News Briefs

Bill bars insurance for civil penalties

Legislation that would prohibit officers, directors and employees from buying insurance shielding them from personally paying compensation clawbacks or civil penalties for harmful actions they commit has been introduced in the U.S. House of Representatives.

The bill, H.R. 5860, called the Executive Compensation Clawback Full Enforcement Act of 2012, would require those facing regulatory or civil penalties for financial wrongdoing to be personally liable for the penalty.

The measure, introduced by Reps. Barney Frank, D-Mass., Henry A. Waxman, D-Calif., and Collin C. Peterson, D-Minn., would bar such individuals from seeking to protect their personal assets from such penalties, and would also bar companies from doing so on their behalf.

It would apply to civil penalties imposed under the Wall Street Reform and Consumer Protection Act of 2010, the Sarbanes-Oxley Act, and other federal financial regulatory laws.

“The provision of the financial reform bill mandating that compensation systems for financial executives which include bonuses also make possible clawbacks is an important step forward in our efforts to avoid the terrible mistakes of the past,” Frank said in a statement. “The creation of insurance policies to insulate financial executives from clawbacks is one more effort by some in the industry to perpetuate a lack of accountability.”

Senate passes FDA drug safety measure

A bill that would revamp the way the Food and Drug Administration reviews and inspects drugs and medical devices has passed the U.S. Senate by a wide margin.

The FDA Safety and Innovation Act, S. 3187, passed the Senate on a 96-1 vote.

The changes are included in a reauthorization bill that provides funding for essential FDA safety approvals and reviews.

The bill would increase the ability of FDA regulators to oversee and respond to safety issues involving prescription and over-the-counter drugs, and speed up the approval process for some potentially life-saving breakthrough drugs by allowing shorter clinical study times.

The bill would also allow the FDA to use outside inspectors to monitor manufacturing facilities and require the agency to provide an explanation for denying approval for some low-risk medical devices within 30 days.

Some say the legislation falls short.

“Tens of thousands of patients have been seriously harmed by dangerous and defective medical devices in recent years because our current system fails to ensure they are safe and effective,” Lisa McGiffert, director of Consumers Union’s Safe Patient Project, said in a statement. “The Senate bill makes some improvements in the law but fails to address some longstanding flaws in our medical device oversight system that endanger patient safety.  Congress is missing the opportunity to fix a broken system that lets too many unsafe medical devices on the market and limits the FDA’s ability to protect patients when problems arise.”

State AGs seeking generic-drug law

State attorneys general are urging Washington lawmakers to pass a bill that would allow generic drug makers to face the same liability as brand-name drug companies for failing to include adequate warnings on drug labels.

In a letter to Senate Judiciary Committee Chairman Sen. Patrick Leahy, D-Vt., 41 state attorneys general urged the passage of the Patient Safety and Generic Drug Labeling Act, S. 2295. The measure, introduced by Leahy, would require generic drug manufacturers to update their warning labels to protect patients from previously unknown side effects.

The bill would overturn the U.S. Supreme Court’s ruling in PLIVA v. Mensing, which held that state-law failure-to-warn claims against generic drug makers were preempted by federal law, which requires generic drugs to carry the same labeling as their brand name counterparts.

“This preemption holding produces arbitrary and unfair results, as both the majority and dissenting opinions in PLIVA recognized,” the letter states. “Consumers whose prescriptions happen to be filled with the brand-name version of a drug are protected by state law from inadequate warnings, but consumers whose pharmacists fill their prescriptions with the generic version are now denied this protection. The adverse consequences are magnified by the fact that over 70 percent of prescriptions in the United States are filled with generic drugs.”

The AGs join others, including the American Medical Association, AARP, Public Citizen and the Alliance for Justice in pressing for passage of the legislation.

NLRB member quits after document leak

After coming under fire over allegations that he leaked confidential documents to former members, National Labor Relations Board member Terence F. Flynn announced that he would resign.

The resignation will be effective July 24, but Flynn immediately recused himself from all agency business and asked that President Obama withdraw his nomination for board member, according to an NLRB statement.

The resignation comes after NLRB Inspector General David Berry released reports concluding that Flynn had violated ethics rules by disclosing confidential information about board cases and activities to former board members Peter Kirsanow and Peter Schaumber when Flynn was serving as chief counsel to board member Brian Hayes.

The inspector general’s reports also concluded that Flynn attempted to conceal his actions by deleting some of the communications upon learning of the investigation.

At the time of the alleged information leaks, Kirsanow served in his current role as outside counsel for the National Association of Manufacturers, and Schaumber was labor advisor to the presidential campaign of former Massachusetts Gov. Mitt Romney. Schaumber stepped down from Romney’s campaign after the NLRB inspector general investigation began.

Berry’s findings will be forwarded to special counsel to determine if any federal laws were broken, and several members of Congress called on Flynn to resign based on the reports.

Flynn has denied wrongdoing.

Rule would boost nonbank  oversight

The Consumer Financial Protection Bureau is proposing a regulation that would increase its oversight of nonbank entities such as mortgage lenders, mortgage servicers, payday lenders, consumer reporting agencies, debt collectors and money services companies.

The proposed rule would boost the agency’s authority to supervise nonbanks under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The act allows the CFPB to supervise nonbanks that the agency has reasonable cause to believe pose a risk to consumers based on consumer complaints or other information it receives.

The measure also specifies how such nonbank entities are to be notified of CFPB action and how they can respond.

“This is an important step in the development of our nonbank supervision program,” CFPB Director Richard Cordray said in a statement. “This proposal allows us to reach nonbanks that we would not otherwise supervise, while providing industry with a streamlined process that is fair and efficient.”

— Compiled by Kimberly Atkins