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  • Yates’ Update on Yates Memo

    By Anne K. Walsh & John R. Fleder

    DOJ Deputy Attorney General Sally Q. Yates spoke last week before the New York City Bar Association White Collar Crime Institute to provide an update on the DOJ policy she announced in September 2015, about which we reported here and here. The focus of her speech was to describe the changes, “both within the Department and outside the Department,” that have been implemented as a result of the eponymous policy, which Ms. Yates refers to as the Individual Accountability Policy.

    Companies under DOJ scrutiny continue to provide facts about individuals to the government. Indeed, Ms. Yates reported that no company has decided not to cooperate with DOJ’s requests for information, despite some critics’ predictions of cooperation fallout from the new policy.  Ms. Yates opined that a decision to forego the benefits accorded cooperation and to “roll the dice” would be a “particularly risky calculus, especially for a publicly traded company.”  Indeed, according to her, companies not only continue to cooperate, but are making “real and tangible efforts” to identify facts about individual conduct.  She described how some companies even provide prosecutors with “Yates Binders,” another eponymous term used to describe compilations of relevant emails of individuals being interviewed by the government.  For companies unsure how to satisfy the government, Ms. Yates offered that companies should turn over information to DOJ “as they receive it,” recognizing that companies may not have all the facts lined up early in the investigation.  And she also encouraged company counsel to ask the prosecutors questions regarding the scope and how to proceed, noting that these question are case-specific and that it is not possible to identify hard and fast rules.

    Ms. Yates emphasized that the policy does not require a company to make a “legal conclusion” about whether any employee is civilly or criminally responsible for the conduct. She stated that DOJ just wants the facts, and that DOJ will make its own judgment about whether an action results in civil or criminal exposure.  Although this sounds like an opportunity for a company to avoid having to “serve up” an individual to DOJ, corporate counsel will almost always have to link the conduct to a legal conclusion to the extent the facts expose the company to civil or criminal liability.

    Moreover, the policy continues to pose very troublesome questions for corporations and their counsel. How do they disclose all the “facts” to the government without waiving privilege?  What “warnings” should be given to employees being interviewed by outside counsel when counsel knows that there is a reasonable chance that the company may need to disclose the facts uncovered in the interviews of those employees?

    Expressing no doubt that the new policy has shaken up the rules of the road, Ms. Yates assured that “equilibrium will return” and that a “new normal will exist.” She defined the new normal to hold wrongdoers accountable based on facts and evidence, not on position or title, power or wealth. As Ms. Yates herself acknowledged, however, the policy is not even a year old; it remains to be seen if there are true benefits of this shift in approach.

    Categories: Enforcement

    HP&M Publishes Comprehensive Deskbook on FDA Compliance and Enforcement

    The FDA Law Blog is pleased to announce the release of the FDA Deskbook, prepared by the attorneys at Hyman, Phelps & McNamara, P.C., the same authors who provide the expertise and analysis contained in this blog.  The FDA Deskbook is a complete resource on compliance and enforcement issues affecting FDA-regulated industry.  Readers of this blog are entitled to a 25% discount using this link.

    Categories: Miscellaneous

    FDA Issues Final Guidance for Medical Foods Largely Ignoring Comments

    By Riëtte van Laack

    FDA announced the availability of the Final Guidance for Medical Foods: “Frequently Asked Questions About Medical Foods; Second Edition.”

    As we previously reported, in August 2013, FDA issued a draft guidance, updating the 2007 guidance for medical foods. In the 2013 draft guidance FDA made numerous statements that we believe were not in accordance with the law. Among other things, FDA specifically excluded foods for certain diseases, such as diabetes, from the medical food definition. The draft guidance generated many comments.

    In the notice of availability published in the Federal Register, FDA asserts that it modified “the guidance where appropriate” and “made editorial changes to improve clarity.” Review of the Guidance shows that, overall, FDA largely ignored the comments and continues to narrowly interpret the definition of medical foods. This is disappointing but hardly surprising development.  

    Possibly the most surprising change is FDA’s new rationale for exclusion of foods for diabetics from the medical food definition. In the 2013 draft guidance, FDA acknowledged that diabetes is associated with nutrient requirements but those requirements could be met by modification of the diet alone. Therefore, such products failed one of FDA’s regulatory requirements for medical foods. In the final guidance, FDA now asserts that there are no special nutrition requirements for patients with diabetes. Therefore, foods for diabetics fail one of the statutory requirements.

    Since this is guidance and FDA does not need to explain its actions, we can only speculate as to FDA’s reasons for its persistence in misinterpreting the law.

    Congress’ Dubious Delegation of Legislative Authority to USP Standards Results in “Instructions”– But Not “Dismissal” – Related to the NECC Criminal Indictment

    By Karla L. Palmer

    A Massachusetts United States district court judge decided last week whether the United States’ reliance on alleged violations of the United States Pharmacopeia (“USP”) compendium addressing sterility of compounded preparations was a permissible delegation of legislative power to USP to define criminal conduct, effectively raising questions about the constitutionality of the FDC Act’s reference to third-party standard-setting organizations in the context of a criminal case. In a slip opinion in United States v. Cadden, 2016 WL 1948832 (D. Mass, Slip Op. May 3, 2016), Judge Richard Stearns takes to task the United States for allegedly relying on USP chapters on compounding (“USP”) to form the basis of certain Racketeer Influenced and Corrupt Organizations (“RICO”) allegations in its indictment filed against the officers and employees of New England Compounding Center (“NECC”) and its sales arm, Medical Sales Management, Inc. (“MSM”).

    The underlying criminal matter arises out of the NECC incident back in 2012, where the pharmacy shipped allegedly contaminated compounded steroid epidural products nationwide, allegedly resulting in widespread sickness and death. Specifically, the United States references “pervasively” throughout the 2014 indictment (i.e., in counts 1-2 and 4-94) USP<797> (Compounding Sterile Preparations) and USP<71> (Sterility Testing). The government alleges that certain defendants conducted the business of NECC and MSM though a “pattern of racketeering activity to obtain money and property by fraudulent pretenses, namely by falsely representing NECC’s compounded drugs to be in compliance” with USP’s standards for sterile compounding. Defendants moved to dismiss counts 1-2 and 4-94, stating that the government “criminalized” the USP, and thus improperly delegated an “essential legislative function” to a “private trade association.”

    The indictment describes the following conduct relating to USP guidelines: use of ingredients; sterilization; sterility testing; labeling; cleaning and disinfecting; environmental monitoring and personnel training and testing. Defendants asserted that Congress, not a private industry group or FDA, must define through enactment of federal statutes conduct that constitutes a crime. Specifically, citing U.S. Const., article 1, defendants stated, “It is a bedrock principle of constitutional law that Congress is the only entity empowered to create criminal laws.” Criminalizing USP violations constitutes an unlawful delegation to a private industry organization of legislative power conferred on Congress in violation of the separation of powers doctrine, they argued.

    The Court noted that defendants also point out – “accurately”- that references to the USP in the Federal Food, Drug, and Cosmetic Act are “patchy” and unsystematic, that no guidance is provided directly by Congress or FDA, and that the Agency has no oversight over USP or discretion to accept or reject revisions to USP. The Court agreed with defendants that the government should be estopped from making any argument to the jury that USP has the force of law, or that violations of its standards are criminal offenses.

    However, the Court ultimately adopted the government’s argument that the indictment “passes muster” because it alleges that defendants perpetrated a scheme to defraud customers based on NECC’s misrepresenting compliance with the USP. The judge also stated that there is no constitutional prohibition against “Congress doing what it did here by looking to best practices in the compounding industry (as distilled in the USP) for assistance in” defining technical matters. Because the judge determined, however, that the indictment may be read to directly criminalize violations of USP standards themselves, which could result in prejudice, the Court ruled it would: (1) not read the indictment to the jury, and (2) instruct the jury in “emphatic terms” that the USP and associated state regulations do not define crimes or their elements. Instead, the failure to comply with USP may only be admissible on the issues of intentional misrepresentation, causation and recklessness related to the allegations involving second degree murder.

    Where does this leave the government’s reliance on USP compendial guidelines to form the basis of criminal violations under the FDCA? Could the violation of a USP guideline or standard alone result in a criminal sanction? Does the non-delegation doctrine apply to criminal conduct violative of standards by private industry groups other than USP? For example, the FDCA defines the term "official compendium” as the official USP, the official NF, the official Homeopathic Pharmacopeia of the United States, or any supplement to them. USP–NF standards also “play a role,” at a minimum, in the adulteration and misbranding provisions of the FD&C Act (which apply as well to biologics)(seeUSP in U.S. Law”). FDCA Sections 501(b) and (c) deem an “official drug” (i.e., a drug purported to be or represented as a drug the name of which is recognized in an official compendium) to be adulterated if it fails to conform to compendial standards of quality, strength or purity. Based on this Court’s opinion, violations of USP or other compendial standards, which references are littered throughout the FDCA, arguably cannot serve as a stand-alone basis for criminal violations of the FDCA: To do so would violate the U.S. Constitution’s non-delegation doctrine. Questions also remain concerning whether the Court’s non-delegation ruling may apply in civil matters. Notwithstanding, as this Court holds, USP (and other private industry) standards may still be considered in the criminal context to the extent that an entity misrepresents its compliance with such standards or guidelines.

    Texas Finalizes Repeal of Medicaid Price Reporting Requirement

    By Alan M. Kirschenbaum

    Last October we reported on a proposed regulation published by the Texas Health and Human Services Commission (HHSC) to repeal a burdensome price reporting requirement for drug manufacturers under Texas Medicaid. HHSC has now finalized the proposed rule without change. See Texas Register of May 6, 2016, at 3298-3300. As we noted in our post last October, the repeal relieves manufacturers of the requirement to calculate and submit updated prices to HHSC for drugs covered under Texas Medicaid, unless an update is requested for specific products by HHSC. Manufacturers that wish to obtain coverage for a new product under Texas Medicaid will continue to be required to submit a Certification of Information Form that includes prices to specified customer categories. The final rule goes into effect on May 15, 2016 (this Sunday).

    Categories: Health Care

    ACI & CRN Co-Sponsor Forum on Dietary Supplements

    The American Conference Institute’s 4th Annual Legal, Regulatory and Compliance Forum on Dietary Supplements will be presented in collaboration with the Council for Responsible Nutrition, and is scheduled for June 27-28 in New York.  The Forum will feature presentations on policy initiatives, federal and state enforcement efforts, and criminal and civil litigation.  Speakers include federal and state officials, trade association representatives, and inside and outside counsel.  Hyman, Phelps & McNamara, P.C.'s  Ricardo Carvajal will participate in a panel focused on FDA rulemaking and guidance documents affecting the dietary supplement industry.  Additional information on the Forum is available here and registration is available here.  FDA Law Blog Readers can get a 15% discount by using the code P15-999-FDA16.

    FDA Issues Much Anticipated Draft Guidance on Additive Manufactured (“3D-Printed”) Devices

    By McKenzie E. Cato* & Allyson B. Mullen

    On May 10, FDA issued the long-awaited draft guidance, “Technical Considerations for Additive Manufactured Devices.”  In October 2014, FDA held a public workshop on AM devices, “Additive Manufacturing of Medical Devices: An Interactive Discussion on the Technical Considerations of 3D Printing.”  Since then, this draft guidance topic appeared on FDA’s priority guidance list in 2015, but was removed without explanation in 2016, leaving some to wonder about its status.  The draft guidance states that it intends to “outline considerations associated with [additive manufacturing (AM)] processes” and provide “recommendations for testing and characterization for devices that include at least one AM fabrication step.”  AM is “a process that builds an object by iteratively building 2-dimensional (2D) layers and joining each to the layer below, allowing device manufacturers to rapidly alter designs without the need for retooling and to create complex devices built as a single piece.”  AM is a category of manufacturing which encompasses “3D printing.”

    The most common AM methods used in the manufacture of medical devices are:

    • Powder fusion: Selective melting or sintering of layers of powder (metal or polymer)
    • Stereolithography: Selective light curing (by laser or projection system) of a vat of liquid material
    • Fused filament fabrication: Melting of solid filament which solidifies in place
    • Liquid-based extrusion: Ejection of a liquid, which solidifies via light exposure, solvent evaporation, or other chemical process

    This layer-building fabrication process allows manufacturers to create anatomically matched devices using a patient’s medical imaging. It also allows manufacturers to easily create internal channels, geometric support structures, and porous materials.

    The draft guidance is divided into two general parts: (1) Quality System Considerations; and (2) Device Testing Considerations (i.e., premarket submission considerations). Below we provide a high-level summary of each.

    Quality System Considerations

    The draft guidance provides technical manufacturing considerations for each step in the manufacturing process of an AM device. Because there are many different combinations of processing steps used in AM technology, FDA recommends that manufacturers create a production flow diagram “that identifies all critical steps involved in the manufacturing of the device, from the initial device design to the post-processing of the final device” and a “high-level summary of each critical manufacturing process.”

    The basic manufacturing process of an AM device is illustrated in the draft guidance by the following flow chart. Each step in this process is addressed in turn.

    AM Device Chart

    Device Design

    The design process may include standard sizes and models or anatomically matched devices designed from a patient’s medical imaging.

    The AM process, compared to other manufacturing techniques, introduces increased variability into the design process for standard-sized devices (e.g., due to pixilation of features in the device design), so FDA recommends that manufacturers identify and document manufacturing tolerances of the machine.

    Regarding patient-matched designs, FDA recommends that manufacturers identify clinically relevant parameters, the range for alteration of these parameters, and which of these parameters may be modified for patient-matching. Patient-matched designs have the added variability of reliance on the accuracy and resolution of medical imaging.  Additionally, any procedure or software used to make manipulations to device design based on a patient’s anatomy should contain “internal checks that prevent the user from exceeding the pre-established device specifications documented in the device master record.”

    Software Workflow

    The software workflow stage involves optimization and conversion of the device design into a format from which it can be printed.

    Errors in file conversion can affect the dimensions of a final finished device. Manufacturers are advised to test all file conversion steps with simulated worst-case scenarios.  Final device files that are used for printing should be archived in a standardized format, such as Additive Manufacturing File (AMF) format, described in ISO/ASTM 52915.

    The draft guidance identifies several additional preparatory processes that are typically accomplished using build preparation software:

    • Build volume placement: Placement and orientation of devices or components within the build volume can affect device or component quality.
    • Addition of support material: Some AM processes require temporary support structures. The location, type, and number of supports can affect the properties of a final device or component.
    • Slicing: Most AM techniques involve a layer-building process. Manufacturers should document their choice of layer thickness, which should reflect a balance of accuracy, quality, and printing speed.
    • Build paths: The path traced by the energy or material delivery system can affect device or component quality. Manufacturers should maintain consistency of build path between identical devices.
    • Machine parameters: Proper calibration and preventive maintenance are key factors to achieve low rejection rates of devices and components.
    • Environmental conditions: The ambient temperature, atmospheric composition, and flow patterns can impact the final properties of a device or component. Manufacturers should establish procedures to control environmental conditions within the build volume.

    Material Controls

    Concurrently with the software workflow stage, material controls are established for the materials used to print the device.

    Manufacturers should document the following information about each starting material used and any processing aids, additives, and cross-linkers: (1) the identity of the material, (2) the material supplier, and (3) the incoming material specifications and material certificates of analysis (COAs) and the test methods used for the COAs. The specifications for starting materials should be based on the AM technology used.  For example, if the starting material is a solid powder, the specifications may be particle size and size distribution.

    Post-Processing

    The post-processing phase includes cleaning, annealing, post-printing machining, and sterilization. Manufacturers are advised to document all post-processing steps and include a discussion of the effects of these steps on the final device.  Manufacturers should identify any potentially detrimental effects of post-processing steps and describe mitigations implemented.

    Process Validation and Acceptance Activities

    The draft guidance suggests the following methods for ensuring consistency of quality:

    • In-process monitoring of parameters such as:
      • temperature at the beam focus,
      • melt pool size,
      • build-space environmental conditions,
      • power of the energy delivery system, or
      • status of mechanical elements of the printing system;
    • Manual or automated visual inspection with defined acceptance criteria;
    • Non-destructive evaluation; and
    • Test coupon evaluation.

    Revalidation may be necessary if there are changes to the manufacturing process or process deviations (e.g., software changes, changes in material, physically moving the machine to a new location).

    Device Testing Considerations

    This section of the draft guidance highlights considerations for manufacturers when preparing premarket submissions for AM devices. The draft guidance indicates that the variability of AM devices, including shape and sizing of patient-matched devices, affects what a manufacturer can and should include in a premarket submission. 

    Device Description: The device description should identify the range of dimensions of the device, any design variations, any critical dimensions or features that are intended to be altered, and the range of allowable values for alterable parameters.  The device description should also describe the type of AM technology used to build the device and a flow chart describing the manufacturing process, including post-processing.  The draft guidance provides no additional details as to what level of information regarding the manufacturing technology or manufacturing process will be required in a premarket submission for an AM device.  This level of detail will be important for not only AM device manufacturers to understand, but also 3D printer and scanner manufacturers, so that they are able to supply AM device manufacturers with the necessary information for these manufacturing tools.

    Mechanical Testing and Dimensional Measurements: The draft guidance indicates the type of performance testing that should be conducted on an AM device will not generally differ substantially from traditional manufacturing methods.  Performance testing may include material property testing (e.g., modulus, yield strength, ultimate strength, creep/viscoelasticity, fatigue, abrasive wear).  Additionally, manufacturers should conduct performance testing on worst-case combinations of dimensions and features.

    Manufacturers should identify the device’s orientation (i.e., anisotropy) relative to the build direction and location within the build space for each performance test, including worst-case orientation. The draft guidance suggests conducting a baseline study of the machine and material combination to determine the degree to which build orientation and location affects mechanical properties.  The draft guidance lacks additional information regarding such a baseline study, including what it is or what such a study would entail.  Manufacturers should also specify the dimensional tolerances and perform dimensional measurements for each AM component.

    Material Characterization: Manufacturers should ensure that there are no unintentionally formed chemical entities that could pose a risk to patient health.  In addition, the draft guidance recommends providing specific details and testing to characterize the materials to be used to build an AM device.

    It is important to note that the draft guidance does not address use or incorporation of biological, cellular, or tissue-based products in AM. Thus, AM manufacturers intending to use such material should seek guidance from CBER.

    Cleaning and Sterilization: The draft guidance states that cleaning and sterilization process validation should account for the geometry of the device under worst-case conditions.  The draft guidance suggests that AM devices may carry an increased risk of residual manufacturing material.  Manufacturers should describe how the cleaning process ensures adequate removal of residual materials as part of the cleaning validation process.  Because of limitations at the end-user facility, the draft guidance recommends that AM device manufacturers perform all final cleaning steps prior to supplying the finished device to the end user.  If the AM device is intended to be reusable, the draft guidance recommends inclusion of reprocessing instructions in the device labeling.

    Additional Labeling Considerations: Finally, the draft guidance addresses additional labeling considerations for devices that are patient-matched.  Such devices should have accompanying physician labeling in the packaging to identify the patient identifier; details identifying use, such as anatomical location; and final design iteration or version used to produce the device.  The draft guidance also highlights that the patient for whom a patient-matched AM device is intended may have experienced anatomical changes since imaging was taken to prepare the device.  As a result, the draft guidance recommends including an expiration date for AM devices and a precaution in the labeling indicating that “patients should be surveyed for potential anatomical changes prior to” using a patient-matched AM device.

    While the draft guidance is a good starting point, it leaves open a number of important questions. For example, the draft guidance provides no information as to who FDA considers to be an AM device manufacturer.  Will all hospitals that own a 3D printer now be considered device manufacturers and required to comply with device regulatory requirements?  The draft guidance states, “point-of-care device manufacturing may raise additional technical considerations,” which suggests that point-of-care manufacturing could be included in the scope of this draft guidance.

    The draft guidance also does not address the distinct challenges of deciding when a new 510(k) may be required for a cleared AM device. 510(k) submissions have not traditionally included information regarding the manufacturing process for the subject device.  Thus, manufacturing changes were not generally contemplated in FDA’s 1997 Guidance, “Deciding When to Submit a 510(k) for a Change to an Existing Device (K97-1).”  Because of the unique nature of AM devices, however, details of the manufacturing process for these devices will likely be included in most AM device 510(k)s.  The draft guidance does not provide any recommendations for AM device manufacturers to aid them in determining when a change to an AM device’s manufacturing process could necessitate a new 510(k).  For example, the draft guidance states that the location of AM manufacturing equipment in a build space could potentially affect the mechanical properties of the resulting AM device.  Accordingly, could a new 510(k) be required if the manufacturing equipment is moved?  What if commercial demand increases and a new piece of equipment is added next to (not in exactly the same location as) the original piece of equipment?

    These are just a couple of the undoubtedly infinite number of open questions for AM device manufacturers. Even with FDA’s effort to provide guidance in this area, we suspect that most AM device manufacturers will need to seek device-specific guidance from FDA prior to submitting a premarket submission for a new AM device.  Our earlier post on the Pre-Submission process and obtaining early feedback from FDA can be found here

    A final interesting note about this draft guidance: FDA characterizes this draft as a “leap-frog guidance.” Leap-frog guidances are relatively new, only having been used by the Agency a few times in the last couple of years.  FDA describes a leap-frog guidance as “a mechanism by which the Agency can share initial thoughts regarding the content of premarket submissions for emerging technologies and new clinical applications that are likely to be of public health importance very early in product development.”  We commend FDA for establishing such a process because we hope it provides greater transparency for industry regarding premarket requirements.  However, unlike Immediately In Effect (IIE) guidances, another new type of guidance document, for which FDA published a draft SOP in September 2013 (see our post on IIE guidances here), we are unaware of any similar public SOPs for leap-frog guidances.  Thus, the specifics of how and when FDA will employ leap-frog guidances is not apparent.

    *Summer Associate

    Categories: Medical Devices

    FDA’s Final Deeming Regulations Covers all “Tobacco Products”

    By David B. Clissold

    On May 10, 2016, FDA published in the Federal Register the final “deeming regulation” asserting control over all tobacco products, even products that do not yet exist, meeting the broad statutory definition of a “tobacco product.” Under the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”), a “tobacco product” is defined in relevant part as “any product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product . . . .” As discussed in our post describing the proposed deeming regulation, the Tobacco Control Act gave FDA the immediate authority to regulate cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. However, any other “tobacco product” could be regulated by FDA only if the agency issued regulations “deeming” such other products to be subject to the Tobacco Control Act. The final rule does exactly that, deeming electronic cigarettes (“e-cigarettes”), cigars, pipe tobacco, nicotine gels, waterpipe (or hookah) tobacco, and dissolvable tobacco products, among other products, to be within FDA’s regulatory authority. (And almost immediately after publishing the final rule, Nicopure Labs, Inc., which distributes vaping devices and manufactures and distributes nicotine- and non-nicotine-containing “e-liquid” filed suit against FDA challenging the regulations as unlawful.)

    In the proposed rule, FDA presented an option that would have exempted premium cigars from FDA regulation. The final rule rejected that possibility and treats all cigars the same. Although the proposed rule requested comment on how the concept of a “continuum of risk” could be applied to the regulation of various tobacco products, FDA proceeded to regulate these diverse products with all the subtlety of a sledgehammer. Among the requirements going into effect on August 8, 2016, all manufacturers of any tobacco product will be required to:

    • Register and list every product (domestic manufacturers only). Foreign manufacturers will be required to register and list too, but this will require a separate regulation with its own effective date.
    • Obtain premarket authorization (SE, SE exempt, or PMTA; see our discussion of the tobacco product pathways to market here) for any product introduced after August 8, 2016.

    For products marketed before August 8, 2016 and not “grandfathered,” the premarket authorization requirements are subject to certain “compliance periods.” Under an FDA compliance policy announced in the final rule, enforcement of the premarket authorization requirement will be delayed depending on the type of premarket authorization submitted:

    • August 8, 2017: Deadline for manufacturer to submit and FDA to accept an SE exemption request.
    • February 8, 2018: Deadline for a manufacturer to submit and FDA to accept an SE report.
    • August 8, 2018: Deadline for a manufacturer to submit and FDA to accept a PMTA. 

    If the manufacturer submits and FDA accepts one of the submissions by the deadline stated above, FDA will not take enforcement action against that product for one year. However, at the end of that period, even if FDA has not completed its review, the product will be subject to enforcement action unless FDA determines that “substantial progress” is being made towards completion. These deadlines are departures from the proposed rule, which provided 24 months for the submission of an SE report or PMTA, and foreclosed the possibility of enforcement action until after FDA had acted upon the submission.

    Another deadline looming for cigar and pipe tobacco manufacturers is August 20, 2016, which is the date by which such manufacturers must submit certain information to FDA for the purpose of calculating user fees. This issue was addressed in a companion final rule and compliance guide.

    Requirements for all manufacturers to list the ingredients in every tobacco product, submit certain “health documents,” and for cigar manufacturers or importers to submit a “warning plan” to FDA, all take effect in 2017. By August 8, 2018, cigar manufacturers must include specified warnings on all packaging and advertisements. The required reporting of harmful or potentially harmful constituents (“HPHC”) takes effect on August 8, 2019, although FDA promised additional HPHC guidance before then.

    With respect to e-cigarettes (examples of a tobacco product category that FDA defines more broadly as “electronic nicotine delivery systems,” or “ENDS”), FDA issued a draft guidance entitled “Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems.” This draft guidance outlines all of the information that FDA considered important for a manufacturer to include in a PMTA for an ENDS. FDA also seems to believe that ENDS manufacturers in particular can make great use of “tobacco product master files” for certain components (e.g., the “e-liquid” in an ENDS), which are the subject of their own guidance. Further, ENDS “retailers who mix or prepare their own e-liquids or create or modify aerosolizing apparatus from various components” are classified as “manufacturers” by FDA, and are thus subject to all of the restrictions on all tobacco product manufacturers (e.g., the premarket submission requirements).

    Although FDA expressed great confidence in its ability to review the avalanche of premarket submissions that it is about to receive, its recent history might suggest some degree of skepticism. FDA gave itself one year to review these new submissions, but even if FDA has not completed its review by the end of that one-year period, the product could nevertheless be subject to enforcement action. The only incentive for FDA to act on such submissions within a year is apparently to meet its own, as yet unspecified, “performance goals.” FDA also indicated that it intends to issue a proposed product standard to regulate the use of “characterizing flavors” in tobacco products. The landscape for the newly deemed tobacco products, particularly ENDS and cigars, is about to become very different from what we know today.

    Categories: Tobacco

    FDA Certitudes: The Creation of an OTC Drug Monograph User Fee Program

    By Kurt R. Karst –  

    There are general life certitudes, such as the quote attributed to Benjamin Franklin: “In this world nothing can be said to be certain, except death and taxes.”  There are also FDA certitudes we’ve come to recognize.  For example, “everything eventually goes generic” . . . . and eventually FDA will be completely “UFAized.” (“UFAization” is the process by which an FDA component gets to collect fees from industry after the enactment of a User Fee Act – “UFA” – and then subsequently becomes focused on so-called process enhancements to meet goals and commitments.)  So we weren’t at all surprised when FDA announced in a Federal Register notice (Docket No. FDA-2016-N-1092) that will be published later this week (as well as in a FAQ document) that the Agency will hold a public meeting on June 10, 2016 “to gather stakeholder input on the potential development of a user fee program for nonprescription (over-the-counter or OTC) monograph drugs.” That’s right; in addition to all of the other FDA User Fee Programs already in existence, we may soon see an OTC Drug Monograph User Fee Program.

    The OTC drug monograph system has been around for quite some time – since 1972 – and it “remains one of the largest and most complex regulatory programs ever undertaken at FDA,” according to FDA. But the process of completing and updating monographs has moved at a glacial pace.  FDA has previously discussed some potential reforms to streamline the process (see our previous post here), but those reforms have not yet panned out.  The creation of a user fee program, however, could result in a “stable and predictable source of adequate funding” that would allow FDA to more quickly complete OTC drug reviews. 

    Crafting a user fee program for OTC monograph drugs will certainly require some tailoring to the unique aspects of the monograph system. As FDA recognizes in the Agency’s meeting announcement notice: 

    There are some important differences between marketing through approved applications and marketing under the monographs. NDAs and ANDAs are product-based; an application typically is submitted with data for a single drug product to be marketed by a single sponsor, and that application will be approved or not approved.  By contrast, the monograph system is ingredient-based; numerous sponsors may make the same ingredient for the same use, and all may market drug products made with this ingredient as long as they comply with all applicable regulations, including the conditions of the monograph.  Sponsors of monograph drugs are not required to seek FDA approval prior to marketing a product under the monograph.  In addition, the monograph system, where ingredients are determined to be GRASE or not, is a public process. Data are submitted to public dockets, and anyone may provide input.  By contrast, while FDA typically makes NDA information public after approval of a product, it generally cannot do so before. 

    With that in mind, FDA lays out the case for the creation of an OTC Drug Monograph User Fee Program, saying that there are several potential benefits:

    • Ability to address safety issues of currently marketed products in an efficient and timely manner.
    • Timely determination on the safety and efficacy of monograph ingredients under the conditions of the monograph, helping to assure appropriate marketing of thousands of nonprescription products used daily by U.S. consumers.
    • Increased availability of certain monograph product innovations proposed by industry.
    • Streamlined ability to update monographs to allow modern testing methods in several areas, potentially reducing the need for animal testing, and simplifying and speeding product development.
    • Development of information technology infrastructure to speed numerous parts of the monograph review process, and enable a modern robust system for submission of materials and archiving of documents.
    • Development of a modern, useful, and transparent FDA monograph website to provide the public and industry with access to important information.
    • Ability to hold more public meetings on important monograph issues.
    • Increased ability of FDA to respond to monograph-related concerns and questions from the public and industry.
    • Establishment of additional infrastructure for the efficient continued conduct of monograph activities in the longer term.

    Before the pubic meeting takes place on June 10th, FDA wants folks to chew on a few questions: (1) What types of user fees (e.g., product listing fees, facility fees, application fees, other types of fees) might be appropriate for a potential monograph user-fee program?; (2) What types of performance goals might be important to consider from a public health and sponsor perspective?; and (3) What parameters could be measured to gauge the success of a user-fee program? Many more questions will likely surface in the coming weeks and months as the skeleton of a system is fleshed out. Whether a system that the OTC drug industry can agree to can be hammered out in time for the next round of UFA reauthorizations in 2017 remains to be seen. . . . But it will happen . . . eventually.

    HP&M Seeks Alternative Statutory Reading of BPCI Act “Deemed to be a License” Provision

    By James E. Valentine & Josephine M. Torrente

    In March, FDA published a draft guidance document that describes FDA’s approach to the implementation of the statutory provision in section 7002(e) of the Biologics Price Competition and Innovation Act of 2009 (BPCI Act) under which an application for a biological product, approved under section 505 the Federal Food, Drug, and Cosmetic Act (FD&C Act) on or before March 23, 2020, will be “deemed to be a license” for the biological product under section 351 of the Public Health Service Act (PHS Act) on March 23, 2020 (see our previous post here). On Friday, Hyman, Phelps & McNamara, P.C. (HP&M) formally commented on the draft guidance document, pointing to unanticipated consequences of its approach that would result in an undue burden on current sponsors, particularly sponsors of biological products who intend to submit applications for products under section 505(b)(2) of the FD&C Act prior to March 23, 2020.

    FDA’s draft guidance suggests that FDA may interpret the “deemed to be a license” provision to mean that, on March 23, 2020, “applications for biological products that have been approved under section 505 of the FD&C Act will no longer exist as New Drug Applications (NDAs) (or, as applicable, Abbreviated New Drug Applications (ANDAs)) and will be replaced by approved Biologics License Applications (BLAs) under section 351(a) or 351(k) of the PHS Act, as appropriate.” FDA, Draft Guidance for Industry, Implementation of the “Deemed to be a License” Provision of the Biologics Price Competition and Innovation Act of 2009, 5 (Mar. 2016) (emphasis added). FDA then goes further, interpreting the provision to mean that “the Agency will not approve any application under section 505 of the FD&C Act for a biological product . . . that is pending or tentatively approved ‘on’ March 23, 2020, even though section 7002(e)(2) of the BPCI Act expressly permits submission of an application under section 505 of the FD&C Act ‘not later than’ March 23, 2020 . . . .” Id.

    As a further result of these interpretations and extensions of the statutory language, the Agency intends to remove products that are deemed to have licenses as “listed drugs” in FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book) on March 23, 2020. As of that date, therefore, FDA’s findings of safety and effectiveness for such products may not be relied upon by a 505(b)(2) applicant for approval of a related product, even if that product’s NDA is under active review at the time. Id. at 6. Under FDA’s proposed interpretation, some sponsors who submit 505(b)(2) NDAs for biological products well in advance of March 2020 may nonetheless find themselves barred from the NDA pathway to market, and without sufficient data or basis to pursue a 351(a) or (k) BLA pathway.

    HP&M’s comment discusses the predictable negative impacts on 505(b)(2) sponsors and the public health that would be caused by FDA’s proposed interpretation of the provision. The comment notes that FDA’s proposed interpretation would impact numerous ongoing development programs, causing irreparable financial harm, stifling innovation and availability of competition, and putting countless patients at unnecessary risk. To avoid these harms, HP&M requests that FDA adopt an alternative statutory reading that would allow 505(b)(2) NDAs submitted by March 23, 2020 to be eligible for review and approval under section 505 of the FD&C Act and, subsequently, deemed to be a license under section 351 of the PHS Act at the time of any approval. This view would preserve the value of investments already made by sponsors of timely submitted 505(b)(2) NDAs which, due only to the vagaries of NDA review (e.g., requests for Major Amendments, Complete Response actions, or unanticipated issues at a contract manufacturer) may not obtain approval by March 23, 2020.

    FDA Revises Guidance on Special Protocol Assessments, Attempts to Reduce Uncertainty

    By James E. Valentine & Alexander J. Varond

    FDA recently issued draft guidance, entitled “Special Protocol Assessment,” which, when finalized, will replace FDA’s 2002 final guidance by the same title. At 23-pages long, the draft guidance is much more thorough than its predecessor (only 11 pages) and warrants attention. The draft guidance provides a detailed overview of the policies and procedures adopted by CDER and CBER for special protocol assessment (SPA). SPA is a mechanism through which sponsors seek to reach an agreement with FDA on the size and design of certain types of studies to assess whether the studies have the ability to adequately address scientific and regulatory requirements. According to the draft guidance, CDER has issued more than 1,000 SPA agreements since the program was established in 1997.

    Before initiating certain studies, including pivotal Phase 3 studies, a sponsor may submit a study protocol to FDA under the SPA program to obtain feedback about the sufficiency of the study’s design to support the development program and ultimately the product’s marketing application. Federal Food, Drug, and Cosmetic Act (FDC Act) § 505(b)(4)(B)&(C). FDA recommends that an SPA request, including specific questions about the proposed protocol, be submitted at least 90 days prior to the anticipated start of the study. In reality, a sponsor should submit its protocol much earlier than this, as the process is often subject to delays and potentially lengthy negotiation.

    The Agency generally responds to SPA requests within 45 days. If agreement is reached on the design of the study, FDA will put the agreement in writing as part of the development plan’s administrative record which indicates that the study is appropriately designed to produce the type of data that could support the sponsor’s application. Otherwise, FDA will issue a “No Agreement Letter” discussing specific design parameters with which FDA does not agree. As we discuss below, even if an agreement is reached and the study is carried out as planned and meets its predefined objectives, FDA has the ability to rescind an SPA agreement for a number of reasons, including on the basis of a “substantial scientific issue” such as a “paradigm shift in disease diagnosis or management.”

    The following protocol types are eligible for an SPA:

    • Animal carcinogenicity protocols;
    • Drug substance and drug product stability protocols;
    • Animal efficacy protocols for studies intended to provide primary evidence of effectiveness required for approval or for licensure for products developed under the animal rule;
    • Protocols for clinical trials or studies intended to form the primary basis of an efficacy claim, regardless of the product development phase (g., Phase 2 or Phase 3); and
    • Protocols for clinical studies necessary to prove biosimilarity and/or interchangeability.

    FDA’s draft guidance includes the following significant changes:

    • Clarifies the types of protocols eligible for SPA, adding:
      • Animal rule efficacy protocols intended to support approval under part 314 subpart I, and part 601 subpart H, for drugs and biological products, respectively; and
      • Protocols intended to support approval of a biosimilar biological product;
    • Provides greater detail about the content of an SPA submission; and
    • Clarifies FDA’s process for rescinding an SPA agreement.

    We discuss this last change in greater detail below.

    Rescinding an SPA Agreement

    In drug development, a predictable regulatory framework is key to facilitating investment in new, innovative therapies by industry and investors. The SPA program was introduced by Congress in response to industry concerns that late changes in personnel or thinking within a review division could serve to impose new requirements on study design despite general agreement at an EOP2 meeting and long after a study had been initiated. The SPA program was designed to provide an additional level of certainty about the adequacy and acceptability of specific critical elements of overall protocol design to ensure that the trial conducted under the protocol will support regulatory requirements for approval. However, for some time stakeholders have raised concerns about FDA’s procedures for adhering to its commitments under an SPA agreement, especially in instances where there may be inconsistent interpretations of the underlying science supporting an SPA (see BIO statement here). Each time a commitment is rescinded by FDA – particularly for studies that are near completion or complete – the value of the SPA process is eroded.

    FDA’s authority to rescind an SPA agreement is set out in FDC Act § 505(b)(5)(C), which prescribes that, once an SPA agreement has been agreed to, the division director may only change or rescind the SPA if “a substantial scientific issue essential to determining the safety or effectiveness of the drug has been identified after the testing has begun.” Despite this broad statutory standard, FDA’s May 2002 SPA guidance document did not provide any insight into what the Agency would consider as a suitable basis for rescinding an SPA.

    The recent example of FDA rescinding an SPA agreement late in the conduct of the trial for Amarin’s drug, Vascepa, demonstrates the type of scenario that has lead to diminished confidence in the SPA program (see our previous post for additional background on Amarin). Vascepa is approved to treat patients with severe hypertriglyceridemia (>500 mg/dL), and Amarin sought to expand its indication to include patients with “persistently high” triglycerides (>200 and ≤ 500 mg/dL). Amarin and FDA negotiated an SPA agreement in 2009 for a single Phase 3 clinical trial to support this new indication. The Amarin study met its primary endpoint, demonstrating statistically significant reductions in triglyceride levels in subjects on Vascepa when compared with the subjects on placebo. The study also met its secondary endpoints. Amarin subsequently submitted a supplemental application for the expanded indication, believing it had satisfied all of FDA’s requirements per the SPA agreement.

    In 2013, after Amarin submitted its supplemental NDA, FDA convened an Advisory Committee during which the Agency called into question the clinical validity of the Phase 3 study endpoint of triglyceride lowering, despite having agreed to that endpoint in the SPA. According to FDA, data from several cardiovascular outcomes trials, some of which were reported out after the SPA was entered into by FDA and Amarin, had cast doubt on the clinical benefit of triglyceride lowering while also fostering uncertainty as to whether a reduction in triglyceride levels would translate into a reduction in cardiovascular events, in general. FDA asked the Advisory Committee to weigh in on whether Vascepa’s triglyceride lowering effect was sufficient to approve the drug for use in patients with persistently high triglycerides. The Advisory Committee voted against approval of Vascepa for that indication. Subsequently, FDA rescinded the SPA agreement and issued a complete response letter to Amarin indicating the need for data showing a reduction in cardiovascular events.

    The rescission of the Amarin SPA agreement, largely because it was a fully competed and positive trial, led to heightened public scrutiny of the scope of FDA’s basis for rescinding an SPA. It appears FDA, in its new May 2016 draft guidance document, is attempting to assuage some of this concern by providing its view of what can constitute a “substantial scientific issue essential to determining the safety or effectiveness of the [product].” The draft guidance document provides three examples of such scientific issues:

    • Identification of data that would call into question the clinical relevance of previously agreed-upon efficacy endpoint (this is what happened with the Amarin SPA agreement);
    • Identification of safety concerns related to the product or its pharmacological class; and
    • Paradigm shifts in disease diagnosis or management recognized by the scientific community and FDA.

    FDA, Draft Guidance, SPA Guidance for Industry, 20 (May 2016).

    FDA also identifies areas of scientific and medical innovation that could affect regulatory aspects of drug development (and presumably could be the basis for rescinding an SPA agreement):

    • An evolving understanding of protocol design;
    • Knowledge of ongoing clinical trials; and
    • The accrual of data regarding other product development programs in the same, or similar, pharmacological class.

    Id. at 22.

    While these examples are descriptive, they neither clearly establish predictable guidelines for what qualifies as a substantial scientific issue nor clarify when such an issue is essential to determining the safety and effectiveness of the drug. If anything they appear to claim nearly unlimited discretion on the part of FDA to rescind SPA agreements. Without plainly delineating the boundaries for the SPA program, and in turn providing a more predictable framework, it is unlikely sponsors will have greater confidence in their reliance on an SPA agreement.

    Comments on the Draft Guidance are due by July 5, 2016 here.

    FDA Sets Enforcement Date for Restaurant Menu (and Coupon!) Labeling

    By Etan J. Yeshua

    Today, FDA officially announced the availability of a final guidance document that answers questions about the Agency’s menu labeling rule. In doing so, FDA also set May 5, 2017 as the rule’s enforcement date. Although there are only a few differences between the final guidance document and the draft that was published last September (which we reported on here), one difference that caught our eye appears to expand the Agency’s understanding of what constitutes a “menu” by including coupons and other materials that provide a web address where customers can place an order.

    The final guidance is available here and is titled “A Labeling Guide for Restaurants and Retail Establishments Selling Away-From-Home Foods – Part II (Menu Labeling Requirements in Accordance with 21 CFR 101.11): Guidance for Industry” (hereinafter “final guidance document”).

    The Countdown to Enforcement

    As we’ve previously reported, the Affordable Care Act amended the Federal Food, Drug, and Cosmetic Act (FDC Act) in 2010 to require that certain chain restaurants and other covered establishments include calorie and other nutrition information on menus, menu boards, and elsewhere in the restaurant. FDA issued final regulations implementing those “menu labeling” requirements in 2014, and set a compliance date of December 1, 2015. Amid requests from industry, FDA extended the compliance date to December 2016. Then, Congress delayed the implementation date even further (in the omnibus appropriations bill for 2016) by postponing implementation until one year after FDA issues a final guidance on the menu labeling requirements. FDA released the final guidance document last Friday, and formally announced its availability (in the Federal Register) today, with enforcement to begin in one year.

    The Definition of “Menu”

    The final guidance document is largely identical to the draft that was published in September 2015. However, one seemingly minor addition in the final guidance document may result in restaurants and other covered establishments having to provide calorie information on many more marketing materials than previously thought.

    FDA’s final regulations state that an establishment must provide calorie counts on “menus” and “menu boards,” and that certain materials may require calorie counts if they are “part of” the establishment’s menu or menu board: “Determining whether a writing . . . is part of the [menu or menu board] depends on a number of factors, including whether the writing lists the name of a standard menu item (or an image depicting the standard menu item) and the price of the standard menu item, and whether the writing can be used by a customer to make an order selection at the time the customer is viewing the writing.” Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments, 79 Fed. Reg. 71,156, 71,254 (Dec. 1, 2014) (to be codified at 21 C.F.R. § 101.11(a)) (emphasis added). In today’s final guidance document, FDA seems to take a more expansive view of this last factor than it previously did.

    In the preamble to the final rule, FDA provided the following as examples of writings that “can be used by a consumer to make an order selection at the time the consumer is viewing the writing (e.g., the writing is posted at the cash register in a covered establishment, or the writing lists the phone number or email address of a covered establishment for purposes of placing an order).” 79 Fed. Reg. at 71,177 (emphasis added). The September 2015 draft guidance document similarly stated that “a pizza coupon that includes a phone number to place the order” is considered to provide a means to make an order selection. See FDA Draft Guidance: A Labeling Guide for Restaurants and Retail Establishments Selling Away-From-Home Foods – Part II (Menu Labeling Requirements in Accordance with 21 CFR 101.11) at 19 (Sept. 2015) (emphasis added).

    The final guidance document, however, states that even a “web address” can turn a coupon into a menu (provided, of course, that the coupon includes the name, or picture, and price of a standard menu item):

    [I]n the example of a pizza coupon that includes a . . . web address where the customer can place an order and that states “1 large pepperoni and sausage pizza $9.99,” the “coupon” can be used by a consumer to make an order selection at the time a consumer is viewing the coupon (i.e., the coupon includes the name of the standard menu item, price of the standard menu item and a . . . web address where an order can be placed).

    Final guidance document at 19-20.

    It is not clear whether a “web address where the customer can place an order” (emphasis added) includes an establishment’s homepage (e.g.www.CafeEtan.com), or only the specific webpage from which customers can place an order (e.g., www.CafeEtan.com/order). It is also not clear whether a street address would similarly turn a coupon or other marketing material into a menu.

    The Agency continues to accept comments to the final guidance document’s docket at www.regulations.gov, and questions about menu labeling at CalorieLabeling@fda.hhs.gov.

    FDA Finalizes Compliance Policy Guide: Pet Food Diets Intended for Sick Animals are Drugs but FDA will Exercise Enforcement Discretion under Limited Circumstances

    By Riëtte van Laack & Wes Siegner

    Under the FDC Act, dog and cat food products that are intended to treat or prevent disease and to provide nutrients in support of the animal’s daily nutrient needs can be regulated as drugs or foods or both. Drugs may be not be marketed without pre-market approval. Thus, according to FDA, pet food products intended to treat sick animals are illegal. Unlike human food products, where FDC Act provisions addressing health claims and food for special dietary use, and the Orphan Drug Act Amendments of 1988 defining “medical food” permit certain disease-related claims, there are no such provisions applicable to products intended for animals. However, as FDA explains in a new guidance, under limited specific circumstances, FDA will exercise enforcement discretion with regard to these products. The guidance identifies eleven factors FDA will consider.

    Although the Agency considers these products drugs, it will exercise enforcement discretion if manufacturing and labeling complies with the regulations for animal feed; i.e., the manufacturing facility must be registered as an animal feed establishment, the product must be manufactured in accordance with cGMPS and preventive controls applicable to animal food manufacturing, and the product must contain only ingredients that are GRAS ingredients, approved food additives, or ingredients defined in the 2015 Official Publication of the Association of American Feed Control Officials. In addition, the product labeling must comply with all labeling requirements for animal food products.

    The label of the product may not include representation regarding its effect on disease. Labeling and other marketing materials may reference the disease but only if the distribution of these materials is be limited so that the information is available for veterinary professionals only. In addition, the product may be made available to the public only through licensed veterinarians or through sales to individuals purchasing the product under the direction of a veterinarian.

    The draft guidance was published in 2012. The Draft Guidance identified specific factors determining enforcement priorities. The Final Guidance is less specific and merely advises Districts to consider enforcement action when one of more of the factors listed by FDA is not present.

    All in all, the final Guidance is substantially similar to the draft guidance. FDA does not explain whether it did consider any of the suggestions made in comments. For example, comments advised FDA that the type of foods at issue generally do not treat or prevent disease but instead “manage” disease in that they address the nutritional needs of animals with diseases. Similarities with medical foods for humans were noted.

    Comments also recommended that FDA not include a date in the reference to the AAFCO Official Publication because this would create issues the moment that publication would be updated. Rather than removing the date, FDA updated it to refer to the 2015 version which has already been replaced by the 2016 edition.

    This guidance does not apply to products intended for nutritional supplementation of foods for animals and products marketed as dietary supplements for animals. These are the subject of a different unpublished FDA enforcement discretion policy.

    Speculating About the Prospects of Exclusivity – A Potentially Risky Game

    By Kurt R. Karst –   

    Speculating about the prospects that FDA will grant a period of marketing exclusivity – 5-year New Chemical Entity (“NCE”) exclusivity, 3-year new clinical investigation exclusivity, 7-year orphan drug exclusivity, or any other type of exclusivity or add-on exclusivity – upon the approval of a marketing application can be a risky venture.  Just ask ViroPharma Incorporated (“ViroPharma”), which made certain statements about the prospect of FDA granting a period of 3-year exclusivity upon the December 14, 2011 approval of a supplemental NDA for VANCOCIN (vancomycin HCl) Capsules.  FDA denied 3-year exclusivity (see our previous post here) and ViroPharma quickly found itself embroiled in years-long class action securities litigation

    Despite the risks of predicting whether or not FDA will grant marketing exclusivity (or a particular type of exclusivity), we still see investment groups and companies making predictions – some stronger than others.  Often these predictions aren’t accompanied by any legal analysis.  But, like tabloids, they’re interesting reading nevertheless.  As Sean Connery’s character William Forrester says to Rob Brown’s character Jamal Wallace in the 2000 film Finding Forrester “The Times is dinner, but The National Enquirer, that’s dessert.”

    Take, for example, recent statements made by Flamel Technologies (“Flamel”) with respect to the company’s AKOVAZ (ephedrine sulfate) Injection, 50 mg/mL, which FDA approved on April 29, 2016 under NDA 208289 (a 505(b)(2) NDA) as a pressor agent to address clinically important hypotension in surgical settings.  Ephedrine sulfate has been marketed by Akorn Pharmaceuticals (“Akorn”), among others, for many years without approval of a marketing application.  According to a Flamel press release, AKOVAZ “is the first [NDA] to receive approval from the FDA for ephedrine sulfate.”  An investment note issued after the approval of AKOVAZ goes further (not “farther,” right Jamal?):

    The FDA will need to address the marketing status of the [Akorn] grandfathered product and [Flamel] told us this morning the FDA will make a decision on Akovaz NCE (new chemical entity) status sometime this month.  In theory, NCE status would confer 5-yrs of regulatory exclusivity.  While [Flamel] mgmt has downplayed their ability to secure NCE status on Akovaz in the past, the mgmt team informed us it remains possible the molecule may be approved with NCE status or that a scenario may exist where [Flamel] and [Akorn] both get NCE status, e.g. shared NCE status that precludes other brands and generics from coming to market over the next 5-yrs.

    At first blush, it might appear that AKOVAZ contains an NCE eligible for 5-year exclusivity.  After all, searches of Drugs@FDA and the Orange Book don’t show any FDA approval of a marketing application for a drug product containing “ephedrine” or “ephedrine sulfate” – just various NDAs and ANDAs for drug products containing some form of pseudoephedrine.  And although FDA has identified the AKOVAZ NDA as a “Chemical Type 7” NDA – i.e., “Drug already marketed without an approved NDA” – even that status is not an absolute indicator of NCE exclusivity eligibility.  FDA’s Manual of Policies and Procedures (“MAPP”) on NDA Classification Codes (MAPP 5018.2) explains that:

    A Type 7 NDA is for a drug product that contains an active moiety that has not been previously approved in an application, but has been marketed in the United States. This classification applies only to the first NDA approved for a drug product containing this (these) active moiety(ies).

    Type 7 NDAs include, but are not limited to:

    (1) The first post-1962 application for an active moiety marketed prior to 1938.
    (2) The first application for an active moiety first marketed between 1938 and 1962 that is identical, related or similar (IRS)6 to a drug covered by a Drug Efficacy Study Implementation (DESI) notice.
    (3) The first application for an IRS drug product first marketed after 1962.
    (4) The first application for an active moiety that was first marketed without an NDA after 1962.

    An analysis of NCE exclusivity eligibility requires more than just consulting Drugs@FDA and the Orange Book, because those databases are are incomplete.  It requires, at the very least, a look-back at all NDAs approved by FDA under FDC Act § 505 since the FDC Act was signed into law by President Roosevelt on June 25, 1938, including those many, many NDAs whose approvals were withdrawn in the early 1970s under FDA’s NDA “clean-up initiative” (35 Fed. Reg. 11,929 (July 24, 1970)). 

    That’s where FDA’s so-called “Ever-Approved List” comes in handy.  It’s a list of drug products purported to have been approved by FDA since 1938 under a marketing application submitted pursuant to FDC Act § 505.  The “Ever-Approved List” is not readily available, but fortunately, we have a copy of the list.  A review of that list shows that FDA has approved many NDAs, starting in 1938, for drug products containing “ephedrine” and “ephedrine sulfate.”  Consider, for example:

    • NDA 000016 for 3M Pharmaceuticals Inc.’s RINOFEDS Capsules, which FDA approved on March 16, 1939, and that contains atropine, ephedrine, and phenobarbital (approval withdrawn on 1/30/1973);
    • NDA 000212 for Glaxo Wellcome Inc.’s VAPOROLE Nasal Spray, which FDA approved on December 14, 1938, and that contains ephedrine 1% (approval withdrawn on August 6, 1971);  
    • NDA 000029 for Reese Chemical Co.’s BLUE Tablets, which FDA approved on September 20, 1938, and that contains calcium lactate, ephedrine sulfate, and iodobenzoic acid (approval withdrawn on July 24, 1970);
    • NDA 002441 for Smith Miller and Patch Inc.’s Tablet dosage form drug product approved on May 4, 1940, and that contains ephedrine sulfate, phenobarbital, and potassium chloride;
    • NDA 003167 for PHD Laboratory Inc’s DEX-O-FED Oral Drops, which FDA approved on Decemner 13, 1940, and that contains chlorobutanol 30% and ephedrine sulfate 50% (approval withdrawn on July 24, 1970); and, more “recently”;
    • NDA 011768 for Roerig’s (a Division of Pfizer Inc.) MARAX Tablets, which FDA approved on May 27, 1959, and that contains ephedrine sulfate, hydroxyzine HCl, and theophylline (approval withdrawn on August 7, 1998; 63 Fed. Reg. 36,923 (July 8, 1998)); and
    • NDA 012879 for Roerig’s (a Division of Pfizer Inc.) MARAX and MARAX-DF Oral Syrup, which FDA approved on August 21, 1961 and May 24, 1963, respectively, and that contain ephedrine sulfate, hydroxyzine HCl, and theophylline (approval withdrawn on August 7, 1998; 63 Fed. Reg. 36,923 (July 8, 1998)).

    Given these previous NDA approvals (as well as several more not listed here), it’s difficult to understand how AKOVAZ could contain an NCE that should be awarded 5-year exclusivity.  But that’s a determination FDA has to make.  How FDA’s determination ends up squaring with predictions made about the drug remains to be seen, but we will likely know in the coming weeks or months. 

    HHS OIG Revises Factors Used to Evaluate Whether to Exclude Based on Health Care Fraud Activities

    By Anne K. Walsh

    A drug or device company (or its officers, management, or employees) who are the target of a False Claims Act lawsuit or investigation face the potential threat of being excluded from Medicare, Medicaid, and other Federal health care programs.  For a drug or device company, exclusion means that none of the company’s products are eligible for payment under a Federal health care program.  For an individual, exclusion effectively bans the subject individual from working in the health care industry during the exclusion period.  Thus it is critical that any response to a False Claims Act investigation include not only arguments to avoid prosecution, but also to dissuade the government from seeking an exclusion remedy. 

    Under section 1128(b)(7) of the Social Security Act (the “Act”), the Office of the Inspector General (OIG) of the Department of Health and Human Services may exclude any individual or entity (collectively “person”) that has engaged in conduct described in section 1128A or 1128B of the Act.  Specifically, (b)(7) exclusion may be imposed on any person that submits, or causes to be submitted, false or fraudulent claims to a Federal health care program, or that violates the Federal health care program anti-kickback statute.  The Act provides OIG with “permissive” exclusion authority in these situations, meaning that it has discretion whether to exclude the person, versus the mandatory exclusion that certain conduct requires under the Act. 

    Over 19 years ago, HHS OIG issued non-binding guidance (62 Fed. Reg. 67392 (Dec. 24, 1997)) that set forth criteria OIG intended to use in determining whether to exercise its permissive exclusion authority.  In 2014, OIG solicited comments for revising these criteria, and based on the five comments it received and the office’s experience to date, issued revised guidance on April 18, 2016.  In short, the guidance explains how OIG will base its decision to exclude on its assessment of future risk to the Federal health care programs.  The “risk spectrum” depicts the lowest risk person as one that self-discloses its conduct, which could result in OIG giving the person a release from potential (b)(7) exclusion.  A person in the middle of the spectrum could avoid exclusion in exchange for agreeing to certain integrity obligations.  If OIG deems a person in the highest risk category, there would be no way to avoid exclusion.

    HHSOIGRiskSpectrum

    In evaluating a person’s place on the risk spectrum, the new guidance describes the facts that HHS OIG considers relevant to the following four broad categories: 

    (1) Nature and circumstances of conduct

    • Higher risk exists if the conduct poses an actual or potential risk to patients or causes substantial financial loss to Federal health care programs, or indicates a pattern of misconduct
    • Higher risk exists if individuals with managerial control led the unlawful activity, or if the person previously was under a corporate integrity agreement (“CIA”).

    (2) Conduct during the government’s investigation

    • Higher risk if the person obstructed the investigation or failed to comply with a subpoena
    • Lower risk if the person initiated an internal investigation and self-disclosed the conduct, or cooperated with the investigation

    (3) Significant ameliorative efforts

    • Lower risk if the person has taken disciplinary action or devoted more resources to the compliance function

    (4) History of compliance

    While a person in the midst of a government investigation under the False Claims Act may be singularly focused on avoiding prosecution, it is important to keep an eye on factors during the investigation that may result in potential exclusion.  The goals are aligned for the most part, but the impact of certain conduct – even actions taken during the investigation – may affect the OIG’s consideration of whether to impose exclusion in the event of a determination of liability.

    Categories: Health Care |  Reimbursement