By Kurt R. Karst –

Last week, the Federal Trade Commission (“FTC”) announced the issuance of the Bureau of Competition’s annual summary of agreements filed with the Commission during the last fiscal year (Fiscal Year 2014) – Agreements Filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.  The FTC’s FY 2014 Staff Report is the first full fiscal year report issued since the U.S. Supreme Court’s June 17, 2013 decision in FTC v. Actavis, Inc., 133 S. Ct. 2233 (2013), which addressed the standards that courts should apply in drug patent settlement cases (also known as “pay-for-delay” or “reverse payment” cases) (see our previous post on the Actavis decision).  Actavis has rippled through the legal system, with lower courts continuing to grapple with the broad contours of that decision, according to a recent article, titled “Where We Stand On Pharmaceutical Patent Settlements,” by Wilson Sonsini Goodrich & Rosati PC attorneys Seth C. Silber, Jeff Bank, Brendan Coffman and Kellie Kemp.

When the FTC issued its FY 2013 Staff Report in December 2014, the Commission noted that “[b]ecause [the Actavis] decision came nearly three quarters of the way through FY 2013, there are not yet enough post-Actavis settlements to draw meaningful conclusions from the [FY 2013] data” (see our previous post here). But with a complete fiscal year of post-Actavis data under its belt, the Commission is making some observations.

According to the FTC Staff Report, FY 2014 saw 160 final patent settlement agreements filed with the Commission – a record number since the data were first collected for FY 2004 – but only 21 of the agreements (involving 20 different brand-name drug products) “potentially involve pay for delay because they contain both explicit compensation from a brand manufacturer to a generic manufacturer and a restriction on the generic manufacturer’s ability to market its product in competition with the branded product.” That’s a drop from the 29 agreements reported in FY 2013, and a “significant decrease” from the record 40 agreements reported in FY 2012.  In addition, 53 of the 160 agreements reportedly involved ANDA sponsors eligible for 180-day exclusivity, of which 11 are identified by the FTC as “potential pay-for-delay settlements.”  The number of potential pay-for-delay settlements is the lowest since FY 2007 when there were also 11 such agreements. 

The downward trends in potential pay-for-delay settlements and settlements involving ANDA first-filers become quite apparent when we at the FDA Law Blog add percentages to the numbers supplied by the FTC and (as we have done in the past) illustrate the numbers in a table.

In a blog post, the FTC is hesitant to say that the numbers show a “lasting trend,” but the Commission does make three observations: (1) more settlements than ever were completed without reverse payments (and almost half in FY 2014 involved cash payments to a generic drug manufacturer of $5 million or less); (2) more settlements than ever were completed without reverse payments; and (3) the use of so called “No-AG” (no authorized generic) commitments appears to be declining.

Given the apparent trending of patent settlement agreements, one must ask whether legislation that would “prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market” is still necessary. After a hiatus, the Preserve Access to Affordable Generics Act reappeared last September in the form of S. 2019 (see our previous post here).  There doesn’t appear to be much steam behind the bill, which has languished in the Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights since it was introduced.  It’s difficult to see how legislators can use the report to support the need for what is essentially a ban on patent settlement agreements involving compensation.  In fact, the silence from Capitol Hill since the FTC Staff Report was published on January 13th is deafening . . . . and is perhaps telling as to the fate that will ultimately befall such legislation.

By Jay W. Cormier & David B. Clissold – 

As we reported 18 months ago here, in July of 2014 the District Court for the District of Columbia granted summary judgment for what is now R.J. Reynolds Tobacco Holdings, Inc. in a lawsuit that alleged that the FDA Tobacco Product Scientific Advisory Committee (“TPSAC”) was tainted by the inclusion of three members who had financial conflicts of interest.  In addition to finding that the appointments were improper, the District Court found that the committee’s 2011 Menthol Report was “at a minimum, suspect, and, at worst, untrustworthy.”  FDA was instructed to appoint an entirely new TPSAC.  

Not surprisingly, FDA appealed on several grounds, the most relevant of which was that the plaintiffs lacked standing.

Last Friday, the DC Circuit agreed with FDA and overruled the District Court’s summary judgment. The Circuit Court concluded that “all three [alleged plaintiff injuries] are too remote and uncertain” for the plaintiffs to have standing to bring the case.  

The impact of vacating the District Court ruling is significant. As the Circuit Court stated in its last sentence of the ruling, “[w]e therefore vacate the judgment of the district court for lack of jurisdiction and dissolve its injunction barring the use of the menthol report and ordering the reconstitution of the Committee.”

Although the direction from the Circuit Court is clear, given the significance of this ruling, we expect that this is not the end of this fight.

By Allyson B. Mullen –

On January 4, CDRH issued its first draft device guidance of the year. The Draft Guidance “Unique Device Identification: Convenience Kits” explains FDA’s position as to what constitutes a convenience kit for purposes of the UDI Rule.  The guidance is quick to point out that the convenience kit definition used in the draft guidance relates to the UDI requirements only, and does not change any other FDA statements regarding what constitutes a convenience kit (e.g., “Convenience Kits Interim Regulatory Guidance” May 20, 1997).  The question of what is a convenience kit is ripe for its own updated guidance. 

The draft guidance defines a convenience kit for purposes of the UDI rule as being “two or more different medical devices packaged together for the convenience of the user where they are intended to remain packaged together and not replaced, substituted, repackaged, sterilized, or otherwise processed or modified before the devices are used by an end user.” This definition is important because if a kit meets the definition of a convenience kit then only the kit label is required to include a UDI and the individual devices within the kit are exempt from the requirement to bear a UDI.  21 C.F.R. § 801.30(a)(11).  If a kit does not meet the definition then each individual device in the kit will be required to comply with the applicable UDI requirements. 

The guidance further elaborates on what it means by the devices being “packaged together.” FDA indicates that devices are packaged together if the devices are “packed (i.e., wrapped or sealed) in a single container that is not intended to be unwrapped or unsealed before it is used by an end user.”

The heart of the draft guidance consists of several examples to illustrate kits that do and do not meet the definition of a convenience kit for purpose of the UDI rule:

• First aid kit – Convenience Kit. The first aid kit meets the definition because the bandages, scissors, etc., are sealed in a single package and are not unpackaged until they are used by the end user.  
• Non-sterile orthopedic device tray or set – Not a Convenience Kit. A non-sterile tray consisting of numerous instruments and implants of various sizes that requires sterilization before use and the unused components from which can be used in another subsequent tray would not meet the definition. This kit does not meet the definition because the components do not remain packaged together prior to use by the end user as they must be unpackaged for sterilization prior to use. In addition, the unused implants and/or reusable instruments can be reprocessed/resterilized and used in a subsequent tray. Thus, these potentially unused components, which may be used later, will not remain packaged with the other components prior to use.
• ACL disposable procedure kit – Convenience Kit. A sterile procedure kit consisting of various instruments, guide wires, graft passers, etc. would meet the definition because the components all remain packaged together up until the point in time when the surgeon opens the tray for use on the patient.
• Reusable medical devices packaged together – Not a Convenience Kit. This example describes non-sterile, reusable surgical instruments packaged together. The draft guidance explains that these co-packaged instruments do not meet the definition of a convenience kit because they would have to be separated prior to use in order to be sterilized. FDA’s rationale appears linked to the device’s need for sterilization rather than the fact that the instruments are reusable, as described in the example title. This ambiguity leads us to wonder whether a kit consisting of reusable devices that did not require sterilization would meet the definition. For example, the first aid kit example contains some devices that are reusable (e.g., scissors, thermometer), and the fact that the devices are reusable does not seem to alter FDA’s analysis in that example. Thus, it appears that meeting the definition – at least in this example – turns on the devices requiring sterilization rather than being reusable.

A few key points regarding the convenience kit definition that we can take from the guidance’s definition and the illustrative examples:

• The contents of the convenience kit do not need to be consumed in a single instance. For example, the contents of the first aid kit will be used over time, but it is still a convenience kit, at least for purposes of the UDI rule.
• Whether a kit is a convenience kit for purposes of UDI is based on the manufacturer’s intent. In the first aid kit example, the manufacturer intends for the kit to remain packaged together prior to use in accordance with the convenience kit definition. The guidance acknowledges, however, that it is likely the purchaser could replace devices originally provided in the kit as they are consumed (e.g., bandages). Because the manufacturer is not doing the replacement and the manufacturer intends for the kit to remain packaged together prior to use, the kit meets the convenience kit definition. It would be interesting to see if FDA would still agree with this position if the example were a higher risk kit.Note: FDA’s proposal to focus on the manufacturer’s intent is consistent with the proposal issued last year on amending the intended use regulation (21 C.F.R. § 801.4) to remove the concept of known off-label use requiring additional labeling to address such use. 80 Fed. Reg. 57756 (Sept. 25, 2015).
• If any devices in the kit require sterilization prior to use, the kit cannot be a convenience kit because the devices must be unpackaged prior to use. The guidance only addresses sterilization, but in our view, it is possible that other processing or preparation could cause a kit to not meet the convenience kit definition.

By Melisa M. Moonan –

It has come to our attention that FDA has initiated inspections at several hospitals in various parts of the country to assess compliance with User Facility Medical Device Reporting (MDR) obligations under section 519 of the Federal Food, Drug, and Cosmetic Act (the Act) and 21 C.F.R. Part 803.

User Facilities such as hospitals are no doubt familiar with handling inspections by State licensing agencies and standards organizations, or even by FDA in the clinical research context. However, an FDA inspection related to MDR requirements may not be as familiar.

Although investigators conducting the inspections are referring to their work – which they candidly admit is a new effort for FDA – as “surveys,” these inspections have all the hallmarks and consequences of regular FDA inspections. Hospital-type user facilities have previously been the subject of warning letters for failures to report and a lack of the systems and procedures required by Part 803.

With all the recent inspections, we thought it would be a good time to post a reminder of User Facility MDR requirements and provide some thoughts on compliance.

User Facility Reporting and Record Keeping Requirements

In the 1990 Safe Medical Devices Act, Congress instituted User Facility reporting requirements for serious injuries and deaths under section 519 of the Act, and FDA subsequently promulgated related regulations under 21 C.F.R. Part 803.

Under the statute and regulations, User Facilities have 10 work days to report deaths and serious injuries when they become aware of information that reasonably suggests that a medical device has or may have caused or contributed to the event. Deaths must be reported to FDA and (if known) the manufacturer of the device.  Serious injuries must be reported to the manufacturer, or if the manufacturer is unknown, to FDA. In addition, annual reports attaching or summarizing the reports for the previous year must be submitted by January 1^st.

User Facilities must also establish “MDR event files” and maintain them at least two years after the date of the event, § 803.18(c). The event files must contain information specified by regulation.  User Facilities must also have written procedures that require compliance with the relevant statutory and regulatory provisions.

The statute and regulations also authorize FDA to enter User Facilities at reasonable times to obtain access to, verify, and copy records that are required to be kept pursuant to MDR reporting obligations, and it is violation of the Act to 1) fail to make required reports, 2) fail to keep required records, or 3) refuse to permit an authorized FDA inspection.

As you can see, User Facilities need to have and maintain systems and procedures to ensure timely reporting and complete recordkeeping, and that provide for related FDA access. In this environment, it may be a good time for hospitals to review MDR systems and procedures for compliance, and ensure readiness for an FDA inspection.

Finally, the timing of the recent inspections is fairly coincident with other developments, including FDA’s new draft guidance on Public Notification of Emerging Postmarket Medical Device Signals (“Emerging Signals”) (Dec. 21, 2015) (see our previous post here). The inspections may indicate a concern that FDA needs to be more proactive to help ensure a level of User Facility MDR submission that is commensurate with incidence of reportable events, and which would enhance “Emerging Signals” detection and analysis. 

These developments suggest we can expect to see continued or even escalating agency activity in this area. User Facilities should consider getting ahead of the curve and proactively making sure that they are in compliance and prepared for inspection.

By James E. Valentine –

On January 13, 2015, CDER’s Clinical Outcome Assessments Staff (formerly Study Endpoints and Labeling Development (SEALD)) announced the launch of Stage 1, or the pilot stage, of its Clinical Outcomes Assessment (COA) Compendium. A COA measures patients’ symptoms, overall mental state, or the effects of a disease or condition on how the patients function. There are four types of COA measures:

• Patient-reported outcome (PRO) measures
• Clinician-reported outcome (ClinRO) measures
• Observer-reported outcome (ObsRO) measures
• Performance outcome (PerfO) measures

Based on prior statements from FDA officials, the COA Compendium, which will be available at www.fda.gov/COACompendium, is supposed to provide clinical trial sponsors a database of: (1) qualified tools; (2) ongoing qualification programs; and (3) previously labeled COAs (from new molecular entity labeling approved 2003 and later). This pilot follows through with CDER’s pledge from spring of 2015 (see our previous coverage here) to provide a collated and summarized list of “potentially acceptable endpoints” that could support labeling claims, as well as encourage development of COAs more generally. Consistent with CDER’s intent for this compendium to serve more as a starting point when considering how measures might be utilized in clinical trials, the compendium is not expected to include detail on the endpoints. Therefore, the COAs currently available can serve to inform discussions between research sponsors and FDA, particularly early in drug development.

The COA Compendium also compliments FDA’s efforts to foster patient-focused drug development (see our coverage of these efforts here). CDER intends for the compendium to facilitate the use of measures that capture outcomes that are important to patients (e.g., PROs) – a “high priority for FDA.” In addition, CDER previously indicated its interest in a second stage of the compendium that would directly incorporate input from Patient-Focused Drug Development meetings to identify gaps in available measurements. Specifically, a list of could be generated of concepts highlighted as important by patients, but for which no tool exists.

CDER is seeking input on the utility of the pilot compendium and approaches for future iterations, including any suggested expansions of its scope. Comments can be submitted to FDA’s docket here.  

By Kurt R. Karst –

A few months have passed since the appeals Takeda Pharmaceuticals U.S.A., Inc. (“Takeda”) and Elliott Associates, L.P., Elliott International, L.P. and Knollwood Investments, L.P. (collectively “Elliott”) filed with the U.S. Court of Appeals for the District of Columbia Circuit after District Court Judge Ketanji Brown Jackson issued a lengthy Opinion (and an Order) in January 2015 upholding FDA’s September 26, 2014 approval of a 505(b)(2) application (NDA 204820) submitted by Hikma Pharmaceuticals LLC (“Hikma”) and its U.S. partner West-Ward Pharmaceutical Corp. (“West-Ward”) for MITIGARE (colchicine) Capsules, 0.6 mg, for prophylaxis of gout flares.  There’s been a decent amount of activity on the court docket since our last post, so an update is in order.

As you might recall, The MITIGARE 505(b)(2) NDA did not cite Takeda’s COLCRYS (colchicine) Tablets, 0.6 mg (NDA 022352), as a listed drug relied on for approval. Instead, the 505(b)(2) NDA cites a different drug – COL-PROBENECID, a fixed-dose combination drug product containing probenecid (500 mg) and colchicine (0.5 mg) that FDA approved on November 23, 1976 under ANDA 084279 – and also relies on published literature on colchicine.  COL-PROBENECID is not listed in the Orange Book with any protections.  In contrast, COLCRYS is listed with information on several patents.  Takeda sued FDA alleging that the Agency’s approval of MITIGARE violates the FDC Act and the Administrative Procedure Act (“APA”) in several respects, including that FDA approved MITIGARE without requiring Hikma to reference COLCRYS and to make patent certifications, and that MITIGARE was approved without certain labeling information FDA required be included in the labeling of COLCRYS (see our previous posts (here, , and ).

Takeda and Elliott, in their Opening Briefs (here and here) filed in the D.C. Circuit, pitched their appeals as presenting issues that, if not resolved with a reversal of Judge Jackson’s decision, would upset the balance Congress intended to create with the passage of the Hatch-Waxman Amendments: the balance between brand-name incentives, on the one hand, and for prompt approval of high quality and lower-cost generic drugs, on the other hand. The Pharmaceutical and Research Manufacturers of America (“PhRMA”) filed an amicus brief that falls in line with the “upending Hatch-Waxman” theme in the Takeda and Elliott briefs, but PhRMA also addressed Judge Jackson’s interpretation of FDC Act § 505(b)(2) in a more general and overarching sense (see our previous post ). 

Since our last update, FDA and Hikma (along with West-Ward) filed their Opening Briefs (here and here), and the Generic Pharmaceutical Association (“GPhA”) filed an amicus brief.

Both FDA and Hikma (West-Ward) argue that the Takeda and Elliott appeals are meritless and pointless, because the statute is clear and FDA is owed deference. As Hikma argues:

Appellants primarily ask this Court to rescind Hikma’s application to allow Takeda “to litigate any patent claims promptly, before FDA approves” the product. But Hikma did not invoke the Hatch-Waxman provision that triggers this pre-approval, patent resolution process. . . .  [U]nder the “quid pro quo” process established by Hatch-Waxman, Hikma owes no quid (a patent certification) for Takeda’s quo (the Colcrys® data).

For its part, Elliott advances an argument eschewed by Takeda—namely, that Hatch-Waxman does not even require such a quid pro quo. But as the district court recognized, “Elliott’s reading is a distortion of the statutory text, rather than a statement of its unambiguous plain meaning.” . . .

Aware of this difficulty, Takeda argues that even though Hikma did not rely on any Colcrys® data, FDA did—noting that the administrative record references Colcrys® “246 times.” But these references simply confirm that FDA diligently studied whether Hikma needed to rely on the Colcrys® data and, after thorough analysis, properly concluded that Hikma did not need to do so. . . .

Takeda alternatively asks the Court to rescind FDA approval on the ground that FDA failed to explain, in light of a prior citizen petition ruling, how the Mitigare® label safely omits the specific dose adjustments referenced in the Colcrys® labeling. But as the district court explained, this argument is “puzzling” given “the agency’s clear and convincing record statements about why it permitted the Mitigare label to differ from that of Colcrys.”  Appellants’ efforts to second-guess FDA’s approval are particularly misplaced given the high level of deference accorded to agencies’ safety-related scientific determinations.  [(Internal citations omitted)]

GPhA’s brief focuses on two arguments raised by Takeda and/or Elliott, and that PhRMA also commented on in its brief: (1) that FDA must require that a 505(b)(2) applicant identify as its listed drug, and therefore certify to patents claiming, the approved drug “most similar” to its test product; and (2) that Hikma/West-Ward was required to certify to the COLCRYS method-of-use patents listed in the Orange Book because a 505(b)(2) applicant is required to certify to any patents that claim the same use as the test product, including use patents for drug products other than the listed drug cited in a 505(b)(2) NDA.  (According to GPhA, PhRMA’s amicus brief “varies this argument slightly to claim that a 505(b)(2) applicant must certify to any patent for a product that is ‘essential’ to the test product’s approval, whether or not the patent was for the listed drug.)

As to the first issue, GPhA says that:

FDA has never adopted Takeda’s “most similar” test. The inflexible standard Takeda seeks conflicts with the text of section 505(b)(2) and FDA’s consistent interpretation that it is the responsibility of the 505(b)(2) applicant to determine which listed drug to reference and how best to combine FDA’s prior approval of the listed drug with new studies to secure a determination of safety and effectiveness from the agency.  By congressional design, the 505(b)(2) approach for listed drugs differs from the more defined and narrow “reference listed drug” (“RLD”) requirements [ANDAs] . . . . Takeda and [PhRMA] seek to impose a parallel RLD requirement for 505(b)(2) products that ignores these differences.

As to the second issue, GPhA says that:

Elliott’s and PhRMA’s interpretations fundamentally distort the basic Hatch-Waxman quid pro quo. The statute requires an applicant to certify to patents for a listed drug product as a price for being able to rely on FDA’s prior approval of that same product.  Elliott’s and PhRMA’s readings would grant brand companies windfall opportunities to delay competition through litigation on patents claimed for products that were not actually relied on by the 505(b)(2) applicant.

Both of Appellants’ statutory arguments, if accepted, would have far-reaching implications for 505(b)(2) products by expanding an applicant’s certification obligations—and, therefore, the ability of brand companies to delay competition from 505(b)(2) products through patent litigation—well beyond the parameters established by Congress and applied by FDA. The district court rejected Appellants’ construction of the FDCA and FDA regulations, and so too should this Court. [(Emphasis in original)]

In Reply Briefs (here and here) Takeda and Elliott press their respective arguments, saying that Appellees are practicing revisionist history when it comes to MITIGARE’s approval, and that FDA ignores the clear statutory mandate about patent certifications. The bottom line in the case when it comes to 505(b)(2) reliance, says Takeda, “is whether Colcrys data was necessary to FDA’s approval of Mitigare.”  “Although FDA claims in the alternative that it was not, the record belies that claim,” says Takeda.  

Although Oral Argument was initially set for February 12, 2016, that date was removed from the Court’s calendar. We’re still waiting on a date agreeable to the parties.

Hyman Phelps & McNamara P.C. (“HP&M”) is pleased to announce that Mark I. Schwartz has joined the firm as Of Counsel. Mr. Schwartz advises clients on biologic, drug, and device compliance, as well as on regulatory issues. He joined the firm after spending close to 13 years in various capacities at the Food and Drug Administration. Most recently, Mr. Schwartz was CBER’s Deputy Director in the Office of Compliance and Biologics Quality (2012-2015), an office with approximately 140 staff members. Two of the Office’s four division directors reported directly to Mr. Schwartz, namely, the Director of the Division of Case Management and the Director of Inspections and Surveillance.

In his capacity as Deputy Director, he advised the Center Director, the Director of the Office of Compliance and Biologics Quality, as well as various offices within CBER and CDER on a variety of compliance issues involving medical products. Mr. Schwartz also represented the Office and the Center in various FDA and outside activities.

Mr. Schwartz’s day-to-day activities included the review of draft 483s, warning letters, untitled letters and NOIRs, among others, for issuance, and determinations as to whether a regulatory letter, enforcement action or other action would be warranted. Mr. Schwartz also worked on BPDRs and potential recall situations, he reviewed complaints and adverse events, and cleared all significant advertising and promotional labeling matters for the office. He participated in dozens of regulatory meetings with industry, and reviewed draft guidance documents and regulations for Office clearance.

Prior to his tenure at CBER, Mr. Schwartz was Associate Chief Counsel for Biologics and Drugs (2008-2012), Associate Chief Counsel for Biologics (2005-2008) and Associate Chief Counsel for Foods (2003-2005). Before joining FDA, Mr. Schwartz was a commercial litigator in Washington, D.C., and prior to that, in his native Montreal, Canada.  He has law degrees from Duke University School of Law and l'Université de Sherbrooke (Canada), as well as a Bachelor of Science degree from McGill University (Canada).

Mr. Schwartz has been an Adjunct Professor of Food and Drug Law at both George Mason University School of Law and Howard University School of Law, and he has published op-eds and articles on FDA-related issues in the International Herald Tribune/The New York Times, Barron’s Magazine, Financial Post (Canada), the Food and Drug Law Journal and UPDATE Magazine, among others. Mr. Schwartz also served as a member of the Food and Drug Law Journal Editorial Advisory Board from 2008-2011.

By Allyson B. Mullen –

On New Year’s Eve, FDA gave an end of the year surprise to the device industry: the draft guidance “Public Notification of Emerging Postmarket Medical Device Signals ('Emerging Signals').” FDA indicates that the purpose of the guidance is to provide information regarding Emerging Signals to patients, consumers, and physicians about medical devices.  The guidance defines an Emerging Signal as “new information about a medical device used in clinical practice:

1. That the Agency is monitoring or analyzing,
2. That has the potential to impact patient management decisions and/or alter the known benefit-risk profile of the device,
3. That has not yet been fully validated or confirmed, and
4. For which the Agency does not yet have specific recommendations.”

Emerging Signals can include “a newly recognized type of adverse event associated with a medical device, an increase in the severity or frequency of reporting of a known event, new product-product interactions, device malfunctions or patient injuries potentially related to improper device use or design, or a reduction in benefit to the patient.”

While acknowledging that information regarding Emerging Signals will be unconfirmed, the draft guidance indicates that FDA expects the public to use the Emerging Signal information to make treatment choices based on current information. FDA also intends for the communication to limit the number of patients exposed to a potential risk while it is under investigation (read users will limit use of the device after FDA notifies users) and promote vigilance on the part of the public to report occurrences of the event to FDA.

FDA indicates it will consider the following factors when evaluating and communicating about Emerging Signals:

• “Seriousness of the adverse event(s) (e.g., severity and reversibility) relative to the known benefits of the device;
• Magnitude of the risk (e.g., likelihood of occurrence);
• Magnitude of the benefit;
• Strength of the evidence of a causal relationship between the use of a device and the adverse event;
• Extent of patient exposure (e.g., how broadly is the device used, is the device still actively manufactured and distributed);
• Whether there is a disproportionate impact on vulnerable patient population (e.g., children, pregnant women, elderly, cancer patients, chronically ill, at-home/unmonitored);
• Potential for preventing, identifying, monitoring or mitigating the risk;
• Availability of alternative therapies;
• Implications for similar or related devices (e.g., multiple models from multiple manufacturers);
• Anticipated time for completion of initial FDA assessment and development of recommendations;
• Accuracy and availability of information already in the public domain.”

While we agree with FDA that it is important for the public to understand potential risks associated with medical devices, we think there is significant risk with providing unvalidated information too soon. Indeed, FDA acknowledges this risk in the guidance by indicating it is possible such communication could lead to the public not using a beneficial device.  The guidance does not, however, provide any mitigation to this risk.  FDA says it considers “human behavior in [its] decision to communicate.”  However, FDA says nothing about literature showing that people tend to overweight low risks. See e.g., Daniel Kahneman, Thinking, Fast and Slow (Farrar, Straus and Giroux 2011).

Given the risk that users will limit their use of a beneficial device, the fact that the manufacturer(s) is the likely expert on the signal, and that signals can come from sources of varying reliability, we find it surprising that FDA says nothing about consulting with industry prior to issuing any public communication. Nowhere in the draft guidance does FDA indicate that it will consult with or obtain information from industry regarding the Emerging Signals.  It is foreseeable that plaintiff’s attorney’s will try to use this mechanism to prompt a notification by FDA.  This kind of notification could be a problem in any product liability litigation.  FDA needs to take into account the source and quality of the data it is relying on to make notification decisions.

The draft guidance indicates that FDA will make a decision regarding whether to notify the public of an Emerging Signal within 30 days of receiving initial or new information. FDA may provide updated information to the public when new information is obtained, and FDA should provide updates on its website at least twice per year.  We find it interesting that FDA states it will provide these updates on its website, but it does not indicate how it will communicate the initial notice.  It is possible then that FDA could actively notify the public (e.g., through letters to doctors), but then only provide updated information passively by posting it on the website.  This disparity could lead to those who are initially notified of the Emerging Signal not being aware of the updated information posted on FDA’s website.  There is also no clear mechanism for companies to provide information for use by FDA in updating its notification.

The guidance also notably lacks any time frames around FDA’s investigation into an Emerging Signal. It appears there is a risk that FDA could notify the public of an Emerging Signal under the guidance, but then not promptly follow through with its investigation.  The guidance indicates that before notifying the public, FDA should identify a potential causal relationship between the adverse event or clinical outcome and a device (or type of device) based on reliable information.  As we all know, however, a potential causal relationship does not always turn out to be a causal relationship, and if FDA releases a public notice prematurely, the negative effect on the device’s reputation may be irreversible.  Thus, it would seem reasonable to us that if FDA were to use this early notification process it should commit to a reasonably expeditious investigation of the issue.  No such commitment appears in the draft guidance.

We agree with the premise of the draft guidance, the public should be made aware of the risks and benefits associated with commercially available devices. However, this guidance appears to us to allow FDA to communicate theoretical, unproven risks without balancing that information with the benefits of the device.  It is notable that this mechanism for rapid dissemination of information applies only to risks, not benefits.  In fact, if the situation were reversed and the manufacturer wanted to notify the public of a new or greater benefit associated with a device, FDA would certainly want validated data.  Before finalizing the draft guidance, we hope FDA balances the need to provide the public with up-to-date risk information with the risk of the public reducing or ceasing use of a beneficial device and takes steps to ensure that FDA has a solid foundation for any notification.

By Ricardo Carvajal – 

FDA announced the seizure of dietary supplements purportedly containing kratom, which the agency describes as “a botanical substance that could pose a risk to public health and have the potential for abuse.”  The seizure followed on the heels of an administrative detention – a preliminary step that enables FDA to restrict the movement of a product in commerce while the agency decides whether further action is warranted.  As an aside, the execution of administrative detention was made easier by the Food Safety Modernization Act, which lowered the standard for administrative detention from “credible evidence or information indicating” that a food “presents a threat of serious adverse health consequences or death,” to “reason to believe” that a food is adulterated or misbranded.  In the case of kratom, it is doubtful that FDA could have met the previous, higher standard because recalls of kratom have been classified as Class II (i.e., a situation in which use of, or exposure to, a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote).

The government’s complaint for forfeiture alleges that the kratom supplements targeted by the seizure are adulterated because kratom is a new dietary ingredient for which a required premarket notification has not been submitted.  The complaint further alleges that the supplements are adulterated because there is inadequate information to provide reasonable assurance that kratom does not present a significant or unreasonable risk of illness or injury.

As noted in FDA’s press release, FDA previously issued an import alert targeting kratom.  The recently announced seizure indicates that FDA also intends to go after products already on the domestic market.

By Larry K. Houck –

Several recent developments relating to cannabidiol and marijuana occurred over the past several weeks. We summarize them below:

One Step Forward for Cannabidiol Research

The Drug Enforcement Administration (“DEA”) announced that it has eased some of the regulatory requirements for FDA-approved clinical trials with cannabidiol (“CBD”). DEA, Press Release, DEA Eases Requirements for FDA-Approved Clinical Trials on Cannabidiol (Dec. 23, 2015). CBD is an extract of the marijuana plant and, like marijuana, is currently classified as a Schedule I controlled substance. However, CBD contains less than one percent tetrahydrocannabinol (“THC”), the active ingredient in marijuana, and thus, appears to have a very low potential for abuse. DEA has been considering for a number of years whether CBD should be descheduled based on its lack of abuse potential. Under current regulations, researchers must obtain a DEA registration and submit a research protocol to conduct clinical trials with CBD under a Food and Drug Administration (“FDA”) Investigational New Drug Application. 21 C.F.R. § 1301.18. Researchers submit a protocol with their DEA application indicating the quantity of CBD that they will use in their research. DEA’s recent action will allow a DEA-registered researcher who is granted a waiver to “readily modify their protocol and continue their research seamlessly” and obtain additional needed CBD. Prior to DEA easing the regulatory requirements, researchers who required additional CBD than what was initially approved had to submit a written request to modify their registration. Both DEA and FDA had to approve the modification request. DEA opined that the change “will streamline the research process regarding CBD’s possible medicinal value and help foster ongoing scientific studies.” DEA announced the action in a news release and by letter to DEA-registered CBD researchers.

Neither Snow Nor Rain Nor Gloom of Night . . . But Marijuana Ads?

As previously reported (here and here) both DOJ and the Treasury Department have emphasized that the federal government will not interfere with activities authorized under state marijuana laws and regulations except pursuant to several enforcement priorities where the federal government may still seek to enforce federal prohibitions on marijuana. A recent letter from the United States Postal Service (“USPS”) to Congress has made it clear that such enforcement priorities extend to using the U.S. mail for advertising marijuana sales.

In a December 15, 2015 letter responding to an inquiry from Senator Ron Wyden (D. Oregon), the USPS stated “that advertisements for the sale of marijuana are non-mailable.” Letter to the Honorable Ron Wyden, U.S. Senate, from Thomas J. Marshall, General Counsel and Executive Vice President (Dec. 15, 2015). The USPS Portland (Oregon) District Office had initiated the correspondence that led to the USPS national policy letter when it warned a local newspaper that material containing advertisements for marijuana sales are non-mailable and noted that the authority for enforcing the CSA “rests primarily” with DEA under DOJ. Mailpieces Containing Advertisements About Marijuana, United States Postal Service (Nov. 27, 2015). The USPS letter to Senator Wyden stated that marijuana is a Schedule I controlled substance under the federal CSA and the CSA prohibits persons from placing “in any newspaper, magazine, handbill, or other publications, any written advertisement knowing that it has the purpose of seeking or offering illegally to receive, buy, or distribute a Schedule I controlled substance” and using the mail to facilitate committing an act or acts that constitute a felony under the CSA. The letter further states that this CSA provision expresses Congress’ judgment that the mail should not be used to transmit advertisements for the sale of marijuana even if permitted by state law. The USPS determination impacts newspapers and other publications who use the mail for delivery.

The letter notes that it has issued national policy that instructs Postmasters and Managers of Business Mail Entry that they do not have the authority to decide whether matter is non-mailable because of content and they cannot deny or exclude it from the mail. Instead, they should advise those mailing the non-mailable material about their obligation to comply with the CSA, and accept the material if the person mailing the material insists on mailing it. Postmasters and Managers of Business Mail Entry must follow the Postal Operations Manual and report mail “that appears non-mailable” to the local Inspection Service responsible for their facility. The matter will “be turned over to the responsible law enforcement agencies for investigation if appropriate.”

The USPS letter attempts to distinguish this action from recent amendments to the federal spending bills that prohibit DOJ and DEA from using funds to interfere with a state’s law authorizing the use, distribution, possession or cultivation of medical marijuana.  See e.g., Consolidated and Further Continuing Appropriations Act, 2015, H.R. 83, 113th Cong. § 538 (2014). The USPS letter opines that Congress’ decision to add that restriction in the 2015 federal appropriations act does not affect the agency’s view that marijuana sales advertisements are non-mailable under the CSA and that treating such advertisements as non-mailable “in no way prevents states from implementing their medical marijuana programs, because it does not inhibit the ability of state-sanctioned medical marijuana distributors to conduct their activities in accordance with state law. . .[r]ather, it simply clarifies that those distributors cannot use a federal instrumentality-the U.S. Mail-to solicit sales in contravention of federal law.”

The USPS decision does seem inconsistent with the current position of the DOJ and Treasury Department in regard to not interfering with state marijuana laws. However, one way to view the USPS decision is that the federal government is stating that while it will not interfere with state laws and regulations, they will also not allow a federal agency to be used to facilitate a state activity that is a violation of federal law and regulations. This is akin to a prohibition on allowing a state marijuana retail establishment on federal land. It also must be assumed that these restrictions would extend to advertisements for any marijuana-related products which are also prohibited under 21 U.S.C. § 863 prohibiting the sale of drug paraphernalia. Finally, it begs the question: Which law enforcement authority will receive and investigate reports of mailing publications advertising marijuana sales from the local USPS Inspection Service?

By James C. Shehan –

The worlds of FDA regulatory law and employment law rarely intersect, so when we came across a recent case in which they did, we thought it worthy of commentary.  In that case, a federal appeals court held that GMP troubles leading to a mass seizure were not an “unforeseeable business circumstance” that could excuse an employer from complying with the Worker Adjustment and Retraining Notification (WARN) Act’s requirement that employees be notified at least 60 days prior to a mass layoff.  The court’s opinion also provides a rare judicial analysis of the reasonableness of management’s response to serious drug GMP issues. 

Last year, the United States Court of Appeals for the Sixth Circuit handed down a decision in Calloway v. Caraco Pharmaceutical Laboratories, Ltd.,  800 F. 3d 244 (Aug. 26, 2015), affirming a lower court decision in favor of a class of plaintiffs consisting of employees at Caraco’s two Michigan generic drug manufacturing plants who were laid off beginning June 26, 2009.  The Caraco facilities had a lengthy history of cGMP woes laid out in detail by the court – warning letters in 2000 and 2002, followed by 483s in 2005, 2006, 2007, 2008 (two) and 2009, as well as another warning letter issued on October 31, 2008.  There was a recall of one product manufactured at the facility in 2008 and recalls of 29 products in 2009.  Correspondence between Caraco and FDA showed a steadily escalating level of seriousness in FDA’s characterizations of the problems at the plant.  In addition, Caraco hired two outside GMP consultant firms in 2008.  One of the consultants warned Caraco that it was “at risk” of FDA enforcement actions such as seizures or injunctions and the other said that an enforcement action by FDA were “likely.”  While the company repeatedly told FDA that it was addressing the GMP problems and that it recognized the seriousness of the violations, the company ignored one consultant’s advice to destroy cross contaminated products, immediately recall other products, delay moving into a new facility, and not start production of newly approved products.  In addition, in an email to the CEO, a Caraco vice president characterized the view that an enforcement action was likely as “alarmist.”  

Six weeks after issuing the eighteen item 2009 483, FDA seized products at the two Caraco Michigan facilities.  Caraco ceased manufacturing at those facilities and with no prior notice began a mass layoff of both hourly and salaried employees at those facilities.  Two and a half years later, one of those employees filed a class action in Michigan federal court, alleging a WARN Act violation.

Among other things, the WARN Act requires employers to give a 60-day notice to affected employees before a facility closing or mass layoff.  Caraco and the plaintiffs agreed that Caraco is an employer within the meaning of the Act, that the class members are affected employees and that the layoff was caused by the FDA seizure.  The sole contested issue was the applicability of an exception to the Act’s 60-day notice requirement – such notice is not required if the layoffs are “caused by business circumstances that were not reasonably foreseeable.” 

Department of Labor regulations expound on this requirement – “[a]n important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by some sudden, dramatic, and unexpected action or condition outside the employer’s control.”  20 C.F.R. § 639.9(b)(1).  The regulations also stipulate that a government-ordered closing of a site that occurs without prior notice may be an unforeseeable business circumstance.  Id.  On the other hand, the regulations state that “[t]he test for determining when business circumstances are not reasonably foreseeable focuses on an employer’s business judgment” and require that an employer “exercise such commercially reasonable business judgment as would a similarly situated employer.”  20 C.F.R. § 639.9(b)(2). 

In defending its position that the seizures were not reasonable foreseeable, Caraco argued that between 2007 and 2009, FDA issued 1,390 warning letters but conducted only 22 seizures, that FDA had not seized products after its first two warning letters, and the 2008 warning letter contained the same boilerplate language as the earlier two letters concerning possible enforcement action.  Caraco also argued that the impossibility of predicting the timing of a seizure made issuance of a layoff notification impractical. 

The appellate court rejected these points and instead found that the district court was correct in finding the FDA seizures to be “reasonably foreseeable.”  The Court stated that Caraco knew as early as July 2008 that enforcement action could result from GMP deficiencies.  The court noted the increasingly critical nature of the 483s, the multiple recalls and that Caraco’s GMP consultants had told it that an enforcement action was likely.  The Court also pointed out that Caraco’s GMP issues were public, appearing in a company January 2009 press release and a February 2009 SEC filing.  Regarding Caraco’s point that a seizure was statistically unlikely, the Court said that “such evidence could just as easily be interpreted to show that enforcement actions were rare not because they were empty threats but because other employers who were issued warning letters promptly corrected their deficiencies or in some other way were not similarly situated to Caraco when the FDA seized its products.”

In rebuffing Caraco’s assertion that it was reasonable to believe that its cooperation and good relationship with FDA made a seizure was unlikely, the Court said that Caraco was not, in fact, sufficiently cooperative, citing a longstanding problem with tablet size variation that it had failed to correct, the multiple recalls, and an April 14-17 outside consultant audit that showed a lack of improvement since the 2008 warning letter.  The Court also stated that a “reasonable drug manufacturer should have known that a positive working relationship with the FDA would not be enough to insulate it from the possibility of regulatory action.”

Significantly, the Court also rejected Caraco’s argument that it believed that it was making progress in addressing its GMP issues.  The Court found that it was “reasonable for the district court to conclude that Caraco gave no indication of making changes in its business practices in the wake of the FDA’s 2008 warning letter.  Although Caraco did take some action in response to the warning letters and Form 483s, the district court did not err in determining that these actions fell short of the kind of significant change that a reasonable employer should have known was necessary to forestall an enforcement action.”

In the wake of this case, it seems reasonable for any company facing serious GMP problems to add one more item to its to-do list: consider whether it should provide a 60-day WARN Act notice to employees before making any layoffs or closures due to those GMP issues.       

Avid readers may be aware that these Caraco facilities also played a role in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, a Supreme Court  decision in which the Court held that a patent use code  qualifies as “patent information” submitted under FDC Act §§ 505(b) and (c) and may be the subject of a counterclaim to correct or delete patent information (see our posts here, here and here).  

By Allyson B. Mullen –

In August, CDRH quietly implemented a new version of the 510(k) Refuse to Accept (RTA) Policy in a draft guidance, titled "Refuse to Accept Policy for 510(k)s" (New RTA Guidance). This change was done with so little fanfare that many did not even notice – we did not even blog on it. We recently realized, however, that the new RTA policy warranted discussion, and FDA should be commended for the changes it instituted.

You may recall that we previously blogged on some of the foolish RTA comments we saw in CDRH’s first year of implementing the 510(k) RTA policy.  The changes made to the 510(k) RTA policy appear to try to curb some of these mindless RTA comments by giving “FDA staff . . . discretion to determine whether missing checklist items are needed to ensure that the submission is administratively complete to allow the submission to be accepted.” New RTA Guidance at 7. Reviewers are also now permitted to “request missing checklist items interactively from submitters during the RTA review.” Id. We read this as allowing reviewers to request outstanding items from submitters without formally refusing the submission. While we have yet to see such interactive review employed by reviewers, permitting such flexibility is positive compared to rigid application of a checklist.

CDRH also implemented several changes to the checklists to address this new discretionary, “common sense” approach. Some of these examples are seen in the Traditional 510(k) RTA Checklist and include:

• The requirement for drawings, schematics, etc. now states “submission includes a statement that engineering drawings, schematics, etc. are not applicable to the device (e.g., device is a reagent and figures are not pertinent to describe the device).” Although companies are still required to state that this item is not required, it appears CDRH is trying not to be inflexible with its requirements.
• The introductory questions in the Sterilization and Biocompatibility sections, now asks if this information is not provided because it is “not needed for [the] device (e.g., software-only device).”
• The introductory questions in the Software and EMC and Electrical Safety sections now asks if this information was not addressed because it is “not needed for this device (e.g., surgical suture, condom).” We hope this new question will prevent future requests for software information for vinyl gloves as we discussed in our previous RTA blog post.

Reviewer discretion is not always a good thing, however. We recently heard about FDA refusing a 510(k) during the RTA review because a company did not provide a copy of its sterilization protocol and report. While this request may not seem unreasonable, the RTA expressly says, “the sterilization validation report is not required.” Traditional RTA Checklist at 13 & Abbreviated RTA Checklist at 15. Thus, while we commend FDA for attempting to make the RTA process more reasonable by allowing discretion, this discretion should not be used to permit reviewers to unilaterally expand the checklist requirements by asking for items the checklist expressly indicates are not required.

A few other changes of note in the Traditional 510(k) Checklist include:

• The Traditional 510(k) RTA checklist no longer requires companies to include copies of the Standards Data Report Form (FDA Form 3654) for all national or international standards referenced in the submission. We expect, however, that during the 510(k) review, reviewers will still ask for copies of the Standards Data Report Form.
• If the subject device is intended to be marketed with multiple components, accessories, and/or as part of a system, the 510(k) must now not only indicate the 510(k) numbers for the associated components, accessories, and system parts, but it must also expressly specify which components, accessories, and system parts are not cleared.
• The checklist now recommends a tabular format for performing the predicate device comparison. We hope this recommendation does not restrict submitters from using whatever format it thinks is best to compare the proposed and predicate devices.
• The checklist now indicates that any differences in indication for use, intended use or technological characteristics between the proposed and predicate devices must be expressly stated. This requirement appears to be more substantive than administrative because in order to determine if any differences have been expressly stated, the reviewer performing the RTA would need to substantively assess the predicate device comparison.
• For products labeled “non-pyrogenic,” the submission must include a description of the methods used to assess pyrogenicity.

It is too soon to tell if these changes and FDA’s attempt at increased reviewer discretion will translate into more reasonable RTA reviews. It does, however, show how even seemingly low-key, unpublicized changes to checklists can affect the processing of 510(k)s.

By Riëtte van Laack –

On December 23, 2015, FDA issued a proposed rule amending the regulations for prescription and over-the-counter (OTC) fixed-combination products, co-packaged drugs, and combinations of active ingredients under consideration for inclusion in an OTC monograph. The 20-page proposal is intended to harmonize the rules for fixed-combination prescription and OTC drugs. For purposes of the proposed rule, the term “drug” includes biological products but does not include medical devices. FDA does not provide information on the intent and driver for the proposed rule.

The proposed rule creates a single set of regulations for prescription and OTC combination drugs, and codifies, what FDA asserts, is FDA’s existing policy on the type of studies needed to show that the combination drug requirements are met. In addition, the proposed rule clarifies the application of FDA’s requirements regarding fixed-combination drugs to certain natural source drugs and addresses the issue of co-packaging. It further establishes the circumstances under which FDA may waive the requirements for a particular drug or biological product.

Under the proposed rule, fixed-combination and co-packaged drugs will be generally recognized as safe and effective when three criteria are met:

1. each active ingredient must make a contribution to the effect(s) of the combination, enhance the safety or effectiveness of an active ingredient, or minimize the potential for abuse of an active ingredient;
2. the combination of the active ingredients does not decrease the safety or effectiveness of any of the individual active ingredients; and
3. the dosage of each active ingredient must be such that the combination is safe and effective and provides “rational concurrent therapy.

“Rational concurrent therapy” constitutes a “medically appropriate treatment for a [defined] patient population” which “can benefit from all of the active ingredients at the specific doses present, given for a similar duration of treatment, and not be adversely affected by receiving them in combination.”

Fixed-combination drugs can provide convenience, therapeutic benefit, and even economic benefit to patients. However, there also are potential disadvantages, such as a lack of flexibility in adjusting the dosage of each active ingredient to individual needs and the potential overexposure or unnecessary exposure to a particular ingredient.

FDA proposes to define “co-packaged drug” as a “product that contains two or more separate drugs in their final dosage forms that are intended to be used together for a common or related therapeutic purpose and that are contained in a single package or unit.” In the absence of another explanation for the co-packaging, such as “convenience,” a “travel kit” or a “value pack,” the act of shrink-wrapping or otherwise packaging two products together constitutes an implied claim that the co-packaged products are intended to be used together for a common or related therapeutic purpose. Unless the co-packaged product has been approved or falls within a final or tentative final monograph, the product is an unapproved new drug. FDA groups fixed-combination and co-packaged drugs together because, according to the Agency, co-packaged drug products can “raise concerns” that are similar to those associated with fixed-combination drugs.

In line with previous actions against such products, FDA takes the position that co-packaging of a dietary supplement and a drug is an implied claim that the dietary supplement is intended for a therapeutic purpose, and, therefore, the dietary supplement will be considered a drug under the FDC Act. Apparently, in FDA’s world, there is no alternative explanation (e.g., convenience) for this type of co-packaging.

The proposed rule does not apply to products such as whole blood, individual or pooled transfusible blood components, pooled plasma products, plasma derivatives from human or animal sources and to individual natural-source drugs, (which are drugs derived from natural raw materials), even though such drugs may contain multiple ingredients derived from the same source.

FDA would be authorized to grant a waiver from all of the proposed requirements because for those products for which it would be unfeasible or medically unreasonable or unethical to meet the requirements of the proposed rule. According to FDA, the types of products for which a waiver would be appropriate include traditional botanical products composed of multiple botanical raw materials in fixed ratios; traditional medicinal products composed of multiple parts of animals;  traditional medicinal products composed of substances derived from more than one type of natural source and cellular and gene therapies.

The comment period closes March 22, 2016.

By Riëtte van Laack –

“Native advertising” is advertising that looks like “news, feature articles, product reviews, entertainment, and other material surrounding it.” In the digital context, native advertising constitutes marketing material that is designed to mimic the look and feel of the host website. It is an increasingly popular means of promotion for marketers but, due to its nature, represents a concern for the FTC. The FTC believes that the purposeful “blurring” of advertising and host content increases the risk of deceiving consumers.

In December 2013, FTC expressed some of these concerns in an FTC workshop regarding native advertising, appropriately titled “Blurred Lines.” Two years later, on December 22, 2015, the Agency issued an enforcement policy statement, “Enforcement Policy Statement on Deceptively Formatted Advertisements,” explaining how the FTC’s general consumer protection principles apply to native advertising.  Simultaneously, the Agency issued a guide concerning native advertising, “Native Advertising: A Guide for Business” (Business Guide).

It is the FTC’s position that native advertising that does not disclose the commercial nature of the content is misleading. This is so even if the product claims are truthful. At the time the consumer accesses the content, the commercial nature of the content must be clear. According to the FTC, clarification about the commercial nature after the consumer has accessed the content may not be sufficient to undo the initial deception.

Although the term native advertising is generally used for digital marketing, it is clear from FTC’s policy statement that the concept is not new or limited to digital marketing. In fact, in 1967, the FTC already addressed the issue of print advertisements in news format. Similar principles apply to so-called “misleading door openers” such as sales visits and calls and emails with falsified sender information and an advertiser’s use of consumer and other endorsements. In all these forms of advertising, the consumers may be misled not by the content but about the commercial nature or source of the statements.

In the FTC’s evaluation of native advertising two issues will be considered: 1) the transparency about the commercial nature of the advertisement; and 2) the truthfulness of the content of the advertisement. If a disclosure is required to ensure that the native advertising is interpreted as advertising, the disclosure must be clear and prominent. The FTC evaluates that advertising as a whole considering such factors as the overall appearance, the similarity of advertising and non-advertising material and the ease of distinguishing between these two.

This Business Guide “builds on” other guides including the Dot Com Disclosures guidance, and the Endorsements and Testimonials Guides, as well as FTC enforcement actions against infomercial producers and operators of fake news websites marketing products. It provides 17 scenarios of how FTC determines whether material constitutes advertising and whether disclosures would be needed. Although FTC indicates that it intends to provide flexibility, at times it seems prescriptive. For example, in the section on “clarity of meaning,” FTC asserts that “[a]dvertisers should not use terms such as ‘Promoted’ or ‘Promoted Stories,’” to identify native advertising because those terms are “at best ambiguous and potentially could mislead consumers that advertising content is endorsed by a publisher site.” 

Traditionally, the FTC has not held publishers responsible for misleading ads on their properties because “they were just a distribution channel.” However, as explained in a final note in the guide, the involvement of the publisher in creating the content, creates some potential liability; “everyone participating in the promotion of . . . products is [expected to be] familiar with the . . . principles that an ad should be identifiable as an ad to consumers.”

By Alexander J. Varond –

On December 18, Congress extended the rare pediatric disease priority review voucher (pediatric PRV) program out to September 30, 2016. The extension was granted as part of Congress’s budget deal. Although modest, it has been welcomed by industry. Many hope, however, that the six-month extension is merely a stopgap for a more robust extension of the program.

Since March 2015, there has been much speculation regarding if and when the pediatric PRV program would be renewed. FDA’s pediatric PRV program’s 1-year sunset provision was triggered when FDA issued the third PRV for Cholbam (see our previous post here). A number of attempts have been made to renew the program ahead of the March 2016 sunset: Representative Butterfield proposed extending the program in the Advancing Hope Act, the Senate proposed a corresponding but different bill, and the House of Representative’s 21st Century Cures Act also would breathe new life into the program. We blogged about these efforts here, here, and here.

Sanofi Redeems its Second Pediatric PRV

Sanofi recently redeemed its second PRV when it submitted an NDA for its fixed-ratio combination of insulin glargine and lixisenatide to treat Type II diabetes. Sanofi purchased the pediatric PRV from Retrophin Inc. in May for $245 million. This is the second pediatric PRV the company has redeemed. Sanofi appears to have used the PRV in an attempt to beat Novo Nordisk’s once-daily single-injection combination of Tresiba (insulin degludec) and Victoza (liraglutide), Xultophy, to market. Novo Nordisk submitted its NDA for Xultophy in September 2015. Earlier this year, Sanofi successfully used a pediatric PRV for its PCSK9 inhibitor, Praluent, beating Amgen’s PCSK9, Repatha, to market.