The SEC is asking companies and investors to put on their thinking caps for some brainstorming next year on ways to simplify securities disclosure requirements to improve their effectiveness and minimize duplication.
As part of its obligations under the Jumpstart Our Business Startups (JOBS) Act, the SEC submitted a report to Congress Friday that provides a framework for a comprehensive review of the commission’s disclosure rules. The report, which was due in October 2012, goes beyond the JOBS mandate, which dealt solely with the SEC’s registration rules.
Noting that the last comprehensive revision of the disclosure rules was in 1996, the SEC staff report recommended an in-depth review of the rules, including those related to risk, a registrant’s business and operations, corporate governance, executive compensation, offerings, exhibits and other general requirements. Additionally, the report suggested comprehensive reviews of industry guides, financial reporting and other disclosure requirements contained in rules and forms.
For the review to be truly comprehensive, it should go beyond the rules themselves to include disclosure requirements developed through interpretations in SEC releases, staff interpretations and guidance. It also should consider whether external factors, such as enforcement actions and judicial opinions, “may have contributed to the length and complexity of company filings and the costs of compliance,” the report said.
Recognizing that an economic analysis is necessary in re-evaluating the disclosure rules, the staff proposed a number of economic principles that should be considered in the review, including:
• the historical objectives of a given rule;
• the extent to which a requirement entails high administrative and compliance costs, especially for emerging growth companies;
• the extent to which disclosure of proprietary information may have competitive or other economic costs, particularly for emerging growth companies;
• the importance of maintaining investor confidence in the reliability of public company information to encourage capital formation.
The framework laid out in the report is the first step in reforming the rules. The next step is for the SEC staff “to develop specific recommendations for updating the rules that dictate what a company must disclose in its filings,” commission Chairwoman Mary Jo White said.
To do that, the SEC will seek input from companies about how to make the disclosure rules work better for them. It also will ask investors about what information they want and how it can be best presented.
“For their part, companies should examine how they can improve the quality and effectiveness of their disclosures and how our rules can be improved to facilitate clear and effective communications to investors,” said Keith Higgins, director of the SEC’s Division of Corporation Finance.
Drug spending to increase
The amount the U.S. spends on prescription drugs is expected to grow 5.2 percent in 2014, according to the Centers for Medicare & Medicaid Services (CMS).
The forecast attributes 2.9 percent of that growth to the Affordable Care Act (ACA), as CMS anticipates increased use of prescription drugs among people who are newly insured and those who will have expanded coverage under the act.
The predicted increase follows an 0.8 percent decrease in 2012 that CMS chalked up to the patent cliff that resulted in greater use of generics, increases in cost-sharing requirements and lower spending on new drugs.
CMS projected greater increases in drug spending in subsequent years. For 2015 through 2022, rising prices and increased utilization are expected to drive a 6.5 percent overall average annual growth in prescription drug spending. Other factors for that growth include the aging population, a leveling off of the generic dispensing rate and the prescribing of drugs earlier in the treatment process.
The ACA also is expected to push up the overall spending of health care by 6.1 percent in 2014, with an annual 6.2 percent growth rate from 2015 through 2022. Total health care spending in 2022 will be about $621 billion, making up about one-fifth of the U.S. Gross Domestic Product, CMS said.
Invitation ‘misbrands’ Vascepa
An invitation to physicians to sign up for webcasts on using Amarin Pharmaceuticals Ireland Ltd.’s Vascepa drew the ire of the FDA’s Office of Prescription Drug Promotion (OPDP).
Although it’s basically a bare-bones schedule of webcasts, the invitation “misbrands” Vascepa (icosapent ethyl) because it presents two efficacy claims without conveying any risk information, OPDP said in a letter issued last week.
One efficacy claim OPDP pointed to is the actual invite, which reads: “Join us to learn more about lowering triglyceride (TG) levels in adult patients with very high TG, including a review of key clinical data for Vascepa followed by a question-and-answer session with faculty.”
Amarin made the second efficacy claim, OPDP said, when it included the drug’s current indication – use as an adjunct to diet to reduce TG levels in adults with severe hypertriglyceridemia – in a one-column box beneath the webcast schedule. The box also listed limitations of use that say the effect of the drug on the risk for pancreatitis and on cardiovascular mortality and morbidity in patients with severe hypertriglyceridemia has not been determined.
Right below the instructions on registering for a webcast, the invitation said: “Please see the accompanying full prescribing information for Vascepa.” Including that statement and the accompanying prescribing information didn’t mitigate “the misleading omission of risk information” from the invitation itself, OPDP said.
The untitled letter coincided with the FDA’s notice last week that it was delaying its decision on approving a supplemental indication that would expand Vascepa’s label to adults on statin therapy with mixed dyslipidemia and triglyceride levels between 200 mg/dL and 499 mg/dL. A few months ago, an advisory committee voted 9-2 against recommending approval of the new indication, citing the need for data from a cardiovascular outcomes trial that won’t be completed until 2016. (See BioWorld Today, Oct. 17, 2013.)