Theranos, the health-tech and medical lab startup, was once one of the most hyped companies to come out of Silicon Valley. In 2014, after catching the attention of high-profile investors, the company reached a valuation of $9 billion. Following several employee and journalistic leaks in 2015, however, the public began to see the company for what it was, a fraud. An October 3, 2016 Inside Compliance article titled “Theranos: New Compliance Program Hopes to Save the Company,” was written following Theranos’ appointment of two outside executives to oversee regulatory, quality, and compliance standards. It is now clear that these efforts to save Theranos were too little too late, but we see some useful takeaways from Theranos’ downfall. This article will explore the key lessons learned as it relates to leadership, ethics, and compliance.
The Department of Health and Human Services Center for Medicare and Medicaid Services have proposed a ruleto update the proficiency testing (PT) regulations under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). The new rule seeks to address current analytes, substances or constituents for which the laboratory conducts testing, and newer technologies. The rule would further make technical changes to the PT referral regulations to be more closely aligned with the CLIA statute.
On February 22, 2019, the Department of Health and Human Services submitted a final rule to the Federal Register, substantially altering existing guidelines for family planning programs’ reception of federal funds under Title X of the Public Health Service Act (PHS Act). Among other things, the new regulations prohibit qualifying programs from referring patients to abortion providers. Public statements from organizations such as Planned Parenthood suggest lawsuits for injunctive relief are imminent.
On January 15, 2019, Senators Ron Wyden and Jeff Merkley sent a letter to the U.S. Food and Drug Administration (FDA) urging the agency to update its federal regulations governing the use of certain cannabis-derived ingredients in food, beverages and dietary supplements. As writers of the Hemp Farming Act, Wyden and Merkley, initiated the removal of the hemp plant and derivatives of Cannabis sativa from the list of controlled substances under the Controlled Substance Act. The Hemp Farming Act passed as a provision in the Agriculture Improvement Act of 2018, and thus, legalized the production and sale of industrial hemp and hemp-derived compounds, including cannabidiol (CBD).
The Common Rule, the Federal policy protecting human subjects of biomedical and behavioral research, was published in 1991. The process to update the policy has taken place over the last several years, leading to the final rule revisions which were effective as of July 19, 2018. After January 20, 2019, institutions are now permitted to implement the entirety of the revised Common Rule. Any institution receiving funds, supervision, or review from any of the twenty Federal Departments and Agencies that have codified the Common Rule must implement this revised rule in their compliance programs.
A pair of injunctions in the Northern District of California on January 13, and the Eastern District of Pennsylvania on January 14, halted the implementation of amendments to a religious exemption to the so-called contraception “mandate” of the Affordable Care Act, also known as Obamacare. The “mandate” requires most employers to include contraception coverage in the insurance plans they offer to employees. While Obama administrative agencies contemplated religious exemptions early on, contentious litigation and political transition expanded the scope of the exemption until these latest developments.
In September 2018, the Food and Drug Administration (“FDA”) announced a new policy that provides for the release of a list of retailers that have received a food subject to recall. In the past, the FDA did not release such information because the agency deemed it confidential commercial information. The lack of information on the part of the FDA has been a huge detriment to the public. Prior to the new guidance, the public would only find out information about the particular food that was being recalled, not where this recalled food was available for purchase. The public was told just to stop purchasing that recalled food, whether it be romaine lettuce or beef, even if there were retailers who were selling non-contaminated products. This procedure not only hurts the public but also has a huge financial effect on those retailers who are not selling contaminated or recalled products. The FDA has effectuated a new guidance because they have found that such information is necessary to enforce a recall and to ensure public safety.
Just in time for holiday shopping, and at the beginning of Q4, President Trump delivered some news for holiday shoppers. In what shocked some, but others found as expected and inevitable, President Trump continued his message to the world that the US will not be “handing out donations” much longer. His latest re-negotiation to bring dollars back to the US has left overseas ecommerce providers wondering what the latest move in this Administration’s financial overturn is going to do for their business. It’s not the big players like Amazon that’ll feel the brunt of this, but the smaller players in the eCommerce space that outsource their products overseas may feel a hit in their margins as this move by Trump takes its toll.
The National Institute of Health (NIH) has submitted a proposal to amend the NIH Guidelinesfor research involving recombinant or synthetic nucleic acid molecules. The proposed amendmentseeks to streamline the oversight for human gene transfer clinical research protocols and reduce duplicative reporting requirements already captured within existing regulatory framework. The amendment specifically seeks to delete the NIH protocol registration submission and reporting requirements under Appendix M of the NIH Guidelines, and modify the roles and responsibilities of entities involved in human gene transfer or the Recombinant DNA Advisory Committee(RAC).
The rise of electronic cigarettes was initially met with relaxed FDA regulation given optimism that they could help adult smokers curb use of more toxic combustible cigarettes. This optimism was in spite of e-cigarettes’ growing popularity among adolescents and young adults. On September 12, the FDA signaled a pivot from this approach when FDA Commissioner Scott Gottlieb described youth e-cigarette use as having reached epidemic proportions. Gottlieb announced that the FDA had issued more than 1,300 warning letters and fines to retailers caught selling e-cigarette products to minors. It also issued an order to the five major e-cigarette manufacturers (Juul, Vuse, Blu, MarkTen XL, and Logic) to each submit a plan outlining how the company will address youth access and use of their products. Failure to submit a sufficient plan could lead the FDA to revisit its earlier decision on flavored e-cigarette products, which allowed manufacturers a grace period until 2022 to receive FDA approval.