Medical Device Daily Washington Editor

The amount of negative press that FDA has endured over perceived bias in its advisory panels has stirred things up at the agency and prompted a review of its advisory panel protocols dealing with conflicts of interest.

As a result, the agency has issued a new draft guidance that reduces the amount of financial interest a prospective panelist can possess before being disqualified to sit on an advisory committee.

Randall Lutter, PhD, the agency's acting deputy commissioner for policy, said in a statement that the draft guidance "should provide more consistency in the consideration of who is eligible to participate in advisory committee meetings and would simplify the process" of making that determination. If FDA follows through with this draft, it will replace a guidance that came out seven years ago on this subject, the Waiver Criteria 2000. The FDA docket is open for 60 days for public comment.

The draft document states that the previous process was "complex and has been poorly understood," and that while the agency has observed the same set of conflict-of-interest laws that is in place for other government agencies, "the public has a particular interest in and high expectations for FDA's process."

On the other hand, the agency acknowledges that the 2000 edition of the waiver criteria document was sufficiently complex that even FDA "centers and offices found it difficult to achieve consistent results that the public could readily understand." The idea behind the new guidance is that it will "increase the transparency, clarity and consistency of the advisory committee process and enhance public trust in this important function."

Broadly speaking, the guidance would disqualify a prospective participant if he or she has a financial interest of more than $50,000, "regardless of the need for her expertise," and any interest of a lower aggregate value would be able to participate on a non-voting basis only, assuming that the need for that individual's expertise "outweighs the potential conflict."

The previous guidance allowed, in some circumstances, for as much as $100,000 in holdings, in some circumstances.

The proposed guidance lays out a six-step procedure for determining eligibility: Among these steps.

• Determination of whether the panel meeting will address a "particular matter," as opposed to "consideration or adoption of broad policy options."
• Determining whether or not the meeting will exert "a direct and predictable effect on the financial interests of the affected" organization(s). While this decision is insensitive to "the magnitude of the gain or loss," a prospective panelist cannot be ruled out by a "chain of causation [that] is attenuated or is contingent on the occurrence of events that are speculative or that are independent of and unrelated to the matter" at hand.
• Determination of the potential financial interest of the prospective panelist, his/her spouse or "general partners," prospective employers, and "any organization in which the member serves as an officer, director, trustee, employee or general partner."

Should the would-be panelist clear this hurdle, any financial interests that were held within the 12 previous months will disqualify the candidate if those interests would have resulted in disqualification were those interests still in force.

Some exemptions to the financial interest rule still apply, including if the interest is in the form of a pension "or other employee benefit" or in diversified mutual funds.

GAO report says CMS lax on tax fraud

The Government Accountability Office continues its watchdog ways with a March 20 report to the Senate Permanent Subcommittee on Investigations (part of the Senate's Committee on Homeland Security and Governmental Affairs), and officials at GAO testified that CMS is not making use of a program that allows the Internal Revenue Service to collect back taxes from Medicare providers, an oversight that could be costing Uncle Sam upwards of $100 million a year.

According to the report posted at the GAO web site, "our analysis of data provided by HHS and IRS indicates that over 21,000 Medicare Part B physicians, health professionals and suppliers had tax debts totaling over $1 billion." The total number of providers comes out to about 5% of all doctors, providers and suppliers, and the unpaid taxes "largely consists of individual income and payroll taxes."

GAO asserted that "our $1 billion estimate of tax debts owed…is understated because IRS data does not reflect all amounts owed," but excludes tax returns that have not been filed and underreported tax liabilities. The report also stated that audits of IRS activities indicated that the agency's data "contain coding errors that affect the accuracy of taxpayer account information, including erroneous exclusion of tax debt from IRS's collection activities."

The report gives some egregious examples of taxpayer fraud, including that of an operator of an ambulance service who paid his employees in cash, but was still doing business with CMS after a fraud conviction.

In another, a physician uncovered in the investigation reportedly "gambled millions of dollars at the same time that the individual owed hundreds of thousands of dollars in federal taxes."

More routine problems were with physicians who "were sanctioned by their state medical boards for, among other things, drug abuse and sub-standard care."

According to GAO, while "federal law generally prohibits IRS from disclosing taxpayer data to HHS and its contractors unless the taxpayer provides consent," HHS has no policy to ask a contractor or doctor for consent and as a consequence, has no mechanism to prevent providers and suppliers from doing Medicare business. Also, the Taxpayer Relief Act of 1997 apparently authorizes IRS to continuously levy "certain federal payments to delinquent taxpayers," but HHS is said to have made no effort to make use of this program, and no relevant tax debt has been collected via CMS.

"As a result, we estimate that for the first nine months of calendar year 2005 alone, the federal government lost opportunities to collect between $50 million and $140 million in unpaid federal taxes."