As an end of the year gift, FDA finalized its guidance document, Digital Health Technologies for Remote Data Acquisition in Clinical Investigations, in late December. We previously blogged on the draft guidance (here) and on FDA’s broader framework for Digital Health Technologies (DHT) (here and here).  A DHT is a system that uses computing platforms, connectivity, software, and/or sensors, for health care and related uses. The guidance addresses the use of DHTs in clinical investigations of drugs, biologics, and medical devices.

Overall, the final guidance provides many editorial clarifications as well as some noteworthy updates, including discussions on DHTs that meet the definition of a device, selection of a DHT and rationale for use in a clinical investigation, retention and protection of data collected by DHTs, and DHT updates.

The final guidance provides additional discussion with respect to DHTs that meet the definition of a device. Just like other devices used in a clinical investigation are exempt from most regulatory requirements, the same goes for DHTs. The table below, consistent with FDA’s DHT Guidance, illustrates what regulatory requirements apply to medical device DHTs used in clinical investigations, whether the DHTs are the object of the investigation (i.e., investigational device as defined in 21 C.F.R. § 812.3(g)), or simply used to collect data as part of a clinical investigation of a drug, biologic, or different medical device. It is interesting to note that even when the DHT is not the subject of the investigation and therefore not an investigational device as defined in 21 C.F.R. Part 812, the requirements under 21 C.F.R. Part 812 are applied for the use of the DHT in the clinical study.

Another noteworthy update in the final version of the guidance relates to the selection of a DHT or other technologies (e.g., smartphones and tablets) for remote data acquisition in a clinical investigation. For these devices that do not have market authorization and are only used for remote data collection in a clinical investigation, if the sponsor conducts verification and validation activities consistent with the guidance to demonstrate the DHT is “fit-for-purpose,” FDA does not intend to assess sponsors’ compliance with design controls. Drug or biologic sponsors should engage with manufacturers of DHTs to ensure appropriate evidence has been established for the DHTs before use in a clinical study. Whereas if the DHT meets the device definition and is used outside of a clinical investigation, full compliance with design controls requirements is applicable.

The final guidance also revised sections on verification, validation, and usability evaluation of DHTs, clarifying that verification and validation should be addressed regardless of whether the DHT meets the definition of a device and should consider all relevant functions of the DHT in the context of use in the clinical investigation. An important footnote is added stating that when DHTs include device software functions that sponsors should address the documentation recommendations in the FDA’s guidance on Content of Premarket Submissions for Device Software Functions.  Considerations for design of usability evaluation are provided as well as a statement that the principles in the FDA’s guidance on Applying Human Factors and Usability Engineering to Medical Devices may be helpful in designing appropriate usability evaluations for DHTs.

The final guidance also expands the discussion of analysis of data collected from DHTs which should be defined in a clinical study’s statistical analysis plan. New content in this section relates to late phase trials and reduction and handling of missing data. Use of automated data monitoring and alerts, participant reminders, a “run-in” period for participants, and investigator outreach are provided as examples that may reduce missing data.

With respect to DHT record protection and retention, the final guidance clarifies how DHT data will be reviewed in an inspection, noting that data may be requested in various formats and that data must be maintained according to sponsor or investigator’s record retention requirements and should be in human readable form. However, in general, FDA does not intend to request machine or raw data that require electronic processing to be understood in an inspection. This section of the guidance further clarifies that source data are considered the first durable electronic data repository which the data are transferred to, and that FDA does not intend to inspect individual DHTs for source data.

With respect to DHT updates and other changes during clinical investigations, the final guidance notes significant changes in the measurement after updates may invalidate the results from a clinical investigation. As such, careful evaluation of changes and validation of changes where measurements may be affected by a change are important. If changes to the measurement have occurred after the update, sponsors should compare data from DHTs before and after the update, conducting sensitivity analyses as necessary, and taking steps to mitigate any resulting differences.

If a sponsor is considering the use of a DHT in a clinical investigation, this guidance will help ensure they have the required documentation to demonstrate the DHT is “fit-for-purpose” to include in a final submission. The sponsor should be able to describe the DHT design and technological characteristics, data output provided, and how the DHT measures the event of interest. Details such as this might be publicly available or provided by the DHT manufacturer to the sponsor or, depending on the technology, could require the DHT manufacturer to provide the sponsor a right to reference to the DHT master file. If sponsors are considering the use of DHT to capture novel endpoints, rather than simply using the DHT to replace manual capture of established endpoints, sponsors should be prepared to provide additional justifications regarding the use of the DHT, its impact on the participants, effect on interventions, how it relates to other endpoints, the reliability of the data, and how the positive control can be detected using the novel endpoint.

Any sponsor considering the use of DHT in a clinical investigation will benefit from careful consideration of the recommendations contained in the guidance to facilitate a successful future marketing authorization submission to the FDA.

Last week, DEA and DOJ announced a $59 million civil penalty settlement with eBay related to the failure to comply with Controlled Substances Act (CSA) requirements for identifying purchasers, maintaining records, and filing reports of individuals selling/purchasing pill presses and encapsulating machines.  As stated in the press release, this was the fourth largest civil penalty settlement under the CSA and, ironically, did not involve the sale or distribution of any controlled substance.  It also was the first CSA settlement with an e-commerce company on violations of the CSA but, given the environment on diversion and counterfeits, may not be the last.

The CSA and regulations promulgated by DEA regulate the sale, import, and export of tableting machines the same as they regulate List I chemicals.  21 U.S.C. § 830.  While a DEA registration is not required to sell these products, by definition, any person selling these products is a “regulated person” and all sales of these products are considered “regulated transactions.” 21 U.S.C. §§ 802(38), (39)(B).  Thus, such persons are subject to identification, recordkeeping, and reporting requirements.  In brief, in regard to proof of identity, the seller must obtain sufficient information to identify and document the identity of the purchaser.  21 C.F.R. § 1310.07.  The regulations also require detailed information about each transaction involving a tableting machine, including the date, name and address, quantity, method of transfer, etc.  21 C.F.R. § 1310.06.  Also, pursuant to 21 U.S.C. § 830(b) and 21 C.F.R. § 1310.05(b)(2), each regulated person must orally report “any domestic regulated transaction in a tableting machine or an encapsulating machine . . . when the order is placed with the seller.”  Also, a DEA Form 452 report must be electronically filed within 15 days after the order is shipped.

According to the eBay settlement agreement, the government contends that from October 2015 to the present, eBay did not comply with any of “the CSA’s reporting and recordkeeping obligations” involving thousands of transactions.  In addition to the tableting machines, the government alleged that eBay sold pill presses and counterfeit dies to hundreds of buyers.  Also, DEA and DOJ contend, eBay did not verify purchaser’s identification as required by the regulations.

The settlement agreement states that the government took into account eBay’s compliance investments, implying that eBay was given some credit that may have reduced the amount of the fine.  eBay also agreed to a policy of “Corporate Compliance Program and Reporting Requirements” which includes:

• continued prohibition on listing on the website any pill press, tableting machine, or encapsulating machine;
• continuing to maintain a Prohibited, Restricted, and Counterfeit Items Committee;
• within 90 days, providing a report identifying any listing with sales that were removed or purchased items in violation of eBays policy within the prior year; and
• quarterly reports of any listings with completed sales that are identified as violating eBay’s policies and whose accounts eBays suspended.

Given the recent reports of counterfeit drugs, especially fentanyl, we would expect DEA and DOJ to continue strict enforcement of these requirements.  See, e.g., DEA’s Fake Pills Fact Sheet.  This matter also raises anew the applicability and scope of laws and regulations to e-commerce platforms that, while not directly the seller or purchaser, is involved in facilitating such transactions.  Of note, in August 2020, DEA announced a “proactive collaboration with online e-commerce companies” to inform and educate e-commerce companies about the requirements and importance of safeguarding these products and ensuring they do not get diverted.  DEA reported that Amazon had already agreed to ban sales of tableting, encapsulating, and pill punch machines for its platform.  It is unclear whether DEA had any conversations with eBay at that time.

The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations invited Hyman, Phelps & McNamara, P.C. Counsel John Claud to testify yesterday about FDA’s foreign inspection program. Mr. Claud frequently counsels foreign and domestic clients on issues relating to inspections and cGMP remediations.

We’ve blogged previously on the troubles FDA has faced ramping up its foreign inspections program after the pandemic. Yesterday, Mr. Claud went to Capitol Hill to participate in a hearing called “Protecting American Health Security: Oversight of Shortcomings in the FDA’s Foreign Drug Inspection Program.”

Mr. Claud was joined in his testimony by Mary Denigan-Macauley, a Director for Health Care at the Government Accountability Office (GAO) and Dinesh Thakur. Mr. Thakur is a public health advocate and a former executive at Ranbaxy Laboratories in India. FDA was invited to attend but did not.

GAO wrote a thorough 2022 report that assessed relative lack of foreign inspections for drug making facilities, and dissected the complex problems that make foreign inspections difficult for FDA. The Subcommittee majority has held prior hearings and written letters about these problems, as the issue has vexed FDA in recent years. In fairness, we’d note that FDA reports that inspections are on the rise—but definitely not back to pre-pandemic levels.

In its 2022 report, GAO recommended that FDA initiate pilot programs that assess unannounced international inspections. At the hearing yesterday, several Subcommittee members expressed dismay that FDA announces international inspections, an Agency policy due in part to the logistical burden of getting inspectors to foreign sites. The Chair of the Subcommittee, Morgan Griffith (R-VA), noted that “It’s alarming that—given this advanced warning—the FDA still found deficiencies during 66 percent of foreign inspections, including serious deficiencies in 16 percent of those inspections.”

The hearing also featured discussion about high turnover in FDA’s inspector employment ranks. GAO found that “vacancies among investigators available to conduct foreign inspections represent another challenge” for FDA, and that in some cases FDA relied on translators supplied by the inspected facilities. The Subcommittee members discussed how the Agency might make those jobs less apt to turnover. Several minority members called for flexible appropriations so that international inspectors could be fairly compensated.

In his remarks, Mr. Claud noted that FDA might make more efforts to gather evidence using technology. Teleconferences, document review, and other remote tools may not be a full inspectional cure for a bad actor, he said, but using remote inspections to “contribute to FDA’s risk assessment” might allow the Agency to divert resources to other, more dire inspectional priorities that require an in-person presence.

He also noted the outsized impact that the foreign inspection issue has on the generic industry, which faces stiff competition from many foreign manufacturers for already thin profit margins. Finally, Mr. Claud noted that FDA should also rely on its like-minded foreign counterparts and its cadre of mutual recognition agreements to ease the foreign inspection burden.

The Members of the Subcommittee and the witnesses all acknowledged that these are complex issues, and the Chairman went out of his way to say that “The FDA . . . is trying to do the best they can. We just need to figure out how to make them a little quicker and more agile.” Mr. Claud closed his testimony echoing that sentiment. He said that resolving the obstacles to successful international inspections that FDA faces “are vitally important challenges in a global marketplace.”

Last week FDA issued a new draft guidance titled Collection of Race and Ethnicity Data in Clinical Trials and Clinical Studies for FDA-Regulated Medical Products.  As we described in our blog post here, the Food and Drug Omnibus Reform Act (FDORA) enacted at the end of 2022 adds new statutory obligations related to the development of diversity action plans by sponsors of certain device and drug clinical trials, and requires FDA to issue guidance.  FDA specifically notes that the Draft Guidance does not address diversity action plans or the appropriate population for a clinical study, while also reminding readers that sponsors should enroll participants who reflect the population that will use the medical product if approved.  Nevertheless, the Draft Guidance represents another step forward in the journey toward increasing diversity in clinical trials and representation of the real world populations who will use the products in studies.

The new Draft Guidance focuses on standardizing the approach and terminology used in gathering information about race and ethnicity to ensure that information is collected and reported consistently in submissions to FDA.  In keeping with the goal of standardization, the Draft Guidance is issued by a long list of agency level offices (including the Offices of the Commissioner, Minority Health and Health Equity, and Women’s Health, among others) and all three human medical product centers (CDER, CBER and CDRH), as well as the Oncology Center of Excellence.

Specifically, the Draft Guidance recommends that the minimum choices offered for ethnicity include “Hispanic or Latino” and “Not Hispanic or Latino.”  Similarly, for race, the Draft Guidance recommends the following minimum choices with direction to the reader to select one or more:

• American Indian or Alaska Native
• Asian
• Black or African American
• Native Hawaiian or Other Pacific Islander
• White

FDA states that it recognizes that the categories were developed in the United States and may not be adequate to describe racial and ethnic groups in other countries. If expanded choices are desirable, FDA recommends following the standards from the 2011 HHS Implementation Guidance on Data Collection Standards for Race, Ethnicity, Sex, Primary Language, and Disability Status and provides more detailed categories from that guidance.

The Draft Guidance emphasizes that study team should not answer the questions based on observation or even on existing medical records. Instead, the information should be self-reported or, if that is not possible, provided by a first-degree relative or knowledgeable representative.

Notably, FDA recognizes that Office of Management and Budget (OMB) Policy Directive 15 (issued in 1997 and currently being reviewed for update) which provides a minimum standard for collecting and presenting data on race and ethnicity by Federal agencies states that recommended race and ethnicity categories “were not anthropologically or scientifically based designations, but . . . describe the sociocultural construct of our society.”  FDA states, however, that collecting data on race and ethnicity is critical to identifying population-specific signals, noting that differences in response to medical products while uncommon may be attributable to intrinsic factors (e.g., genetics, metabolism, skin pigmentation) or extrinsic factors (e.g., diet, socioeconomic status, culture).

FDA states that the term clinical studies refers in the Draft Guidance to both interventional studies and observational studies though some recommendations are relevant only to interventional studies.

When finalized, the Draft Guidance will take the place of the 2016 guidance Collection of Race and Ethnicity Data in Clinical Trials.  The comment period ends on April 29, 2024.

HP&M has been helping clients navigate the challenges of state licensing regulations for drugs, biologics, medical devices, OTCs, 503B outsourcing facilities, 503A pharmacies, foods, dietary supplements, cannabis, and wholesalers/distributors for many years. With regulations varying significantly from one state to another, companies in these sectors often find themselves immersed in a labyrinth of compliance requirements.

Some of the services HP&M offers include:

• comprehensive regulatory assessments
• pre-launch licensing support
• license gap analysis
• support for new product/company acquisitions, regulatory diligences
• DEA registrations and state-controlled substance licenses

With the complexities of licensure, Sara M. Keup has joined the firm to assist attorneys Karla L. Palmer, Larry K. Houck, and Kalie E. Richardson with navigating this ever-changing regulatory environment.  It is critical for companies to stay abreast of current laws and regulations to avoid costly penalties and business disruptions.

Having previously worked at HP&M, Sara recently rejoined the firm to assist clients with regulatory licensing services.  Her expertise includes preparation and maintenance of licensing documentation, communications with state boards and government agencies, conducting research, and the preparation of associated licensing documentation and applications. She also provides consulting services for state licenses, as well as regulatory due diligence concerning licensing requirements, primarily for pharmaceutical manufacturers, wholesale distributers, and pharmacies. Sara is conveniently able to be a client’s one-stop point of contact for licensing needs.

If you’re concerned about regulatory gaps, facing licensing issues, or looking for a more efficient way to manage your state licensing program, HP&M is here to help. Our state licensing team is dedicated to providing the expertise you need to navigate the state licensing maze with ease.

On January 18, 2024, the director of FDA’s Center for Devices and Radiological Health and the chief medical officer and acting director of CMS’ Center for Clinical Standards and Quality issued a joint press release supporting FDA’s recent proposed rule regulating Laboratory Developed Tests (LDTs). That CMS teamed up with its sister agency to support FDA’s proposed rule is itself unusual.  More surprising still is CMS’ unabashed declaration of its own lack of “expertise to assure that tests work,” given CMS has for decades been responsible for implementation of the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and, according to CMS’s own 2006 CLIA fact sheet, “has primary responsibility under CLIA for regulating laboratories.”

Indeed, as the fact sheet explains, Congress enacted CLIA following reports of inaccurate Pap smear results intended to detect cervical cancer precisely to ensure the “accuracy and reliability of all laboratory testing.”  Under this paradigm, only laboratories certified by CMS (or a deemed accrediting body) may perform clinical testing services.  To obtain certification, laboratories must comply with regulatory requirements relating to personnel qualification and training, record keeping, quality control, and proficiency testing, and must maintain a quality assurance and quality control program adequate to ensure the validity and reliability of the laboratory examinations. CLIA-certified laboratories are subject to inspections by CMS (or a CMS-approved accreditation organization) to confirm that the testing complies with CLIA regulations, including that there is adequate validation of the tests, supervision by the laboratory director and quality procedures in place.

The joint press release largely repeats, and has CMS endorse, the arguments FDA has previously made in support of its proposed rule, which we rebut in the detailed comments we filed on behalf of a coalition of laboratories. The two agencies are similarly aligned in their opposition to suggestions that “concerns with LDTs should be addressed through expansion of CLIA.” Many have read this as a deliberate swipe at an alternative, legislative pathway for CLIA modernization proposed by the Association for Molecular Pathology and supported by a diverse group of stakeholders.  The joint press release counters that “this is not the answer,” and alleges that “establishing a duplicative system for the oversight of tests by expanding CLIA would create more government bureaucracy and inconsistencies.”

There is great irony in the agencies’ professed concern for increasing bureaucracy.  In a case of the pot calling the kettle black, FDA has no stated plan of how it will address its exponentially increasing workload should it finalize its proposed LDT rule. FDA estimates that the proposed rule would increase the volume of device premarket submissions it receives up to twenty-fold in a single year and that the volume would, on an ongoing basis, be at levels at least twice as high as FDA currently manages. FDA will need to hire (and train) significant volumes of new personnel to manage these new submissions just as CMS may need to hire (and train) additional personnel if its authority is significantly expanded. And while FDA suggests in the proposed rule that review of LDT applications could be outsourced to third-party reviewers (which is entirely unrealistic given the program’s history), the suggestion of needing outside help simply underscores that FDA does not believe that it currently has the personnel it needs to regulate LDTs.

The press release also fails to consider other pathways to address the agencies’ concerns about LDTs. Some states, like New York, require separate licensure of laboratories and premarket review of certain tests, including review of clinical validation data, to perform LDTs on specimens from the state. We are unaware of FDA having expressed that New York State’s validation requirements are inadequate, and New York State approval is not accompanied by the myriad other FDA requirements for medical devices that FDA’s proposed rule would impose on labs (e.g., Medical Device Reporting, Quality System Regulation compliance, and reporting of corrections and removals).

The joint press release provides support for the adage that “opposites attract”; FDA claims broad authority to regulate LDTs notwithstanding its lack of statutory authority under the Federal Food, Drug, and Cosmetic Act, while CMS disavows the clear authority over clinical laboratory testing with which it has long been imbued under CLIA.

On January 31, 2024, FDA announced its intent to initiate the reclassification process for most in vitro diagnostic (IVD) products that are currently class III (high risk) into class II (moderate risk). Most of these reclassified tests will supposedly be infectious disease and companion diagnostic IVDs. Reclassification would allow developers to seek clearance for substantially equivalent tests through the 510(k) pathway rather than the more costly and time-consuming premarket approval (PMA) pathway.

The announcement also states that FDA expects most future companion diagnostic and infectious disease IVDs would be regulated as class II devices, even if they are novel and require de novo classification.

One can’t help but read this announcement as an effort by FDA to prepare for (or at least give the appearance of preparing for) the deluge of IVD premarket submissions the agency expects it will receive following (the presumed) finalization of its proposed rule regulating LDTs. As we outlined in a previous blog, by FDA’s own (artificially low) estimate, the agency anticipates in will receive, in a single year:

• 32,160 510(k) premarket notifications;
• 4,210 PMAs, PDPs, Panel-Track PMA Supplements; and
• 4,020 de novo

This is 10 times the number of submissions the agency currently receives in a year across all device types. These numbers look even worse when you consider that most of these LDTs would be high risk or novel and, therefore, result in 57 times more PMAs and 61 times more de novo submissions than the FDA normally receives in a year.

This is to say nothing of the expected doubling of annual device submissions FDA expects it will then receive on an ongoing basis. And as we note in that earlier blog, there is good reason to believe all of the above numbers are gross underestimates.

Perhaps this is why FDA is trying to preemptively reclassify most of the high-risk tests currently on the market and signaling that it expects most future companion diagnostic and infectious disease IVDs would be regulated as class II devices going forward. But there are reasons why this move will not lessen FDA’s workload nearly as much as it might seem at first blush.

First, all this would do is move the premarket submission from one bucket to another. LDTs that can demonstrate substantial equivalence to a reclassified predicate device will still have to submit a 510(k) premarket notification. More novel LDTs will need to pursue de novo classification, which in many cases requires extensive clinical data to support authorization. Either way, FDA will need to review each of these applications and within shorter MDUFA timelines to boot.

Second, the lower cost to developers to assemble, and user fee to file for, a 510(k) or de novo submission compared to a PMA could increase the overall number of applications FDA receives, as developers that might have been deterred by the high cost of a PMA decide that a 510(k) or de novo submission is more manageable.

Finally, the vast majority of these submissions, whether for 510(k) clearance, de novo classification or PMA are likely to be accompanied by pre-submission requests to ensure the data the laboratories will be presenting to FDA in their submission is what the agency will expect.

FDA simply does not have the resources to handle the apocalyptic volume of premarket submissions it will have to review if it finalizes the LDT rule. We have yet to see the agency put forth a plan that would meaningfully change this calculation (see e.g., our view of FDA’s farcical reference to its third-party review program). This reclassification announcement is no different.

While we commend FDA for taking a critical look at the regulatory burdens placed on current high-risk tests, it is no substitute for creating a meaningful plan for how it will address the resources needed should the agency finalize the proposed LDT rule.  We hope that the next announcement for FDA includes such a plan.

In a new publication in the Washington Legal Foundation’s (WLF) Legal Backgrounder, we argue that FDA’s recent proposed rule regulating Laboratory Developed Tests (LDTs) is vulnerable to legal challenge, once finalized. FDA’s proposed rule has every hallmark of a case subject to the “major questions doctrine,” according to which agency action must be support by clear congressional authorization.  FDA points to a nearly 50-year-old statute, the Medical Device Amendments (MDA), as the source of its supposed authority to regulate LDTs as medical devices—authority which it apparently chose to not enforce until now. But, as we detail in the WLF publication: “the MDA supplies no such clear [congressional authorization]. Instead its text and structure affirmatively undermine the Proposed Rule’s core claims.”

This is to say nothing of the Administrative Procedure Act (APA) challenges the final rule may be vulnerable to, including whether the Agency manages to meet its obligations to fully respond to the more than 6,000 comments it received on the proposed rule by the breakneck April timeline the Agency is pursuing for publication of the final rule.

FDA’s proposed rule, and the industry fervor it has sparked, may supply Congress with a renewed sense of urgency and purpose to pass legislation that expressly addresses how LDTs should be regulated—industry groups have, for example, proposed legislation that would modernize the CLIA regulations that currently govern laboratories. In the absence of new legislation, litigation over the rule is virtually inevitable.

In September 2022, while the world was still in the midst of the COVID-19 epidemic and dealing with significant supply chain woes, President Biden issued an Executive Order—Executive Order 14081—titled “Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy.”  Section 1 of the Executive Order laid out the Biden Administration’s policy to, among other things, “coordinate a whole-of-government approach to advance biotechnology and biomanufacturing towards innovative solutions in health, climate change, energy, food security, agriculture, supply chain resilience, and national and economic security.”  To that end, the Executive Order provides that the Assistant to the President for National Security Affairs (“APNSA”), in consultation with the Assistant to the President for Economic Policy (“APEP”) and the Director of the Office of Science and Technology Policy (“OSTP”), shall coordinate the executive branch actions necessary to implement Executive Order 14081 through the interagency process; and that the APNSA and the APEP, in coordination with the Secretary of the Department of Health and Human Services, among other exectutive branch components, “shall develop a strategy that identifies policy recommendations to expand domestic biomanufacturing capacity for products spanning the health, energy, agriculture, and industrial sectors, with a focus on advancing equity, improving biomanufacturing processes, and connecting relevant infrastructure.”

Fast-forward to March 2023, when The White House OSTP issued a document per Executive Order 14081, titled “Bold Goals for U.S. Biotechnology and Biomanufacturing; Harnessing Research and Development to Further Societal Goals.”  One component of the OSTP report is “Biotechnology and Biomanufacturing R&D to Further Supply Chain Resilience,” and it includes nine goals in three themes “intended to provide a broad vision to build supply chain resilience for the U.S. bioeconomy.”  As the report explains:

This report provides a vision for harnessing research and development (R&D) advances in biotechnology and biomanufacturing to build supply chain resilience. This vision is comprised of nine near- and longterm bold goals, and associated R&D needs, within three major themes. If this vision is achieved, the United States can bring innovative biotechnologies and products to markets faster while building a more robust supply chain ecosystem.

In Theme 1, we provide bold goals for alternative supply chain pathways via biotechnologies and biomanufacturing to promote economic security. We identify R&D opportunities to promote the development of innovative biomanufacturing pathways that could address supply chain bottlenecks for critical drugs, chemicals, and other materials.

In Theme 2, we explore biomanufacturing innovation to enhance supply chain resilience. We identify R&D efforts required to advance flexible and adaptive biomanufacturing platforms to mitigate the effects of supply chain disruptions.

In Theme 3, we address standards and data infrastructure to support biotechnology and biomanufacturing commercialization and trade. We identify standards and data R&D needed to enable biotechnology and biomanufacturing scale-up and global competitiveness of U.S. companies.

Achieving these bold goals will require public-private partnerships, effective coordination with domestic and international partners, and integration of key biosafety and biosecurity considerations. Realization of these bold goals can also enable the United States to maintain its global leadership in the emerging bioeconomy and create quality jobs while addressing some of society’s greatest challenges.

The first goal under Theme 1—Goal 1.1—is identified as “Improving Supply Chains for Critical Drugs,” and states: “In 5 years, deploy broad synthetic biology and biomanufacturing capabilities to produce at least 25% of all active pharmaceutical ingredients (APIs) for small molecule drugs” (emphasis added).

That’s a pretty lofty API manufacturing goal, but one that the API Innovation Center (“APIIC”) was charged to take up, consider, and propose some possible solutions.  And so in November 2023 in St. Louis, Missouri, APIIC convened a working group of 15 experts in an event titled “Pathway to Build Supply Chain Resilience for Critical Drugs.”  This blogger was fortunate enough to have been invited to participate in the working group as a moderator of two of four panels.  The four panels of experts focused on: (1) Current U.S. capacity and technologies to support small molecule API production, including the impact of key starting material availability on U.S. API production; (2) Criteria for selection of essential medicine small molecule APIs for manufacture; (3) Barriers to reshoring small molecule API manufacturing; and (4) Ways to build a resilient drug supply chain.

The robust discussion that day in November 2023 is now captured in an APIIC report announced this week, titled “A Bold Goal: Reshoring 25% of Small Molecule API to the U.S. in 5 Years.”   As discussed in the new report, producing 25% of all APIs for small molecule drugs within 5 years is an achievable goal:

To achieve this goal, this white paper proposes API manufacturers adopt advanced manufacturing technologies provisioned through public incentives.  Industry should leverage existing technologies while furthering research and development of innovative and disruptive technologies, in partnership with academia and government.  A single public entity should coordinate the public-private partnerships established as part of this national strategy.  Identifying a subset of APIs for initial deployment would yield invaluable insights that further propel the nation towards achieving the 25% goal.

These concepts are further explored in the report.  For example:

To mitigate the risk of relying on China and India for small-molecule APIs, the panel determined advanced manufacturing biotechnologies and biomanufacturing processes must be implemented.  Advancements in synthetic biology realized through advanced technology can improve small molecule API manufacturing.  The cost of implementing these technologies must be addressed.  Price erosion and consolidation have had a major impact on the U.S. generic pharmaceutical industry, resulting in low profit-margins.  A public-private modernization model, together with federally committed contracts, will accelerate the implementation of advanced manufacturing technology. Regulatory barriers to implementation should also be addressed and “Made in America” incentives should be addressed to enhance market competitiveness.

Ultimately, APIIC identifies several immediate, short-term, and long-term steps to meet the “Bold Goal,” and concludes that “[a] comprehensive approach of the U.S. government, including the appointment of a coordinating entity, establishment of new funding lines, and rigorous review of regulatory authorities and policies, is imperative in implementing the incremental steps mentioned above.  Improving our national health security requires significant mitigation of risk by creating a diversified manufacturing base and distributed buffer inventories that will guarantee Americans reliable access to essential medications.”

We encourage folks to review the full report and to consider what additional actions can be done to onshore the U.S. drug supply chain.

The American Conference Institute’s (“ACI’s”) popular “FDA Boot Camp”—now in its 42nd iteration—is scheduled to take place from March 13-14, 2024, at the SpringHill Suites NY Manhattan Times Square South, New York. The conference is billed as the premier event to provide folks with a roadmap to navigate the difficult terrain of FDA regulatory law.

For nearly 20 years, ACI’s FDA Boot Camp has been the training grounds for life sciences attorneys and executives to master the fundamentals of FDA law and regulation.  Join our co-chairs Kurt R. Karst (Director, Hyman, Phelps & McNamara, P.C.) and Stacy Cline Amin (Partner, Morrison & Foerster (Former Chief Counsel, U.S. FDA)) as they lead an all-star faculty in providing you and your team with the working knowledge of core essentials of FDA law and regulation, including the new amendments under the Food and Drug Omnibus Reform Act (“FDORA”).  This in-depth training will include practical real-world examples that will help you to excel in your everyday practices.  Join the “Who’s Who” of the FDA Bar and don’t miss your opportunity to join their ranks!

FDA Law Blog is a conference media partner.  As such, we can offer our readers a special 10% discount. The discount code is: D10-999-FDA24.  You can access the conference brochure and sign up for the event here (or by emailing customerservice@americanconference.com or by calling 1-888-224-2480).  We look forward to seeing you at the conference.

The Office of Compliance (OC) at FDA’s Center for Drug Evaluation and Research (CDER) had a role in many of the major public health enforcement matters you may have read about last year. OCs recent 2023 Annual Report—covering the fiscal year from October ’22 to September ’23—puts some meat on the bones of those issues and describes how OC touches almost every area of enforcement that CDER undertakes. One of 12 offices at CDER, a look at its annual report tells us a great deal about CDER’s enforcement priorities.

Led by former federal prosecutor Jill Furman, OC is charged with shielding consumers “from poor quality, unsafe, and ineffective drugs through compliance strategies and risk-based enforcement actions.” The tools it uses to accomplish that mission include those designed to help regulated entities that want to follow best public health practices, like guidances, public notifications, and requests for information. OC also has input into FDA’s more forceful enforcement measures, like warning letters, import alerts, and consent decrees.

Of course, CDER is a massive organization and OC doesn’t do its work alone. But its Annual Report is a helpful tool to highlight CDER’s post-pandemic public health enforcement priorities. Some takeaways on those efforts that we gleaned from the report:

Compounding. OC devoted a lot of resources to its compliance efforts directed at human drug compounding. OC and CDER continue to use a carrot-and-stick approach with compounders, noting both the creation of the Compounding Quality Center of Excellence and its collaboration with the industry, but also the eleven warning letters FDA sent to drug compounders last year.

Drug Supply Chain. Recalls, warning letters to online pharmacies, and drug-related import alerts were key tools for OC’s efforts to safeguard the drug supply chain from adulterated products over the prior fiscal year. Communication in this area included on-line videos, webinars, summits, conferences, and international outreach. This is another area in which FDA works with industry to try to ensure voluntary compliance from regulated entities.

Guidances. OC had a major hand in drafting some key guidances this year, including the recent draft guidance on Post-Warning Letter Meetings Under GDUFA, a potentially important enforcement guide for generic drug makers that we blogged on back in September.

Quality. According to the report, the most common FY23 CGMP citations from warning letters involved citations of quality units under 21 CFR 211.22, “Responsibilities of quality control unit.” In practice, this means that in addition to observations about specific quality deviations, FDA is intent to cite entire quality units for overall dereliction of duty. This is important information for every drug maker and its quality teams.

Clinical Trials. We’ve recently discussed FDA’s clinical trial oversight, and OC didn’t miss the chance to emphasize that it has a role in developing policy about how FDA-regulated research should be conducted. OC boasted of over 600 bioresearch monitoring inspections, 128 clinical inspection summaries, and 11 warning letters in the clinical trial space, among its other efforts.

FDA components aren’t always forthcoming with initiatives and statistics that provide insight into policy priorities. Additionally, annual reports can often be a collection of stylized, glossed-over stats masking bureaucratic shuffling. But at an agency where so many different offices are charged with working together across numerous missions, we were impressed with OC’s 2023 accomplishments. We also appreciate any glimpse we can get into the Agency’s compliance priorities.

Select Graphics and Charts from Office of Compliance 2023 Annual Report (here and here)

In August 2023 the Food and Drug Administration (“FDA”) and Health and Human Services (“HHS”) recommended that the Drug Enforcement Administration (“DEA”) reschedule marijuana from schedule I under the federal Controlled Substances Act (“CSA”) to schedule III.  By doing so, FDA determined that marijuana not only no longer meets schedule I criteria, but by leapfrogging to schedule III, concluded that it does not meet schedule II criteria either.

FDA conducted the eight-factor scheduling analysis required by the CSA in 2016 and found that marijuana continued to meet the scheduling criteria for remaining in schedule I.  Denial of Petition to Initiate Proceedings to Reschedule Marijuana, 81 Fed. Reg. 53,688 (Aug. 12, 2016); Denial of Petition to Initiate Proceedings to Reschedule Marijuana, 81 Fed. Reg. 53,767 (Aug. 12, 2016).  FDA found that marijuana continued to have a high potential for abuse, lacked accepted safety for use under medical supervision and had no currently accepted medical use in treatment in the United States.  Id.  DEA also made specific findings relative to the eight factors, but without FDA finding that marijuana had a currently accepted medical use in treatment, DEA had to deny rescheduling petitions to move marijuana from schedule I.

For FDA to recommend rescheduling marijuana from schedule I in 2023 means that it has been determined that unlike in 2016, marijuana now has a currently accepted medical use in treatment in the U.S.

The mostly redacted, then publicly available letter accompanying the basis for the recommendation stated that FDA was making a recommendation about marijuana, referring to botanical cannabis (Cannabis sativa L.) within the CSA’s definition of “marihuana” or “marijuana” based on FDA’s eight factor analysis.  Rachel L. Levine, Assistant Secretary for Health, HHS, to Anne Milgram, Administrator, DEA (Aug. 29, 2023).  The letter noted that the National Institute on Drug Abuse (“NIDA”) concurred with FDA’s recommendation.

Scheduling under the CSA

The CSA classifies controlled substances into one of five schedules depending upon their potential for abuse.  Schedule I drugs have a high potential for abuse and no currently accepted medical use in treatment in the U.S.  Controlled substances that have an accepted medical use are classified in schedules II-V based on their relative potential for abuse and physical and psychological dependence.  Among the drugs with accepted medical uses, those in schedule II have the greatest potential for abuse and those in schedule V the least.

The CSA requires analysis of eight statutory factors for scheduling, rescheduling or descheduling substances of abuse.  Those factors are:

1. The drug’s actual or relative potential for abuse.
2. The scientific evidence of the drug’s pharmacological effect, if known.
3. The state of current scientific knowledge regarding the drug.
4. The drug’s history and current pattern of abuse.
5. The drug’s scope, duration, and significance of abuse.
6. The risk to public health.
7. The drug’s psychic or physiological dependence liability.
8. Whether the drug is an immediate precursor of substance already controlled.  21 U.S.C. § 811(c).

In addition to the eight-factor analysis, for scheduling purposes FDA and DEA make three additional findings to determine scheduling placement.  Those findings are:

1. The drug’s relative abuse potential to other drugs;
2. Whether the drug has a currently accepted medical use in treatment in the U.S. or a currently accepted medical use with severe restrictions; and
3. The drug’s relative safety or ability to produce physical dependence compared to other drugs.

FDA’s Center for Drug Evaluation and Research Controlled Substances Staff conducts the scheduling analysis and makes recommendations.  HHS forwards FDA’s analysis and recommendation to DEA.  DEA completes its own eight-factor analysis and scheduling determination.  If FDA recommends a substance not be controlled, DEA cannot control it.  FDA’s recommendation as to “scientific and medical matters” is binding on DEA.  21 U.S.C. § 811(b).

Rescheduling Analyses, 2016

DEA noted in 2016 that a drug had a currently accepted medical use for purposes of the CSA if it was the subject of an approved new drug application (“NDA”) under the Federal Food, Drug and Cosmetic Act.  FDA had not approved any drug product for marketing containing marijuana so DEA applied a five-part test it had established when denying marijuana rescheduling in 1994.  Under that test, a drug was considered to have a currently accepted medical use only if it met all five elements.  The elements were:

1. The drug’s chemistry is known and reproducible;
2. There are adequate safety studies;
3. There are adequate and well-controlled studies proving efficacy;
4. The drug is accepted by qualified experts; and
5. The scientific evidence is widely available. 81 Fed. Reg. at 53,700; 81 Fed. Reg. at 53,779.

DEA found in 2016 that marijuana met none of the of elements and therefore did not have a currently accepted medical use in treatment in the U.S.

Rescheduling Recommendation, 2024

FDA’s 2023 analysis and recommendation finally came to light when Texas attorney Matt Zorn posted it on his website a week ago.  The basis for FDA’s recommendation explains how it now considers marijuana to have a currently accepted medical use in treatment seven years after recommending against rescheduling for lack of a currently accepted use.

“Marijuana,” subject to the rescheduling recommendation, means all parts of the plant Cannabis sativa L., whether growing or not; its seeds; resin extracted from any part; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin.  21 U.S.C. § 802(16)(A).  “Marijuana” outside of the CSA definition, including hemp, mature stalks, fiber from the mature stalks, oil or cake made from seeds, and sterilized seeds incapable of germination are not controlled and not subject to the recommendation.  21 U.S.C. § 802(16)(B).

FDA has not approved an NDA for a drug containing botanical marijuana but notes that two drug products containing delta-9-tetrahydrocannabinol (“delta-9-THC”) (as dronabinol), the primary compound in marijuana have received FDA approval: Marinol and Syndros.  FDA, Basis for the Recommendation to Reschedule Marijuana Into Schedule III of the Controlled Substances Act, 3.  Dronabinol is a schedule I substance unless contained in FDA-approved Marinol (schedule III) or Syndros (schedule II).  Id. at 4.

FDA’s 2023 analysis focused on whether marijuana has a currently accepted medical use and on new epidemiological data related to abuse of marijuana since its last analysis.  Id. at 5.  FDA conducted epidemiological analyses regarding marijuana abuse and associated harms by comparing with heroin (schedule I); fentanyl, oxycodone, hydrocodone, cocaine (schedule II); ketamine (schedule III); benzodiazepines, zolpidem, tramadol (schedule IV); and alcohol. Id.

FDA concluded based on analysis of the eight factors that marijuana should be rescheduled to schedule III.  Id.  FDA also found that marijuana meets the following three criteria for placing a substance in Schedule III under 21 U.S.C. 812(b)(3):

1.  Marijuana has a Potential for Abuse Less than for Schedule I and II Drugs.

FDA explained that delta-9-THC is the substance in marijuana with psychoactive properties that produces euphoria or a “high” and is responsible for the drug’s abuse potential.  Marijuana is the most frequently abused illicit drug in the U.S. among illicit comparator drugs and FDA found that even with the high prevalence of nonmedical use, epidemiological indicators suggest that marijuana does not produce outcomes as serious as those compared to schedule I or II drugs.  The data demonstrate that marijuana produces fewer negative outcomes than drugs in schedules I or II.  Id. at 62.

When compared with the selected comparator drugs for various epidemiological measures, marijuana was at the lowest ranking for poison control abuse, likelihood its use would lead to a poison control call, accidental poisoning, unintentional exposure, emergency department visits and hospitalizations, likelihood of substance use disorder diagnosis, deaths reported to poison control centers, and overdose deaths.  Comparators drugs heroin (schedule I), oxycodone and cocaine (schedule II) were in the highest rankings.   Id.  FDA evaluated available data and concluded that “while marijuana is associated with a high prevalence of abuse,” serious outcomes related to that abuse led FDA to conclude that marijuana is most appropriately controlled in schedule III.  Id. at 63.

2.  Marijuana has a Currently Accepted Medical Use in Treatment in the U.S.

HHS conducted a two-part test to determine whether marijuana has a currently accepted medical use in the U.S.  The Office of the Assistant Secretary for Health (“OASH”) found that more than 30,000 healthcare professionals “are authorized to recommend the use of marijuana for more than six million registered patients, constituting widespread clinical experience associated with various medical conditions recognized by a substantial number of jurisdictions across the United States.”  Id. at 24.  Thirty-eight states currently authorize marijuana in different dosage formulations for specific qualifying medical conditions.  OASH concluded that “there is widespread current experience with medical use of marijuana in the United States” by the licensed healthcare providers for which “such medical use is recognized by entities that regulate the practice of medicine” in these states.  Id. at 63.  OASH concluded that Part 1 findings warranted assessment by FDA under the test’s Part 2 to determine if credible scientific evidence supports at least one of the medical conditions satisfied in Part 1.

FDA conducted Part 2 based on reviews of studies investigating the safety and efficacy/effectiveness of marijuana, relevant professional societies’ position statements, data from state medical marijuana programs and national surveys, and labeling of FDA-approved products relevant to the analysis.  Id.  FDA analyzed the following indications: anorexia related to a medical condition, anxiety, epilepsy, inflammatory bowel disease, nausea and vomiting (e.g., chemotherapy-induced), pain, and post-traumatic stress disorder.  FDA and HHS concluded that “there exists some credible scientific support for the medical use” in the U.S. of marijuana for the treatment of anorexia related to a medical condition, nausea and vomiting (e.g., chemotherapy-induced), and pain.  Id. at 63-64.  The conclusions do not imply the safety and effectiveness for FDA approval of marijuana for any particular indication.

FDA also noted that one of the criterion for schedule I control is the lack of accepted safety for use of the drug under medical supervision.  FDA concluded that there is accepted safety for the use of marijuana under medical supervision for the treatment of anorexia related to a medical condition, nausea and vomiting (e.g., chemotherapy-induced), and pain.  Apart from the findings made for recommending rescheduling marijuana in schedule III, marijuana does not meet the schedule I criteria.  Id. at 64.

3.  Marijuana Abuse May Lead to Moderate or Low Physical Dependence or High Psychological Dependence.

FDA noted that clinical studies demonstrate that marijuana produces physical and psychological dependence, and abuse may lead to moderate or low physical dependence depending on frequency and degree of marijuana exposure.  While exposure can produce psychic dependence, FDA noted that the likelihood of serious outcomes is low.  Id. at 64-65.

International Treaty Obligations

While FDA made its case for recommending that marijuana be rescheduled to schedule III under the CSA, DEA asserted as a threshold matter in 2016 that the only schedule it could have rescheduled marijuana to was schedule II in order for the U.S. to comply with its international treaty obligations.  The CSA requires the Attorney General, and by delegation the DEA Administrator, to carry out treaty obligations without regard to the required scheduling findings or procedures.  21 U.S.C. § 811(d)(1).  The U.S. is a signatory to the Single Convention on Narcotic Drugs, 1961, and marijuana is a schedule I substance under that treaty.  The DEA Administrator has to control marijuana in the schedule she deems most appropriate to fulfill U.S. obligations under the Single Convention.  Prior rescheduling proceedings established that marijuana could not be scheduled in any less restrictive schedule than schedule II.

A new lawsuit against FDA is the latest happening in the veterinary drugs space and, by extension, FDA’s Center for Veterinary Medicine (CVM). We blogged about CVM last week and explained the increasing attention to animal health products due to the expansion of the animal and pet product market. Phibro Animal Health Corp. has filed suit in the D.C. District Court challenging FDA’s plan to remove their products from the market.

Specifically, FDA is looking to remove a drug called carbadox from the market. Used for over 50 years, carbadox is an antimicrobial drug used to treat gastrointestinal disease in pigs. Last November, FDA published a notice of a proposal to withdraw approval of the three carbadox New Animal Drug Applications (“NADAs”) under 21 U.S.C. 360b(d)(1)(I). That section of the FDCA allows the Agency to issue an order refusing to approve a drug if substantial evidence shows it to be carcinogenic. But did FDA pig out?

FDA says that since the approval of carbadox, new evidence about residue from the drug remaining in pork products has come to light. That evidence now leads FDA to believe that old testing methods used for approval are inadequate to measure the cancer risk that the drug poses. According to FDA, the more recent evidence shows that carbadox residues stick around in processed pork longer than was previously understood. In light of this new data and improved science, FDA has determined that carbadox must come off the market.

Phibro holds the three NADAs at issue here, and the company, unsurprisingly, vehemently disagrees with FDA. In its whopping 70-page complaint. Phibro is asking for judicial review of FDA’s decision, claiming that the Agency skirted its responsibilities under the Administrative Procedures Act (“APA”). Phibro alleges that once FDA determined internally that carbadox was a danger to the pork-eating public, it “took shortcuts by issuing its orders without conducting an evidentiary hearing mandated by statute.”

Indeed, according to the company, FDA’s revocation of the regulatory method of testing that landed the carbadox approval is all a pretext to remove the drug from the market without an evidentiary hearing that Phibro claims would reinforce the drug’s safety. The company asserts that carbadox residues fall below dangerous levels before the products hit consumers’ plates, and that the Agency’s anti-carbadox bias and failure to follow the mandated regulatory procedures violated the “the FDCA, FDA’s regulations, the APA, and due process.”

Carbadox has had a tortured approval history. FDA has expressed concerns about risks to consumers since the drug was approved. At that time, the Agency allowed it to stay on the market under a program that tested edible portions of pigs, a method FDA now claims is not sufficient. The EU prohibited it in 1999, almost immediately after FDA approved the testing methods at issue here, and Canada banned it in 2006. In 2016, FDA again threatened to remove it, but ultimately took no action for reasons that remain unclear.

FDA now says that this long prologue put Phibro on notice that its bacon was close to the fire. In its public website message about carbadox, FDA notes that “[b]ecause the FDA first made public its concern regarding the adequacy of the 1998-approved [testing] method with regard to carbadox in 2016, the swine industry has had the opportunity to consider and mitigate potential impacts of this action for several years.”

We will see how FDA responds to the suit, but we also note that Phibro’s complaint prominently uses internal communications from FDA, obtained via FOIA, to make its case that the Agency’s bias prompted the alleged shortcuts in administrative procedure. Included in those messages are staff assertions that further consideration of this issue is a “waste of time” given the current state of the evidence, as well as an unfortunate allegation that during a public meeting, Agency officials “exchanged Internet memes lampooning Phibro’s representative while she presented the company’s evidence and legal arguments.” One image was of a small violin with the caption “Aww, you poor thing” sarcastically emblazoned below it.

While these may be distractions from the real question—whether the Agency followed APA requirements in withdrawing Phibro’s NADAs—they certainly aren’t a good look for the Agency. FDA has not responded to the suit yet, but its litigators from the Department of Justice are going to need to figure out if they want to respond to the allegations of bias as viewed through this window into how the FDA policy sausage is made.

You know a court decision is going to be worth reading when the judges compare FDA’s regulatory governance of flavored e-cigarettes to a Shakespearean gaslighting.  To quote the Fifth Circuit: “It was the regulatory equivalent of Romeo sending Mercutio on a wild goose chase—and then admitting there never was a goose while denying he even suggested the chase.”  With such an opening, you can just imagine the tenor of the opinion the Fifth Circuit released a few days ago in response to a lawsuit filed by a manufacturer of bottles of flavored nicotine liquid used to refill e-cigarette products or tank systems after the Agency denied plaintiff’s marketing applications, along with 55,000 other flavored e-cigarette applications.  Let’s just say, the smackdown—er, decision—eviscerates FDA’s approach to regulating flavored e-cigarettes.

In Wages and White Lion Investments (DBA Triton Distribution) v. FDA, Petitioners, a liquid nicotine manufacturer, sued FDA arguing that the Agency was arbitrary and capricious in rejecting the Petitioner’s Premarket Tobacco Application (“PMTA”) in violation of the Administrative Procedure Act (“APA”).  If you made it through the first 2 pages of the opinion, this Court’s answer is clear: FDA flagrantly violated the APA in denying those flavored e-cigarette applications due to the Agency’s utter failure to provide comprehensible instructions and consistent policies.

This story goes back to the 2009 Family Smoking Prevention and Tobacco Control Act, which prohibits manufacturers from selling any “new tobacco product” without authorization from FDA.  In 2016, FDA determined that e-cigarettes and their component parts fell under the term “new tobacco products,” requiring manufacturers of such products to submit PMTAs for FDA review before the Agency would issue a marketing order permitting the legal sale of the product.  FDA extended PMTA compliance deadlines for years so it could figure out appropriate application instructions and so that manufacturers could figure out how to comply. FDA originally set the PMTA deadline as August 8, 2022, but a district court in Maryland ordered FDA to shorten it. FDA complied with that order, later extended the deadline because of COVID, and eventually settled on a PMTA deadline of September 9, 2020. Before that deadline, as the Fifth Circuit Court explained, FDA provided PMTA instructions on at least five relevant occasions:

1. At an October 2018 Public Meeting, FDA said in a formal presentation that “No specific studies are required for a PMTA” and that PMTA could be supported without conducting new nonclinical or clinical sources given other data. Youth behavioral data was not specifically required but FDA encouraged such information.
2. FDA published a June 2019 guidance, which stated that manufacturers would not need to perform long-term studies or submit long-term data in PMTAs. FDA said randomized clinical trials could be used, but so could observational studies with respect to cessation data.  FDA also directed manufacturers to produce detailed marketing plans.
3. At an October 2019 Meeting, FDA explained the application process and provided assurances that decisions would be made on each specific product in a submission—not the submission in its entirety.
4. In September 2019, FDA issued a proposed rule reiterating that it did not expect long-term studies to be necessary, but that marketing plans were critical to success of a PMTA.
5. Finally, FDA issued another guidance in January 2020 (and revised in April) that stated that after the PMTA deadline set for September 2020, the Agency would prioritize “flavored, cartridge-based” e-cigarettes over than tobacco or menthol-flavored. FDA explained that “cartridge-based” products are more attractive to youth than “open tank systems,” which are bigger, harder to conceal, more complicated, and require refilling.

Importantly, the Court emphasized, “Never in this long, winding, and byzantine regulatory process of meetings, PowerPoint decks, proposed rules, comment periods, guidance documents, and enforcement priorities did FDA ever say that it was contemplating an across-the-board ban on flavored products.”  Nor did FDA give notice that favored product manufactures had to submit robust scientific studies on flavored cigarette products.  Yet…

Petitioners filed PMTAs for their flavored nicotine liquids, which included marketing and sales access restriction plans, with FDA before the deadline.  They also submitted long-term, controlled, and peer-reviewed studies to show that e-cigarettes generally cause smokers to switch to vaping.  They also included observational studies.  But they did not submit information specific to flavored products.

In August 2021, FDA issued a press release announcing the denial of 55,000 flavored e-cigarette applications en masse.  FDA proceeded to deny 946,000 flavored product applications in just over two weeks. In the August 2021 press release, the Agency announced for the first time that a randomized controlled study or other comparably robust and reliable study is required in a PMTA for a flavored e-cigarette product.  Petitioners asked for more time to amend their PMTAs to include the newly-required studies, but, as the Court explained, FDA went ahead and issued Marketing Denial Orders due to the absence of the “once-optional-but-now-required scientific studies.”  The Court also took umbrage with FDA’s plain statement that it “refused to even read petitioners’ marketing plans” that the Agency emphasized so heavily in guidance.  Petitioners moved to stay their Marketing Denial Orders pending review in Court.  Though a Fifth Circuit merits panel refused, the Court granted rehearing.

In a 10-5 en banc decision, the Fifth Circuit Court found that “FDA acted arbitrarily and capriciously in rejecting petitioners’ PMTAs.”  Going through “[f]our well-established and longstanding principles of administrative law,” the Court explained how any one of such principles “independently require that result.”  Specifically, the Court explained that:

• Any agency cannot invent post hoc justifications for its decision in court and outside the administrative record;
• An agency must provide fair notice before it deprives a citizen of property;
• When an agency chances its position, it must display awareness of the change and explain it; and
• Even if an agency acknowledges and explains a change in its position, it cannot fault a regulated entity for relying in good faith the on the previous one.

FDA failed on each count.  FDA said no new clinical data would be necessary then denied Petitioners’ and many other PMTAs for flavored e-cigarette products because those applications contained no randomized controlled trial and/or longitudinal cohort study.  And FDA deemed irrelevant robust scientific studies showing e-cigarettes induce adults to switch from smoking because it did not show that flavored e-cigarettes promote switching more than unflavored ones.  And, the Court stated, FDA failed to even read the marketing plans it stressed as necessary.

FDA did justify its position—using arguments that apparently have worked in other circuits—by citing to several ambiguous sentences in its June 2019 guidance insinuating that randomized data might be required.  FDA claimed that these sentences provided fair notice, but the Court disagreed, noting that FDA had repeatedly stated in no uncertain terms that such studies would not be mandatory in PMTAs.  Indeed, FDA received over one million PMTAs for flavored e-cigarette products “and not a single one of them contained the scientific studies that FDA now requires . . . .”  Says the Court: “It is perhaps possible that FDA did its part to give the regulated community clear guidance and that one million out of one million not only got it wrong but got it unreasonably wrong. But administrative law does not turn on such infinitesimal possibilities.”

While FDA did try to suggest that these studies were not a requirement, the Court cited a PMTA checklist in FDA’s Decisions Document that included a requirement for a randomized controlled trial or a longitudinal cohort study.  According to the Court, “[t]hat sure looks like a requirement that petitioners perform long-term scientific studies on their e-cigarette products.” Further, FDA “created a new, after-the-fact, categorical ban on using scientific data from unflavored products to support flavored PMTAs.”  The Court stated that FDA essentially “imposed an across-the-board ban on all flavored products, regardless of device type.”  All of this, the Fifth Circuit stated, is a clear demonstration that FDA added requirements without fair notice and without acknowledging any change in its position.   “All that matters here,” said the Court, “is that the agency unquestionably changed its position and then pretended otherwise.”

FDA’s argument in the alternative—that any “error was harmless”—was shut down by the Court as the Agency’s “misunderstand[ing] of how harmless error review works under the APA.”  The harmless error doctrine arises from the administrative law principle than agency errors result in a remand back to the Agency—not in a court substituting a more adequate or proper remedy.  The Fifth Circuit Court reasoned that the harmless error doctrine would have applied only if FDA were required to deny the Petitioner’s applications; but it did not apply just because FDA “will deny [the Petitioner’s applications] on remand even if we send the case back . . . .” The harmless-error rule, in other words, does not apply to discretionary administrative decisions.

We note that the Fifth Circuit is not the first circuit to have addressed the issue.  The Eleventh Circuit came to the same conclusion as the Fifth—that FDA acted arbitrarily and capriciously—but five other circuits have sided with FDA.  FDA clearly made that point in this case, arguing to the Fifth Circuit that it must look to its “sister circuits,” but the Court flatly rejected that line of reasoning noting that “law is not a nose-counting exercise” and then explaining why it disagreed with each of its “sister circuits.”  With this circuit split and the literal millions of rejected PMTA e-cigarette applicants, and several other circuits left to opine, this is not the last we’ll hear of this issue.  We just hope that all future decisions are as engagingly written as the Fifth Circuit’s.  Give it a read—you’ll enjoy it.

Two Hyman, Phelps & McNamara, P.C. (HPM) Directors, Karla Palmer and Dara Levy, will present at the Puerto Rico Pharmaceutical Summit 2024, February 6, 2024, at the La Concha Renaissance San Juan Resort in San Juan, Puerto Rico.  This day-long (FREE) seminar is a must-attend event for anyone in the pharmaceutical sector interested in understanding the “ins and outs” of doing business in the Territory, as well as an opportunity to interact with those who already have a keen understanding of doing business in Puerto Rico.  As a bonus, you can spend a day or two away from the cold US weather.

Given the significant growth and development opportunities available in Puerto Rico, Karla and Dara will discuss the FDA’s prescription drug approval process, and more importantly the “exportation” of prescription pharmaceuticals — including controlled substances — from Puerto Rico into the United States.

Some of the other (but not all…) topics of interest at this day-long conference presented by US and Puerto Rico industry thought leaders include:

1. Experiences and Challenges of Puerto Rico State Licensing
2. Internal Investigations: Monitoring, Compliance, Enforcement Actions
3. The State of the Pharmaceutical Industry in Puerto Rico
4. Navigating Global Turbulence: Drop Your Anchor in Puerto Rico

Puerto Rico continues to attract and retain the best and brightest in pharmaceuticals across the globe. Boasting a highly skilled workforce, state-of-the-art facilities, and a supportive business environment, it’s no surprise that Puerto Rico has become a hub for industry pioneers in biopharma, research, supply chain management and technology.

HPM is a co-sponsor of the event.  The event is hosted by by Porzio, Bromberg & Newman. Advance registration is required, and capacity is limited.  To register, please use this link.