturing site change and no inventoryfor IC Green is currently available. The firm isworking with the FDA’s Drug Shortage team tobring the product to market in an expedited man-ner, the company said.

The warning letter cited Akorn for failing todetermine whether numerous product complaintsfor its AK-Fluor (fluorescein injection) were re-

lated to visible precipitate found in the product,which led to a global investigation initiated in2004, the agency said.

“Although your firm documented that ad-verse reactions to the drug substance itself are notunusual in this product, the question of a possibleconnection between the illnesses and injuries re-ported and the precipitate still needs to be ad-dressed, either to confirm such a connection or torule it out,” the FDA said.

Failure to initiate a global investigation foradditional complaints relating to AK-Fluor wasalso cited as a violation of a standard operatingprocedure (SOP) established in January 2006,which requires that complaints of a similar naturebe globally investigated.

None of the AK-Fluor complaints receivedsince the last FDA inspection in 2005, includingthose that have occurred since the effective dateof the SOP, referenced the 2004 global investiga-tion of AK-Fluor, the FDA said.

(See Akorn, Page 10)

Page 10 DRUG GMP REPORT May 2007

“The assertion made in your FDA-483 re-sponse that the subsequent complaints were notsubject to the SOP because they were not similarin nature lacks credibility,” the agency said. Apercentage of the complaints “were for the sameproduct codes that were the subject of the com-plaints leading to the 2004 Global Investigationand most of these involved illness and injury, asdid the 2004 complaints,” the FDA said.

Additionally, investigations of out-of-speci-fication results within the required 30-day time-frame per SOPs were not completed, and ap-proval for extensions were not obtained, the FDAsaid. The firm also did not complete deviation re-ports for the late complaints required by SOPs.

“We note that failure to follow written pro-cedures pertaining to investigation follow-up andcompletion of corrective actions within specifiedtimeframes is a repeat observation from our No-vember 8 through 19, 2004 inspection of yourfirm,” the agency said.

In addition, the quality assurance officer alsoverified a corrective action for an out-of-specifi-cation result before the actual correction tookplace, the FDA said.

The firm was also allowing employees accessto common areas while wearing factory scrubs anddedicated factory shoes. In addition, there are nomeasures employed to prevent cross-contaminationfrom factory shoes worn in locker rooms wherenon-factory shoes were also worn, the FDA said.

The firm was also cited for not placing multi-

ple, nonviable particulate monitoring devices with-in an appropriate vicinity to critical aseptic fillingzones. In the firm’s Form 483 response, the compa-ny explained that although the subject probes werenot physically within a certain proximity to the crit-ical areas, the locations were appropriate becausethe position allowed the devices to “experiencehigher counts,” the FDA said.

However, “During the inspection, our inves-tigator asked why the laser particle counter (LPC)units were placed … away from the critical asep-tic fill zone. He was told that the general shapeand size of the LPC units and the position of theattached monitoring tubing present some limita-tions with regard to the placement of the LPCunits,” the FDA said.

While the optimal positions for monitoringmay not necessarily be within a certain vicinity ofthe aseptic fill zone, “the size and shape of themonitoring equipment should not be the decidingfactor in selecting these locations,” The FDA said.

Akorn said that it expects the warning letter tohold up the in-service date of its lyophilizer(freeze-dried) manufacturing services operations,which it does not currently possess and previouslyexpected to have in place by mid-2007. As of theend of 2006, the firm spent approximately $22 mil-lion on updating its lyophilization operations, as itplaned to develop an internal abbreviated new drugapplication lyophilized product pipeline.

Akorn also received a warning letter for theDecatur facility in 2000. The most recent warningletter can be viewed at www.fda.gov/foi/warning_letters/s6329c.pdf. — Christopher Hollis

Akorn, from Page 9

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ePrescribing: Sizable Gaps Exist

Between Policy and Practice

Sizable gaps may exist between policymakers’ vision of eprescribing and physicians’ actual use of

commercial eprescribing products, according to a recent study published in the April 3 online issue of

Health Affairs.

The study, contracted by the Agency for Healthcare Research and Quality, was based on 44 telephone

interviews with doctors at 21 physician practices, 12 of which employed at least 51 doctors and nine of

which employed 20 or less. It was also based on input from five industry experts.

Eprescribing leads to basic documentation benefits, and is also intended to help doctors modify their

prescribing choices by providing drug interaction safety alerts and complete information on medications

and dosages.

Although physicians were positive about eprescribing systems’ most basic benefits, such as prescrib-

ing safety, reduced pharmacy callbacks, improved prescription renewal management and practice efficien-

cy, many respondents said their systems’ advanced features were either not completely functional or non-

existent, according to study researcher Joy Grossman, with the Center for Studying Health System Change,

and co-authors.

Experts Suggest Legislative

Fixes for EHR Adoption

Health IT (HIT) has enormous quality and cost-saving potential, but small physician offices “are lag-

ging badly in adopting it,” Mark Leavitt, chair of the Certification Commission for Healthcare Information

Technology, said at a recent hearing.

Fewer than one out of 10 small practices have fully switched to electronic health records (EHRs), he

added, speaking before the House Subcommittee on Regulations, Healthcare and Trade.

Leavitt said the main barriers to HIT adoption by small practices are cost and risk. Purchasing a comprehen-

sive EHR system, including hardware, software and training, costs $15,000–$50,000 per physician, he said.

Smaller practices experience the highest per-physician costs and the lowest return on investment, with

most of the savings going to healthcare payers, he said. “The healthcare payment system provides no addi-

tional reimbursement to physicians for employing EHR technology.”

Margaret Kelley of Southeast Ob-Gyn Associates said there is a mistaken belief “that physicians will easi-

ly recoup their investment … [but HIT] makes many offices significantly less efficient for months or even

May 2007

(See EHR, Page 2)

(See ePrescribing, Page 3)

PPHARMAHARMADEVICEEVICEPHARMADEVICETMTM

A monthly supplement to Drug GMP Report covering Part 11-related issues.IT REPORTIT REPORTIT REPORT

years after upgrading” because of installation and

training. And even when efficiencies are realized,

they don’t necessarily translate into more patients

or more revenue, she said.

Medicare and private sector health insurers

“are complicit in keeping us in a paper-based sys-

tem” by not recognizing the value of technology

and by underpaying small practices, Kelley said.

Leavitt suggested restructuring physician pay-

ments to include incentives for HIT adoption and

to use HIT to measure and improve quality.

Lynne Kirk, president of the American Col-

lege of Physicians (ACP), recommended that

Congress consider legislation to build an add-on

code for office visits and other services into the

Medicare physician payment system.

Bills introduced in the last Congress includ-

ed the options of grants, loans, tax credits or a

combination of the three, she said. “We believe

those funding mechanisms, coupled with a

Medicare add-on, are sufficient to put the neces-

sary HIT systems into the hands of solo and

small physician practices.”

The administration has taken some steps to ad-

vance HIT adoption, Kirk said, noting that in 2004,

President Bush called for the widespread adoption of

interoperable EHRs within the next decade.

However, the bills to support HIT have failed

to pass both houses of Congress, “making the pres-

ident’s 10-year goal seem out of reach,” she said.

Kirk said ACP believes it is “absolutely essen-

tial” for Congress to offer targeted financial assis-

tance programs to help solo and small medical prac-

tices afford the start-up and ongoing costs of HIT.

The average annual ongoing cost is approxi-

mately $8,500 per physician, she said, adding

that reimbursement policies should allow physi-

cians to share in the systemwide savings that re-

sult from HIT.

Small practices also face significant risks

when converting to electronic records, including

the risks of selecting the wrong product or endan-

gering patient privacy if computer systems are in-

adequately secured.

Leavitt said that certification of EHR prod-

ucts can mitigate the risks to practices by:

� Reducing risks they face when purchasing

HIT;

� Ensuring that the systems they buy are inter-

operable;

� Enhancing the availability of financial in-

centives and regulatory relief; and

� Ensuring these systems will be secure.

Another area of concern is the lack of a uni-

form standard between EHR vendors, Kevin

Napier of Internal Medicine of Griffin, said. For

example, if a solo practitioner were to join anoth-

er group, he could not integrate his old patient

files into the new practice without a costly con-

version process, Napier said.

In addition, when physicians use EHR tem-

plates, they confront the problem that insurance

chart reviewers often scrutinize templates, claim-

ing that using templates makes it easier to bill at

higher levels, according to David Shober of

Lawrence County Family Medicine.

Justification for higher billing is dependent

upon the content of the physician’s documenta-

tion, he said. A larger amount of documentation

substantiates a higher-level code, which pays

more reimbursement.

Furthermore, a legal concern is that template

notes are often attacked in the courtroom or in a

deposition, he said. “An insinuation is made that

the examination was not done and the documen-

tation was not appropriate,” he said.

Shober said the use of templates must be ac-

cepted as a standardized type of recordkeeping,

and that congressional support of this would be

beneficial. — April Astor

Page 2 PHARMADEVICE IT REPORT May 2007

EHR, from Page 1

May 2007 PHARMADEVICE IT REPORT Page 3

For physician practices with systems that lack

access to electronic medical records (EMRs), tech-

nical difficulties with receiving complete patient

medication history files made it so that physicians

could only view complete histories for a subset of

patients. Doctors also could not tell when prescrip-

tions had been discontinued.

The study authors also noted that physi-

cians’ views differed on the utility of eprescribing

formularies for medication selection. “In many

practices, physicians routinely ignored the formu-

lary information, for a variety of reasons. Some

physicians thought that it covered too few pa-

tients to be worthwhile or that the data were un-

reliable,” Grossman wrote.

“Others found little value in the automated

suggestions for alternative medications or felt

strongly that they should select the most medical-

ly appropriate drugs for patients without regard to

the formulary,” Grossman continued.

In noting the limitations doctors encountered

with eprescribing, Grossman said that the Centers

for Medicare & Medicaid Services’ eprescribing

initiative could serve as a model for electronic

formulary data standards.

HHS has been working with the private sector

on pilot testing systems to develop standards for in-

corporating formulary and patient benefit informa-

tion in eprescribing applications, Grossman said.

“These technical standards may address

some of the functional and implementation barri-

ers identified in this study,” Grossman said.

Practices that used EMRs in conjunction with

eprescribing systems did see some clinical benefits.

For example, doctors said they were less likely to

authorize prescription renewals without the appro-

priate documentation. “Respondents believed that

the greatest time savings came from streamlining

management of renewals, particularly for patients

with multiple medications,” Grossman wrote.

Two-thirds of respondents used eprescribing

modules that were attached to EMR systems.

Grossman noted that practices using stand-alone

eprescribing systems continued to pull charts to

access needed clinical data, although they dealt

with fewer calls from pharmacies because of pre-

scription legibility.

As for the economic benefits of eprescribing

systems, “several respondents felt that there were

no substantial savings because any efficiency

gains needed to be balanced against the upfront

and ongoing costs of implementing the system,”

according to Grossman.

Only one practice could identify savings

from eprescribing. However, most others provid-

ed examples of how it freed up support staff for

other tasks, Grossman said. In general, “their per-

spective was that eprescribing produces better

outcomes for a comparable effort.”

Effect on Selecting Generics

Physicians using eprescribing systems gen-

erally believe that the technology assists them in

prescribing generic medications, Grossman said.

“While most physicians claimed that they

had been active generic prescribers even before

they began eprescribing, they generally believed

that eprescribing tools (for example, formulary

information or medication dictionary) made these

efforts somewhat easier,” Grossman wrote.

Although roughly half of physician practices

interviewed did not have access to patient formu-

lary information in their eprescribing systems,

“physicians who regularly used formulary data

did report some marginal change in prescribing

practices,” Grossman wrote.

Most physicians noted that the medical dic-

tionary features of eprescribing systems did assist

in identifying generic medications, Grossman

told PIR in a separate interview. Medical diction-

aries are core features of any eprescribing system,

Grossman said. — Christopher Hollis

ePrescribing, from Page 1

BRIEFS

Page 4 PHARMADEVICE IT REPORT May 2007

First Company to eSubmitAstraZeneca was the first pharmaceutical com-

pany submitting its drug reporting documents elec-

tronically to the FDA through the agency’s Electron-

ic Submissions Gateway, the company announced.

The company is using SAFE (Signatures and

Authentication for Everyone) digital signatures

for the electronic submissions, which helps elimi-

nate the need to create, verify, store and maintain

original paper documents, AstraZeneca said.

AstraZeneca has submitted more than 150

drug safety and other digitally signed documents

to the FDA since September 2006.

The company will speak about its experiences

with SAFE signatures and the FDA’s electronic sub-

missions process at a conference on digital identity

management May 24. In addition, a white paper is

now available describing how the company adopted

SAFE digital signature technology on the SAFE-

BioPharma website, www.safe-biopharma.com.

The SAFE-BioPharma Association is a non-

profit association that created and manages the

SAFE digital identity and signature standards.

CMS Launches HIT ProgramThe Centers for Medicare & Medicaid Ser-

vices (CMS) announced the national launch of

Doctor’s Office Quality Information Technology

University, or DOQ-IT U, to support health infor-

mation technology (HIT) in physicians’ offices.

DOQ-IT U is an interactive, web-based tool

to provide solo and small-to-medium sized physi-

cian practices with the education to adopt HIT,

including lessons on culture change, vendor se-

lection and operational redesign, as well as clini-

cal processes. The elearning system is free.

DOQ-IT U will provide assistance to physi-

cians in the adoption and implementation of elec-

tronic health records, CMS Acting Administrator

Leslie V. Norwalk said.

More information on the program can be

viewed at elearning.qualitynet.org.

USDA Provides Telemedicine LoansThe U.S. Department of Agriculture (USDA) is

providing $62.9 million in distance learning and

telemedicine loans, $75 million in loan and grant

combinations and $15 million in grants to help serve

rural communities, the department announced.

The USDA said it has invested more than

$166 million in its Distance Learning and Telemed-

icine Program over the past five years, adding that

the funding has helped 2,226 healthcare institutions

develop new technologies to improve local care.

The technology allows physicians to examine

patients and direct their treatment from remote treat-

ment centers. Patients in rural areas will also be able

to participate in educational programs through dis-

tance learning plans, the department added.

The USDA recommended the new funding

be used to enhance rural critical access to hospi-

tals and key community facilities.

President: Cynthia Carter; Publisher: Matt Salt; Editorial Director: Christopher Changery; Executive Editor: Elizabeth Saloom

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