The Food and Drug Administration (FDA) this week put five electronic-cigarette makers on notice that they're violating federal manufacturing and drug-safety laws. 

The FDA also announced it will begin regulating the industry in the name of public health.

"FDA invites electronic cigarette firms to work in cooperation with the agency toward the goal of assuring that electronic cigarettes sold in the United States are lawfully marketed,” Janet Woodcock, director of FDA's Center for Drug Evaluation and Research, wrote in a letter to the Electronic Cigarette Association, a lobbyist group.

Powered by a battery, electronic cigarettes vaporize liquid drugs so that users can inhale them. And nicotine isn't the only drug available for the devices: some companies market them for their capability to deliver weight-loss and erectile dysfunction drugs. 

Under current law, "a company cannot claim that its drug can treat or mitigate a disease, such as nicotine addiction, unless the drug’s safety and effectiveness have been proven," FDA said in a release. "Yet all five companies claim without FDA review of relevant evidence that the products help users quit smoking cigarettes."

The FDA gave the companies 15 days to respond.

This post was updated at 12:39 p.m.

Gloves coming off… The rift between the White House and the insurance industry grew more pronounced this week, as the two sides traded barbs over the influence of healthcare reform on a recent wave of proposed premium hikes.

Hearing news that some companies — proposing rate increases up to 9 percent — told customers the reforms forced the hikes, Health and Human Services Secretary Kathleen Sebelius dashed off a letter to the insurance lobby Thursday warning of "zero tolerance" from the White House for "misinformation and unjustified rate increases." 

"Given the importance of the new protections and the facts about their impact on costs, I ask for your help in stopping misinformation and scare tactics about [the law]," Sebelius, a former state insurance commissioner, wrote Thursday in a letter to America's Health Insurance Plans (AHIP), the industry lobbying group. 

"I want AHIP's members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections."

Hardly cowed, AHIP snapped back Thursday evening, arguing that "basic law[s] of economics" demand that new benefits will come with additional costs. 

"The new health care reform law mandates that health insurance coverage include a wide range of new benefits beyond what many families and small businesses previously purchased," Karen Ignagni, AHIP president and CEO, said in a statement. "It's a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before."

And all of this before the medical loss ratio rules are in place. 

GOP touts GAO report that clears Democrats of propaganda: House GOP leaders on Thursday trumpeted a new report from the Government Accountability Office (GAO) finding that an informational brochure mailed to seniors in May contained no propaganda about the new reform law.

The main health insurance lobby reacted strongly Thursday afternoon after the Obama administration called on health plans to stop "misinformation and scare tactics" about the healthcare reform law.

The administration's letter to America's Health Insurance Plans comes after several health plans told customers that they were raising rates in part because of the new reform law. In it, Health and Human Services Secretary Kathleen Sebelius warned: "I want AHIP's members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections."

"Health insurance premiums are increasing because of soaring prices for medical services, the impact of younger and healthier people dropping their insurance during the weak economy, and additional benefits required under the new law," AHIP President and CEO Karen Ignagni responded in a statement. "The new health care reform law mandates that health insurance coverage include a wide range of new benefits beyond what many families and small businesses previously purchased. It's a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before. Health plans will continue to do everything they can to incorporate all of these new benefits while keeping health care coverage as affordable as possible for families and employers."

Sebelius acknowledged that the new law will cause an increase in premiums, albeit "minimal."

"According to our analysis and those of some industry and academic experts, any potential premium impact from the new consumer protections and increased quality provisions under the Affordable Care Act will be minimal," she writes. "We estimate that that the effect will be no more than one to two percent."

Excessive premium hikes, Sebelius warns, will not be tolerated.

"We will also keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014. Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections."

The nation's largest business lobby on Thursday urged Senate lawmakers to back the full repeal of a controversial provision of the new healthcare reform law designed to ensure that businesses (and others) pay all the taxes they owe.

The provision, the U.S. Chamber of Commerce wrote in a letter to senators, "will dramatically increase accounting costs and expose businesses to costly and unjustified audits by the IRS." 

"When America is counting on the small business community to generate jobs and grow the economy, lawmakers should not force companies to divert their precious time and resources to collect volumes of information and fill out mounds of new paperwork for the government," the group wrote.

The Chamber is urging a full repeal of the filing requirement, as proposed by Sen. Mike Johanns (R-Neb.), and not just a scaling back, as offered by Sen. Bill Nelson (D-Fla.). 

The Nelson amendment — which eliminates the new filing requirement for businesses with fewer than 25 employees — "would likely discourage job creation because the full cost of compliance must be accounted for when exceeding this threshold," the Chamber says. 

The group is also slamming the Democratic alternative for its offset: a $15 billion tax on oil companies that "would likely be passed along to consumers," the Chamber writes.

"The Chamber will consider including votes on, or in relation to, these amendments in our annual How They Voted scorecard," the group warns.

Under the healthcare reform law, businesses, nonprofits and other entities will be required to report purchases of goods from individual suppliers, even corporations, when costs exceed $600. Under previous law, the Form 1099 filing requirement pertained only to services through unincorporated entities. 

The provision is not a new tax, but merely attempts to close the tax gap by making it harder for businesses to avoid the taxes they owe. The provision, which takes effect in 2012, is estimated to generate more than $17 billion over the next decade.

A cloture vote on the Johanns bill is scheduled for next Tuesday, with action on the Nelson bill expected to follow.

Congressional investigators said Thursday that the Obama administration's healthcare reform brochure did not violate prohibitions on publicity and propaganda.

Republicans on the House Ways and Means Committee requested the review of the Department of Health and Human Services's four-page brochure when it was sent to Medicare beneficiaries back in May.

"Although the HHS brochure contains instances in which HHS presented abbreviated information and a positive view of PPACA [the health reform law] that is not universally shared, nothing in the brochure constitutes communications that are purely partisan, self-aggrandizing, or covert," the 15-page report states.

Predictably, Republicans selectively picked from the GAO report to make their case that the "nearly $20 million Medicare mailer misleads America's seniors by falsely claiming the Democrats' health care law would not negatively impact seniors' benefits." 

Specifically, Ways and Means ranking member David Camp (R-Mich.) and health subcommittee ranking member Wally Herger (R-Calif.) highlighted the following statements from the report: 

"[T]he brochure overstates some of (the law's) benefits”;

“In our view, the brochure presents a picture of PPACA that is not universally shared. For example, two government analyses have determined that (its) reductions in funding for Medicare Advantage may decrease enrollment and result in less generous benefit packages,” and “…significant increases in premiums for some beneficiaries may be necessary”; and   

“The brochure does not provide beneficiaries with a comprehensive summary of changes to Medicare that will be implemented as a result of (the law), and in several instances it provides abbreviated information that leaves out details about (the law).”

The trade group representing generic drugmakers said Thursday that lawmakers should rethink their efforts to restrict patent settlements in light of a federal court's decision this week.

The U.S. Court of Appeals for the Second Circuit denied a full hearing in the case of a patent settlement concerning the antibiotic drug Cipro.

The Generic Pharmaceutical Association (GPhA) said the decision provides "a clear sign that the FTC's [Federal Trade Commission] position that patent settlements are anti-competitive, anti-consumer is fatally flawed."

Senate appropriators in late July voted to vote limit generic drugmakers receiving cash settlements in patent disputes with brand-name drugs. Sens. Herb Kohl (D-Wis.) and Chuck Grassley (R-Iowa) have championed the "pay-for-delay" legislation that would allow settlement agreements only when the drug companies can prove to a judge by clear and convincing evidence that the deal won't harm competition.

The Congressional Budget Office says the provision would save the government about $2.5 billion over 10 years, and the FTC has estimated it would save consumers at least $3.5 billion a year.

"GPhA urges Congress to examine the facts around patent settlements and not base important health policy decisions on rhetoric and half-truths," the statement says. "It is the patent that precludes or delays a generic from coming to market. Settlements have never resulted in delaying generic market entry past patent expiration. Winning drug patent litigation is a 50-50 proposition at best for generic companies. But settling patent litigation is a proven way to assure that affordable generics reach consumers earlier than would otherwise be possible."

The Senate Appropriations health subpanel will meet next week to examine the consequences of a recent court-ordered moratorium on federal funding of embryonic stem cell research, Chairman Tom Harkin (D-Iowa) announced Thursday. 

Last month, a federal judge temporarily blocked the Obama administration's efforts to expand such research, arguing that the process violates a law against the federally funded destruction of human embryos.

On Tuesday, U.S. District Judge Royce Lamberth denied a White House request to delay the moratorium while the appeals process runs its course.

The hearing is scheduled for next Thursday at 10 a.m.

The featured witness will be Francis Collins, director of the National Institutes of Health, who will appear along with a handful of stem cell researchers.

This post was updated at 10:27 a.m. Sept. 10. An earlier version mistakenly said the hearing would take place in the Senate HELP Committee. 

The health reform law mandates that state Medicaid programs allow terminally ill children to receive curative treatment even if they elect hospice benefits, the federal Centers for Medicare and Medicaid Services reiterated in guidance released Thursday.

In a letter to state health officials, federal Medicaid director Cindy Mann said states will be required to submit new paperwork to indicate that "hospice is provided to children concurrently with curative treatment." The new rules apply to both state Medicaid programs and Children's Health Insurance Programs (CHIP) operating as Medicaid expansions.

States with separate CHIP programs are still free not to cover hospice services, but if they do, they must now offer curative treatment concurrently.

Prior to enactment of healthcare reform, "curative treatment of a terminal illness ceased upon election of the hospice benefit" Mann writes.

"We believe implementation of this new provision is vitally important for children and their families seeking a blended package of curative and palliative services. This provision will increase utilization of hospice services since parents and children will no longer be required to forego curative treatment."

Rep. Michael Burgess (R-Texas) said malpractice costs are "huge," but conceded that limiting claims won't translate into instant savings.

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