CMS-FDA MOU Spells Opportunities and Challenges for the Life Sciences Industry
 
July 14, 2010
 
Michael M. Gaba- Washington

When FDA Commissioner Margaret Hamburg signed a Memorandum of Understanding (MOU) with the Centers for Medicare & Medicaid Services on June 25, 2010 (MOU 225-10-0010), she formalized an information sharing enterprise between these two Public Health Service agencies that has been evolving over the past few years. The two agencies have very different missions:

• The FDA's focus is to determine whether medical technologies, i.e., pharmaceuticals, medical devices, biologics, or some combination thereof, are safe and effective for their intended uses.
• CMS's focus is on coverage and payment, to determine whether items and services are "reasonable and necessary" to treat the Medicare population.

Sharing Data and Dialog

A decade ago, these two agencies communicated rarely and thought little about how the data they each collected could be refined or shared to better utilize their own limited resources and those available to the life sciences industry. Over the past several years, however, the FDA and CMS have recognized a stronger connection between their missions and a shared need for data and dialogue. The formal signing of the MOU, the terms of which have been negotiated for several years, is an important step consistent with the Department of Health & Human Services' and the Obama Administration's overarching mission of transparency in government operations.

The MOU is intended to promote collaboration and the sharing of information and expertise between the FDA and CMS in order to enhance both agencies' knowledge and efficiency. The goals of the collaboration are to develop better and more efficient inter-agency coordination by sharing each other's tools and expertise, and to build infrastructure and processes that will pave the way for the sharing of information used to evaluate the safety, efficacy, utilization, coverage, payment and clinical benefit of drugs, biologics and medical devices.

Privacy of Data Is Paramount

The MOU outlines several points of agreement, which set up the basic infrastructure for information sharing between the two agencies and address some of the complications that are likely to arise as a result of the collaboration. Much of the MOU deals with maintaining the privacy of the data shared between the agencies. In particular, the agencies agree to provide administrative, technical, procedural and physical safeguards against unauthorized disclosure of information protected by the Freedom of Information Act (FOIA), including personal privacy information, trade secrets and other confidential commercial information. Access to the shared information will be limited to authorized agency employees and officials who require access to perform their official duties. These individuals will be advised of the confidential nature of the information, the safeguards required to protect the information and all applicable penalties for noncompliance. Any FOIA request directed to the receiving agency will be forwarded to the agency that provided the information for its official response.

In addition, the agencies agree to protect against unauthorized use of shared information by implementing procedures to ensure that shared information is used solely in accordance with the Trade Secrets Act; the Federal Food, Drug and Cosmetic Act; the Privacy Act; and the implementing regulations of these statutes, as well as the HIPAA Privacy Rule. The agencies' use of the information will also be restricted to the purposes outlined in the MOU. Written approval from the agency providing the information will be required before the receiving agency will be allowed to use the information for any other purpose.

Principal Points of Contact

Each agency has assigned a principal point of contact, who will be directly responsible both for making initial requests for information on behalf of his agency and for receiving initial requests from its sister agency. FDA has designated as its principal point of contact David H. Dorsey, J.D., Acting Deputy Commissioner for Policy, Planning and Budget; CMS has selected Barry M. Straube, M.D., CMS Chief Medical Officer and the agency's Director of the Office of Clinical Standards and Quality, which is responsible for making Medicare coverage determinations. Dr. Straube's selection as CMS's principal point of contact is telling. It underscores the interest of CMS in accessing industry data generated for FDA purposes to determine its applicability in making national coverage decisions.

The MOU: A Double-Edged Sword

Both opportunities and challenges for the life sciences industry are posed by the MOU. Data shared within the confines of the agreement may allow for Medicare coverage and payment determinations to become effective upon FDA approval. Since the seminal 2003 CMS coverage and reimbursement decision for Johnson & Johnson's drug-eluting stent, which became effective upon FDA approval, very few similar scenarios have played out. Perhaps this MOU will trigger more activity in this area. The challenge will be in how data sharing and increased dialogue between the two agencies will impact each agency's decision-making. Will CMS's interest in the impact of new technologies on patient outcomes and comparative effectiveness influence FDA's review of safety and efficacy? How will FDA's approval of products for specific indications impact CMS's current coverage for off-label uses of products? While the FDA is eager to access Medicare claims data to help judge product safety and efficacy, will CMS be equally anxious to evaluate industry data generated to satisfy the FDA's post-market surveillance requirements to better inform its own coverage and payment decisions? Now that the MOU has been signed, the life sciences industry should closely watch and participate in this process to ensure its voice is heard as data flows between these sister agencies.

The authors acknowledge the assistance of Jennifer Nowak, a Law Clerk in the firm’s Washington, D.C. office, in the preparation of this alert.

Related Practices

• Healthcare & Life Sciences